EXHIBIT 10.4

THIS LICENSE AGREEMENT NOT VALID UNTIL EXECUTION COPIES HAVE BEEN SIGNED BY ALL
PARTIES.

                           EXCLUSIVE LICENSE AGREEMENT

      THIS AGREEMENT (the "Agreement") by and between YALE UNIVERSITY, a
corporation organized and existing under and by virtue of a charter granted by
the general assembly of the Colony and State of Connecticut and located in New
Haven, Connecticut ("YALE"), The Research Foundation of State University of New
York, on behalf of University at Buffalo, a nonprofit, educational corporation
organized and existing under the laws of the State of New York ("FOUNDATION")
and Hudson Health Sciences, Inc. a corporation organized and existing under the
laws of the State of DELAWARE, and with principal offices located at 400 Oyster
Point Boulevard, Suite 215, South San Francisco, CA 94080 ("LICENSEE") is
effective as of February, 4, 2004 ("EFFECTIVE DATE").

                              ARTICLE 1 BACKGROUND

      1.1. In the course of research conducted under the auspices of Yale
University, and, previously and separately, under auspices of FOUNDATION (the
"INSTITUTIONS"), Yung-Chi Cheng and Chien-Neng Chang in the Department of
Pharmacology at Yale and Thomas J. Bardos, Yung-Chi Cheng, Alan C. Schroeder,
and Simon M. N. Efange at SUNY Buffalo (the "INVENTORS"), have produced
inventions entitled "Therapeutic Use of IPDR" and "5-Ioso 2-Pyrimidinone
Nucleoside", respectively.

      1.2. YALE has been granted the exclusive right and responsibility for
negotiating, arranging, and managing licenses for the mutual benefit of
FOUNDATION and YALE pursuant to an agreement between FOUNDATION and YALE dated
as of February 4, 2004.

      1.3. INSTITUTIONS wish to have the INVENTIONS and any resulting patents
commercialized to benefit the public good.

      1.4. LICENSEE has represented to INSTITUTIONS to induce INSTITUTIONS to
enter into this Agreement that it shall act diligently to develop and
commercialize the LICENSED PRODUCTS for public use throughout the LICENSED
TERRITORY (as defined below).

      1.5. INSTITUTIONS are willing to grant a license to LICENSEE, subject to
the terms and conditions of this Agreement.

      1.6. In consideration of these statements and mutual promises,
INSTITUTIONS and LICENSEE agree to the terms of this Agreement.

                             ARTICLE 2 DEFINITIONS

The following terms used in this Agreement shall be defined as set forth below:
<PAGE>

      2.1. "AFFILIATE" shall mean any entity or person that directly or
indirectly controls, is controlled by or is under common control with LICENSEE.
For purposes of this definition, "control" means possession of the power to
direct the management of such entity or person, whether through ownership of
more than fifty percent (50%) of voting securities, by contract or otherwise.

      2.2. "ANTIDILUTION PROTECTION" shall mean that in the event that price per
share of LICENCEE's adjusted common stock value fails to exceed FAIR MARKET
VALUE in any subsequent financing, LICENSEE shall issue to INSTITUTIONS
additional shares in such amount so that INSTITUTIONS shall maintain an implied
monetary interest in LICENSEE, based on valuation at the time of such subsequent
financing, of not less than the value of INSTITUTION's shares or options upon
date of grant.

      2.3 "CONFIDENTIAL INFORMATION" shall mean all information disclosed by one
party to the other during the negotiation of or under this Agreement in any
manner, whether orally, visually or in tangible form, that relates to LICENSED
PATENTS or the Agreement itself, unless such information is subject to an
exception described in Article 8.2; provided, however, that CONFIDENTIAL
INFORMATION that is disclosed in tangible form shall be marked "Confidential" at
the time of disclosure and CONFIDENTIAL INFORMATION that is disclosed orally or
visually shall be identified as confidential at the time of disclosure and
subsequently reduced to writing, marked confidential and delivered to the other
party within thirty (30) days of such disclosure. CONFIDENTIAL INFORMATION shall
include, without limitation, materials, know-how and data, technical or
non-technical, trade secrets, inventions, methods and processes, whether or not
patentable. Notwithstanding any other provisions of this Article 2.2,
CONFIDENTIAL INFORMATION of LICENSEE that is subject to Article 8 of this
Agreement is limited to information that LICENSEE supplies pursuant to
LICENSEE's obligations under Articles 7 and 9 of this Agreement, unless
otherwise mutually agreed to in writing by the parties.

      2.4 "EARNED ROYALTY" is defined in Article 6.1.

      2.5 "EFFECTIVE DATE" is defined in the introductory paragraph of this
Agreement.

      2.6 `FAIR MARKET VALUE" shall mean $2.37 per share of common stock at
4,000,000 shares outstanding on the EFFECTIVE DATE of the license; or for
subsequent stock grant shall mean the last sale price of the Common Stock on the
trading day on which the value is being determined or, in case no such reported
sales take place on such day, the average of the last reported bid and asked
prices of the Common Stock on such day, in either case on the principal national
securities exchange on which the Common Stock is admitted to trading or listed,
or if not listed or admitted to trading on any such exchange, the representative
closing sale price of the Common Stock as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"), or other
similar organization if NASDAQ is no longer reporting such information, or, if
the Common Stock is not reported on NASDAQ, the high per share sale price for
the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or if not so available, the fair
market value of the Common Stock as determined by the price per share in the
most recent private financing round wherein (i) the total shares in the
financing represent no less than five percent (5%) of the equity after the
financing, (ii) greater than fifty percent (50%) of the shares were purchased by
parties


                                      -2-
<PAGE>

unaffiliated with Company management or directors, and (iii) the transaction was
not connected to any business agreement between an investing party or parties
and the Company.

      2.7 "FIELD" shall mean all uses.

      2.8 "FIRST SALE" shall mean the first sale to a third party of any
LICENSED PRODUCT or LICENSED METHOD in any country.

      2.9 "IND" shall mean an investigational new drug application filed with
the United States Food and Drug Administration prior to beginning clinical
trials in humans in the United States or any comparable application filed with
regulatory authorities in or for a country or group of countries other than the
United States

      2.10 "INVENTIONS" are IPdR composition, as covered by United States Patent
4,895,937 entitled "5-Ioso 2-Pyrimidinone Nucleoside", and use for the treatment
of cancers as covered by a United States Patent 5,728,684 and related pending or
issued foreign applications, together with any continuations,
continuations-in-part, and any divisional, or substitute patents, any reissues
or re-examinations of any such applications or patents, and any extension of the
term of any such patent

      2.11 "INVENTORS" are defined in Article 1.1

      2.12 "INSOLVENT" shall have the meaning ascribed to such term in the
United States Federal Bankruptcy Law, as amended from time to time, or has
commenced bankruptcy, reorganization or insolvency proceedings, or any other
proceeding under any federal, state or other law for the relief of debtors.

      2.13 "LICENSE" refers to the license granted under Article 3.1.

      2.14 "LICENSED METHODS" shall mean any method, procedure, service or
process the practice of which, in the absence of a license from INSTITUTIONS,
would infringe a VALID CLAIM of a LICENSED PATENT or which uses a LICENSED
PRODUCT.

      2.15 "LICENSED PATENTS" shall mean the United States or foreign patent
application(s) and patents(s) listed in Appendix A and owned by INSTITUTIONS or
FOUNDATION during the term of this Agreement, together with any continuations,
divisionals, and continuations-in-part, to the extent the claims of any such
patent or patent application are directed to subject matter specifically
described in the patent applications listed on Appendix A; any reissues,
re-examinations, or extensions thereof, or substitutes therefor; and the
relevant international equivalents of any of the foregoing. Appendix A is
incorporated into this Agreement.

      2.16 "LICENSED PRODUCTS" shall mean any product (including any apparatus
or kit) or component part thereof, the manufacture, use or sale of which, in the
absence of a license from INSTITUTIONS, would infringe a VALID CLAIM of a
LICENSED PATENT.

      2.17 "LICENSED TERRITORY" shall mean worldwide.


                                      -3-
<PAGE>

      2.18 "NDA" shall mean a new drug application filed with the United States
Food and Drug Administration to obtain marketing approval for a LICENSED PRODUCT
in the United States or any comparable application filed with a regulatory
authority in or for a country or group of countries other than the United
States.

      2.19 "NET SALES" shall mean:

            (a) gross invoice price from the sale, lease or other transfer or
disposition of the LICENSED PRODUCTS or LICENSED METHODS, or from services
performed using LICENSED PRODUCTS or LICENSED METHODS, by LICENSEE, SUBLICENSEES
or AFFILIATES to third parties, except as set forth in Article 2.16(b), less the
following deductions, provided they actually pertain to the disposition of the
LICENSED PRODUCTS or LICENSED METHODS and are separately invoiced:

            (i) all discounts, credits and allowances on account of returns;

            (ii) transportation and insurance; and

            (iii) duties, taxes and other governmental charges levied on the
      sale, transportation or delivery of LICENSED PRODUCTS or practice of the
      LICENSED METHODS, but not including income taxes.

No deductions shall be made for any other costs or expenses, including but not
limited to commissions to independents, agents or those on LICENSEE's,
SUBLICENSEE's or an AFFILIATE's payroll or for the cost of collection.

            (b) "NET SALES" shall not include the gross invoice price for
LICENSED PRODUCTS or LICENSED METHODS sold to, or services performed using
LICENSED PRODUCTS or LICENSED METHODS for, any AFFILIATE unless such AFFILIATE
is an end-user of any LICENSED PRODUCT or LICENSED METHOD, in which case such
consideration shall be included in NET SALES at the average selling price
charged to a third party during the same quarter.

      2.20 "REASONABLE COMMERCIAL EFFORTS" shall mean documented efforts that
are consistent with those utilized by companies of similar size and type that
have successfully developed products and services similar to LICENSED PRODUCTS
and LICENSED METHODS.

      2.21 "SUBLICENSE INCOME" shall mean consideration in any form received by
LICENSEE or an AFFILIATE in connection with a grant to any third party or
parties of a sublicense or other right, license, privilege or immunity to make,
have made, use, sell, have sold, distribute, import or export LICENSED PRODUCTS
or to practice LICENSED METHODS, but excluding consideration included within NET
SALES. SUBLICENSE INCOME shall include without limitation any license signing
fee, license maintenance fee, unearned portion of any minimum royalty payment
received by LICENSEE, equity, distribution or joint marketing fee, research and
development funding in excess of LICENSEE's cost of performing such research and
development, and any consideration received for an equity interest in, extension
of credit to or other investment in LICENSEE to the extent such consideration
exceeds the fair market value


                                      -4-
<PAGE>

of the equity or other interest received as determined by agreement of the
parties or by an independent appraiser mutually agreeable to the parties.

      2.22 "SUBLICENSEE" shall mean any third party sublicensed by LICENSEE to
make, have made, use, sell, have sold, import or export any LICENSED PRODUCT or
to practice any LICENSED METHOD.

      2.23 "TERM" is defined in Article 3.4.

      2.24 "VALID CLAIM" shall mean a pending, issued or unexpired claim of a
LICENSED PATENT so long as such claim shall not have been irrevocably abandoned
or declared to be invalid in an unappealable decision of a court or other
authority or competent jurisdiction through no fault of cause of LICENSEE.

      2.25 "ACADEMIC RESEARCH PURPOSES" shall mean use of a LICENSED PRODUCT or
a LICENSED METHOD for academic research or other not-for-profit scholarly
purposes which are undertaken at An academic, non-profit, or governmental
institution and that does not use a LICENSED PRODUCT or a LICENSED METHOD in the
production or manufacture of products for sale or the performance of services
for a fee.

                        ARTICLE 3 LICENSE GRANT AND TERM

      3.1. Subject to all the terms and conditions of this Agreement,
INSTITUTIONS hereby grants to LICENSEE an exclusive license, under the LICENSED
PATENTS, with the right to grant sublicenses, to make, have made, use, sell,
have sold, import or export LICENSED PRODUCTS, and to practice any LICENSED
METHOD, within the FIELD in the LICENSED TERRITORY (the "LICENSE").

      3.2. To the extent that any invention included within the LICENSED PATENTS
has been funded in whole or in part by the United States government, the United
States government retains certain rights in such invention as set forth in 35
U.S.C. ss.200-212 and all regulations promulgated thereunder, as amended, and
any successor statutes and regulations (the "Federal Patent Policy"). As a
condition of the license granted hereby, LICENSEE acknowledges and shall comply
with all aspects of the Federal Patent Policy applicable to the LICENSED
PATENTS, including the obligation that LICENSED PRODUCTS used or sold in the
United States be manufactured substantially in the United States. Nothing
contained in this Agreement obligates or shall obligate INSTITUTIONS to take any
action that would conflict in any respect with its past, current or future
obligations to the United States Government under the Federal Patent Policy with
respect to the LICENSED PATENTS.

      3.3. The LICENSE is expressly made subject to INSTITUTIONS's reservation
of the right to make, use and practice the LICENSED PATENTS and LICENSED METHODS
for ACADEMIC RESEARCH PURPOSES. Nothing in this Agreement shall be construed to
grant by implication, estoppel or otherwise any licenses under patents of
INSTITUTIONS other than the LICENSED PATENTS.


                                      -5-
<PAGE>

      3.4. Unless terminated earlier as provided in Article 13, the term of this
Agreement (the "TERM") shall commence on the EFFECTIVE DATE and shall
automatically expire, on a country-by-country basis, on the date on which the
last of the claims of the patents described in the LICENSED PATENTS in such
country expires, lapses or is declared to be invalid by a non-appealable
decision of a court or other authority of competent jurisdiction through no
fault or cause of LICENSEE.

      3.5. Except as expressly provided in this Agreement, under no
circumstances will LICENSEE, as a result of this Agreement, obtain any interest
in or any other right to any technology, know-how, patents, patent applications,
materials or other intellectual or proprietary property of INSTITUTIONS.

      3.6 To the YALE--Office of Cooperative Researchs' knowledge and belief,
the INSTITUTIONS have all right, title, and interest in and to the LICENSED
PATENTS, including exclusive, absolute, irrevocable right, title and interest
thereto, free and clear of all liens, charges, encumbrances or other
restrictions or limitations of any kind whatsoever and to the YALE Office of
Cooperative Researchs' knowledge and belief there are no licenses, options,
restrictions, liens, rights of third parties, disputes, royalty obligations,
proceedings or claims relating to, affecting, or limiting its rights or the
rights of the LICENSEE under this Agreement with respect to, or which may lead
to a claim of infringement or invalidity regarding, any part or all of the
LICENSED PATENTS and their use as contemplated in the underlying patent
applications as presently drafted.

      3.7 To the YALE Office of Cooperative Research's knowledge and belief
there is no claim, pending or threatened, of infringement, interference or
invalidity regarding, any part or all of the LICENSED PATENTS and their use as
contemplated in the underlying patent applications as presently drafted. In the
event that the INSTITUTIONS become knowledgeable of material information,
INSTITUTIONS shall inform LICENSEE promptly.

                             ARTICLE 4 SUBLICENSES

      4.1. INSTITUTIONS hereby grants to LICENSEE the right to sublicense its
right to make, have made, use, sell, have sold, import or export LICENSED
PRODUCTS and to practice any LICENSED METHOD, within the FIELD in the LICENSED
TERRITORY provided this Agreement is in effect and LICENSEE is not in breach of
its obligations hereunder.

      4.2. Any sublicense granted by LICENSEE shall include substantially the
same Definitions and provisions on Due Diligence, Confidentiality and Publicity,
Reporting Requirements, Indemnification, Insurance and Warranties, Patent
Notices and Use of INSTITUTIONS' Name, as are agreed to in this Agreement, and
such other provisions as are needed to enable LICENSEE to comply with this
Agreement. LICENSEE will provide INSTITUTIONS with a copy of each Sublicense
Agreement promptly after execution. A breach of this provision shall constitute
a material breach that is subject to Article 13.5(b).

      4.3. LICENSEE may determine royalty rates payable by SUBLICENSEES in its
discretion; however, LICENSEE shall pay royalties to INSTITUTIONS on NET SALES
of SUBLICENSEES based on the same royalty rate as apply to NET SALES by LICENSEE
and its


                                      -6-
<PAGE>

AFFILIATES. In addition, LICENSEE shall pay to INSTITUTIONS a percentage of any
SUBLICENSE INCOME per the following schedule, wherein "ex US" shall mean any
country outside of the United States:

Calendar Year of        Percentage Payable      Percentage Payable
Sublicensing Income     to INSTITUTIONS         to INSTITUTIONS ex US
-------------------     ---------------         ---------------------
     2004               Forty percent (40%)     Twenty percent (20%)
     2005               Thirty percent (30%)    Fifteen percent (15%)
     2006               Twenty percent (20%)    Ten percent (10%)
     2007               Fifteen percent (15%)   Seven and a half percent (7.5%)
     2008               Ten percent (10%)       Five percent (5%)
2009 and beyond         Five percent (5%)       Two and a half percent (2.5%)

      4.4. LICENSEE agrees that it has sole responsibility to promptly :

            (a) provide INSTITUTIONS with a copy of each sublicense granted by
LICENSEE under this Agreement and any amendments to such sublicense and to
notify INSTITUTIONS of termination of any sublicense; and

            (b) summarize and deliver to INSTITUTIONS copies of all reports
provided to LICENSEE by SUBLICENSEES.

     ARTICLE 5 MILESTONE PAYMENTS, MAINTENANCE FEES AND OTHER CONSIDERATION

      5.1. In consideration for initiation of the license granted hereunder, on
the Effective Date, the LICENSEE agrees to: (i) pay to INSTITUTIONS One Hundred
Thousand Dollars ($100,000); (ii) issue to INSTITUTIONS ten (10) year
fully-vested options (the "OPTIONS") to one hundred thousand (100,000) shares of
common stock of the Company (the "COMMON STOCK") at an exercise price equal to
one dollar and forty three cents ($1.43) per share (a form of such agreement
(the "OPTION AGREEMENT") is attached as Appendix B hereto); INSTITUTIONS and
LICENSEE agree to execute such other documents and to provide such additional
information as may be required by law to issue the OPTIONS in accordance with
the terms of this Agreement. The OPTIONS shall be entitled to receive
ANTIDILUTION PROTECTION and shall have rights and preferences that are no less
than any other stock or options issued by the Company either prior to the
EFFECTIVE DATE or within twelve (12) months of the EFFECTIVE DATE

            (a) INSTITUTIONS shall have the right to participate, on a pro rata
basis, in any sales of shares by existing shareholders in subsequent financings.

            (b) The Company agrees that if, at any time, and from time to time,
after the earlier to occur of (i) the date of the initial public offering of the
Common Stock (the "IPO") or (ii) the first date (the "Trading Date") on which
the Common Stock (or securities received in exchange for Common Stock) trades on
a national securities exchange or on the NASDAQ (a "Trading


                                      -7-
<PAGE>

Event"), the Board of Directors of the Company (the "Board") shall authorize the
filing of a registration statement under the Securities Act (other than the
initial public offering of the Company's Common Stock or a registration
statement on Form S-8, Form S-4 or any other form that does not include
substantially the same information as would be required in a form for the
general registration of securities) in connection with the proposed offer of any
of its securities by it or any of its stockholders, the Company shall: (A)
promptly notify the INSTITUTIONS and INVENTORS that such registration statement
will be filed (i) so that INSTITUTIONS may exercise their OPTIONS should they
choose to do so at that time, and (ii) that the shares held by the INSTITUTIONS
(including those received pursuant to the exercise of OPTIONS at that time) will
be included in such registration statement at INSTITUTIONS' request; (B) cause
such registration statement to cover all of such shares owned by the
INSTITUTIONS for which the INSTITUTIONS requests inclusion; (C) use best efforts
to cause such registration statement to become effective as soon as practicable;
and (D) take all other reasonable action necessary under any Federal or state
law or regulation of any governmental authority to permit all such shares that
have been issued to the INSTITUTIONS to be sold or otherwise disposed of, and
will maintain such compliance with each such Federal and state law and
regulation of any governmental authority for the period necessary for such
INSTITUTION to promptly effect the proposed sale or other disposition.

            (c) Any COMMON STOCK or OPTIONS to be issued pursuant to the terms
of this Agreement shall also be issued in accordance with the directions of
INSTITUTIONS so that INSTITUTIONS may comply with INSTITUTIONS' royalty sharing
policies, including direct issuance of certain of the COMMON STOCK and OPTIONS
to the INVENTORS. Rights provided to INSTITUTIONS hereunder due to their
ownership of COMMON STOCK and OPTIONS shall also apply to COMMON STOCK and
OPTIONS received by INVENTORS hereunder (including without limitation the right
to receive notice pursuant to Section 5.1(b) of this Agreement.

            (d) COMPANY is duly authorized to enter into this Agreement and to
issue the COMMON STOCK and OPTIONS as outlined herein, and has procured any and
all necessary approvals in connection therewith. Upon COMPANY'S execution of the
Agreement and any OPTION AGREEMENTS issued pursuant to the Agreement, such
agreements shall constitute legal, valid, binding and enforceable obligations of
the COMPANY.

      5.2. LICENSEE shall pay to YALE an estimated $15,000 for YALE's
unreimbursed past patent expenses within 90 days of the Effective Date.

      5.3. During the TERM of this Agreement, LICENSEE agrees to pay to
INSTITUTIONS an annual license maintenance fee of Twenty Five Thousand Dollars
($25,000.00) commencing on the first anniversary of the EFFECTIVE DATE and every
anniversary thereafter until LICENSEE starts to pay Minimum Royalty Payments
under Article 6 hereunder.

      5.4. LICENSEE shall pay the following non-refundable milestone payments to
INSTITUTIONS for each LICENSED PRODUCT developed by LICENSEE:


                                      -8-
<PAGE>

            (a) Two Hundred Fifty Thousand Dollars ($250,000.00) upon the
demonstration of efficacy in a Phase IIb clinical trial for a LICENSED PRODUCT;
and

            (b) Two Hundred Fifty Thousand Dollars ($250,000.00) following
receipt by the LICENSEE of an approvable letter from the United States Food and
Drug Administration ("FDA") for the first NDA filed by the Company for a
LICENSED PRODUCT.

            Solely with respect to the milestone payment described in 5.3(a),
the LICENSEE shall pay INSTITUTIONS a minimum of One Hundred Thousand ($100,000)
in cash. The LICENSEE may, in its sole discretion, determine to satisfy the
balance of such milestone payment through the issuance to INSTITUTIONS of shares
of COMMON STOCK at the then current FAIR MARKET VALUE of the COMMON STOCK. Any
shares issued pursuant to this Section 5.3 shall be entitled to ANTIDILUTION
PROTECTION.

      5.5. Neither the license issue maintenance fee set forth in Article 5.2
nor the milestone payments set forth in Article 5.3 shall be credited against
EARNED ROYALTIES payable under Article 6.

      5.6. As partial consideration for the license granted herein, LICENSEE
-agrees to enter into a research agreement within 60 days of the EFFECTIVE DATE
under which LICENSEE will fund research by - Yung-Chi Cheng at YALE related to
the INVENTIONS, which funding shall be in the minimum amount of eighty one
thousand dollars ($81,000) for a period of two years from the effective date of
such research agreement, subject to approval of a research plan by Dr. Cheng and
YALE.

              ARTICLE 6 EARNED ROYALTIES; MINIMUM ROYALTY PAYMENTS

      6.1. During the TERM of this Agreement, as partial consideration for the
LICENSE, LICENSEE shall pay to INSTITUTIONS an earned royalty on worldwide
cumulative NET SALES of LICENSED PRODUCTS or LICENSED METHODS by LICENSEE or its
SUBLICENSEES or AFFILIATES of three percent (3%) in each calendar year ("EARNED
ROYALTIES").

      6.2. Minimum Royalty Payments. LICNESEE shall pay make minimum royalty
payments creditable to royalties from sales in the following amounts:

                      Calendar Year         Minimum Royalty Payment
                      -------------         -----------------------
                         2012                     $  200,000
                         2013                     $  500,000
                         2014                     $1,000,000
                         2015                     $  500,000

      6.3. LICENSEE shall pay all EARNED ROYALTIES accruing to INSTITUTIONS
within forty five (45) days from the end of each calendar quarter (March 31,
June 30, September 30 and December 31), beginning in the first calendar quarter
in which NET SALES occur.

      6.4. All EARNED ROYALTIES and other payments due under this Agreement
shall be paid to INSTITUTIONS in United States Dollars. In the event that
conversion from foreign


                                      -9-
<PAGE>

currency is required in calculating a payment under this Agreement, the exchange
rate used shall be the Interbank rate quoted by Citibank at the end of the last
business day of the quarter in which the royalty was earned. If overdue, the
royalties and any other payments due under this Agreement shall bear interest
until payment at a per annum rate two percent (2%) above the prime rate in
effect at Citibank on the due date and INSTITUTIONS shall be entitled to recover
reasonable attorneys' fees and costs related to the administration or
enforcement of this Agreement, including collection of royalties or other
payments, following such failure to pay. The payment of such interest shall not
foreclose INSTITUTIONS from exercising any other right it may have as a
consequence of the failure of LICENSEE to make any payment when due.

                            ARTICLE 7 DUE DILIGENCE

      7.1. LICENSEE has designed a plan for developing and commercializing the
LICENSED PATENTS that includes a description of research and development,
testing, government approval, manufacturing, marketing and sale or lease of
LICENSED PRODUCTS and/or LICENSED METHODS ("PLAN"). A copy of the PLAN is
attached to this Agreement as Appendix C and incorporated herein by reference.

      7.2 LICENSEE shall use all REASONABLE COMMERCIAL EFFORTS, after the
EFFECTIVE DATE of this Agreement, to begin to implement the PLAN at its sole
expense and thereafter to diligently commercialize and develop markets for the
LICENSED PRODUCTS and LICENSED METHODS. In addition, the LICENSEE agrees as
follows:

            (a) Within 90 days of the EFFECTIVE DATE, LICENSEE shall have a cash
      balance in its account of no less than $1,000,000.00;

            (b) LICENSEE shall initiate a Phase I clinical trial within 24
      months of the EFFECTIVE DATE;

            (c) LICENSEE shall initiate a Phase II clinical trial within 18
      months of completion of a successful Phase I clinical trial; and

            (d) LICENSEE shall file an NDA for regulatory approval in the United
      States within seven (7) years of the execution date of this Agreement.

      7.3 Within thirty (30) days of each anniversary of the EFFECTIVE DATE of
this Agreement, LICENSEE shall provide a written report to INSTITUTIONS,
indicating LICENSEE's progress and problems to date in performance under the
PLAN, commercialization of LICENSED PRODUCTS and LICENSED METHODS, and an
updated copy of the PLAN that includes a forecast and schedule of major events
required to market the LICENSED PRODUCTS. The updated PLAN shall be consistent
with those utilized by companies of similar size and type that have successfully
developed products and services similar to LICENSED PRODUCTS and LICENSED
METHODS.

      7.4 If at any time LICENSEE abandons or suspends its research, development
or marketing of the LICENSED PRODUCTS and or LICENSED METHODS, or its intent to
research, develop and market such products or methods, or otherwise fails to
comply with its due


                                      -10-
<PAGE>

diligence obligations under this Article for a period exceeding ninety (90)
days, LICENSEE shall immediately notify INSTITUTIONS giving reasons and a
statement of its intended actions.

      7.5 LICENSEE agrees that INSTITUTIONS shall be entitled to terminate this
Agreement pursuant to Article 13.1(b) if: (a) LICENSEE shall fail to receive
written approval of the PLAN as defined in Article 7.1 or Article 7.2; or (b)
LICENSEE shall fail to implement the PLAN in accordance with this Article, and
(c) LICENSEE shall fail to incur direct expenditures toward the development and
commercialization of a LICENSED PRODUCT or LICENSED METHOD per the following
schedule:

                   Calendar Year                      Amount
                   -------------                      ------

                        2005                       $500,000.00
                        2006                       $500,000.00
                        2007                      $1,000,000.00
                        2008                      $1,500,000.00
                        2009                      $2,000,000.00
                        2010                      $2,000,000.00
                        2011                       $500,000.00
                        2012                       $500,000.00

                    ARTICLE 8 CONFIDENTIALITY AND PUBLICITY

      8.1. Subject to the parties' rights and obligations pursuant to this
Agreement, INSTITUTIONS and LICENSEE agree that during the term of this
Agreement and for five (5) years thereafter, each of them:

            (a) will keep confidential and will cause their AFFILIATES and, in
the case of LICENSEE, its SUBLICENSEES, to keep confidential, CONFIDENTIAL
INFORMATION disclosed to it by the other party, by taking whatever action the
party receiving the CONFIDENTIAL INFORMATION would take to preserve the
confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be
less than reasonable care; and

            (b) will only disclose that part of the other's CONFIDENTIAL
INFORMATION to its officers, employees or agents that is necessary for those
officers, employees or agents who need to know to carry out its responsibilities
under this Agreement; and

            (c) will not use the other party's CONFIDENTIAL INFORMATION other
than as expressly set forth in this Agreement or disclose the other's
CONFIDENTIAL INFORMATION to any third parties under any circumstance without
advance written permission from the other party; and

            (d) will, within sixty (60) days of termination of this Agreement,
return all the CONFIDENTIAL INFORMATION disclosed to it by the other party
pursuant to this Agreement except for one copy which may be retained by the
recipient for monitoring compliance with this Article 8.


                                      -11-
<PAGE>

      8.2. The obligations of confidentiality described above shall not pertain
to that part of the CONFIDENTIAL INFORMATION that:

            (a) was known to the recipient prior to the disclosure by the
disclosing party; or

            (b) is at the time of disclosure or has become thereafter publicly
known through no fault or omission attributable to the recipient; or

            (c) is rightfully given to the recipient from sources independent of
the disclosing party; or

            (d) is independently developed by the receiving party without use of
or reference to the CONFIDENTIAL INFORMATION of the other party; or

            (e) is required to be disclosed by law in the opinion of recipient's
attorney, but only after the disclosing party is given prompt written notice and
an opportunity to seek a protective order.

      8.3. Except as required by law, neither party may disclose the financial
terms of this Agreement without the prior written consent of the other party.

                   ARTICLE 9 REPORTS, RECORDS AND INSPECTIONS

      9.1. LICENSEE shall, within thirty (30) days after the calendar year in
which NET SALES first occur, and within thirty (30) days after each calendar
quarter (March 31, June 30, September 30 and December 31) thereafter, provide
INSTITUTIONS with a written report detailing the NET SALES and uses, if any,
made by LICENSEE, its SUBLICENSEES and AFFILIATES of LICENSED PRODUCTS and
LICENSED METHODS during the preceding calendar quarter and calculating the
payments due pursuant to Article 6. NET SALES of LICENSED PRODUCTS or LICENSED
METHODS shall be deemed to have occurred on the date of invoice for such
LICENSED PRODUCTS or LICENSED METHODS. Each such report shall be signed by an
officer of LICENSEE (or the officer's designee), and must include:

            (a) the number of LICENSED PRODUCTS manufactured, sold, leased or
otherwise transferred or disposed of, and the amount of LICENSED METHODS sold,
by LICENSEE, SUBLICENSEES and AFFILIATES;

            (b) a calculation of NET SALES for the applicable reporting period
in each country, including the gross invoice prices charged for the LICENSED
PRODUCTS and LICENSED METHODS and any permitted deductions made pursuant to
Article 2.20;

            (c) a calculation of total royalties or other payment due, including
any exchange rates used for conversion; and

            (d) names and addresses of all SUBLICENSEES and the type and amount
of any SUBLICENSE INCOME received from each SUBLICENSEE.


                                      -12-
<PAGE>

      9.2. LICENSEE and its SUBLICENSEES shall keep and maintain complete and
accurate records and books containing an accurate accounting of all data in
sufficient detail to enable verification of EARNED ROYALTIES and other payments
under this Agreement. LICENSEE shall preserve such books and records for three
(3) years after the calendar year to which they pertain. Such books and records
shall be open to inspection by INSTITUTIONS or an independent certified public
accountant selected by INSTITUTIONS, at INSTITUTIONS' expense, during normal
business hours upon ten (10) days' prior written notice, for the purpose of
verifying the accuracy of the reports and computations rendered by LICENSEE but
in no event more than two (2) times during any 12 month period. In the event
LICENSEE underpaid the amounts due to INSTITUTIONS with respect to the audited
period by more than five percent (5%), LICENSEE shall pay the reasonable cost of
such examination, together with the deficiency not previously paid, and accrued
interest on the underpayment at the lesser of the maximum rate allowed by law or
1 1/2 % per month, all within thirty (30) days of receiving notice thereof from
INSTITUTIONS.

      9.3. On or before the ninetieth (90th) day following the close of
LICENSEE's fiscal year, LICENSEE shall provide INSTITUTIONS with a summary
report of LICENSEE's certified financial statements for the preceding fiscal
year including, at a minimum, a balance sheet and an income statement.

      9.4 Within thirty (30) days of LICENSEE's FIRST SALE, LICENSEE shall
notify INSTITUTIONS of such FIRST SALE.

                          ARTICLE 10 PATENT PROTECTION

      10.1. LICENSEE shall be responsible for all future costs of filing,
prosecution and maintenance of all United States patent applications contained
in the LICENSED PATENTS. Any and all such United States patent applications, and
resulting issued patents, shall remain the property of INSTITUTIONS.

      10.2. LICENSEE shall be responsible for all present and future costs of
filing, prosecution and maintenance of all foreign patent applications, and
patents contained in the LICENSED PATENTS in the countries outside the United
States in the LICENSED TERRITORY selected by INSTITUTIONS and agreed to by
LICENSEE. All such applications or patents shall remain the property of
INSTITUTIONS.

      10.3. If LICENSEE does not agree to pay the expenses of filing,
prosecuting or maintaining a patent application or patent in any country outside
the United States, or fails to pay the expenses of filing, prosecuting or
maintaining a patent application or patent in the United States, then LICENSEE's
rights under this Agreement shall terminate automatically with respect to that
country.

      10.4. The costs mentioned in Articles 10.2 and 10.3 shall include, but are
not limited to, any past, present and future taxes, annuities, working fees,
maintenance fees, renewal and extension charges. Such past costs shall be
payable pursuant to Section 5.1 herein. Payment of future costs shall be made,
at YALE's option, either directly to patent counsel or by reimbursement to YALE.
LICENSEE shall make payment directly to the appropriate party within thirty (30)
days of receiving its invoice. If LICENSEE fails to make payment to YALE or
patent


                                      -13-
<PAGE>

counsel, as appropriate, within the thirty day period, LICENSEE shall be charged
a five percent (5%) surcharge on the invoiced amount per month or fraction
thereof or such higher amount as may be charged by patent counsel. Failure of
LICENSEE to pay the surcharge shall be grounds for termination by YALE under
Article 13.5(b).

      10.5. All patent applications under the LICENSED PATENTS shall be
prepared, prosecuted, filed and maintained by independent patent counsel
selected by LICENSEE and agreed to by YALE. LICENSEE shall be responsible for
directing prosecution. With respect to any LICENSED PATENTS, LICENSEE and patent
counsel shall (a) consult with YALE and keep YALE fully informed about the
progress of all patent applications and patents, including all issues relating
to the preparation, filing, prosecution and maintenance of LICENSED PATENTS, (b)
consult with YALE and keep YALE fully informed about LICENSEE's patent strategy
with respect to the LICENSED PATENTS, (c) provide to YALE advance copies of
documents relevant to preparation, filing, prosecution and maintenance of the
LICENSED PATENTS sufficiently in advance of filing to allow YALE a reasonable
opportunity to review and comment on such documents, (d) seriously consider all
YALE comments on such patent filings and (e) provide YALE with final copies of
such documents. LICENSEE agrees to use commercially reasonable efforts to obtain
broad and strong patent protection in the best interest of YALE and LICENSEE.
LICENSEE will not abandon any patent application, or make decisions that would
have a material impact on the nature or scope of any claims, without YALE's
prior written consent.

      10.6. LICENSEE shall apply, and shall require SUBLICENSEES to apply, the
patent marking notices required by the law of any country where LICENSED
PRODUCTS are made, sold or used, and in accordance with the applicable patent
laws of that country.

                     ARTICLE 11 INFRINGEMENT AND LITIGATION

      11.1. Each party shall promptly notify the other in writing in the event
that it obtains knowledge of infringing activity by third parties, or is sued or
threatened with an infringement suit, in any country in the LICENSED TERRITORY
as a result of activities that concern the LICENSED PATENTS and shall supply the
other party with documentation of the infringing activities that it possesses.

      11.2. During the TERM of this Agreement:

            (a) LICENSEE shall have the first right and obligation to defend the
LICENSED PATENTS against infringement or interference in the FIELD and in the
LICENSED TERRITORY by third parties except with respect to use of LICENSED
PRODUCTS by INSTITUTIONS or non-profit institutions collaborating with
INSTITUTIONS for ACADEMIC RESEARCH PURPOSES. This right and obligation includes
bringing any legal action for infringement and defending any counter claim of
invalidity or action of a third party for declaratory judgment for
non-infringement or non-interference. If, in the reasonable opinion of
LICENSEE's and INSTITUTIONS' respective counsel, INSTITUTIONS are required to be
a named party to any such suit for standing purposes, LICENSEE may join
INSTITUTIONS as a party; provided, however, that (i) INSTITUTIONS shall not be
the first named parties in any such action, (ii) the pleadings and any public
statements about the action shall state that the action is being pursued by
LICENSEE and that LICENSEE has joined


                                      -14-
<PAGE>

INSTITUTIONS as a party; and (iii) LICENSEE shall keep INSTITUTIONS reasonably
apprised of all developments in any such action. LICENSEE may settle such suits
solely in its own name and solely at its own expense and through counsel of its
own selection; provided, however, that no settlement shall be entered without
INSTITUTIONS' prior written consent. LICENSEE shall bear the expense of such
legal actions. Except for providing reasonable assistance, at the request and
expense of LICENSEE, INSTITUTIONS shall have no obligation regarding the legal
actions described in Article 11.2 unless required to participate by law.
However, INSTITUTIONS shall have the right to participate in any such action
through its own counsel and at its own expense. Any recovery shall first be
applied to LICENSEE's out of pocket expenses and legal fees, and second shall be
applied to INSTITUTIONS' out of pocket expenses, including legal fees. Any
excess recovery over those expenses representing loss of sales due to the
infringement shall be treated as NET SALES for which INSTITUTIONS shall be paid
EARNED ROYALTIES. INSTITUTIONS shall recover 25% of excess recovery over
expenses and loss of sales.

            (b) In the event LICENSEE fails to initiate and pursue or
participate in the actions described in Article 11.2(a) within sixty (60) days
of (a) notification of infringement from INSTITUTIONS or (b) the date LICENSEE
otherwise first becomes aware of an infringement, whichever is earlier,
INSTITUTIONS shall have the right to initiate such legal action at its own
expense and INSTITUTIONS may use the name of LICENSEE as party plaintiff to
uphold the LICENSED PATENTS. In such case, LICENSEE shall provide reasonable
assistance to INSTITUTIONS if requested to do so. INSTITUTIONS may settle such
actions solely through its own counsel. Any recovery shall be split between
INSTITUTIONS and LICENSEE on a pro rata basis as determined by the relative
total out of pocket and legal expenses incurred by each party in pursuing the
legal action solely through INSTITUTIONS counsel and settled in favor of
INSTITUTIONS.

      11.3. In the event LICENSEE is permanently enjoined from exercising its
LICENSE under this Agreement pursuant to an infringement action brought by a
third party, or if both LICENSEE and INSTITUTIONS elect not to undertake the
defense or settlement of a suit alleging infringement for a period of six (6)
months from notice of such suit, then either party shall have the right to
terminate this Agreement in the country where the suit was filed with respect to
the licensed patent following thirty (30) days' written notice to the other
party in accordance with the terms of Article 15.

                         ARTICLE 12 USE OF YALE'S NAME

      LICENSEE shall not use the name "Yale" or "Yale University," nor any
variation or adaptation thereof, nor any trademark, tradename or other
designation owned by YALE, nor the names of any of its trustees, officers,
faculty, students, employees or agents, for any purpose without the prior
written consent of YALE in each instance; provided, however, that YALE
acknowledges and agrees that the LICENSEE may use the names of YALE where the
use of such names may be required by law, including in various documents used by
the LICENSEE for capital raising and financing without such prior written
consent.

      LICENSEE shall not use the name "The Research Foundation of State
University of New York", "University at Buffalo" or "State University of New
York", nor any variation or


                                      -15-
<PAGE>

adaptation thereof (including logos or symbols association with the foregoing),
nor any trademark, tradename or other designation owned by FOUNDATION or related
entity, nor the names of any of its trustees, officers, faculty, students,
employees or agents, for any purpose without the prior written consent of
FOUNDATION in each instance; provided, however, that FOUNDATION acknowledges and
agrees that the LICENSEE may use the names of FOUNDATION where the use of such
names may be required by law, including in various documents used by the
LICENSEE for capital raising and financing without such prior written consent.

                             ARTICLE 13 TERMINATION

      13.1. INSTITUTIONS shall have the right to terminate this Agreement upon
written notice to LICENSEE in the event LICENSEE:


            (a) fails to make any payment whatsoever due and payable pursuant to
this Agreement with the exception of license initiation payment under Article
5.1 (i) unless LICENSEE shall make all such payments within the thirty (30) day
period after receipt of written notice from INSTITUTIONS (provided that the
payment of interest under Article 6.4 shall not foreclose INSTITUTIONS from
exercising any rights it may have under this Article 13.1(a)); or

            (b) commits a material breach of any other provision of this
Agreement which is not cured (if capable of being cured) within the sixty (60)
day period after receipt of written notice thereof from INSTITUTIONS, or upon
receipt of such notice if such breach is not capable of being cured; or

            (c) fails to obtain or maintain adequate insurance as described in
Article 14, whereupon INSTITUTIONS may terminate this Agreement immediately upon
written notice to LICENSEE.

            (d) fails to make the license initiation payment under Article 5.1
(i) within 3 business days of the EFFECTIVE DATE

      13.2. This Agreement may be terminated by INSTITUTIONS in the event
LICENSEE (i) shall cease to carry on its business or becomes INSOLVENT and has
not cured within 60 days, (ii) files for bankruptcy, (iii) a petition in
bankruptcy is filed against LICENSEE and is consented to, acquiesced in or
remains undismissed for sixty (60) days, (iv) LICENSEE makes a general
assignment for the benefit of creditors, or (v) a receiver is appointed for
LICENSEE. LICENSEE shall disclose documents in such instances within 30 days.

      13.3. LICENSEE shall have the right to terminate this Agreement upon
written notice to INSTITUTIONS:

            (a) at any time on 90 day's notice to INSTITUTIONS; or


                                      -16-
<PAGE>

            (b) in the event INSTITUTIONS commits a material breach of any of
the provisions of this Agreement and such breach is not cured (if capable of
being cured) within the sixty (60) day period after receipt of written notice
thereof from LICENSEE, or upon receipt of such notice if such breach is not
capable of being cured.

      13.4. Upon termination of this Agreement, for any reason, all rights and
licenses granted to LICENSEE under the terms of this Agreement are terminated
and INSTITUTIONS has the option, in its discretion, to terminate any sublicense
granted by LICENSEE. Upon such termination, LICENSEE shall cease to manufacture
or sell LICENSED PRODUCTS and cease to practice LICENSED METHODS. Within sixty
(60) days of the effective date of termination LICENSEE shall return to
INSTITUTIONS:

            (a) All materials relating to or containing the LICENSED PATENTS,
LICENSED METHODS or CONFIDENTIAL INFORMATION disclosed by INSTITUTIONS the last
report required under Article 7 or 9; and

            (b) All payments incurred up to the effective date of termination.

      13.5. Termination of this Agreement shall not affect any rights or
obligations accrued prior to the effective date of such termination and
specifically LICENSEE's obligation to pay all royalties and other payments
specified by Article 5 and 6. The following provisions shall survive any
termination: Articles 2 and 8, the preservation and inspection obligations of
Article 9, Article 12, Article 13, Article 14, Article 15, Article 16.1, and
Article 17. The parties agree that claims giving rise to indemnification may
arise after the TERM or termination of the LICENSE granted herein.

      13.6. The rights provided in this Article 13 shall be in addition and
without prejudice to any other rights which the parties may have with respect to
any default or breach of the provisions of this Agreement.

      13.7. Waiver by either party of one or more defaults or breaches shall not
deprive such party of the right to terminate because of any subsequent default
or breach. Upon termination of this Agreement for any reason other than breach
by INSTITUTIONS, LICENSEE shall permit INSTITUTIONS and its future licensees to
utilize, reference and otherwise have the benefit of all regulatory approvals
of, or clinical trials or other studies conducted on, and all filings made with
regulatory agencies with respect to, the LICENSED PRODUCTS or LICENSED METHODS.
In addition, at INSTITUTIONS' request, LICENSEE shall deliver to INSTITUTIONS
all records required by regulatory authorities to be maintained with respect to
the sale, storage, handling, shipping and use of the LICENSED PRODUCTS or
LICENSED METHODS, all reimbursement approval files, all documents, data and
information related to clinical trials and other studies of LICENSED PRODUCTS or
LICENSED METHODS, any other data, techniques, know-how and other information
developed or generated that relate to the LICENSED PATENTS, LICENSED PRODUCTS or
LICENSED METHODS, and all copies and facsimiles of such materials, documents,
information and files. INSTITUTIONS agrees that, subject to the provisions of
Article 8, LICENSEE may retain one copy thereof to the extent LICENSEE is
required by law to maintain such copy.


                                      -17-
<PAGE>

              ARTICLE 14 INDEMNIFICATION; INSURANCE; NO WARRANTIES

      14.1. LICENSEE shall defend, indemnify and hold harmless INSTITUTIONS,
their trustees, directors, officers, employees, and agents and their respective
successors, heirs and assigns against any and all liabilities, claims, demands,
damages, judgments, losses and expenses of any nature, including without
limitation legal expenses and attorneys' fees (a "CLAIM"), arising out of any
theory of liability (including without limitation tort, warranty, or strict
liability) and the death, personal injury, or illness of any person or out of
damage to any property related in any way to the rights granted under this
Agreement; or resulting from the production, manufacture, sale, use, lease, or
other disposition or consumption or advertisement of the LICENSED PRODUCTS or
LICENSED METHODS by LICENSEE, its AFFILIATES, SUBLICENSEES or any other
transferees; or in connection with any statement, representation or warranty of
LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees with respect to
the LICENSED PRODUCTS or LICENSED METHODS; provided, however, that the LICENSEE
shall not be responsible to indemnify INSTITUTIONS pursuant to this section 14.1
to the extent any CLAIM arises out of INSTITUTIONS' gross negligence or willful
misconduct.

      14.2. LICENSEE shall purchase and maintain in effect and shall require its
SUBLICENSEES to purchase and maintain in effect a policy of commercial, general
liability insurance to protect INSTITUTIONS with respect to events described in
Article 14.1. Such insurance shall:

                (a) list "YALE, its trustees, directors, officers, employees and
agents" and "FOUNDATION, its trustees, directors, officers, employees and
agents" as additional insureds under the policy;

            (b) provide that such policy is primary and not excess or
contributory with regard to other insurance INSTITUTIONS may have;

            (c) be endorsed to include product liability coverage in amounts no
less than One Million Dollars ($1,000,000.00) per incident and Three Million
Dollars ($3,000,000.00) annual aggregate; and

            (d) be endorsed to include contractual liability coverage for
LICENSEE's indemnification under Article 14.1; and

            (e) by virtue of the minimum amount of insurance coverage required
under Article 14.2(c), not be construed to create a limit of LICENSEE's
liability with respect to its indemnification under Article 14.1.

      14.3. By signing this Agreement, LICENSEE certifies that the requirements
of Article 14.2 will be met on or before the earlier of (a) the date of FIRST
SALE of any LICENSED PRODUCT or LICENSED METHOD or (b) the date any LICENSED
PRODUCT, or LICENSED METHOD is tested or used on humans, and will continue to be
met thereafter. Upon INSTITUTIONS' request, LICENSEE shall furnish a Certificate
of Insurance and a copy of the current Insurance Policy to INSTITUTIONS.
LICENSEE shall give thirty (30) days' written notice to INSTITUTIONS prior to
any cancellation of or material change to the policy.


                                      -18-
<PAGE>

      14.4. (a) INSTITUTIONS MAKE NO, AND EXPRESSLY DISCLAIMS ALL,
REPRESENTATIONS OR WARRANTIES THAT ANY CLAIMS OF THE LICENSED PATENTS, ISSUED OR
PENDING, ARE VALID, OR THAT THE MANUFACTURE, USE, SALE OR OTHER DISPOSAL OF THE
LICENSED PRODUCTS, OR PRACTICE OF THE LICENSED METHODS DOES NOT OR WILL NOT
INFRINGE UPON ANY PATENT OR OTHER RIGHTS NOT VESTED IN INSTITUTIONS.

            (b) INSTITUTIONS MAKE NO, AND EXPRESSLY DISCLAIMS ALL,
REPRESENTATIONS AND WARRANTIES WHATSOEVER WITH RESPECT TO THE LICENSED PATENTS,
LICENSED PRODUCTS AND LICENSED METHODS, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. LICENSEE SHALL MAKE NO STATEMENTS, REPRESENTATION OR WARRANTIES
WHATSOEVER TO ANY THIRD PARTIES WHICH ARE INCONSISTENT WITH SUCH DISCLAIMER BY
INSTITUTIONS. IN NO EVENT SHALL INSTITUTIONS, OR THEIR TRUSTEES, DIRECTORS,
OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR
INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER UNLESS INSTITUTIONS
SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE
POSSIBILITY OF THE FOREGOING. IN NO EVENT SHALL EITHER INSTITUTION, OR ITS
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE FOR DAMAGES
IN EXCESS OF AMOUNTS SUCH INSTITUTION HAS RECEIVED FROM LICENSEE UNDER THIS
LICENSE.

                          ARTICLE 15 NOTICES, PAYMENTS

      15.1. Any notice or other communication required by this Agreement (a)
shall be in writing, (b) may be delivered personally or sent by reputable
overnight courier with written verification of receipt or by registered or
certified first class United States Mail, postage prepaid, return receipt
requested, (c) shall be sent to the following addresses or to such other address
as such party shall designate by written notice to the other parties, and (d)
shall be effective upon receipt:

FOR INSTITUTIONS:                           FOR LICENSEE:
Director                                    President & CEO
YALE UNIVERSITY                             HUDSON HEALTH SCIENCES, Inc.
Office of Cooperative Research              400 Oyster Point Blvd., Suite 215
P.O. Box 208366                             South San Francisco, CA 94080
433 Temple Street
New Haven, CT 06520-8336

Director
Intellectual Property Division/STOR
UB Technology Incubator, Suite 111
Baird Research Park
1576 Sweet Home Road
Amherst, NY 14228


                                      -19-
<PAGE>

All notices and other communications required by this Agreement shall be sent to
all parties hereto for the period commencing on the Effective Date and ending on
January 23, 2008, and all notices and other communications required by this
Agreement shall only be sent by and to LICENSEE and YALE after January 23, 2008.

All payment payable by LICENSEE to INSTITUTIONS shall be either sent to YALE on
behalf of the INSTITUIONS, or wired to INSTITUTIONS per instructions from YALE .
YALE shall be responsible for disbursing FOUNDATION's share of such amounts to
FOUNDATION, except that FOUNDATION's share of any Common Stock or options to be
issued pursuant to this Agreement shall be directly issued to FOUNDATION.

                     ARTICLE 16 LAWS, FORUM AND REGULATIONS

      16.1. Any matter arising out of or related to this Agreement shall be
governed by and in accordance with the substantive laws of the State of
Connecticut, without regard to its conflicts of law principles, except where the
federal laws of the United States are applicable and have precedence. Any
dispute arising out of or related to this Agreement shall be brought in a court
of competent jurisdiction in the State of Connecticut.

      16.2. LICENSEE shall comply, and shall cause its AFFILIATES and
SUBLICENSEES to comply, with all foreign and United States federal, state, and
local laws, regulations, rules and orders applicable to the testing, production,
transportation, packaging, labeling, export, sale and use of the LICENSED
PRODUCTS and practice of the LICENSED METHODS. In particular, LICENSEE shall be
responsible for assuring compliance with all United States export laws and
regulations applicable to this LICENSE and LICENSEE's activities under this
Agreement.

                            ARTICLE 17 MISCELLANEOUS

      17.1. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors and permitted
assigns.

      17.2. This Agreement constitutes the entire agreement of the parties
relating to the LICENSED PATENTS, LICENSED PRODUCTS and LICENSED METHODS, and
all prior representations, agreements and understandings, written or oral, are
merged into it and are superseded by this Agreement.

      17.3. The provisions of this Agreement shall be deemed separable. If any
part of this Agreement is rendered void, invalid, or unenforceable, such
determination shall not affect the validity or enforceability of the remainder
of this Agreement unless the part or parts which are void, invalid or
unenforceable shall substantially impair the value of the entire Agreement as to
either party.

      17.4. Paragraph headings are inserted for convenience of reference only
and do not form a part of this Agreement.


                                      -20-
<PAGE>

      17.5. No person not a party to this Agreement, including any employee of
any party to this Agreement, shall have or acquire any rights by reason of this
Agreement. Nothing contained in this Agreement shall be deemed to constitute the
parties partners with each other or any third party.

      17.6. This Agreement may not be amended or modified except by written
agreement executed by each of the parties. This Agreement is personal to
LICENSEE and shall not be assigned by LICENSEE without the prior written consent
of INSTITUTIONS, except that LICENSEE may assign this Agreement to an entity
that acquires all or substantially all of LICENSEE'S assets or that part of
LICENSEE's business to which the Agreement relates, provided that any such
assignee has agreed in writing to be bound by the terms and conditions of this
Agreement. Any attempted assignment in contravention of this Article 17.6 shall
be null and void and shall constitute a material breach of this Agreement.

      17.7. LICENSEE, or any SUBLICENSEE or assignee, will not create, assume or
permit to exist any lien, pledge, security interest or other encumbrance on this
Agreement or any sublicense.

      17.8. The failure of any party hereto to enforce at any time, or for any
period of time, any provision of this Agreement shall not be construed as a
waiver of either such provision or of the right of such party thereafter to
enforce each and every provision of this Agreement.

      17.9. This Agreement may be executed in any number of counterparts and any
party may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.

IN WITNESS to their Agreement, the parties have caused this Agreement to be
executed in duplicate originals by their duly authorized representatives.

<TABLE>
<CAPTION>
<S>                       <C>                                  <C>
YALE UNIVERSITY           The Research Foundation of           Hudson Health Sciences, Inc.
                          State University of New York, on
                          behalf of University at Buffalo

By:___________________    By:___________________               By:_____________________

Print Name:___________    Print Name: __________               Print Name: ____________

Title_________________    Title_________________               Title___________________
</TABLE>


                                      -21-
<PAGE>

                                   APPENDIX A

                                LICENSED PATENTS

<TABLE>
<CAPTION>
CNTRY          TITLE (ASSIGNEE)                                            APPLNNO         FILEDATE   PATENTNO   ISSUEDATE  STATUS
<S>            <C>                                                         <C>             <C>        <C>        <C>        <C>
United States  5-Ioso 2-Pyrimidinone Nucleoside (FOUNDATION)                                          4,895,937  1/23/90    Issued

Canada         Determination of prodrugs metabolizable by the liver and    2,103,050       5/15/1992                        Pending
               therapeutic use thereof (YALE)

European       Determination of prodrugs metabolizable by the liver and    92912221.6-1216 5/15/1992                        Pending
               therapeutic use thereof (YALE)

Ireland        Determination of prodrugs metabolizable by the liver and    IR 92/1581      5/15/1992                        Pending
               therapeutic use thereof (YALE)

Israel         Determination of prodrugs metabolizable by the liver and    101,879         5/15/1992  101,879    5/15/1992  Issued
               therapeutic use thereof (YALE)

Japan          Determination of prodrugs metabolizable by the liver and    92/500240       5/15/1992                        Pending
               therapeutic use thereof (YALE)

South Korea    Determination of prodrugs metabolizable by the liver and    245252          5/15/1992  245252     11/27/1999 Issued
(Republic of   therapeutic use thereof (YALE)
               Korea)
United States  Determination of prodrugs metabolizable by the liver and    08/146,164      4/19/1994  5,728,684  3/17/1998  Issued
               therapeutic use thereof (YALE)

Israel         Determination of prodrugs metabolizable by the liver and    121,375         7/23/1997  121,375    8/13/1999  Issued
               therapeutic use thereof (YALE)
</TABLE>


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