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                                                                   EXHIBIT 10.17





                                  December 27, 1996


Ramus Medical Technologies
6420 Via Real, Unit 8
Carpinteria, CA  93013

                            Re:  CO-DEVELOPMENT AGREEMENT

Gentlemen:

         By this letter we are pleased to confirm the terms of our mutual
agreements regarding the co-development between PDT Cardiovascular, Inc.
("PDTC") and Ramus Medical Technologies ("Ramus") of technology and devices for
use in applying photodynamic therapy technology to Ramus' autologous vascular
grafts for coronary arteries and for other vessels ("Ramus Products").  PDTC
(and its affiliates) is a pharmaceutical and medical device company which, using
its proprietary technology and know-how, has developed and will continue to
develop, on its own or in collaboration with third party vendors, photoreactive
drugs and related electromagnetic energy sources, whether used separately or in
combination ("Photodynamic Therapy"), for use in photodynamic therapy.  Ramus is
a development stage medical device company which, using its proprietary
technology and know-how, has developed the Ramus Products and will continue to
develop the Ramus Products.

         PDTC and Ramus agree to use reasonable efforts to cooperate in the
joint development of technology, instruments, devices and products for applying
PDTC's Photodynamic Therapy technology to Ramus Products.  Unless otherwise
agreed to in writing by the parties, PDTC shall conduct, or arrange for one or
more a third parties to conduct, all reasonably necessary non-human tests in
preparation and support of a regulatory submission (the "Pre-Clinical Tests"),
and Ramus shall manufacture Ramus Products for use in the Pre-Clinical Tests in
quantities agreed to in writing by the parties. Unless otherwise agreed to in
writing by the parties, PDTC shall also conduct, or arrange for one or more a
third parties to conduct, all reasonably necessary tests performed on humans in
preparation and support of regulatory submissions (the "Clinical Tests") of
co-developed technology and devices.

         Ramus will provide without charge reasonable quantities of Ramus
Products to PDTC for purposes of the co-development of technology and devices
and for the Pre-Clinical Tests and Clinical Tests.  PDTC will provide its
photodynamic therapy technology to the co-development of technology and devices
and the Pre-Clinical Tests and Clinical Tests without charge.  All other costs
of the Pre-Clinical Tests and Clinical Tests will be paid for by PDTC.

         Unless otherwise agreed to in writing by the parties, PDTC will, with
counsel of its choice, prepare, file and prosecute, in the name of PDTC and at
PDTC's expense, any applicable


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Ramus Medical Technologies
December 27, 1996
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regulatory submissions covering Co-Developed Technology (as defined below) and
instruments, devices or products, or functionally separable component thereof,
that embody, incorporate, are composed of, function or are produced by means of,
or derive utility from any Co-Developed Technology ("Co-Developed Devices"),
including any "investigational device exemption" application ("IDE"),
"investigational new drug" application ("IND"), Pre-Market Approval Application
or 501(k) Application ("PMA") or New Drug Application ("NDA") or any other
application submitted to the United States Food and Drug Administration or any
successor agency ("FDA") for the purpose of conducting clinical investigations
of a drug or device, obtaining premarket or regulatory approval for a drug or
device, and any supplement or abbreviated application relating thereto (or the
equivalent in any foreign country).  The parties also agree to cooperate to
secure government or private price approvals and reimbursement qualifications in
preparation for product launch of co-developed devices in the field of
photodynamic therapy.  PDTC and Ramus agree to provide each other with access to
information or data relating to Co-Developed Devices which the other may need
for regulatory submissions or compliance.  The actual costs of any regulatory
submission shall be paid by PDTC.

         PDTC and Ramus shall jointly own the entire right, title and interest
in and to all technology conceived, made, created, developed, produced, designed
or reduced to practice, jointly by PDTC and Ramus, or their respective
affiliates, during the course and as a result of the performance of their work
and services under this co-development agreement ("Co-Developed Technology") and
all Co-Developed Devices; provided, however, PDTC grants to Ramus an exclusive
worldwide license under PDTC's interest in the Co-Developed Technology on terms
to be agreed upon by the parties to make, use, offer for sale, import, export,
distribute and sell Co-Developed Devices outside of Photodynamic Therapy
applications.  PDTC will retain all right, title and interest in and to all
ideas, concepts, inventions (whether or not patentable), discoveries,
improvements, unpublished research and development information, information
disclosed (whether or not claimed) in patent applications or unissued patents,
trade secrets, technical and other information and data, including apparatus,
compositions, methods, processes, techniques, controls, routines, systems
(including quality assurance systems), procedures, reports, operating, test and
performance data, and process, mechanical, material and product specifications
("Know-How") owned by or licensed to PDTC or any of its affiliates other than
Co-Developed Technology  ("PDTC Technology"), and Ramus will retain all right,
title and interest in and to all Know-How owned by or licensed to Ramus or any
of its affiliates other than Co-Developed Technology  ("Ramus Technology").
PDTC will retain the entire right, title and interest in and to any compound
owned by or licensed to PDTC or any of its affiliates, to the extent that PDTC
has the right to use, make, sell or license such compound ("PDTC Drugs"), and
nothing in this agreement shall give Ramus any rights in or to any PDTC Drugs.

         Until after the expiration of the term of this agreement, except as
expressly set forth herein or otherwise agreed to in writing by the parties:
(i) neither PDTC nor Ramus shall, directly or indirectly, grant any rights in,
to or under the Co-Developed Technology to any third party; (ii) neither PDTC
nor Ramus shall, directly or indirectly, make, use, sell, distribute or license
Co-Developed Devices; (iii) Ramus shall not, directly or indirectly, make, use,
sell, distribute or license any Co-Developed Device with any Photodynamic
Therapy drugs other than PDTC Drugs; and (iv) Ramus shall not, directly or
indirectly, make, use, sell, distribute or license any Ramus Technology or any
products developed thereunder, other than as required for the manufacture, use,
sale, distribution or license of Co-Developed Devices in the field of
photodynamic therapy or involving any other form or


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Ramus Medical Technologies
December 27, 1996
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provider of photodynamic therapy. The terms of any commercialization of any
Co-Developed Devices or Co-Developed Technology shall be agreed by the parties
in writing prior to such commercialization.

         If a patentable invention embodying Co-Developed Technology, or
related to Co-Developed Devices or to photodynamic therapy using Ramus Products,
is (a) conceived in the course of this agreement and (b) reduced to practice
either during the term of this agreement or during the six (6) month period
after its termination, PDTC and Ramus shall together determine whether to file
patent applications covering the invention.  Both parties agree to begin
application and prosecution in a timely manner once patentable inventions are
identified and disclosed.  Any such patent applications shall be prepared by
PDTC and filed jointly in the name of PDTC and Ramus.  PDTC shall prepare,
prosecute and maintain any and all United States and foreign patents embodying
Co-Developed Technology or related to Co-Developed Devices or photodynamic
therapy using Ramus Products.  The reasonable costs thereof shall be shared
equally by the parties.  If PDTC elects not to prepare, prosecute or maintain
any such patent, Ramus shall have the right, but not the obligation, to do so in
its own name and for its own benefit and PDTC agrees to execute an assignment of
its rights in such patent to Ramus.  If PDTC and Ramus mutually agree in writing
to allow either party to utilize any Patent outside the field of photodynamic
therapy using Ramus Products, such agreement shall include, at a minimum, terms
as to the development, manufacture and royalty obligations of the parties.

         In exercising the rights, and in carrying out the duties and
obligations set forth in this agreement, each party shall comply with all
applicable state, federal and country laws or rules.  Each party shall also
comply to the extent of its duties hereunder with all applicable state, federal
or other rules and regulations governing the manufacture, records, distribution,
promotion, marketing and sale of Co-Developed Devices and that it shall
specifically comply with applicable current good clinical practices, good
laboratory practices and good manufacturing practices promulgated from time to
time by the FDA in accordance with the Food, Drug & Cosmetic Act (21 U.S.
Section 301, ET SEQ.)  as such shall be amended from time to time and
regulations promulgated thereunder, as amended from time to time (or the
equivalent in any foreign country).  PDTC and Ramus will promptly notify each
other of, and provide copies of, any correspondence and other documentation
received or prepared in connection with any FDA action or notification regarding
Co-Developed Devices.

         Unless otherwise agreed to by the parties, the parties will maintain
in confidence information relating to PDTC Technology, Ramus Technology,
Co-Developed Technology or Co-Developed Devices (including without limitation,
information developed in Pre-Clinical Tests and Clinical Tests) and licenses,
patents, patent applications, technology or processes and business plans, in
each case, of the other party, including information designated as confidential
in writing from one party to another (all of the foregoing hereinafter referred
to as "Confidential Information"), disclosed to the other and shall not, during
the term of this agreement and for a period of five (5) years thereafter, use
such Confidential Information, except as permitted by this agreement or disclose
the same to anyone other than those of its officers, directors, employees,
affiliates and sublicensees as are necessary in connection with either parties'
activities as contemplated in this agreement.  This obligation of
confidentiality shall not apply to the extent that (i) a party is required to
disclose information by applicable law, such as pursuant to Securities and
Exchange Commission rules and regulations, or by order of a governmental agency
or a court of competent jurisdiction; (ii) a party can demonstrate that the
disclosed information was, at the time of disclosure, already in the public
domain other than as a result of actions or failure to act of a party, its
officers, directors, employees, affiliates


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Ramus Medical Technologies
December 27, 1996
Page 4

and sublicensees in violation hereof; (iii) the disclosed information was
rightfully known by a party or its affiliates or sublicensees (as shown by its
written records) prior to the date of disclosure to the other party in
connection with this agreement; or (iv) the disclosed information was received
by a party or its affiliates or sublicensees on an unrestricted basis from a
third party which is not the other party or an affiliate of the other party and
not under a duty of confidentiality, and which was rightfully known to said
source.

         This co-development agreement shall be effective as of the date
hereof, and shall continue in full force and effect for the greater of seventeen
(17) years or twelve (12) years from the date of first NDA or PMA approval for
commercial sale of Co-Developed Devices or the life of any patent issued on the
Co-Developed Technology.  Provided that both parties agree in writing, at least
one hundred eighty (180) days prior to the expiration of the then existing term,
PDTC and Ramus shall have the option to extend the term of this agreement by
successive two (2) year periods.

         If the foregoing correctly sets forth our agreement with respect to
the matters set forth herein, please so indicate by signing two copies of this
agreement and returning one of such signed copies to PDTC, whereupon this
agreement will constitute our binding agreement with respect to the matters set
forth herein.

                                            Very truly yours,

                                            PDT CARDIOVASCULAR, INC.


                                            By: /s/ Gary S. Kledzik
                                                -------------------------------
                                            Title: Chairman



Accepted and agreed to as of
the 27th day of December 1996

RAMUS MEDICAL TECHNOLOGIES


By: /s/ Charles S. Love
    ------------------------------------
    Title: President