<PAGE>

                                                                   Exhibit 10.69

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

                                LICENSE AGREEMENT

This Agreement, effective as of February 1, 1997, is made and entered into
between the President and Fellows of Harvard College (hereinafter HARVARD)
having offices at the Office for Technology and Trademark Licensing, 124 Mt.
Auburn Street, Suite 410, Cambridge, Massachusetts, 02138 and Ontogeny, Inc.
(hereinafter LICENSEE), a corporation of Delaware having offices at 45 Moulton
St., Cambridge, MA 02138.

Whereas HARVARD is Owner by assignment from Drs. A. McMahon and P. Chuang
entitled 'Hedgehog Interacting Proteins and Uses Related Thereto', filed on
September 20, 1996, in the foreign patent applications corresponding thereto,
and in the inventions described and claimed therein (HU Case No. 1311-96); and

Whereas HARVARD is committed to a policy that ideas or creative works produced
at HARVARD should be used for the greatest possible public benefit; and

Whereas LICENSEE is prepared and intends to diligently develop the invention and
to bring products to market which are subject to this Agreement; and

Whereas HARVARD accordingly believes that every reasonable incentive should be
provided for the prompt introduction of such ideas into public use, all in a
manner consistent with the public interest; and

Whereas LICENSEE is desirous of obtaining an exclusive worldwide license in
order to practice the above referenced inventions covered by PATENT RIGHTS in
the United States and in certain foreign countries, and to manufacture, use and
sell in the commercial market the products made in accordance therewith; and

Whereas HARVARD is desirous of granting such a license to LICENSEE in accordance
with the terms of this Agreement.

Now therefore, in consideration of the foregoing premises, the parties agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

1.1   PATENT RIGHTS shall mean United States patent application Serial No.
      60/026,155 filed September 20, 1996, the inventions described and claimed
      therein, and any divisions, continuations, continuations-in-part to the
      extent that their claims are dominated by existing PATENT RIGHTS, patents
      issuing thereon or reissues thereof, and any and all foreign patents and
      patent applications corresponding thereto, to the extent these are owned
      by or controlled by HARVARD; which will be automatically incorporated in
      and added to this Agreement and shall periodically be added to Appendix A
      attached to this Agreement and made a part thereof.
<PAGE>

1.2   CLAIM shall mean (a) a valid and enforceable claim of an issued patent
      included in the PATENT RIGHTS and (b) with respect to a patent application
      of the PATENT RIGHTS, a claim of such patent application which has not
      been abandoned or rejected by an administrative agency from which no
      appeal can be taken.

1.3   BIOLOGICAL MATERIALS shall mean the proprietary materials developed in the
      laboratories of Dr. A. McMahon as a result of research concerning the
      licensed subject matter, identified in Appendix B, such Appendix to be
      periodically updated by mutual agreement, and supplied to LICENSEE by
      HARVARD together with any progeny, mutants or derivatives, to the extent
      that they contain a substantial portion of the original BIOLOGICAL
      MATERIALS. Proprietary materials shall mean materials which are not
      generally available from another source and which are under the control of
      HARVARD.

1.4   LICENSED PRODUCTS shall mean products, the manufacture, use or sale of
      which would, absent the license granted hereunder, infringe a CLAIM.

1.5   ROYALTY PRODUCTS shall mean products which are not LICENSED PRODUCTS and
      (a) are identified or discovered in material part through the use of
      processes or subject matter covered in a CLAIM or (b) incorporate a
      substantial portion of a BIOLOGICAL MATERIAL or which could not be made
      except by utilizing a BIOLOGICAL MATERIAL.

1.6   NET SALES shall mean the amount billed or invoiced for sales of LICENSED
      PRODUCTS:

      (a)   Customary trade, quantity or cash discounts and non-affiliated
            brokers' or agents' commissions actually allowed and taken;

      (b)   Amounts repaid or credited by reason of rejection or return; and/or

      (c)   To the extent separately stated on purchase orders, invoices or
            other documents of sale, taxes levied on and/or other governmental
            charges made as to production, sale, transportation, delivery or use
            and paid by or on behalf of LICENSEE.

      (d)   Amounts charged for shipping, packaging, insurance, storage or
            handling to the extent these are individually itemized on invoices.

1.7   AFFILIATES shall mean any third party company, corporation, or business
      controlling, controlled by or under common control with LICENSEE. Control
      shall mean ownership or control of at least fifty percent (50%) of the
      voting stock.

                                   ARTICLE II
                                      GRANT

2.1   HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the
      terms and conditions hereof, a worldwide license, under PATENT RIGHTS to
      make and have made, to use and have used, to sell and have sold the
      LICENSED PRODUCTS for the life of PATENT RIGHTS, and a worldwide license
      to use BIOLOGICAL MATERIALS


                                     - 2 -
<PAGE>

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

      to make and have made, to use and have used, to sell and have sold or to
      identify the ROYALTY PRODUCTS. Such license shall include the right to
      grant sublicenses. In order to provide LICENSEE with a period of
      exclusivity, HARVARD agrees it will not grant licenses under PATENT RIGHTS
      to others except as required by HARVARD's obligations in paragraph 2.2 (a)
      or as permitted in paragraph 2.2 (b) and that it will not provide
      BIOLOGICAL MATERIALS to others for any commercial purpose. LICENSEE agrees
      during the period of exclusivity of this license in the United States that
      any product subject to this Agreement to be sold in the United States by
      LICENSEE or its AFFILIATES or sublicensees will be manufactured
      substantially in the United States.

2.2   The granting and acceptance of this license is subject to the following
      conditions:

      (a)   HARVARD's "Statement of Policy in Regard to Inventions, Patents and
            Copyrights" dated March 17, 1986, Public Law 96-517, Public Law
            98-620 and HARVARD's obligations under agreements with other
            sponsors of research. Any right granted in this Agreement greater
            than that permitted under Public Law 96-517 or Public Law 98-620
            shall be subject to modification as may be required to conform to
            the provisions of that statute.

      (b)   HARVARD shall have the right to make and to use and to grant
            nonexclusive licenses to make and to use, for research purposes only
            and not for any commercial purpose, the BIOLOGICAL MATERIALS and the
            subject matter described and claimed in PATENT RIGHTS. HARVARD, to
            the extent it is aware of any patent rights arising from such
            research conducted during the term of this Agreement, shall notify
            LICENSEE of said rights. For clarification, HARVARD's rights under
            this clause 2.2(b) extend only for academic research or other
            not-for-profit scholarly purposes which are undertaken at a
            non-profit or governmental institution that does not use PATENT
            RIGHTS and/or BIOLOGICAL MATERIALS in the production or manufacture
            of products for sale or the performance of services for a fee.

      (c)   LICENSEE shall use reasonable efforts to effect introduction of the
            LICENSED PRODUCTS into the commercial market as soon as practicable,
            consistent with sound and reasonable business practices and
            judgment; thereafter, until the expiration of this Agreement,
            LICENSEE shall endeavor to keep such LICENSED PRODUCTS reasonably
            available to the public.

      (d)   HARVARD shall have the right to terminate or render this license
            nonexclusive at any time after [**] from the date of license if, in
            HARVARD's reasonable judgment, LICENSEE fails to satisfy both of the
            following conditions, which such failure is not cured within ninety
            (90) days after written notice of such failure by HARVARD to
            LICENSEE:

            (i)   is not demonstrably engaged in research, development,
                  manufacturing, marketing or licensing program, as appropriate,
                  directed toward the development and commercialization of the
                  licensed subject matter, and


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

            (ii)  has not devoted at least the level of resources outlined below
                  to the development and commercialization of the licensed
                  subject matter:

                      Year      Minimum Number of FTEs  Minimum Annual Budget
                      ----      ----------------------  ---------------------
                        1                [**]                    [**]
                        2                [**]                    [**]
                        3                [**]                    [**]
                  4 (and after)          [**]                    [**]

                  FTEs are defined as full-time equivalent scientists and/or
                  technicians and/or consultants. Of those FTEs dedicated to the
                  development of the licensed subject matter, fifty percent
                  (50%) will possess an advanced scientific degree or its
                  equivalent.

                  In making this determination, HARVARD shall take into account
                  the normal course of such programs conducted with sound and
                  reasonable business practices and judgment and shall take into
                  account the reports provided hereunder by LICENSEE.

      (e)   HARVARD shall have the right to terminate this Agreement if LICENSEE
            does not adhere to the following performance MILESTONEs for at least
            one potential LICENSED PRODUCT or ROYALTY PRODUCT.

            Years from Date
            of Agreement     ROYALTY
            ---------------  ---------------------------------------------------

            [**]             Lead Candidates Identified

            [**]             IND (or equivalent) Filing

            [**]             Commencement of Phase I (or equivalent) study

            [**]             Commencement of Phase II (or equivalent) study

      (f)   LICENSEE shall pay to HARVARD the following payments upon execution
            of the first corporate partnership in a field primarily relating to
            the hedgehog-interacting protein technology:

            (1)   [**], if the partnership has a determined value of between
                  [**]and [**] dollars ([**] and [**], or

            (2)   [**], if the partnership has a determined value of greater
                  than [**] dollars [**].

            If the corporate partnership incorporates both the
            hedgehog-interacting protein technology and the hedgehog technology,
            the parties will discuss the relative


                                     - 4 -
<PAGE>

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

            contributions of each technology to the partnership. If it is
            determined that the two technologies have roughly equal importance,
            then the payments of (1) and (2) above shall be reduced by fifty
            (50%) percent. If it is determined that the contribution of the
            hedgehog-interacting protein technology is less than fifty (50%)
            percent, no payments shall be due.

            Determined value shall include the sum of any equity payments,
            up-front payments or fees, and the total of committed research
            sponsorship payments. Such payments shall be creditable against
            royalty payments as defined in Section 3.3. Deductions from royalty
            payments based on this credit may not exceed fifty percent (50%) of
            the royalty payment due HARVARD in any one year.

      (g)   All sublicenses granted by LICENSEE hereunder shall include a
            requirement that the sublicensee use reasonable commercial efforts
            to bring the subject matter of the sublicense into commercial use as
            quickly as is reasonably possible. Such sublicenses shall be subject
            and subordinate to the terms and conditions of this Agreement.
            Copies of all sublicense agreements shall be provided to HARVARD.

      (h)   If LICENSEE (or its sublicensees) do not devote resources equivalent
            to the full time of at least one FTE (which shall possess an
            advanced scientific degree) for any calendar year (commencing in
            1997) to the development and/or commercialization, as appropriate,
            of any part of the subject matter of the PATENT RIGHTS for use in
            any specific field and if HARVARD requests in writing that LICENSEE
            grant a sublicense to a third party to develop and/or commercialize
            such part of the subject matter for use in such field, LICENSEE
            shall within ninety (90) days after receipt of such notice either
            (i) commit at least one FTE toward such development and/or
            commercialization or (ii) grant such requested sublicense, unless
            LICENSEE reasonably satisfies HARVARD that such sublicense would be
            contrary to sound and reasonable business practice and that the
            granting of such sublicense would not materially increase the
            availability to the public of products manufactured under this
            license.

2.3   HARVARD hereby grants to LICENSEE the right to assign the licenses granted
      or to be granted in paragraph 2.1 to an AFFILIATE subject to the terms and
      conditions hereof.

2.4   All rights reserved to the United States Government and others under
      Public Law 96-517 and 98-620 shall in no way be affected by this
      Agreement.

                                   ARTICLE III
                                    ROYALTIES

3.1   Upon execution of this Agreement, LICENSEE shall pay to HARVARD a
      nonrefundable, non-creditable fee of [**] dollars.

3.2
      (a)   Upon execution of this Agreement, LICENSEE, shall issue to HARVARD
            [**] shares (the "Shares") of LICENSEE'S Common Stock ("Common
            Stock"). Such


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<PAGE>

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

            shares shall be considered a part of the royalty consideration for
            the grant of this license. The Common Stock issued to HARVARD shall
            have the characteristics, rights, preferences and privileges set
            forth in the Certificate of Incorporation of the LICENSEE.

      (b)   LICENSEE shall issue to HARVARD another [**] shares (the "Shares")
            of LICENSEE's Common stock ("Common Stock") and shall pay an
            additional non-refundable, non-creditable fee of [**] dollars, if it
            is demonstrated that any member of the hedgehog-interacting protein
            gene family can exist as an extracellular factor and can be
            solubilized. Such demonstration must occur within eighteen (18)
            months from the date of execution of this Agreement. Payment shall
            be made within thirty (30) days from the date such data are
            disclosed to LICENSEE.

      (c)   HARVARD represents and warrants to LICENSEE as follows:

            (i)   HARVARD is acquiring the Shares for its own account for
                  investment and not with a view to, or for sale in connection
                  with any distribution thereof, nor with any present intention
                  of distributing or selling the same; and HARVARD has no
                  present or contemplated agreement, undertaking, arrangement,
                  obligation, indebtedness or commitment providing for the
                  disposition thereof.

            (ii)  HARVARD has full power and authority to enter into and to
                  perform this Agreement in accordance with its terms.

            (iii) HARVARD has sufficient knowledge and experience in investing
                  in companies similar to LICENSEE so as to be able to evaluate
                  the risks and merits of its investment in LICENSEE and is able
                  financially to bear the risks thereof.

      (d)   EACH certificate representing the Shares shall bear a legend
            substantially in the following form:

                  "The shares represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, and
                  may not be offered, sold or otherwise transferred, pledged or
                  hypothecated unless and until such shares are registered under
                  such Act or an opinion of counsel satisfactory to the Company
                  is obtained to the effect that such registration is not
                  required."

            The foregoing legend shall be removed from the certificates
            representing any Shares, at the request of the holder thereof, at
            such time as they become eligible for resale pursuant to the
            Securities Act of 1933, as amended.

      (e)   at any time LICENSEE proposes to register any of its Common Stock,
            under the Securities Act of 1933, LICENSEE shall offer HARVARD the
            opportunity to


                                     - 6 -
<PAGE>

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

            have its Shares registered under the registration statement to be
            filed at such time, in accordance with the terms.

3.3
      (a)   LICENSEE shall pay HARVARD during the term of this license a royalty
            of [**] of the NET SALES of all LICENSED PRODUCTS sold by LICENSEE
            and its AFFILIATES; provided, however, that in the case of LICENSED
            PRODUCTS covered by a pending patent claim, such royalty of [**]
            shall be due and payable as follows: [**] percent shall be payable
            to HARVARD pursuant to Section 4.4(a), and the remainder shall
            accumulate and shall not be required to be paid by LICENSEE to
            HARVARD unless and until such claim is issued as part of a patent in
            the applicable jurisdiction. A LICENSED PRODUCT that is a LICENSED
            PRODUCT solely as a result of any such claim that has been
            abandoned, has been rejected by an administrative agency from which
            no appeal can be taken or has been pending for more than five years
            in any jurisdiction shall cease to be a LICENSED PRODUCT in such
            jurisdiction unless and until such claim is issued as part of a
            patent.

      (b)   If LICENSEE grants a sublicense under this Agreement to a
            sublicensee (other than an AFFILIATE) for development of a product
            in a field as to which LICENSEE or an AFFILIATE has committed or
            provides a written commitment to devote within the succeeding six
            (6) month period the resources equivalent to the full time of at
            least two of its own FTEs, one having an scientific advanced degree
            (a "Joint Field"), LICENSEE shall pay to HARVARD [**] of any
            royalties, fees or other amounts received by LICENSEE or its
            AFFILIATES as a result of the sublicensee's development and/or sale
            of LICENSED PRODUCTS or ROYALTY PRODUCTS, excluding (i) amounts paid
            in partial or full consideration of equity of LICENSEE or its
            AFFILIATES, (ii) amounts paid to fund research and development
            activities conducted by LICENSEE or its AFFILIATES and (iii)
            non-monetary considerations, including, without limitation
            intellectual property rights, noncompetition covenants and the like.

            If LICENSEE grants a sublicense under this Agreement to a
            sublicensee (other than an AFFILIATE) for development of a product
            in a field other than a joint Field, LICENSEE shall pay to HARVARD
            [**] of any royalties, fees or other amounts received by the
            LICENSEE or its AFFILIATES as a result of the sublicensee's
            development and/or sale of ROYALTY PRODUCTS or LICENSED PRODUCTS,
            excluding (i) amounts paid in partial or full consideration of
            equity of LICENSEE or its AFFLIATES, (ii) amounts paid to fund
            research and development activities conducted by LICENSEE or its
            AFFILIATES and (iii) non-monetary consideration, including, without
            limitation, intellectual property rights, noncompetition covenants
            and the like.

            LICENSEE shall not grant a sublicense hereunder (other than to an
            AFFILIATE) pursuant to a transaction in which LICENSEE surrenders
            substantially all of its legal rights and economic interest in the
            PATENT RIGHTS and LICENSED


                                     - 7 -
<PAGE>

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

            PRODUCTS to a third party in exchange for the transfer by such third
            party to LICENSEE of rights to a different technology or products.

      (c)   If LICENSEE or its sublicensees, in order to make, use, sell or
            otherwise exploit the LICENSED PRODUCTS in any jurisdiction,
            reasonably determine that they must make royalty payments ("Third
            Party Payments") to one or more independent third parties to obtain
            a license or similar right to make, use, sell or otherwise exploit
            the LICENSED PRODUCTS such that the total royalty burden for such
            LICENSED PRODUCT equals or exceeds [**] percent, LICENSEE may reduce
            the royalty due to HARVARD by [**] for each percent above [* *]
            percent, but in no event shall any such payment due to HARVARD be
            reduced by more than [**] as a result of such reduction.

      (d)   If this license is converted to a non-exclusive one and if other
            non-exclusive licenses are granted, the above royalties shall not
            exceed and shall be reduced to the royalty being paid by other
            licensees during the term of the nonexclusive license.

      (e)   In the case of ROYALTY PRODUCTS, LICENSEE shall pay a royalty of
            [**] percent of NET SALES of such ROYALTY PRODUCT and shall not pay
            the royalties specified in Section 3.3a. Such payments are in
            recognition of LICENSEE's early and exclusive use of the licensed
            subject matter.

            If this license is terminated by LICENSEE or its AFFILIATES, or is
            converted to a non-exclusive one or terminated by HARVARD for a
            financial default the above royalty payments shall still be due with
            respect to all ROYALTY PRODUCTS identified by LICENSEE or its
            AFFILIATES prior to such termination or conversion. If this license
            is converted to a non-exclusive one or terminated by HARVARD for any
            reason other than a financial default, the above royalty payments
            will be due on only the first ROYALTY PRODUCT sold after such
            termination or conversion and identified prior to such termination
            and conversion.

      (f)   On sales between LICENSEE and its AFFILIATES or sublicensees, for
            resale, the royalty shall be paid only on the resale by the
            AFFILIATE or sublicensee, and a single royalty shall be paid by
            LICENSEE and its AFFILIATES with respect to amounts received by them
            as a result of such resale.

      (g)   If any of the LICENSED PRODUCTS include one or more material, active
            components not covered by a CLAIM of PATENT RIGHTS (a "Combination
            Product"), NET SALES for purposes of determining royalties for the
            Combination Product shall be calculated by multiplying NET SALES for
            the Combination Product by a fraction, A/A+B, where A is the total
            invoice price of the component or components covered by a CLAIM of
            PATENT RIGHTS if sold separately in the relevant market and B is the
            total invoice price of any other material components in the
            combination if sold separately in the relevant market. In the event
            that the material component covered by a CLAIM of PATENT


                                     - 8 -
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     Confidential Materials omitted and filed separately with the Securities
              and Exchange Commission. Asterisks denote omissions.

            RIGHTS or any other material component in the Combination Product is
            not sold separately, NET SALES for purposes of determining royalties
            shall be calculated by multiplying NET SALES of the Combination
            Product by a fraction, n/C, where n is the number of components
            covered by a CLAIM of PATENT RIGHTS and C is the number of material,
            active components in the Combination Product.

3.4   On January 1 of each calendar year after the effective date of this
      Agreement, LICENSEE shall pay HARVARD a non-refundable license maintenance
      LICENSED and/or advance on royalties of [**]; such payment may be credited
      against running royalties due for that calendar year and LICENSED reports
      should reflect the use of this credit. None of these payments are
      creditable against ROYALTY payments nor against royalties due for any
      subsequent calendar year. HARVARD shall have the right to terminate this
      license, subject to the cure period defined in Section 8.2, in the event
      that LICENSEE does not pay the following license maintenance fees and/or
      advance on royalties.

                                   ARTICLE IV
                                    REPORTING

4.1   Prior to signing this Agreement, LICENSEE has provided to HARVARD
      LICENSEE's corporate overview and will provide prior to the date of
      execution of this Agreement, a written business plan and a reasonable
      written research and development plan under which LICENSEE intends to
      bring the subject matter of the licenses granted hereunder into commercial
      use upon execution of this Agreement. Such plan, which is subject to
      change, shall include proposed marketing efforts.

4.2   LICENSEE shall provide written annual reports within sixty (60) days after
      June 30 of each calendar year which shall include but not be limited to:
      reports of progress on research and development, regulatory approvals,
      manufacturing, sublicensing, marketing and sales during the preceding
      twelve (12) months as well as plans for the coming year. If progress
      differs from that anticipated in the plan provided under Section 4.1,
      LICENSEE shall explain the reasons for the difference and submit a
      modified plan for HARVARD's review. LICENSEE shall also provide any
      reasonable additional data HARVARD requires to evaluate LICENSEE's
      performance.

4.3   LICENSEE shall report to HARVARD the date of first sale of LICENSED
      PRODUCTS and ROYALTY PRODUCTS in each country within sixty (60) days of
      occurrence.

4.4   (a)   After the commencement of sales, LICENSEE agrees to submit to
            HARVARD within sixty (60) days after the calendar half years ending
            June 30 and December 31, reports setting forth for the preceding six
            (6) month period at least the following information:

            (i)   the number of the LICENSED PRODUCTS sold by LICENSEE, its
                  AFFILIATES and sublicensees in each country;

            (ii)  total billings for such LICENSED PRODUCTS;


                                     - 9 -
<PAGE>

            (iii) deductions applicable to determine the NET SALES thereof;

            (iv)  sublicense income subject to sharing with HARVARD;

            (v)   such other information as shall be necessary to determine
                  royalty payments or other payments due to HARVARD;

            (vi)  the amount of royalty due thereon;

            and with each such royalty report to pay the amount of royalty due.
            LICENSEE shall specify which PATENT RIGHTS are utilized for each
            LICENSED PRODUCT included in the report. Such report shall be
            certified as correct by an officer of LICENSEE and shall include a
            detailed listing of all deductions from royalties as specified
            herein. If no royalties are due to HARVARD for any reporting period,
            the written report shall so state.

      (b)   All payments due hereunder shall be payable in United States
            dollars. Conversion of foreign currency to U.S. dollars shall be
            made at the conversion rate existing in the United States (as
            reported in the New York Times or, if not in the New York Times,
            then in the Wall Street Journal) on the last working day of each
            LICENSED period. Such payments shall be without deduction of
            exchange, collection or other charges.

      (c)   All such reports shall be maintained in confidence by HARVARD,
            except as required bylaw, including Public Law 96-517 and 98-620;
            however, HARVARD may include annual amounts of royalties paid in its
            usual financial reports.

      (d)   Late payments shall be subject to an interest charge of one and one
            half percent (1 1/2%) per month.

                                    ARTICLE V
                                 RECORD KEEPING

5.1   LICENSEE shall keep, and shall require its AFFILIATES and sublicensees to
      keep accurate and correct records of LICENSED PRODUCTS and ROYALTY
      PRODUCTS made, used or sold under this Agreement, appropriate to determine
      the amount of royalties due hereunder to HARVARD. Such records shall be
      retained for at least three (3) years following a given reporting period.
      They shall be available during normal business hours for inspection at the
      expense of HARVARD by HARVARD's Internal Audit Department or by a
      Certified Public Accountant selected by HARVARD and approved by LICENSEE
      for the sole purpose of verifying reports and payments hereunder. Such
      accountant shall not disclose to HARVARD any information other than
      information relating to accuracy of reports and payments made under this
      Agreement. In the event that any such inspection shows an underreporting
      and underpayment in excess of five percent (5%) for any twelve (12) month
      period, then LICENSEE shall pay the cost of such examination as well as
      any additional sum that would have been payable to HARVARD had the
      LICENSEE reported correctly, plus interest.


                                     - 10 -
<PAGE>

                                   ARTICLE VI
                DOMESTIC AND FOREIGN PATENT FILING & MAINTENANCE

6.1   Upon execution hereof, LICENSEE shall reimburse HARVARD for all reasonable
      expenses HARVARD has incurred for the preparation, filing, prosecution and
      maintenance of PATENT RIGHTS. LICENSEE shall also reimburse HARVARD for
      all such expenses it incurs prior to LICENSEE's assumption of these costs
      per Section 6.2.

6.2   As soon as reasonably possible after execution of this Agreement, LICENSEE
      shall assume primary responsibility for the filing, prosecution and
      maintenance of any and all patents and patent applications included in
      PATENT RIGHTS, using patent counsel reasonably acceptable to HARVARD, and
      LICENSEE shall be responsible for all costs relating thereto. Counsel will
      directly notify HARVARD and LICENSEE and provide them copies of any
      official communications from the United States and foreign patent offices
      relating to said prosecution. Counsel shall also provide HARVARD with
      advance copies of all relevant communications to the various patent
      offices, so that HARVARD may be informed and apprised of the continuing
      prosecution of patent applications in PATENT RIGHTS. HARVARD shall have
      reasonable opportunities to participate in decision making on all key
      decisions affecting filing, prosecution and maintenance of patents and
      patent applications in PATENT RIGHTS including, without limitation, the
      right to approve or disapprove the abandonment of any patent or claims
      thereof and LICENSEE will use reasonable efforts to incorporate HARVARD's
      reasonable suggestions regarding said prosecution. LICENSEE shall use all
      reasonable efforts to amend any patent application to include claims
      reasonably requested by HARVARD to protect LICENSED PRODUCTS.

6.3   HARVARD and LICENSEE agree to cooperate fully in the preparation, filing,
      prosecution and maintenance of PATENT RIGHTS and of all patents and patent
      applications licensed to LICENSEE hereunder, executing all papers and
      instruments or requiring members of HARVARD to execute such papers and
      instruments so as to enable LICENSEE to apply for, to prosecute and to
      maintain patent applications and patents in HARVARD's name in any country.
      HARVARD agrees to deliver manuscripts authored by Dr. A. McMahon and
      relating to the subject matter of PATENT RIGHTS to LICENSEE in a timely
      fashion to allow review and, where appropriate, filing of
      continuation-in-part patent applications.

6.4   If LICENSEE elects no longer to pay the expenses of a patent application
      or patent included within PATENT RIGHTS, LICENSEE shall notify HARVARD not
      less than sixty (60) days prior to such action, such date being at least
      30 (thirty) days prior to any pending action or expenditure, and shall
      thereby surrender its rights under such patent or patent application.

6.5   In the event that LICENSEE elects not to prosecute or maintain any of the
      patents or patent applications relating to the PATENT RIGHTS or any
      portion thereof in any jurisdiction, then HARVARD shall have the right, at
      its own expense to prosecute or maintain the patents or patent
      applications relating to the PATENT RIGHTS or portion


                                     - 11 -
<PAGE>

      thereof in such jurisdiction, but LICENSEE shall have no further rights to
      such patents or patent applications or portion thereof.

6.6   If HARVARD can demonstrate that it is not being adequately informed or
      apprised of the continuing prosecution of patents or patent applications
      in PATENT RIGHTS, or that it is not being provided with reasonable
      opportunities to participate in decision making or that its interests are
      not being adequately protected, HARVARD shall be entitled to engage, at
      LICENSEE's expense, independent patent counsel to review and evaluate
      patent prosecution and filing of patents and patent applications included
      in PATENT RIGHTS. Henceforth HARVARD and LICENSEE shall share
      responsibility for patent prosecution, with LICENSEE reimbursing HARVARD
      in full for any patent expenses incurred by HARVARD.

                                   ARTICLE VII
                                  INFRINGEMENT

7.1   With respect to any PATENT RIGHTS under which LICENSEE is exclusively
      licensed pursuant to this Agreement, LICENSEE or its sublicensee shall
      have the right to prosecute in its own name and at its own expense any
      suspected infringement of such patent, so long as such license is
      exclusive at the time of the commencement of such action. HARVARD agrees
      to notify LICENSEE promptly of each infringement of such patents of which
      HARVARD is or becomes aware. Before LICENSEE or its sublicensees commences
      an action with respect to any infringement of such patents, LICENSEE shall
      give careful consideration to the views of HARVARD and to potential
      effects on the public interest in making its decision whether or not to
      sue and in the case of a LICENSEE sublicense, shall report such views to
      the sublicensee.

7.2   If LICENSEE or its sublicensee elects to commence an action as described
      above and HARVARD is a legally indispensable party to such action, HARVARD
      shall have the right to assign to LICENSEE all of HARVARD's right, title
      and interest in each patent which is a part of the PATENT RIGHTS and is
      the subject of such action (subject to all HARVARD's obligations to the
      government and others having rights in such patent). In the event that
      HARVARD makes such an assignment, such assignment shall be irrevocable,
      and such action by LICENSEE on that patent or patents shall thereafter be
      brought or continued without HARVARD as a party, if HARVARD is no longer
      an indispensable party. Notwithstanding any such assignment to LICENSEE by
      HARVARD and regardless of whether HARVARD is or is not an indispensable
      party, HARVARD shall cooperate fully with LICENSEE in connection with any
      such action. In the event that any patent is assigned to LICENSEE by
      HARVARD, pursuant to this paragraph, such assignment shall require
      LICENSEE to continue to meet its obligations under this Agreement as if
      the assigned patent or patent application were still licensed to LICENSEE.

7.3   If LICENSEE or its sublicensee elects to commence an action described
      above and HARVARD is a legally indispensable party to such action, HARVARD
      may join the action as a co-plaintiff. Upon doing so, HARVARD shall be
      consulted on any actions LICENSEE or its sublicensees intend with respect
      to the suspected infringement.


                                     - 12 -
<PAGE>

7.4   LICENSEE shall reimburse HARVARD for any reasonable costs it incurs as
      part of an action brought by LICENSEE or its sublicensee, irrespective of
      whether HARVARD shall become a co-plaintiff.

7.5   If LICENSEE or its sublicensee elects to commence an action as described
      above, LICENSEE may reduce, by up to fifty percent (50%), the LICENSED due
      to HARVARD earned under the patent subject to suit by fifty percent (50%)
      of the amount of the expenses and costs of such action, including attorney
      fees. In the event that such fifty percent (50%) of such expenses and
      costs exceed the amount of royalties withheld by LICENSEE for any calendar
      year, LICENSEE may to that extent reduce the royalties due to HARVARD from
      LICENSEE in succeeding calendar years, but never by more than fifty
      percent (50%) of the LICENSED due in any one year.

7.6   No settlement, consent judgement or other voluntary final disposition of
      the suit may be entered into without the consent of HARVARD, which consent
      shall not be unreasonably withheld.

7.7   Recoveries or reimbursements from such action shall first be applied to
      reimburse LICENSEE and HARVARD for litigation costs not paid from
      royalties and then to reimburse HARVARD for royalties withheld. Any
      remaining recoveries or reimbursements shall be shared 75% to LICENSEE and
      25% to HARVARD.

7.8   In the event that LICENSEE and its sublicensee, if any, elect not to
      exercise their right to prosecute an infringement of the PATENT RIGHTS
      pursuant to the above paragraphs, HARVARD may do so at its own expense,
      controlling such action and retaining all recoveries therefrom. LICENSEE
      shall cooperate fully with HARVARD in connection with any such action.

7.9   Without limiting the generality of paragraph 7.8, HARVARD may, at its
      election and by notice to LICENSEE, establish a time limit of one hundred
      and twenty (120) days for LICENSEE to decide whether to prosecute any
      infringement of which HARVARD is or becomes aware. If, by the end of such
      one hundred and twenty (120) day period, LICENSEE has not commenced such
      an action, HARVARD may prosecute such an infringement at its own expense,
      controlling such action and retaining all recoveries therefrom. With
      respect to any such infringement action prosecuted by HARVARD in good
      faith, LICENSEE shall pay over to HARVARD any payments (whether or not
      designated as "royalties") made by the alleged infringer to LICENSEE under
      any existing or future sublicense authorizing LICENSED PRODUCTS, up to the
      amount of HARVARD's unreimbursed litigation expenses (including, but not
      limited to, reasonable attorneys' fees).

7.10  In the event that a declaratory judgement action alleging invalidity of
      any of the PATENT RIGHTS shall be brought against LICENSEE, HARVARD, at
      its sole option, shall have the right to intervene, in which event both
      parties shall jointly control the defense of such action and share equally
      its expenses and costs.


                                     - 13 -
<PAGE>

                                  ARTICLE VIII
                            TERMINATION OF AGREEMENT

8.1   This Agreement, unless extended or terminated as provided herein, shall
      remain in effect until the last patent or patent application in the PATENT
      RIGHTS has expired or been abandoned.

8.2   In the event LICENSEE fails to make payments or stock transfers due
      hereunder, HARVARD shall have the right to terminate this Agreement upon
      forty-five (45) days written notice of such failure, unless LICENSEE makes
      such payments plus interest within the forty-five (45) day notice period.
      If payments are not so made, HARVARD may immediately terminate this
      Agreement, unless such occurs as a result of a bona fide dispute as to the
      amount due.

8.3   In the event that LICENSEE shall be in default in the performance of any
      obligations under this Agreement (other than as provided in 8.2 above
      which shall take precedence over any other default), and if the default
      has not been remedied within ninety (90) days after the date of notice in
      writing of such default, HARVARD may terminate this Agreement by written
      notice.

8.4   In the event that LICENSEE shall become insolvent, shall make an
      assignment for the benefit of creditors, or shall have a petition in
      bankruptcy filed for or against it, which petition is not dismissed within
      90 days of filing, HARVARD shall have the right to terminate this entire
      Agreement immediately upon giving LICENSEE written notice of such
      termination.

8.5   Any sublicenses granted by LICENSEE under this Agreement shall provide for
      termination or assignment to HARVARD, at the option of HARVARD, of
      LICENSEE's interest therein upon termination of this Agreement.

8.6   LICENSEE shall have the right to terminate this Agreement by giving ninety
      (90) days advance written notice to HARVARD to that effect. Upon
      termination, a final report shall be submitted and any LICENSED payments
      and unreimbursed patent expenses due to HARVARD become immediately
      payable.

8.7   Sections 33(c), 8.6, 9.2, 9.3 9.4 and 9.5 of this Agreement shall survive
      termination.

                                   ARTICLE IX
                                     GENERAL

9.1   HARVARD represents and warrants that Drs. A. McMahon and P. Chuang have
      assigned to HARVARD their entire right, title, and interest in the patent
      applications or patents comprising the PATENT RIGHTS and that HARVARD has
      the authority to issue the licenses granted to LICENSEE hereunder under
      said PATENT RIGHTS. HARVARD does not warrant the validity of the PATENT
      RIGHTS licensed hereunder and makes no representations whatsoever with
      regard to the scope of the licensed PATENT RIGHTS or that such PATENT
      RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without
      infringing other patents.


                                     - 14 -
<PAGE>

9.2   HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND
      MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
      ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS, BIOLOGICAL MATERIAL, OR
      INFORMATION SUPPLIED BY HARVARD OR LICENSED PRODUCTS OR ROYALTY PRODUCTS
      CONTEMPLATED BY THIS AGREEMENT. Further HARVARD has made no investigation
      and makes no representation that the BIOLOGICAL MATERIALS supplied by it
      or the methods used in making or using such materials are free from
      liability for patent infringement.

9.3   LICENSEE shall not distribute or release the BIOLOGICAL MATERIALS to
      others except to further the purposes of this Agreement. LICENSEE shall
      protect the BIOLOGICAL MATERIAL at least as well as it protects its own
      valuable tangible personal property and shall take reasonable and legal
      measures in any bankruptcy proceeding to protect the BIOLOGICAL MATERIAL
      from any claims by third parties including creditors and trustees in
      bankruptcy.

9.4

      (a)   LICENSEE shall indemnify, defend and hold harmless HARVARD and its
            directors, governing board members, trustees, officers, faculty,
            medical and professional staff, employees, students, and agents and
            their respective successors, heirs and assigns (the " Indemnitees"),
            against any liability, damage, loss or expenses (including
            reasonable attorneys' fees and expenses of litigation) incurred by
            or imposed upon the Indemnitees or any one of them in connection
            with any claims, suits, actions, demands or judgments arising out of
            any theory of product liability (including, but not limited to,
            actions in the form of tort, warranty, or strict liability)
            concerning any product, process or service made, used or sold
            pursuant to any right or license granted under this Agreement. The
            above indemnification shall apply whether or not such liability,
            damage, loss or expense is attributable to the negligent activities
            of the Indemnitees.

      (b)   LICENSEE agrees, at its own expense, to provide attorneys reasonably
            acceptable to HARVARD to defend against any actions brought or filed
            against any party indemnified hereunder with respect to the subject
            of the indemnity contained herein, whether or not such actions are
            rightfully brought.

      (c)   Beginning at the time as any such product, process or service is
            being commercially distributed or sold (other than for the purpose
            of obtaining regulatory approvals) by LICENSEE or by a sublicensee,
            AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and
            expense, procure and maintain comprehensive general liability
            insurance in amounts not less than $2,000,000 per incident and
            $2,000,000 annual aggregate and naming the Indemnitees as additional
            insureds. During clinical trials of any such product, process or
            service, LICENSEE shall, at its sole cost and expense, procure and
            maintain comprehensive general liability insurance in such equal or
            lesser amount as HARVARD shall require, naming the Indemnitees as
            additional insureds. Such


                                     - 15 -
<PAGE>

            comprehensive general liability insurance shall provide (i) product
            liability coverage and (ii) broad form contractual liability
            coverage for LICENSEE's indemnification under this Agreement. If
            LICENSEE elects to self-insure all or part of the limits described
            above (including deductibles or retentions which are in excess of
            $250,000 annual aggregate) such selfinsurance program must be
            acceptable to HARVARD and the Risk Management Foundation of the
            Harvard Medical Institutions, Inc. The minimum amounts of insurance
            coverage required shall not be construed to create a limit of
            LICENSEE's liability with respect to its indemnification under this
            Agreement.

      (d)   LICENSEE shall provide HARVARD with written evidence of such
            insurance upon request of HARVARD. LICENSEE shall provide HARVARD
            with written notice at least fifteen (15) days prior to the
            cancellation, non-renewal or material reduction in coverage in such
            insurance; if LICENSEE does not obtain replacement insurance
            providing comparable coverage within such fifteen (15) day period,
            HARVARD shall have the right to terminate this Agreement effective
            at the end of such fifteen (15) day period without notice or any
            additional waiting periods.

      (e)   LICENSEE shall maintain such comprehensive general liability
            insurance beyond the expiration or termination of this Agreement
            during (i) the period that any product, process, or service,
            relating to, or developed pursuant to, this Agreement is being
            commercially distributed or sold by LICENSEE or by a sublicensee,
            AFFILIATE or agent of LICENSEE and (ii) a reasonable period after
            the period referred to in (e) (i) above which in no event shall be
            less than ten (10) years.

9.5   LICENSEE shall not use HARVARD's name or any adaptation of it or the name
      or names of any of HARVARD's inventors in any advertising, promotional or
      sales literature without the prior written assent of HARVARD, provided,
      however, that LICENSEE shall have the right to confirm the existence and
      general content of this Agreement.

9.6   Without the prior written approval of HARVARD, the license granted
      pursuant to this Agreement shall not be transferred or assigned in whole
      or in part by LICENSEE to any party other than to an AFFILIATE or
      successor to the business interest of LICENSEE relating to the PATENT
      RIGHTS. This Agreement shall be binding upon the successors, legal
      representatives and assignees of HARVARD and LICENSEE.

9.7   The interpretation and application of the provisions of this Agreement
      shall be governed by the laws of the Commonwealth of Massachusetts.

9.8   LICENSEE agrees to comply with all applicable laws and regulations. In
      particular, it is understood and acknowledged that the transfer of certain
      commodities and technical data is subject to United States laws and
      regulations controlling the export of such commodities and technical data,
      including all Export Administration Regulations of the United States
      Department of Commerce. These laws and regulations, among other things,
      prohibit or require a license for the export of certain types of technical
      data to


                                     - 16 -
<PAGE>

      certain specified countries. LICENSEE hereby agrees and gives written
      assurance that it will comply with all United States laws and regulations
      controlling the export of commodities and technical data, that it will be
      responsible for any violation of such by LICENSEE or its AFFILIATES or
      sublicensees, unless its AFFILIATES and sublicensees so agree in a
      separate and binding arrangement, and that it will defend and hold HARVARD
      harmless in the event of any legal action of any nature occasioned by such
      violation.

9.9   LICENSEE agrees to obtain all regulatory approvals required for the
      manufacture and sale of LICENSED PRODUCTS and ROYALTY PRODUCTS and to
      utilize appropriate patent marking on such LICENSED PRODUCTS. LICENSEE
      also agrees to register or record this Agreement as is required by law or
      regulation in any country where the license is in effect.

9.10  Written notices required to be given under this Agreement shall be
      addressed as follows:

      If to HARVARD:                    Office for Technology and Trademark
                                        Licensing
                                        Harvard University
                                        124 Mt. Auburn Street, Suite 410
                                        Cambridge, MA  02138-5701

      If to LICENSEE:                   Ontogeny, Inc.
                                        45 Moulton St.
                                        Cambridge, MA 02138
                                        Attn:  President

      With a copy to:                   Hale and Dorr LLP
                                        60 State Street
                                        Boston, MA  02109
                                        Attn:  Mark G. Borden, Esq.

      or such other address as either party may request in writing.

9.11  Should a court of competent jurisdiction later consider any provision of
      this Agreement to be invalid, illegal, or unenforceable, it shall be
      considered severed from this Agreement. All other provisions, rights and
      obligations shall continue without regard to the severed provision,
      provided that the remaining provisions of this Agreement are in accordance
      with the intention of the parties.

9.12  In the event of any controversy or claim arising out of or relating to any
      provision of this Agreement or the breach thereof, the parties shall try
      to settle such conflicts amicably between themselves.


                                     - 17 -
<PAGE>

9.13  This Agreement constitutes the entire understanding between the parties
      and neither party shall be obligated by any condition or representation
      other than those expressly stated herein or as may be subsequently agreed
      to by the parties hereto in writing.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

         PRESIDENT AND FELLOWS                       ONTOGENY, INC.
           OF HARVARD COLLEGE

          /s/ Joyce Brinton                       /s/_Thomas D. Ingolia
----------------------------------------     --------------------------------
        Joyce Brinton, Director                  Thomas D. Ingolia, PhD
  Office for Technology and Trademark             Senior Vice President
               Licensing


              1/28/97                                   2/1/97
        ------------------                          --------------
                Date                                     Date


                                     - 18 -
<PAGE>

                                   APPENDIX A

The following comprise PATENT RIGHTS:

US provisional application serial no. 60/026,155

                                   APPENDIX B

The following comprise BIOLOGICAL MATERIALS:

1.    HIP gene cDNA

2.    DNA sequence information on the HIP gene(s)

3.    In situ hybridization probes for HIP

4.    Bacterial and eukaryotic expression constructs for HIP

5.    Polyclonal antibodies to HIP


                                     - 19 -