<PAGE>

                                                                   Exhibit 10.46

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

                                LICENSE AGREEMENT

This Agreement 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 One Kendall Square, Bldg. 600, Cambridge, MA 02139.

Whereas HARVARD is Owner by assignment from Drs. Douglas Melton and Ali
Hemmati-Brivanlou of their entire right, title and interest in United States
Patent Application Serial No. 08/136,748, filed on October 14, 1993 entitled
'Method of Inducing and Maintaining Neural Cells', in the foreign patent
applications corresponding thereto, and in the inventions described and claimed
therein (HU Case no. 956-93); and

Whereas HARVARD is Owner by assignment from Drs. Clifford Tabin and Andrew
McMahon of their entire right, title and interest; and THE IMPERIAL CANCER
RESEARCH FUND (ICRF) is Owner by assignment from Dr. Philip Ingram of his entire
right, title and interest in United States Patent Application Serial No.
08/176,427, filed on December 30, 1993 entitled 'Vertebrate Embryonic
Pattern-Inducing Proteins and Uses Related Thereto', in the foreign patent
applications corresponding thereto, and in the inventions described and claimed
therein (HU Case no. 963-93); and

Whereas HARVARD has entered into an agreement with ICRF granting HARVARD
authority to act on ICRF's behalf and to bind ICRF in licensing ICRF's rights to
United States Patent Application Serial No. 08/176,427, filed on December 30,
1993, and to the foreign patent applications corresponding thereto, and in the
inventions described and claimed therein; 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:
<PAGE>

                                    ARTICLE I
                                   DEFINITIONS

1.1   PATENT RIGHTS shall mean United States patent application Serial No.
      08/136,748 filed October 14, 1993 and United States patent application
      Serial No. 08/176,427 filed December 30, 1993, 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.

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 Drs. A. McMahon, C. Tabin and D. Melton 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   ROYALTY PRODUCTS shall mean products, the manufacture, use or sale of
      which would, absent the license granted hereunder, infringe a CLAIM.

1.5   MILESTONE PRODUCTS shall mean products which are not ROYALTY PRODUCTS and
      (a) are identified or discovered in material part through the use of
      processes or subject matter covered in a CLAIM or (b) agonize or
      antagonize members of the hedgehog gene family or (c) agonize or
      antagonize follistatin or (d) 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 ROYALTY
      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.
<PAGE>

      (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
      ROYALTY PRODUCTS for the life of PATENT RIGHTS, and a worldwide license to
      use BIOLOGICAL MATERIALS to make and have made, to use and have used, to
      sell and have sold or to identify the MILESTONE 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
            non-exclusive 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.

      (c)   LICENSEE shall use reasonable efforts to effect introduction of the
            ROYALTY 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 ROYALTY PRODUCTS reasonably
            available to the public.
<PAGE>

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

      (d)   HARVARD shall have the right to terminate or render this license
            non-exclusive at any time after three (3) years 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

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

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

            FTEs are defined as full-time equivalent scientists and/or
            technicians and/or consultants. One half of the minimum number of
            total FTEs will be allocated to the development of each of the
            follistatin technology and the hedgehog technology. Of those FTEs
            dedicated to the development of the licensed subject matter, [**]
            ([**]%) will possess an advanced scientific degree.

            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 ROYALTY PRODUCT or MILESTONE PRODUCT.
<PAGE>

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

                         Years from Date of
                             Agreement                Milestone
                             ---------                ---------
                                [**]                     [**]
                         [**] through [**]               [**]
                         [**] through [**]               [**]
                         [**] through [**]               [**]

      (f)   LICENSEE shall pay to HARVARD the following payments upon execution
            of the first corporate partnership in a field primarily relating to
            either the hedgehog or the follistatin technologies:

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

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

            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 and/or milestone payments as defined in Section
            3.3. Deductions from royalty payments or milestone payments based on
            this credit may not exceed fifty percent (50%) of the royalty or
            milestone 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 two FTEs (one of which shall possess an
            advanced scientific degree) for any calendar year (commencing in
            1995) 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 two FTEs 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
<PAGE>

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

            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
      non-refundable, 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 shares shall be considered part of the
            royalty consideration for the grant of this license. As of the date
            hereof, LICENSEE has issued and outstanding 1,680,000 shares of
            Common Stock and 4,737,778 shares of Series A Convertible Preferred
            Stock. The Shares issuable to HARVARD hereunder shall represent, as
            of the date hereof, at least [**]% of the total voting power of the
            issued and outstanding capital stock of LICENSEE. The Common Stock
            issued to HARVARD shall have the characteristics, rights,
            preferences and privileges set forth in the Certificate of
            Incorporation of the LICENSEE and set forth herein in Appendix C.

      (b)   In the event that LICENSEE shall issue additional shares of capital
            stock, subsequent to the date hereof, LICENSEE shall notify HARVARD
            as to the number of shares proposed to be issued (the "Offered
            Shares") and the price per share of the Offered Shares. HARVARD
            shall have the right to elect to purchase, by written notice
            provided to LICENSEE within 30 days after the LICENSEE's notice, its
            pro rata share of the Offered Shares. HARVARD's pro rata share shall
            be a fraction, the numerator of which shall be the number of shares
            of Common Stock then held by HARVARD and the denominator of which
            shall be the total number of shares of Common Stock then outstanding
            (including shares issuable upon conversion or exercise of then
            outstanding convertible securities, options and warrants). "Offered
            Shares" shall not include: (i) shares issued to employees, directors
            or consultants of LICENSEE pursuant to authorization of the Board of
            Directors, (ii) shares issued in connection with any acquisition of
            the business or assets of a third party, (iii) shares issued in
            connection with a stock dividend, stock split or similar event or
            (iv) shares issued in connection with collaboration, licensing or
            equipment lease financing arrangements with third parties. The
            provisions of this Section 3.2(b) shall terminate upon, and not
            apply to, the LICENSEE's initial public offering of Common Stock
            pursuant to a registration statement under the Securities Act of
            1933.
<PAGE>

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

      (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)   If 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 have its Shares registered under the
            registration statement to be filed at such time, in accordance with
            the terms set forth in Appendix C.

3.3   (a)   LICENSEE shall pay HARVARD during the term of this license a royalty
            of [**] percent ([**]%) of the NET SALES of all ROYALTY PRODUCTS
            sold by LICENSEE and its AFFILIATES; provided, however, that in the
            case of ROYALTY PRODUCTS covered by a pending patent claim, such
            royalty of [**] percent ([**]%) 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 ROYALTY
            PRODUCT that is a ROYALTY PRODUCT solely as a result of any such
            claim that has been abandoned, has been rejected by an
<PAGE>

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

            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 ROYALTY 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 [**] percent
            ([**]%) 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 ROYALTY PRODUCTS or MILESTONE 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
            [**] percent ([**]%) 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 MILESTONE PRODUCTS or
            ROYALTY 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 ROYALTY PRODUCTS from either the hedgehog
            technology or the follistatin technology 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 ROYALTY 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 ROYALTY PRODUCTS such that the total royalty burden for such
            ROYALTY PRODUCT, excluding royalties payable to Columbia University
            or the Salk Institute, equals or exceeds [**] ([**]%) percent,
            LICENSEE may reduce the royalty due to HARVARD by [**] ([**]%) for
            [**]
<PAGE>

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

            above [**] ([**]%) percent, but in no event shall any such payment
            due to HARVARD be reduced by more than 50% 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 non-exclusive license.

      (e)   In the case of MILESTONE PRODUCTS, LICENSEE shall pay the following
            payments 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:

            [**] MILESTONE PRODUCT                      $[**]
            Cumulative Sales of
            MILESTONE PRODUCT of [**]                   $[**]
            Cumulative Sales of
            MILESTONE PRODUCT of [**]                   $[**]

            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 milestone payments shall still be due
            with respect to all MILESTONE 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 milestone payments
            will be due on only the first MILESTONE 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 ROYALTY 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 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
<PAGE>

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

            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
      royalty and/or advance on royalties of [**] dollars ($[**]); such payment
      may be credited against running royalties due for that calendar year and
      royalty reports should reflect the use of this credit. None of these
      payments are creditable against milestone 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, within nine (9) months of
      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 ROYALTY
      PRODUCTS and MILESTONE 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 ROYALTY PRODUCTS sold by LICENSEE, its
                  AFFILIATES and sublicensees in each country;

            (ii)  total billings for such ROYALTY PRODUCTS;

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

            (iv)  sublicense income subject to sharing with HARVARD
<PAGE>

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

            (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
            ROYALTY 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
            royalty 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 by law, 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 [**] percent
            ([**]%) 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 ROYALTY PRODUCTS and MILESTONE
      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.

                                   ARTICLE VI
                DOMESTIC AND FOREIGN PATENT FILING & MAINTENANCE
<PAGE>

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 which amount HARVARD represents equals
      $33,384.56 as of December 29, 1994. 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 ROYALTY 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.

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 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
<PAGE>

      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.

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.
<PAGE>

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 royalty 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 royalty due in any one year.

7.6   No settlement, consent judgment 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.

7.9   In the event that a declaratory judgment 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.

                                  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.
<PAGE>

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 royalty payments
      and unreimbursed patent expenses due to HARVARD become immediately
      payable.

8.7   Sections 3.3(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. D. Melton, A. Hemmati-Brivanlou,
      C. Tabin, A. McMahon and P. Ingham have assigned to HARVARD or ICRF their
      entire right, title, and interest in the patent applications or patents
      comprising the PATENT RIGHTS, and that ICRF has authorized HARVARD to
      license its rights 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.

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 ROYALTY PRODUCTS OR MILESTONE 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
<PAGE>

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

      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 ICRF
            and their 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 $[**] per incident and $[**]
            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 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 $[**] annual aggregate) such self-insurance 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
<PAGE>

            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.

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 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 ROYALTY PRODUCTS and MILESTONE PRODUCTS and to
      utilize appropriate patent marking on such ROYALTY 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
<PAGE>

                               Cambridge, MA 02138-5701

      With a copy to:          Office of Technology Licensing and Industry
                               Sponsored Research
                               Harvard University
                               333 Longwood Avenue, Suite 640
                               Boston, MA 02115

      If to LICENSEE:          Ontogeny, Inc.
                               One Kendall Square; Bldg 600
                               Cambridge, MA 02139
                               Attn.  President

      With a copy to:          Hale and Dorr
                               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.

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.

      The effective date of this Agreement is February 9,1995.

               PRESIDENT AND FELLOWS
                OF HARVARD COLLEGE                        ONTOGENY, INC.

       /s/ Joyce Brinton                          /s/
   -----------------------------------------    --------------------------------
             Joyce Brinton, Director                         Signature
       Office for Technology and Trademark
                    Licensing                   --------------------------------
                                                               Name

                                                --------------------------------
                                                               Title
<PAGE>

                                   APPENDIX A

The following comprise PATENT RIGHTS:

USSN 08/136,748
PCT/US94/11745

USSN 08/176,427
USSN 08/227,371 (CIP of USSN 08/176,427)
PCT/US94/14992
<PAGE>

                                   APPENDIX B

The following comprise BIOLOGICAL MATERIALS

From USSN 08/136,748/ Melton and Hemmati-Brivanlou

1XAR1
pSP64TXFS-319
XFS-319 (Seq. ID #1)

From USSN 08 /176,427/ McMahon, Tabin and Ingham

pCHA (Seq ID# 12)
pCHB (Seq ID #13)
pHH-2
W1-15.1
pWEXP2
[WRES4
WEXP2-CShh
pWEXP-CShh pHS-Shh

Sonic/RCAS-A1
Sonic/RCAS-A2
Sonic/RCAN-A1
Sonic/RCAN-A2
Sonic/RCAS-E1
Sonic/RCAS-E2

From USSN 08/227,371

Polypepetides

Gene                          Species                     Seq ID No
----                          -------                     ---------
Sonic hedgehog (shh)          mammalian                   11, 13
                              avian                       8
                              fish                        12

Indian hedgehog (Ihh)         human                       14
                              mouse                       10

Desert hedgehog (Dhh)         mouse                       9
<PAGE>

                                   APPENDIX C

                     Registration Rights for Ontogeny, Inc.

                                   Appendix C

                               Registration Rights

      1. Certain Definitions. For purposes of this Appendix C:

            (a) "Registrable Shares" means (i) the Shares, excluding any
Unvested Shares, and (ii) any other shares of Common Stock issued in respect of
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of Common
Stock which are Registrable Shares shall cease to be Registrable Shares upon any
sale pursuant to a Registration Statement or Rule 144 under the Securities Act.

            (b) "Registration Statement" means a registration statement filed
with the United States Securities and Exchange Commission (the "Commission") for
a public offering and sale of Common Stock under the Securities Act of 1933, as
amended (the "Securities Act") (other than a registration statement on Form S-8
or Form S-4, or their successors, or any other form for a similar limited
purpose, or any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation).

            (c) "Company" means Ontogeny, Inc.

            (d) "Purchaser" means the President and Fellows of Harvard College.

      2. Incidental Registration.

            (a) Whenever the Company proposes to file a Registration Statement
for the registration of shares of Common Stock for its own account, it will,
prior to such filing, give written notice to the Purchaser of its intention to
do so and, upon the written request of the Purchaser given within 20 days after
the Company provides such notice (which request shall state the intended method
of disposition of such Registrable Shares), the Company shall use its best
efforts to cause all Registrable Shares which the Company has been requested by
the Purchaser to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of the Purchaser;
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this Section 2 without obligation to the
Purchaser.

            (b) In connection with any registration under this Section 2
involving an underwriting, the Company shall not be required to include (i) any
Registrable Shares in such registration unless the Purchaser accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, or (ii) except in the Company's initial public offering of
Common Stock, any Registrable Shares then eligible for resale under Rule 144(k)
under the Securities Act. If in the opinion of the managing underwriter it is
appropriate because of marketing factors to limit the number of Registrable
Shares to be included in the offering, then
<PAGE>

the Company shall be required to include in the registration only that number of
Registrable Shares, if any, which the managing underwriter believes should be
included in the offering in accordance with the foregoing is less than the total
number of shares which the Purchaser has requested to be included, then the
Purchaser and other holders of securities entitled to include them in such
registration shall participate in the registration pro rata based upon their
total ownership of shares of Common Stock (giving effect to the conversion into
Common Stock of all securities convertible thereinto).

      3. Allocation of Expenses. The Company will pay all expenses of all
registrations under this Agreement, other than expenses of the Purchaser's
counsel and underwriting discounts and commissions.

      4. Information by Purchaser. The Purchaser shall furnish to the Company
such information regarding the Purchaser and the distribution proposed by the
Purchaser as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Appendix C.

      5. "Stand-Off" Agreement. The Purchaser, if requested by the Company and
the managing underwriter of the Company's initial public offering of Common
Stock or other securities of the Company pursuant to a Registration Statement,
shall agree not to sell or otherwise transfer or dispose of any Registrable
Shares or other securities of the Company held by the Purchaser for a period of
180 days following the effective date of such Registration Statement.

      6. Termination. All of the Company's obligations to register Registrable
Shares under this Agreement shall terminate on the date three years after the
closing of the Company's initial public offering of Common Stock pursuant to a
Registration Statement.
<PAGE>

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

                         Amendment to License Agreement

The President and Fellows of Harvard College and Ontogeny, Inc hereby amend the
License Agreement effective February 9, 1995 as follows:

1. To delete Section 2.2(d) and replace it with the following new Section 2.2(d)

If, in HARVARD's reasonable judgement, LICENSEE fails to satisfy both of the
following conditions for either the hedgehog technology or the follistatin
technology, which failure is not cured within ninety (90) days after written
notice of such failure by HARVARD to LICENSEE, HARVARD shall have the right to
terminate this license or render it non-exclusive with respect to the technology
which is not under development:

(i)   is demonstrably engaged in research, development, manufacturing, marketing
      or licensing program, as appropriate, directed toward the development and
      commercialization of the licensed subject matter, and

(ii)  has devoted at least the level of resources outlined below to the
      development and commercialization of the licensed subject matter:

           Year                Total Number of FTFs          Annual Budget
           ----                --------------------          -------------

1                                      [**]                      $[**]
2                                      [**]                      $[**]
3                                      [**]                      $[**]
4 (and after)                          [**]                      $[**]

      FTEs are defined as full-time equivalent scientists and/or technicians
      and/or consultants. One half of the minimum number of total FTEs will be
      allocated to the development of each of the follistatin technology and the
      hedgehog technology. Of those FTEs dedicated to the development of the
      licensed subject matter, fifty percent (50%) will possess an advanced
      scientific degree.

      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.

2. To delete Section 8.6 and replace it with the following new Section 8.6:

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

The effective date of this amendment is February 25, 1998.
<PAGE>

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE AUTHORIZED THIS AMENDMENT TO BE
EXECUTED BY THEIR DULY AUTHORIZED REPRESENTATIVES


PRESIDENT AND FELLOWS OF
    HARVARD COLLEGE


By:  /s/ Joyce Brinton
   -------------------------
   Joyce Brinton, Director, Officer of Technology
   and Trademark Licensing

Date:    02/27/98
     -----------------------

ONTOGENY, INC

by:  /s/ George Eldridge
   -------------------------

Title: Vice President
       ---------------------

Date:          3/6/98
     -----------------------
<PAGE>

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

                                 AMENDMENT NO. 1
                              TO LICENSE AGREEMENT

      This AMENDMENT No. 1 is made as of this first day of January, 1997, by and
between THE PRESIDENT AND FELLOWS OF HARVARD COLLEGE, a non-profit Massachusetts
educational corporation ("HARVARD"), and ONTOGENY, INC., a Delaware corporation
("LICENSEE").

      WHEREAS, HARVARD and LICENSEE are parties to a License Agreement,
effective as of February 9, 1995 (the "License Agreement"); and

      WHEREAS HARVARD and LICENSEE wish to amend the License Agreement as
hereafter provided.

      NOW, THEREFORE, in consideration of the mutual covenants of HARVARD and
LICENSEE and further good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, HARVARD and LICENSEE, intending to
be legally bound, hereby agree as follows:

      1. Section 3.1 of the License Agreement is hereby amended to read in full
as follows:

      Upon execution of this Agreement, LICENSEE shall pay to HARVARD a
      non-refundable, non-creditable fee of [**] dollars. HARVARD hereby
      acknowledges receipt of [**] dollars of such fee.

      2. The "If to LICENSEE:" in the notice provisions of Section 9.10 of the
License Agreement is hereby amended to read in full as follows:

      If to LICENSEE:         Chief Executive Officer
                              Ontogeny, Inc.
                              45 Moulton Street
                              Cambridge, MA 02138-1118

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

      3. Except as expressly amended by this Amendment No. 1, the License
Agreement shall remain in full force and effect as the same was in effect
immediately prior to the effectiveness of this Amendment No. 1.

      4. This Amendment No. 1 shall be governed by and construed on the same
basis as the License Agreement, as set forth therein.
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has fully executed this
Amendment No. 1 all as of the day and year first above written.

                            THE PRESIDENT AND FELLOWS
                            OF HARVARD COLLEGE

                            By: /s/ Joyce Brinton
                               -----------------------------------
                               Joyce Brinton
                               Director


                            ONTOGENY, INC.

By:  Thomas D. Ingolia
   -----------------------------
     Thomas D. Ingolia, Ph.D.
     Senior Vice President