<PAGE>

                                                                   Exhibit 10.40

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


                                   AMENDED AND RESTATED

                         RESEARCH AND COMMERCIALIZATION AGREEMENT

                                      by and between

                                      Ontogeny, Inc.

                                           and

                                       Biogen, Inc.

                                    November 30, 1998
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

Introduction

Article 1.  Definitions......................................................2

Article 2.  The Collaboration...............................................10

      2.1   Research Phase..................................................10

      2.2   Commercialization Phase.........................................12

      2.3   Accounting and Internal Controls................................14

      2.4   Restrictions....................................................15

Article 3.  Grant of Rights.................................................15

      3.1   License Grants for Research Purpose.............................15

      3.2   License Grants with Respect to Products that Comprise
            Hedgehog-based Molecular Entities...............................16

      3.3   Other License Grants............................................17

      3.4   Restrictions on Licenses Granted by Ontogeny....................18

      3.5   Sublicensing Obligations........................................18

      3.6   Commercialization Option........................................18

      3.7   Right of First Offer............................................19

Article 4.  Payment Obligations.............................................20

      4.1   Research License Fee and Stock Purchase.........................20

      4.2   Development Program Fee and Stock Purchase......................20

      4.3   Research Funding................................................20

      4.4   Follow-on Research Support Fee..................................21

      4.5   Breakup Fee.....................................................21

      4.6   Milestone Payments..............................................21

      4.7   Royalties.......................................................22


                                      (i)
<PAGE>

      4.8   Payment Currency and Interest on Payments Past Due..............24

      4.9   Tax Withholding.................................................24

      4.10  Records; Audits.................................................24

Article 5.  Line of Credit..................................................25

      5.1   Availability of Line of Credit..................................25

      5.2   Repayment.......................................................25

Article 6.  Commercialization Obligations...................................26

      6.1   General.........................................................26

      6.2   Product Objectives..............................................26

      6.3   Consequences of Failure to Meet Commercialization Objectives....27

Article 7.  Intellectual Property Rights....................................27

      7.1   Ownership.......................................................27

      7.2   Prosecution and Maintenance of Patent Right.....................28

      7.3   Infringement by Third Parties...................................29

      7.4   Infringement of Third Party Rights..............................30

Article 8.  Representations, Warranties and Covenants.......................31

      8.1   Representations, Warranties and Covenants of Ontogeny...........31

      8.2   Representations, Warranties and Covenants of Biogen.............31

      8.3   Disclaimers.....................................................31

Article 9.  Confidential Information........................................32

      9.1   Treatment of Confidential Information...........................32

      9.2   Release from Restrictions.......................................32

Article 10.  Term and Termination...........................................32

      10.1  Term............................................................32

      10.2  Termination by Biogen...........................................33


                                      (ii)
<PAGE>

      10.3  Termination for Breach..........................................33

      10.4  Consequences of Termination.....................................33

      10.5  Survival of Rights and Obligations..............................33

Article 11.  Miscellaneous..................................................34

      11.1  Product Liability Indemnification...............................34

      11.2  Publicity.......................................................34

      11.3  Governing Law...................................................35

      11.4  Dispute Resolution..............................................35

      11.5  Waiver..........................................................35

      11.6  Notices.........................................................35

      11.7  No Agency.......................................................36

      11.8  Entire Agreement................................................36

      11.9  Headings........................................................37

      11.10 Severability....................................................37

      11.11 Assignment......................................................37

      11.12 Successors and Assigns..........................................37

      11.13 Counterparts....................................................37

      11.14 Force Majeure...................................................37

Schedule A - Ontogeny Hedgehog Proteins

Schedule B - Disease Indications Excepted from the Field

Schedule C - Research Workplan

Schedule D - Therapeutic Areas

Schedule E - Line of Credit Note

Exhibit A - Note Purchase Agreement


                                     (iii)
<PAGE>

                              AMENDED AND RESTATED
                    RESEARCH AND COMMERCIALIZATION AGREEMENT

      This Amended and Restated Research and Commercialization Agreement (the
"Agreement") dated as of November 30, 1998 is made by and between Ontogeny,
Inc., a Delaware corporation, having its principal place of business at 45
Moulton Street, Cambridge, Massachusetts 02138 ("Ontogeny") and Biogen, Inc., a
Massachusetts corporation, having its principal place of business at 14
Cambridge Center, Cambridge, Massachusetts 02142 ("Biogen").

                                  INTRODUCTION

      1. Ontogeny is in the business of conducting research in the field of
developmental biology, an objective of which is to discover therapeutic inducing
molecules that are specific for different types of cells.

      2. Biogen has expertise in the discovery, development, manufacture and
commercialization of pharmaceutical products.

      3. Biogen desires that Ontogeny, on behalf of and in collaboration with
Biogen. undertake a research project, the goal of which is to characterize
certain of Ontogeny's proprietary inducing molecules in order to determine their
therapeutic utility when administered systemically or into the central nervous
system. In addition, Biogen desires to obtain from Ontogeny an option to develop
and commercialize pharmaceutical products that are based upon molecules
characterized in the course of the research project.

      4. In return for Ontogeny's commitment to undertake the research project
described herein and for the grant by Ontogeny of an option to develop and
commercialize pharmaceutical products based on molecules characterized in the
course of the research project, Biogen is willing to (i) fund and participate in
the research project and (ii) pay Ontogeny the research license fee provided for
herein. In the event that Biogen exercises its option to develop and
commercialize pharmaceutical products that are based upon molecules
characterized in the course of the research project, Biogen is willing to (i)
undertake the development and commercialization of such pharmaceutical products,
and (ii) pay Ontogeny the development program fee, milestone payments and
royalties provided for herein.

      5. Ontogeny and Biogen entered into a Research and Commercialization
Agreement (the "Original Agreement") dated as of July 1, 1996, as amended by
that First Amendment to the Original Agreement (the "First Amendment") dated as
of June 22, 1998, that Second Amendment to the Original Agreement (the "Second
Amendment") dated as of July 31, 1998, that Third Amendment to the Original
Agreement (the "Third Amendment") dated as of September 30, 1998 and that Fourth
Amendment to the Original Agreement (the "Fourth Amendment") dated as of October
31, 1998.

      6. Ontogeny and Biogen are desirous of amending and restating the terms of
the Original Agreement, as amended.
<PAGE>

      In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Ontogeny and Biogen agree as follows:

                             Article 1. Definitions

      As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the following meanings:

      1.1 "Affiliate" means any corporation, company, partnership, joint
venture, firm and/or entity which controls, is controlled by or is under common
control with a Party. For purposes of this Section 1.1, "control" shall mean (a)
in the case of corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the stock or shares entitled to vote for the election of
directors and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.

      1.2 "Biogen Gene Therapy Intellectual Property Rights" means (a) the
Biogen Gene Therapy Patent Rights and (b) any other intellectual property rights
in and to the Biogen Gene Therapy Technology.

      1.3 "Biogen Gene Therapy Patent Rights" means all patents and patent
applications (which for all purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) throughout the world, covering or relating to the Biogen Gene Therapy
Technology, including any substitutions, extensions, reissues, reexaminations,
renewals, divisions, continuations, continuations-in-part or supplemental
protection certificates, which Biogen owns or otherwise has the right to grant
licenses under.

      1.4 "Biogen Gene Therapy Technology" means all Technology which Biogen
solely owns (including Biogen Solely-Owned Collaboration Technology (as defined
in Section 7.1 (a))) or, with the exception of Collaboration Technology that is
jointly owned with Ontogeny, Ontogeny's Solely-Owned Collaboration Technology
and Ontogeny Technology, which Biogen otherwise has the right to grant licenses
under as of the Effective Date or during the term of the Collaboration which is
specific to Gene Therapy and which does not embody or is not an improvement of
Ontogeny Technology, including but not limited to vectors, other gene delivery
methods, control elements, gene regulation elements, promoters, and related
formulations; provided however that Biogen Gene Therapy Technology shall not
include Fundamental Hedgehog Gene Therapy Collaboration Technology or Hedgehog
Specific Gene Therapy Collaboration Technology.

      1.5 "Biogen Intellectual Property Rights" means (a) the Biogen Patent
Rights and (b) any other intellectual property rights in and to the Biogen
Technology which Biogen owns or otherwise has the right to grant licenses under.

      1.6 "Biogen Patent Rights" means all patents and patent applications
(which for all purposes of this Agreement shall be deemed to include
certificates of invention and applications for certificates of invention)
throughout the world, covering or relating to the Biogen Technology, including
any substitutions, extensions, reissues, reexaminations, renewals,


                                       2
<PAGE>

divisions, continuations, continuations-in-part or supplemental protection
certificates, which Biogen owns or otherwise has the right to grant licenses
under.

      1.7 "Biogen Technology" means all Technology, exclusive of the Biogen Gene
Therapy Technology and the Collaboration Technology, which Biogen owns or
otherwise has the right to grant licenses under as of the Original Effective
Date or during the term of the Collaboration, which is reasonably necessary to
either or both Parties in order to discover, research, develop, make, use, sell
or seek approval to market a therapeutic product that comprises a Hedgehog-based
Molecular Entity.

      1.8 "Collaboration" means the Research Program and, if initiated, the
Commercialization Program.

      1.9 "Collaboration Patent Rights" means all patents and patent
applications (which for all purposes of this Agreement shall be deemed to
include certificates of invention, applications for certificates of invention
and utility models) throughout the world, covering or relating to the
Collaboration Technology, including any substitutions, extensions, reissues,
reexaminations, renewals, divisions, continuations, continuations-in-part or
supplemental protection certificates.

      1.10 "Collaboration Technology" means all Technology, as well as
improvements related thereto, conceived, reduced to practice or developed by a
Party or jointly by the Parties during, and in the conduct of, the
Collaboration.

      1.11 "Columbia License Agreement" means the license agreement, dated
January 1, 1995, between Ontogeny and the Trustees of Columbia University in the
City of New York, pursuant to which Ontogeny is granted selected rights to
proprietary Technology relating to the Vertebrate Hedgehog Family.

      1.12 "Commercialization Phase" means the phase of the Collaboration, as
more fully described in Section 2.2, that is initiated only upon the initiation,
if any, of the first Development Program.

      1.13 "Commercialization Program" means the development, manufacturing and
commercialization activities, as more fully defined in Section 2.2, conducted by
the Parties during the Commercialization Phase.

      1.14 "Comparable Proteins" means two or more Ontogeny Hedgehog Proteins
that show comparable activity in relevant animal models for the same disease
indications and no meaningful activity in relevant animal models for any other
disease indications.

      1.15 "Confidential Information" means all materials, trade secrets or
other information, including, without limitation, proprietary information and
materials (whether or not patentable) regarding a Party's Technology, products,
business information or objectives.

      1.16 "Contract Year" means the twelve (12) month period beginning on the
Original Effective Date, and each succeeding twelve (12) month period thereafter
until the termination of the Collaboration.


                                       3
<PAGE>

      1.17 "Desert Hedgehog" means (a) a protein that is a member of the
Vertebrate Hedgehog Family and whose amino acid sequence is substantially the
same, in whole or in part, as that set forth in Schedule A and (b) a protein
that is the human homologue of the protein described in (a).

      1.18 "Development Program" means a development program, initiated upon the
exercise by Biogen of the option set forth in Section 3.6, that is undertaken by
the Parties with respect to an Ontogeny Hedgehog Protein to develop and
commercialize Hedgehog-based Molecular Entity(ies).

      1.19 "Disease Indication" means (a) with respect to a Phase II or Phase
III clinical trial, a disease indication listed in the indication definition in
the clinical trial protocol and (b) with respect to an IND or an NDA. the
disease indication for which approval is being sought, as listed in the
application.

      1.20 "Effective Date" means the date of this Agreement.

      1.21 "FDA" means the United States Food and Drug Administration.

      1.22 "Field" means all therapeutics and prophylactics, other than
therapeutics and prophylactics based on the administration of cells (except with
respect to autologous cells administered in connection with Hedgehog Gene
Therapy), that are administered by the Specified Delivery Methods for any
disease indication, other than the excepted disease indications set forth in
Schedule B.

      1.23 "First Commercial Sale" means, with respect to each Licensed Product
or Ontogeny Product, as the case may be, the first commercial sale of such
product by a Party, its Affiliates, Sublicensees and/or distributors in a
country in the Territory, other than for clinical trial purposes or for
compassionate use.

      1.24 "FTE" means a full time equivalent scientific person year (consisting
of a total of one thousand eight hundred eighty (1,880) hours per year of
scientific work on or directly related to the Collaboration), carried out by an
Ontogeny employee, having at least a Bachelor's Degree. Scientific work on or
directly related to the Collaboration to be performed by Ontogeny employees can
include, but is not limited to, experimental laboratory work, recording and
writing of results, reviewing literature and references, holding scientific
discussions, managing and leading scientific staff, managing external
collaborators, participating in regulatory and/or clinical work, writing and
reviewing patent applications, developing and applying computer programs related
to the Collaboration, and carrying out project management duties.

      1.25 "Fundamental Hedgehog Gene Therapy Collaboration Technology" means
all Biogen's Solely-Owned Collaboration Technology (as defined in Section
7.1(a)) which is specific to Gene Therapy and which covers (i) any modifications
to any Hedgehog-based Molecular Entity or (ii) any expression, promoter or
enhancer elements that are required for the expression of any Hedgehog-based
Molecular Entity. For purposes of this definition, the addition of a promoter or
control or regulation element shall not be deemed to be a modification of the
Hedgehog-based Molecular Entity.


                                       4
<PAGE>

      1.26 "Gene Therapy" means the injection, application or other mode of
administration of a therapeutic product that comprises a nucleic acid or a
functional analog thereof, including, but not limited to, in combination with a
vector, which is intended, upon delivery into a patient (including, but not
limited to, through the administration of autologous cells), to provide a gene
product encoded therein that is expressed.

      1.27 "Good Faith Intent to Develop" means the intent to develop a
Hedgehog-based Molecular Entity for a disease indication in the Field, where
such intent is evidenced by ongoing work in connection with a written workplan
that shall be approved by a majority of the JRMC on or prior to the termination
of the Research Phase (or, in the event Biogen initiates a Development Program
with respect to all three Ontogeny Hedgehog Proteins, a written workplan that
shall be approved by a majority of the JRMC on or prior to return, if any, of
the first Ontogeny Hedgehog Protein to Ontogeny pursuant to a Biogen Early
Termination Notification (as that term is defined in Section 2.2(b)) or
Mandatory Termination (as that term is defined in Section 6.3)), such approval
not to be unreasonably withheld, which workplan shall describe planned research
and development activities (including specific commercialization milestones and
a timeline) directed towards development and commercialization of such
Hedgehog-based Molecular Entity for such disease indication.

      1.28 "Gross Sales" means the gross amount invoiced on sales to independent
third parties of (a) a Licensed Product by Biogen and/or its Affiliates and/or
Sublicensees or (b) an Ontogeny Product by Ontogeny and/or its Affiliates, as
applicable.

      1.29 "Harvard License Agreement" means the license agreement, dated
February 9, 1995, between Ontogeny and the President and Fellows of Harvard
College, pursuant to which Ontogeny is granted selected rights to proprietary
Technology relating to the Vertebrate Hedgehog Family.

      1.30 "Hedgehog-based Molecular Entity" means a molecular entity that is
(a) an Ontogeny Hedgehog Protein, (b) a peptide fragment of an Ontogeny Hedgehog
Protein where such peptide fragment consists of a sequence of amino acids that
is contained within such Ontogeny Hedgehog Protein, (c) an entity that is a
variant of (a) or (b) where such variant is (i) an entity whose structure has
been altered or (ii) an entity consisting of (a) or (b) conjugated with another
entity, where such alteration or conjugation has been done in order to confer
upon the variant a feature or property not possessed by (a) or (b) (such as
altered pharmacokinetic or pharmacodynamic properties, ease-of-manufacturing,
uniqueness, ease-of-manipulation for preclinical research and development,
etc.), or (d) a nucleic acid or a functional analog thereof encoding either (a),
(b) or ( c) above and excluding anti-sense molecular entities.

      1.31 "Hedgehog Gene Therapy" means Gene Therapy where the therapeutic
product comprises a nucleic acid or functional analog thereof of the type
described in Section 1.29(d), provided that Hedgehog Gene Therapy shall be
limited to (a) oral or systemic injection or application, (b) other applications
for systemic effect, and (c) in the case of disorders of the central nervous
system, in addition to (a) and (b), delivery that is through the blood brain
barrier into the cerebrospinal fluid or directly into the central nervous
system.


                                       5
<PAGE>

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

      1.32 "Hedgehog Specific Gene Therapy Collaboration Technology" means
Biogen's Solely-Owned Collaboration Technology (as defined in Section 7.1(a)),
exclusive of Fundamental Hedgehog Gene Therapy Collaboration Technology, which
(a) has specific applicability to Hedgehog Gene Therapy where the therapeutic
product comprises a Hedgehog-based Molecular Entity and (b) works selectively
better for a therapeutic product comprising a Hedgehog-based Molecular Entity
than it does for a therapeutic product comprising a gene other than a
Hedgehog-based Molecular Entity.

      1.33 "IND" means an Investigational New Drug Application filed with the
FDA of an equivalent filing in any Major Market Country.

      1.34 "Indian Hedgehog" means (a) a protein that is a member of the
Vertebrate Hedgehog Family and whose amino acid sequence is substantially the
same, in whole or in part, as that set forth in Schedule A, and (b) a protein
that is the human homologue of the protein described in (a).

      1.35 "Lead Protein" means the one Ontogeny Hedgehog Protein which is the
subject of a Development Program that is designated as the "Lead Protein" by
Biogen on or prior to the termination of the Research Phase, subject to Section
3.6.

      1.36 "Licensed Product" means a product that comprises a Hedgehog-based
Molecular Entity (a) (i) that is based on an Ontogeny Hedgehog Protein that was
the subject of a Development Program that was not terminated by Biogen pursuant
to a Biogen Early Termination Notification (as that term is defined in Section
2.2(b)) or terminated by Ontogeny pursuant to a Mandatory Termination (as that
term is defined in Section 6.3), and (ii) with respect to which the Biogen
Research License (as that term is defined in Section 3.1(a)) was not terminated
pursuant to a Requested Termination (as that term is defined in Section 3.1(a))
under the terms of Section 3.1(a), and (b) which, or the manufacture, use or
sale of which, (i) is covered by a Valid Claim of any Ontogeny Patent Rights
and/or any Collaboration Patent Rights in the country where such product is
manufactured, used or sold, and/or (ii) embodies any of the Ontogeny Technology
and/or the Collaboration Technology.

      1.37 "Major Market Country" means the [**], [**], [**], [**], [**], [**],
[**], [**] or [**].

      1.38 "NDA" means a New Drug Application filed with the FDA or an
equivalent filing in any Major Market Country.

      1.39 "Net Sales" means the Gross Sales of a Licensed Product or an
Ontogeny Product, as the case may be, less the following items, provided that
such items are included in the amount invoiced and do not exceed reasonable and
customary amounts in the country in which such sale or other disposition
occurred: (a) trade, cash and quantity discounts actually allowed and taken; (b)
excises, sales taxes or other taxes imposed upon and paid with respect to such
sales (excluding national, state or local taxes based on income); (c) freight,
insurance and other transportation charges incurred in shipping a Licensed
Product or an Ontogeny Product, as the case may be, to third parties; (d)
amounts repaid or credited by reason of rejections, defects, recalls or returns
or because of retroactive price reductions; (e) import or export duties or their


                                       6
<PAGE>

equivalent and (f) rebates paid pursuant to (government regulations. Such
amounts shall be determined from the books and records of a Party and/or its
Affiliates and/or Sublicensees, as applicable, maintained in accordance with
generally accepted accounting principles, consistently applied.

      If a Licensed Product or an Ontogeny Product, as the case may be, is sold,
leased, used or otherwise commercially disposed of for value (including, without
limitation, disposition in connection with the delivery of other products or
services) in a transaction that is not an outright arm's length sale to an
independent third party, then the gross amount invoiced in such transaction
shall be deemed to be the gross amount that would have been paid had there been
such a sale at the average sale price of such Licensed Product or Ontogeny
Product, as the case may be, during the applicable royalty reporting period in
the country in which such disposition took place. The preceding sentence shall
not apply to the distribution at no cost of Licensed Products or Ontogeny
Products, as the case may be, to (i) physicians, hospitals or clinics for
promotional purposes or (ii) academic investigators for research or clinical
trial purposes. Net Sales shall also include any consideration received by a
Party and/or its Affiliates and/or Sublicensees, as applicable, in respect of
the sale, use or other disposition of a Licensed Product or an Ontogeny Product,
as the case may be, in a country prior to the receipt of all regulatory
approvals required to commence full commercial sales of such Licensed Product or
Ontogeny Product, as the case may be, in such country (e.g., sales under
"treatment INDs", "named patient sales", "compassionate use sales", or their
equivalents), other than the sale, use or other disposition of such Licensed
Product or Ontogeny Product, as the case may be, in the course of any clinical
trial conducted in order to obtain regulatory approval of such product or for
other research purposes.

      In the event that a Licensed Product or an Ontogeny Product, as the case
may be, is sold as part of a Combination Product (as defined below), the Net
Sales from the Combination Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales of the Combination
Product (as defined in the standard Net Sales definition), during the applicable
royalty reporting period, by the fraction, A/A+B where A is the average sale
price of the Licensed Product or the Ontogeny Product, as the case may be, when
sold separately in finished form and B is the average sale price of the other
product(s) included in the Combination Product when sold separately in finished
form, in each case during the applicable royalty reporting period in the country
in which the sale of the Combination Product was made or, if sales of both the
Licensed Product or the Ontogeny Product, as the case may be, and the other
product(s) did not occur in such period, then in the most recent royalty
reporting period in which sales of both occurred. In the event that such average
sale price cannot be determined for both the Licensed Product or the Ontogeny
Product, as the case may be, and all other product(s) included in the
Combination Product, Net Sales for the purposes of determining royalty payments
shall be calculated by multiplying the Net Sales of the Combination Product by
the fraction C/C+D where C is the fair market value of the Licensed Product or
the Ontogeny Product, as the case may be, and D is the fair market value of all
other pharmaceutical product(s) included in the Combination Product, in each
case as determined by mutual agreement of the Parties. As used above, the term
"Combination Product" means any pharmaceutical product which comprises a
Licensed Product or an Ontogeny Product, as the case may be, and other active
compounds and/or ingredients.

                                       7
<PAGE>

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

      1.40 "Non-Lead Protein" means any Ontogeny Hedgehog Protein which is the
subject of a Development Program that is not designated the Lead Protein.

      1.41 "Ontogeny Hedgehog Protein" means Desert Hedgehog and/or Indian
Hedgehog and/or Sonic Hedgehog.

      1.42 "Ontogeny Intellectual Property Rights" means (a) the Ontogeny Patent
Rights and (b) any other intellectual property rights in and to the Ontogeny
Technology, which Ontogeny owns or otherwise has the right to grant licenses
under, including without limitation those rights obtained by Ontogeny under the
Columbia License Agreement and the Harvard License Agreement.

      1.43 "Ontogeny Patent Rights" means all patents and patent applications
(which for all purposes of this Agreement shall be deemed to include
certificates of invention, applications for certificates of invention and
utility models) throughout the world, covering or relating to the Ontogeny
Technology, including any substitutions, extensions, reissues, reexaminations,
renewals, divisions, continuations, continuations-in-part or supplemental
protection certificates, which Ontogeny owns, or otherwise has the right to
grant licenses under.

      1.44 "Ontogeny Product" means a product that comprises a Hedgehog-based
Molecular Entity (a)(i) that is based on an Ontogeny Hedgehog Protein that was
not the subject of a Development Program, (ii) that is based on an Ontogeny
Hedgehog Protein that was the subject of a Development Program that was
terminated by Biogen pursuant to a Biogen Early Termination Notification (as
that term is defined in Section 2.2(b)), (iii) with respect to which the Biogen
Research License (as that term is defined in Section 3.1(a)) was terminated by
Biogen pursuant to a Requested Termination (as that term is defined in Section
3.1(a)) under the terms of Section 3.1(a), or (iv) that is based on an Ontogeny
Hedgehog Protein that was the subject of a Development Program that was
terminated by Ontogeny pursuant to a Mandatory Termination (as that term is
defined in Section 6.3), but (b) which, or the manufacture, use or sale of
which, (i) is covered by a Valid Claim of any Biogen Patent Rights and/or any
Collaboration Patent Rights solely or Jointly owned by Biogen in the country
where such Hedgehog-based Molecular Entity is manufactured, used or sold, and/or
(ii) embodies any of the Biogen Technology and/or the Collaboration Technology
solely or jointly owned by Biogen.

      1.45 "Ontogeny Technology" means all Technology, exclusive of the
Collaboration Technology, which Ontogeny owns or otherwise has the right to
grant licenses under as of the Original Effective Date or during the term of the
Collaboration, which is reasonably necessary to either or both Parties in order
to discover, research, develop, make, use, sell or seek approval to market a
therapeutic or prophylactic product that comprises a Hedgehog-based Molecular
Entity, including without limitation Technology to which Ontogeny has rights
under the Columbia License Agreement and the Harvard License Agreement.

      1.46 "Original Effective Date" means July 1, 1996.

      1.47 "Party" means Ontogeny or Biogen; "Parties" means Ontogeny and
Biogen.

      1.48 "Protected Indications" means [**] disease indications in the Field
which shall be designated by Biogen in the manner set forth in Section 2.2(c).


                                       8
<PAGE>

      1.49 "Research Phase" means the phase of the Collaboration, as more fully
described in Section 2.1, during which the Parties shall cooperate in the
conduct of the Research Program.

      1.50 "Research Program" means the research activities, as more fully
defined in the Research Workplan, conducted by the Parties during the Research
Phase and undertaken with the goal of determining the therapeutic or
prophylactic utility of products comprising a Hedgehog-based Molecular Entity
that are administered by the Specified Delivery Methods.

      1.51 "Research Workplan" means the workplan, attached as Schedule C, as it
may be updated from time to time by mutual agreement of the parties, that
describes the research activities to be conducted by the Parties in the course
of the Research Program during the Research Phase.

      1.52 "Restricted Protein" means a protein that is designated by Biogen
pursuant to Section 2.2(c) that is subject to certain restrictions on
development and commercialization in indications in the Field pursuant to
Section 2.4(c).

      1.53 "Sonic Hedgehog" means a protein that is a member of the Vertebrate
Hedgehog Family and whose amino acid sequence is substantially the same, in
whole or in part, as that set forth in Schedule A.

      1.54 "Specified Delivery Methods" means (a) delivery that is either oral
or through systemic in injection or application, (b) in the case of disorders of
the central nervous system, in addition to (a), delivery that is through the
blood brain barrier into the cerebrospinal fluid or directly into the central
nervous system and (c) Hedgehog Gene Therapy.

      1.55 "Sublicensee" means any third party other than an Affiliate granted
the right, subject to the terms and conditions of Article 3, to make, use and
sell a Licensed Product or an Ontogeny Product, as the case may be, but not
including a third party that is not granted the right to make such Licensed
Product or Ontogeny Product, as the case may be, but merely purchases such
Licensed Product or Ontogeny Product, as the case may be, in finished form for
resale.

      1.56 "Technology" means information (whether or not patentable and whether
or not copyrightable), including without limitation, ideas, concepts, formulas,
methods, procedures, designs, compositions, plans, applications, specifications,
drawings, techniques, processes, research, technical data, know-how,
apparatuses, equipment, samples, biological materials, vectors, inventions,
discoveries, and the like.

      1.57 "Territory" means all countries of the world.

      1.58 "Therapeutic Area" means a therapeutic area listed in Schedule D.

      1.59 "Valid Claim" means a claim which (a) in the case of any unexpired
United States or foreign patent, shall not have been donated to the public,
disclaimed nor held invalid or unenforceable by a court of competent
jurisdiction in an unappealed or unappealable decision or (b) in the case of any
United States or foreign patent application, shall not have been cancelled,
withdrawn, abandoned, rejected by an administrative agency from which no appeal
can be taken nor been pending for more than seven (7) years.


                                       9
<PAGE>

      1.60 "Vertebrate Hedgehog Family" means a family of proteins that cause
tissue and organ induction, consisting of the Ontogeny Hedgehog Proteins and any
other protein whose amino acid sequence is at least fifty percent (50%)
homologous with the amino acid sequence of any Ontogeny Hedgehog Protein.

                          Article 2. The Collaboration

      2.1 Research Phase.

          (a) Scope and Conduct of the Research Program. The Parties hereby
agree to cooperate in the conduct of the Research Program during the Research
Phase. The Research Program shall be conducted in accordance with the provisions
of the Research Workplan. Within sixty (60) days of the Effective Date, the
Research Workplan shall be amended by the parties and attached hereto as
Schedule C, amending and replacing in its entirety any then-current Schedule C.
In conducting, the Research Program, the Parties shall have and maintain
sufficient flexibility to shift effort and emphasis within the overall scope of
the Research Workplan in a manner that will best result in the identification
and characterization of drug candidates comprising a Hedgehog-based Molecular
Entity with potential utility in the Field. During the course of the Research
Program, each Party shall (i) communicate regularly and work collaboratively
with the other Party and (ii) use commercially reasonable efforts to fulfill its
obligations under the Research Program as described in this Article 2 and, in
greater detail, in the Research Workplan and any amendments thereof.

          (b) Management of the Research Program.

          (i) The Project Team. The Research Program shall be managed by a
project team (the "Project Team"), consisting of an equal number, to be
determined by the Parties, of representatives from Ontogeny and from Biogen, and
led by a representative of Biogen and a representative of Ontogeny (the "Leaders
of the Project Team"). The Project Team shall be responsible for implementing,
coordinating, reviewing and exchanging information regarding the research
activities of the Parties, as set forth in the Research Workplan, and for all
tactical decisions related to the Research Program. In addition, each Party may
at its discretion invite nonvoting employees, consultants or scientific advisors
to attend the meetings of the Project Team as long as such parties are bound by
an obligation of confidentiality to the Party on whose behalf they attend. The
Project Team shall meet no less frequently than once each month and shall meet
at such other times as deemed appropriate by the Leaders of the Project Team.
Each Party may change any one or more of its representatives on the Project Team
at any time upon notice to the other Party. The location of the Project Team
meetings shall alternate between Ontogeny and Biogen, or as otherwise mutually
agreed.

          (ii) The Joint Research Management Committee. The activities of the
Project Team shall be supervised by a joint research management committee (the
"JRMC"), consisting of three (3) representatives designated by Ontogeny and
three (3) representatives designated by Biogen. The representatives on the JRMC
shall select a chairperson from among themselves to serve for a period of twelve
(12) months, with the position of chairperson alternating annually between a
representative from Ontogeny and a representative from Biogen. The JRMC shall be
responsible for all strategic decisions related to the Research Program. In
addition to supervising


                                       10
<PAGE>

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

the activities of the Project Team and making strategic decisions, the JRMC
shall be responsible for reviewing the progress of the Research Program and, if
necessary, modifying the short-term goals of, and the resource allocations
within, the Research Program, provided, however, that no such modification shall
(i) alter the terms of this Agreement or (ii) materially increase the
responsibilities of, or the level of expenses to be incurred by, either Party
without the prior approval of such Party. Each Party shall cause its
representatives to attend the meetings of the JRMC. If a representative of a
Party is unable to attend a meeting, such Party may designate an alternate to
attend such meeting in place of the missing representative. In addition, each
Party may at its discretion invite nonvoting employees, consultants or
scientific advisors to attend the meetings of the JRMC as long as such parties
are bound by an obligation of confidentiality to the Party on whose behalf they
attend. The JRMC shall meet no less frequently than once each calendar quarter,
and shall meet at such other times as deemed appropriate by the JRMC. Formal
minutes of each meeting of the JRMC shall be kept and shall be provided, in a
timely fashion, to each representative on the JRMC. Each Party may change any
one or more of its representatives on the JRMC at any time upon notice to the
other Party. The location of the JRMC meetings shall alternate between Ontogeny
and Biogen, or as otherwise mutually agreed.

          (iii) Management Team Decisions. The unanimous agreement of the
Leaders of the Project Team shall be required to take any action within the
purview of the Project Team. If the Project Team is unable to agree on any issue
within its purview, the issue shall be resolved by the JRMC. Except as otherwise
set forth in Section 1.26 of this Agreement, the unanimous agreement of the
members of the JRMC shall be required to take any action. Any member of the JRMC
who is not present at any meeting, either in person or by a designated
alternate, may appoint another representative or alternate as his/her proxy to
act on his/her behalf on all matters coming to a vote. The JRMC may conduct
meetings in person or by telephone or video conference. If the JRMC is unable to
reach a unanimous agreement on any issue within its purview, such issue shall be
referred to the Chief Executive Officer of Ontogeny and the Chief Executive
Officer of Biogen for resolution. If the Chief Executive Officer of Ontogeny and
the Chief Executive Officer of Biogen are unable to reach agreement on any issue
regarding the Research Program, then such issue shall be submitted to
arbitration pursuant to the provisions set forth in Section 11.4 and the
arbitrators shall have the authority to (i) direct the Parties as to the manner
in which the Parties shall resolve the issue, or (ii) render a final decision
with respect to such issue. The arbitrators shall have no authority to amend
this Agreement or the Research Workplan.

          (c) Obligations of the Parties. Ontogeny shall provide, and Biogen
shall support (pursuant to Section 4.3(a)), the personnel required to supply
[**] FTEs per year for the term of the Research Program. In addition, Biogen
shall make a commitment, in the form of personnel and/or other resources to be
determined by Biogen, that is equivalent in direct financial value to the
personnel commitment made by Ontogeny, except that, for the purposes of this
Section 2.1(c), each FTE per year contributed by Biogen shall be regarded as
equivalent to a contribution of [**] of value per year toward Biogen's total
commitment. Subject to the direction of the JRMC, each Party shall have the
responsibility, during the Research Phase, to conduct those research activities
that are assigned to such Party in the Research Workplan.

          (d) Term. The Research Phase commenced on the Original Effective Date
and shall continue until the earliest to occur of (i) the fifth anniversary of
the Original Effective


                                       11
<PAGE>

Date, (ii) the fourth anniversary of the Original Effective Date in the event
that Biogen does not initiate at least one Development Program on or prior to
such date and the termination of this Agreement.

      2.2 Commercialization Phase.

          (a) Scope and Conduct of the Commercialization Program. The
Commercialization Phase shall commence if and only if Biogen elects to initiate
at least one Development Program pursuant to Section 3.6. The Commercialization
Program shall consist of the Development Program(s) undertaken by the Parties
during the Commercialization Phase. In the event that Biogen elects to initiate
the Commercialization Phase, the Parties shall cooperate in the conduct of the
Commercialization Program. During the course of the Commercialization Program,
each Party shall (i) communicate regularly and work collaboratively with the
other Party and (ii) use commercially reasonable efforts to fulfill its
obligations under the Commercialization Program as described in this Section
2.2.

          (b) Development Program(s). Each Development Program initiated by
Biogen, if any, shall be based on the study of one of the three Ontogeny
Hedgehog Proteins and shall have as its goal the development and
commercialization of a product or products comprising one or more Hedgehog-based
Molecular Entities that derive from such Ontogeny Hedgehog Protein. Each Party
shall have the responsibility, during the term of the Development Program, to
conduct those development, manufacturing and commercialization activities that
are assigned to such Party in a development and commercialization plan prepared
by Biogen and approved by Ontogeny (the "Development and Commercialization
Plan") which such approval shall not be unreasonably withheld. It is anticipated
that the Development and Commercialization Plan shall provide that (i) the
Development Program shall be managed by development and commercialization
committees established and staffed by Biogen, provided, however, that non-voting
representatives of Ontogeny shall be permitted to attend (1) all meetings of
such committees that are devoted solely to the review of the Development Program
and all meetings of such committees that are devoted solely to a review of other
activities directly related to the development, manufacturing and
commercialization of any product(s) comprising a Hedgehog-based Molecular
Entity(ies) based on the Ontogeny Hedgehog Protein that is the subject of such
Development Program, and (2) only at Biogen's invitation, other Biogen meetings
covering the development and commercialization activities related to such
Development Program, (ii) Biogen shall have the major responsibility for the
development and commercialization of any product(s) comprising a Hedgehog-based
Molecular Entity(ies) based on the Ontogeny Hedgehog Protein that is the subject
of the Development Program, provided, however, that Ontogeny shall participate
with Biogen in (1) the preclinical development of such product(s) (with all data
provided to, and considered Confidential Information of, Biogen), (2) at
Biogen's option where appropriate, the clinical development of such product(s)
in the United States (with all data provided to, and considered Confidential
Information of, Biogen), and (3) subject to Biogen's reasonable discretion after
mutual good faith discussion between the Parties, the marketing of (not
including sales), and the professional education activities with respect to,
such product(s) in the Territory, and (iii) Biogen shall have the responsibility
for all aspects of the manufacture (either by itself or by one of its Affiliates
or using a contract manufacturer or otherwise) of any product(s) comprising a
Hedgehog-based Molecular Entity based on the Ontogeny Hedgehog Protein that is
the subject of the Development Program, provided, however,


                                       12
<PAGE>

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

that in the event that Biogen elects to have such product(s) bulk manufactured
by more than one manufacturing source in the United States, and Ontogeny is or
will be, in Biogen's reasonable opinion, capable of manufacturing bulk
commercial product to meet Biogen's commercially reasonable schedule, Biogen
shall grant to Ontogeny the right of first refusal to manufacture such product
as a second manufacturing source in the United States, under the terms of a
manufacturing agreement to be negotiated in good faith by the Parties. In the
event that a Development Program is initiated by Biogen, Biogen hereby agrees to
provide Ontogeny, at Ontogeny's reasonable request, with copies of or, at
Biogen's option, detailed summaries of, those substantive documents relating to
the preclinical and clinical development, regulatory affairs, manufacture and/or
marketing of any product(s) comprising a Hedgehog-based Molecular Entity(ies)
based on the Ontogeny Hedgehog Protein that is the subject of such Development
Program, as well as copies of or, at Biogen's option, detailed summaries of, any
other substantive documents relating to such product(s) that are reasonably
requested by Ontogeny, provided, however, that Biogen may delete information
from the above documents that it determines, in its sole commercially reasonable
discretion, is sensitive commercial of financial information of Biogen. In the
event that a Development Program is initiated by Biogen, Biogen also agrees to
hold two (2) strategy meetings per year. The purpose of these meetings will be
for Ontogeny and Biogen to discuss the overall strategy and direction of the
Development Program(s), including any significant changes since the last
strategy meeting. The meetings shall be attended by at least three people from
each Party, two of whom will be vice president level or above, and each Party
shall provide representation from its business and from its scientific
departments. A Development Program, if initiated, shall commence upon the date
on which Biogen exercises its option with respect to such Development Program,
pursuant to Section 3.6, and shall terminate upon the earliest of (i) the First
Commercial Sale in the first Major Market Country of the first Licensed Product
comprising a Hedgehog-based Molecular Entity based on the Ontogeny Hedgehog
Protein that was the subject of such Development Program, (ii) the receipt by
Ontogeny of written notification from Biogen of Biogen's decision to terminate
such Development Program (a "Biogen Early Termination Notification"), (iii) a
Mandatory Termination (as that term is defined in Section 6.3) with respect to
such Development Program and (iv) the termination of this Agreement.

          (c) Protected Indications. In the event that Biogen has commenced a
Development Program, Biogen may, by providing written notice to Ontogeny on or
prior to the earliest to occur of (i) a Biogen Early Termination Notification
(as that term is defined in Section 2.2(b)), (ii) the occurrence of a Mandatory
Termination (as that term is defined in Section 6.3) and (iii) the termination
of the Research Phase, designate [**] disease indications as Protected
Indications. Notwithstanding the foregoing, if, at the end of the Research
Phase, Biogen has ongoing Development Programs with respect to all three
Ontogeny Hedgehog Proteins, Biogen shall be entitled to delay designation of the
Protected Indications until the occurrence of a Mandatory Termination or
delivery of a Biogen Early Termination Notification, if any, with respect to one
of the Development Programs. Along with designation of the Protected
Indications, Biogen shall designate which of the Ontogeny Hedgehog Proteins will
be Restricted Proteins with respect to the Protected Indications. Biogen shall
pay Ontogeny a fee of [**] Dollars ($[**]) (a "Restriction Fee") for each
Ontogeny Hedgehog Protein designated as a Restricted Protein (whether restricted
as to [**] or [**]), provided that any Ontogeny Hedgehog Protein that is the
subject of a Development Program shall automatically become a Restricted Protein
in the event of termination of the Development Program with respect to such
Ontogeny


                                       13
<PAGE>

Hedgehog Protein whether pursuant to a Biogen Early Termination Notification or
a Mandatory Termination without the payment of any additional Restriction Fee.
In the event that all Development Programs are terminated either through Biogen
Early Termination Notifications, Mandatory Terminations or the termination of
this Agreement, such Protected Indications shall no longer be characterized as
"Protected Indications."

          (d) Biogen Representation on Ontogeny Board of Directors. Upon the
initiation, if any, of the Commercialization Phase, Ontogeny shall grant to
Biogen the right to designate one individual to serve on the Ontogeny board of
directors (the "Ontogeny Board") subject to approval by Ontogeny, which approval
shall not be unreasonably withheld. In the event of any such designation
(including any designation to fill a vacancy created by the departure of a prior
Biogen designee), Ontogeny shall use its best efforts to cause the election of
such designee to the Ontogeny Board. If elected such Biogen designee (the
"Biogen Board Member") shall continue to serve on the Ontogeny Board until the
earliest of (i) the termination by Biogen of the Commercialization Phase, (ii)
the date on which Biogen has sold more than fifty percent (50%) of the shares of
capital stock purchased by it from Ontogeny (or shares of common stock issued
upon conversion thereof), (iii) the completion of the first Phase III clinical
trial for any Licensed Product, (iv) July 1, 2011 and (v) the termination of
this Agreement. In the event that Ontogeny shall become a public company while
Biogen has the right to designate a Biogen Board Member, Ontogeny shall continue
to nominate the Biogen Board Member to serve as a member of the Ontogeny Board,
but his/her annual election shall be subject to the approval of the shareholders
of Ontogeny.

          (e) Term. The Commercialization Phase shall commence on the
initiation, if any, of the first Development Program and shall continue until
the earliest of (i) completion of each of the Development Programs initiated by
Biogen, (it) the early termination (pursuant to Biogen Early Termination
Notification or Mandatory Termination) of each of the Development Programs
initiated by Biogen or (iii) the termination of this Agreement. The term of the
Commercialization Phase, if any, shall overlap that of the Research Phase until
the termination of the Research Phase.

      2.3 Accounting and Internal Controls. Biogen and Ontogeny shall each
conduct the Collaboration in accordance with high standards of business ethics
and maintain accounts in accordance with generally accepted accounting
principles consistently applied and, specifically, shall (a) maintain full and
accurate books, records and accounts (the "Collaboration Records") which shall,
in reasonable detail, accurately and fairly reflect all transactions relating to
the Collaboration and (b) devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with general or specific authorizations, and (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and as
otherwise required to comply with all tax statutes, and to maintain
accountability for assets. During the term of, and for a twelve (12) month
period following the termination of, the Collaboration, each Party shall have
the right quarterly at such Party's expense to have an independent, certified
public accountant, reasonably acceptable to the other Party, review such other
Party's Collaboration Records in the location(s) where such Collaboration
Records are maintained by such other Party upon reasonable notice and during
regular business hours for the


                                       14
<PAGE>

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

sole purpose of verifying the expenditures by such other Party with respect to
the Collaboration. Results of such review shall be made available to both
Parties.

      2.4 Restrictions.

          (a) Biogen Restrictions. Biogen hereby agrees that, except as
otherwise provided in this Agreement, Biogen shall not, either alone or in
collaboration with others or through a Sublicensee, research, develop,
manufacture or commercialize any product that embodies, or is developed through
the use of, Technology related to the Vertebrate Hedgehog Family, for a period
commencing on the Original Effective Date and ending [**] following the
termination of the Research Phase.

          (b) Ontogeny Restrictions Outside the Field. Ontogeny hereby agrees
that Ontogeny shall not, either alone or in collaboration with others or through
a Sublicensee, develop, manufacture or commercialize any therapeutic or
prophylactic product outside the Field that comprises the same Hedgehog-based
Molecular Entity in the same formulation for the same method of delivery as a
Hedgehog-based Molecular Entity being developed by Biogen under a Development
Program.

          (c) Ontogeny Restrictions Within the Field. Ontogeny hereby agrees
that Ontogeny shall not during the term of this Agreement, either alone or in
collaboration with others or through a Sublicensee (and shall cause its
Sublicensees to agree in writing not to), develop (including but not limited to
the conduct of clinical trials) or market (including but not limited to any
promotion or labeling) Ontogeny Products in the Field based on any Restricted
Protein in any Protected Indication.

                           Article 3. Grant of Rights

      3.1 License Grants for Research Purposes.

          (a) License Grant by Ontogeny. Subject to the payment of the research
license fee provided in Section 4.1 and the fulfillment by Biogen of its
obligations under this Agreement, Ontogeny hereby grants to Biogen, and Biogen
hereby accepts, a fully paid-up, non-royalty bearing co-exclusive license (with
Ontogeny) (or sublicense, as the case may be, with respect to Ontogeny
Intellectual Property Rights obtained under license from a third party,
including a sublicense to rights granted under the Columbia License Agreement
and the Harvard License Agreement), without the right to grant sublicenses,
under the Ontogeny Intellectual Property Rights and Ontogeny's rights in and to
the Collaboration Technology, to practice the Ontogeny Technology and the
Collaboration Technology for the purpose of conducting research within the
Territory under the Research Program in order to identify drug candidates that
comprise Hedgehog-based Molecular Entities for use in the Field (the "Biogen
Research License"). The Biogen Research License shall terminate upon the
termination of the Research Phase. Notwithstanding the foregoing, Ontogeny shall
have the right to request, from time to time, that Biogen terminate the Biogen
Research License with respect to specific Hedgehog based Molecular Entities that
are of no further interest to Biogen, and Biogen agrees to consider such request
in good faith, but Ontogeny acknowledges that Biogen shall be under no
obligation to agree to any such request (a "Requested Termination"). In the
event that Biogen agrees to


                                       15
<PAGE>


such request in writing, a Hedgehog-based Molecular Entity as to which the
Biogen Research License has been terminated shall not be available to Biogen for
development under a Development Program.

          (b) License Grant by Biogen. Subject to the fulfillment by Ontogeny of
its obligations under this Agreement, Biogen hereby grants to Ontogeny, and
Ontogeny hereby accepts, a fully paid-up, non-royalty bearing co-exclusive
license (with Biogen), without the right to (grant sublicenses, under the Biogen
Intellectual Property Rights and Biogen's rights in and to the Collaboration
Technology (excluding Biogen Gene Therapy Technology), to practice the Biogen
Technology and the Collaboration Technology for the purpose of conducting
research within the Territory under the Research Program in order to identify
drug candidates that comprise Hedgehog-based Molecular Entities for use in the
Field (the "Ontogeny Research License"). The license granted to Ontogeny under
the preceding sentence shall be limited to the identified purpose, and, subject
to Section 2.4, shall not be deemed to limit Biogen's rights under the Biogen
Intellectual Property Rights or Biogen's rights in and to the Collaboration
Technology. The Ontogeny Research License shall terminate upon the termination
of the Research Phase.

      3.2 License Grants with Respect to Products that Comprise Hedgehog-based
          Molecular Entities.

          (a) License Grant by Ontogeny. In the event that Biogen exercises the
option set forth in Section 3.6, Ontogeny shall grant to Biogen, and Biogen
shall accept, a royalty bearing (at the rates set forth in Section 4.7(a))
exclusive license (or sublicense, as the case may be, with respect to Ontogeny
Intellectual Property Rights obtained under a license from a third party,
including a sublicense to rights granted under the Columbia License Agreement
and the Harvard License Agreement), under the Ontogeny Intellectual Property
Rights and Ontogeny's rights in and to the Collaboration Technology, to develop,
make, have made, import, use, have used, offer to sell, sell, and have sold
Licensed Products in the Field within the Territory. Such license shall include
the right to grant sublicenses pursuant to Section 3.5. Ontogeny acknowledges
that the license granted hereunder shall be effective automatically on the terms
contained herein upon exercise of such option by Biogen, and no further
agreement or action by the Parties shall be necessary to effect such license.

          (b) License Grant by Biogen for Ontogeny Products. Upon the earliest
to occur of (i) a Biogen Early Termination Notification, (ii) the occurrence of
a Mandatory Termination, and (iii) the termination of the Research Phase, Biogen
shall grant to Ontogeny, and Ontogeny shall accept, an exclusive license, under
the Biogen Intellectual Property Rights and Biogen's rights in and to the
Collaboration Technology (excluding Biogen's rights in Biogen Gene Therapy
Technology), to develop, make, have made, import, use, have used, offer to sell,
sell, and have sold Ontogeny Products in and outside the Field within the
Territory, subject to the limitations set forth in Sections 2.4(c); provided,
however, that such license to develop, make, have made, import, use, have used,
offer to sell, sell, and have sold Ontogeny Products outside the Field within
the Territory with respect to Hedgehog Specific Gene


                                       16
<PAGE>

Therapy Collaboration Technology shall be granted only upon the termination of
the Research Phase and that such license to develop, make, have made, import,
use, have used, offer to sell, sell, and have sold Ontogeny Products in the
Field within the Territory with respect to Hedgehog Specific Gene Therapy
Collaboration Technology shall be granted only upon the termination of' this
Agreement. Such license shall include the right to grant sublicenses pursuant to
Section 3.5; provided that the right to grant sublicenses under the license
granted to Ontogeny under this Section 3.2(b) to the Biogen Intellectual
Property Rights and Biogen's rights in and to the Collaboration Technology shall
not extend to the development manufacture, import, marketing, use or sale of
Ontogeny Products based on an Ontogeny Hedgehog Protein in any disease
indications that Biogen has a Good Faith Intent to Develop. Biogen shall notify
Ontogeny if at any time Biogen no longer has a Good Faith Intent to Develop such
disease indications. The license granted to Ontogeny by Biogen under this
Section 3.2 (b) shall be royalty bearing solely with respect to an Ontogeny
Product that is covered by a Valid Claim of any Biogen Patent Rights or embodies
any of the Biogen Technology (a "Royalty Bearing Ontogeny Product"), and
otherwise such license shall be non-royalty bearing with respect to an Ontogeny
Product (a "Non-Royalty Bearing Ontogeny Product"). Royalties shall be
calculated in accordance with the rates set forth in Section 4.7(b) below. In
the event that Biogen owes a royalty to a third party on the sale of a
Non-Royalty Bearing Ontogeny Product, Ontogeny shall reimburse Biogen for the
royalty paid to the third party on account of such sales, up to the amount that
would be payable by Ontogeny to Biogen if such Ontogeny Products were Royalty
Bearing Ontogeny Products. Subject to Section 2.4 and Section 3.3(b), Biogen
retains all rights under the Biogen Intellectual Property Rights and all of
Biogen's rights in and to the Collaboration Technology, with respect to products
other than Ontogeny Products.

          (c) License Grant by Biogen - Outside the Field. Commencing on the
Effective Date, Biogen shall grant to Ontogeny, and Ontogeny shall accept, a
non-royalty bearing, exclusive license in the Territory, with the right to grant
sublicenses consistent with Section 3.5, under Biogen's rights in and to the
Collaboration Technology, (excluding Biogen's rights in Biogen Gene Therapy
Technology) to develop, make, have made, import, use, have used, offer to sell,
sell and have sold outside the Field products that comprise a Hedgehog-based
Molecular Entity ("Outside the Field Products"); provided, however, that such
license to develop, make, have made, import, use, have used, offer to sell, sell
and have sold Outside the Field Products with respect to Hedgehog Specific Gene
Therapy Collaboration Technology shall be granted only upon the termination of
the Research Phase. In the event that Biogen owes a royalty to a third party on
the sale of Outside the Field Products, Ontogeny shall reimburse Biogen for the
royalty paid to the third party on account of such sales, up to the amount that
would be payable by Ontogeny to Biogen if such Outside the Field Products were
Royalty Bearing Ontogeny Products.

      3.3 Other License Grants.

          (a) License Grant by Ontogeny for Non-Hedgehog Products. Upon the
Effective Date, Ontogeny shall grant to Biogen, and Biogen shall accept, a
non-royalty bearing non-exclusive license, under Ontogeny's rights in and to the
Collaboration Technology, to (i) practice the Collaboration Technology for the
purpose of discovering and developing products that do not embody, or are not
developed through the use of, Technology related to the Vertebrate Hedgehog
Family (a "Biogen Non-Hedgehog Product"), and (ii) make, have made, import, use,
have used, offer to sell, sell and have sold Biogen Non-Hedgehog Products in and
outside the Field within the Territory. Such license shall include the right to
grant sublicenses pursuant to Section 3.5.


                                       17
<PAGE>

          (b) License Grant by Biogen for Non-Hedgehog Products. Upon the
Effective Date, Biogen shall grant to Ontogeny, and Ontogeny shall accept, a
non-royalty bearing, non-exclusive license, under Biogen's rights in and to the
Collaboration Technology, excluding Biogen Gene Therapy Technology, Fundamental
Hedgehog Gene Therapy Collaboration Technology and Hedgehog Specific Gene
Therapy Collaboration Technology, to (i) practice the Collaboration Technology
for the purpose of discovering and developing products that do not comprise a
Hedgehog-based Molecular Entity (an "Ontogeny Non-Hedgehog Product"), and (ii)
make, have made, import, use, have used, offer to sell, sell and have sold in
the Territory Ontogeny Non-Hedgehog Products in and outside the Field. Such
license shall include the right to grant sublicenses pursuant to Section 3.5.

      3.4 Restrictions on Licenses Granted by Ontogeny. The licenses granted by
Ontogeny to Biogen under the Ontogeny Intellectual Property Rights, pursuant to
Section 3.1 (a) and Section 3.2(a), are subject to the relevant terms and
conditions of the Columbia License Agreement and the Harvard License Agreement
(the "In-License Agreements"). To the extent that the licenses granted to
Ontogeny under the In-License Agreements become non-exclusive or terminate, the
licenses granted to Biogen hereunder with respect to the technology subject to
the In-License Agreements shall similarly become non-exclusive or terminate, or,
pursuant to the terms of the Harvard License Agreement, shall be assigned to the
President and Fellows of Harvard College ("Harvard") at Harvard's option.

      3.5 Sublicensing Obligations. Biogen shall have the right to grant
sublicenses pursuant to Section 3.2(a) and Section 3.3(a), and Ontogeny shall
have the right to grant sublicenses pursuant to Section 3.2(b), 3.2 (c) and
3.3(b), provided , however, that any sublicense granted by Biogen or Ontogeny,
as the case may be, shall be subject to, and consistent with, the terms and
conditions of this Agreement, and shall provide that the Sublicensee shall not
further sublicense except on terms consistent with this Section 3.5. Biogen or
Ontogeny, as the case may be, shall provide Ontogeny or Biogen, as the case may
be, with a copy of any sublicense granted pursuant to this Agreement within
thirty (30) days after the execution thereof. Such copy may be redacted to
exclude confidential scientific information and other information required by a
Sublicensee to be kept confidential, provided that all relevant financial terms
and information shall be retained therein. In the event of a material default by
any Sublicensee under a sublicense agreement, the Party granting the sublicense
shall inform the other Party and take such action, after consultation with such
other Party, which in the reasonable business judgment of the Party granting
such sublicense shall address such default.

      3.6 Commercialization Option. Subject to the fulfillment by Biogen of its
obligations under this Agreement, Ontogeny hereby grants to Biogen an option to
initiate one or more Development Programs (the "Option"). Such Option is
exercisable by Biogen at any time prior to the termination of the Research Phase
upon prior written notice to Ontogeny; provided, however, that in the event that
Biogen terminates this Agreement on or prior to July 1, 2000 or does not
initiate at least one Development Program on or prior to July 1, 2000, (i) the
Option shall terminate and (ii) Biogen shall pay the Break Up Fee set forth in
Section 4.5 below. Such notice shall indicate the Ontogeny Hedgehog Protein that
is the subject of the Development Program that is to be initiated. In the event
that Biogen initiates more than one Development Program in the exercise of the
Option, Biogen shall provide Ontogeny with written notification of each Ontogeny
Hedgehog Protein that is to be the subject of a Development Program, and


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                Exchange Commission. Asterisks denote omissions.

shall, on or before the end of the Research Phase, designate a Lead Protein.
Biogen may change its Lead Protein at any time by providing written notification
to Ontogeny, provided that no such change shall occur after the first extension,
if any, requested under Section 6.2(l), and no such change shall affect the
timeframes set forth in Section 6.2 with respect to diligence obligations.

      3.7 Right of First Offer. In the event that Biogen exercises the Option
pursuant to Section 3.6, Ontogeny shall grant to Biogen, a right of first offer
(the "Right of First Offer") to collaborate with Ontogeny on one (1) project
that Ontogeny desires to exploit in collaboration with a third party (a "New
Collaboration Project") in which the Parties shall practice Ontogeny Technology,
Collaboration Technology and/or any other Technology, whether or not related to
the Vertebrate Hedgehog Family, which (a) Ontogeny owns or otherwise has the
right to grant licenses under, (b) is not being practiced as part of a
Development Program, (c) is not being practiced as part of a collaboration
between Ontogeny and a third party and (d) is not a technology that Biogen
previously had an opportunity to pursue under this Agreement, (the "Uncommitted
Ontogeny Technology"), in order to discover and develop therapeutic or
prophylactic products for use in or outside the Field, other than products (i)
based on the administration of cells outside of Gene Therapy or (ii) that are to
be developed for any of the disease indications listed in Schedule B. Such right
shall (x) be exercisable only during a period of time in which there is any
borrowing outstanding under the Line of Credit, (y) terminate upon the earliest
of (1) the execution of a definitive agreement with respect to a New
Collaboration Project, if any, (2) the termination by Biogen of this Agreement
or the Commercialization Phase pursuant to Section 2.2(e)(ii), if any, and (3)
the end of the twenty-fourth (24th) month following the initiation of the
Commercialization Phase, and (z) operate as follows:

      (1)   Ontogeny shall promptly send to Biogen a reasonably detailed
            notification of each research and development project contemplated
            by Ontogeny involving the practice of any Uncommitted Ontogeny
            Technology which Ontogeny desires to exploit in collaboration with a
            third party (each, a "Proposed Project").

      (2)   (Biogen shall respond to Ontogeny within [**] of receipt of such
            notification indicating its interest in collaborating with Ontogeny
            with respect to the Proposed Project and in obtaining rights to any
            intellectual property resulting therefrom.

      (3)   For a period of up to [**] after Ontogeny receives notice of
            Biogen's intention to collaborate with Ontogeny with respect to the
            Proposed Project, the Parties shall negotiate in good faith a
            reasonable agreement based upon the anticipated contribution of the
            Parties to such project and to the development and commercialization
            of any products resulting therefrom.

      (4)   In the event that (i) Biogen fails to respond to Ontogeny [**] of
            notification by Ontogeny of the Proposed Project, or (ii) Biogen
            indicates that it is not interested in collaborating with Ontogeny
            which respect to the Proposed Project, or (iii) the Parties fail to
            reach a definitive agreement with respect to the Proposed Project
            within [**] following the receipt by Ontogeny of notice of Biogen's
            intention to collaborate with Ontogeny on such project (a "Loss of
            Right Event"), Ontogeny shall be free to pursue the Proposed Project
            that was the subject of the notification


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                Exchange Commission. Asterisks denote omissions.

            and commercialize any products that result therefrom in
            collaboration with one or more third parties.

      (5)   Ontogeny shall not discuss a Proposed Project with any third party
            unless and until the occurrence of a Loss of Right Event with
            respect to such Proposed Project, provided, however, that if
            discussion of a Proposed Project is initiated by a third party, then
            Ontogeny may inform such third party of Biogen's Right of First
            Offer but must refrain from further discussions with such third
            party with respect to such Proposed Project unless and until the
            occurrence of a Loss of Right Event.

                         Article 4. Payment Obligations

      4.1 Research License Fee and Stock Purchase. In consideration of the
rights granted to Biogen under this Agreement, Biogen (a) paid Ontogeny a
non-refundable, non-creditable research license fee of [**] on the Original
Effective Date, and (b) purchased from Ontogeny shares of Series C Convertible
Preferred Stock of Ontogeny pursuant to a Series C Convertible Preferred Stock
Purchase Agreement dated as of the Original Effective Date (the "Preferred Stock
Purchase Agreement").

      4.2 Development Program Fee and Stock Purchase. In the event that Biogen
exercises the Option pursuant to Section 3.6 and initiates one or more
Development Programs, Biogen shall, for each Development Program initiated by
Biogen, on each date on which the Option with respect to such Development
Program is exercised, (a) pay to Ontogeny a nonrefundable, non-creditable
development program fee of [**], and (b) purchase from Ontogeny, for an
aggregate purchase price of [**], shares of preferred stock of Ontogeny,
pursuant to a stock purchase agreement substantially in the form of the
Preferred Stock Purchase Agreement, at a price per share equal to the fair
market value thereof as determined in good faith by the Parties or, absent such
determination within thirty (30) days after the Option with respect to such
Development Program is exercised, by an investment banking firm mutually agreed
upon by the Parties, provided, however, that if, during the six (6) months prior
to such time, Ontogeny has sold shares of preferred stock with substantially
similar rights in a transaction resulting in at least [**] Dollars ($[**]) of
proceeds, the price to be paid by Biogen shall not be lower than the price in
such transaction. The preferred stock shall have terms (other than the price)
equivalent to the terms of the Series C Convertible Preferred Stock of the
Company ( the "Corporate Partner Preferred Stock").

      4.3 Research Funding.

          (a) Research Phase. In support of the research to be conducted by
Ontogeny in the course of the Research Program, Biogen shall pay Ontogeny, at a
rate of [**] per FTE, an amount equal to (i) [**] for each Contract Year during
the Research Phase.

          (b) Payment Timing. The research funding set forth in this Section
4.3(a) shall be paid to Ontogeny by Biogen on a quarterly basis, with the
payment for the first three (3) month period having been made within ten (10)
days following the Original Effective Date and


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                Exchange Commission. Asterisks denote omissions.

with the payment for each succeeding three (3) month period made within ten (10)
days of the first day of each such three (3) month period.

      4.4 Follow-on Research Support Fee. Biogen shall (i) pay Ontogeny
follow-on research support fees of [**] per year for Contract Years three, four
and five of the Research Phase (the "Follow-on Research Support Fees"), with the
first Follow-on Research Support Fee payable on the Effective Date and the
subsequent Follow-on Research Support Fees payable upon commencement of the
fourth and fifth Contract Years, and (ii) on the Effective Date, enter into a
Note Purchase Agreement, substantially in the form attached hereto as Exhibit A.

      4.5 Breakup Fee. In the event that Biogen does not exercise the Option to
initiate the Commercialization Phase pursuant to Section 3.6 on or prior to July
1, 2000 or Biogen terminates this Agreement and the Research Phase prior to July
1, 2000, Biogen shall pay Ontogeny a fee of [**] upon termination of the
Research Phase (the "Break Up Fee").

      4.6 Milestone Payments. Within thirty (30) days following the occurrence
of the milestones specified below, Biogen shall make the following
nonrefundable, non-creditable payments to Ontogeny:

      (1)   With respect to each Ontogeny Hedgehog Protein that is the subject
            matter of a Development Program, a sum of [**] upon the filing of
            the [**] for the [**] comprising a [**] based on such [**] for the
            [**].

      (2)   With respect to each Ontogeny Hedgehog Protein that is the subject
            matter of a Development Program, a sum of [**] upon the initiation
            of the first Phase I clinical trial in any country in the Territory
            for the first Licensed Product comprising a Hedgehog based Molecular
            Entity based on such Ontogeny Hedgehog Protein that uses a delivery
            mode and formulation that is fully differentiated from the first
            Licensed Product comprising a Hedgehog-based Molecular Entity based
            on such Ontogeny Hedgehog Protein.

      (3)   With respect to each Ontogeny Hedgehog Protein that is the subject
            matter of a Development Program, a sum of [**] upon the completion
            of the first Phase II clinical trial in any country in the Territory
            for the first Licensed Product comprising a Hedgehog-based Molecular
            Entity based on such Ontogeny Hedgehog Protein for the first Disease
            Indication within a Therapeutic Area.

      (4)   With respect to each Ontogeny Hedgehog Protein that is the subject
            matter of a Development Program, a sum of [**] upon the completion
            of the first Phase III clinical trial in which the primary endpoint
            is reached at an acceptable level of toxicity in any country in the
            Territory for the first Licensed Product comprising a Hedgehog-based
            Molecular Entity based on such Ontogeny Hedgehog, Protein for each
            new Disease Indication that represents a unique and different
            disease and not a label expansion or other extension into a
            different segment of the same disease.


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                Exchange Commission. Asterisks denote omissions.

      (5)   With respect to each Ontogeny Hedgehog Protein that is the subject
            matter of a Development Program, a sum of [**] upon the approval of
            the first NDA for the first Licensed Product comprising a
            Hedgehog-based Molecular Entity based on such Ontogeny Hedgehog
            Protein for each new Disease Indication that represents a unique and
            different disease and not a label expansion or other extension into
            a different segment of the same disease.

      4.7 Royalties.

          (a) Royalty Payments to Ontogeny on Licensed Products. Biogen shall
pay Ontogeny earned royalties on the Net Sales of each Licensed Product by
Biogen, its Affiliates and/or its Sublicensees at the following rates:

               Net Sales of Licensed              Royalty Rate
             Product in the Territory           on Net Sales of
                in a Calendar Year              Licensed Product
                ------------------              ----------------

            less than $[**]                           [**]

            [**] Million - $[**]
            Million                                   [**]

            greater than $[**] Million                [**]

      The applicable royalty rate with respect to a Licensed Product for a given
calendar year shall be determined by the [**] of such Licensed Product [**] and
shall be [**] to the [**] in [**]. Royalties shall be paid to Ontogeny on a
country-by-country basis from the date of the First Commercial Sale of a
Licensed Product in a country until (i) [**] after such First Commercial Sale or
(ii) for as long as such Licensed Product, or its manufacture, use or sale, is
covered by a Valid Claim of any Ontogeny Patent Rights or any Collaboration
Patent Rights, whichever of (i) or (ii) is longer. In no event shall more than
one royalty be due Ontogeny for the sale of any Licensed Product.

      Notwithstanding the foregoing, (y) the royalty rates set forth in the
above paragraph shall be reduced, on a country-by-country basis, by [**] on the
Net Sales of any Licensed Product which, or the manufacture, use or sale of
which, is not covered by a Valid Claim of any Ontogeny Patent Rights or any
Collaboration Patent Rights solely or jointly owned by Ontogeny in the country
where such Licensed Product is manufactured or sold, and (z) in the event that
Biogen, its Affiliates or its Sublicensees, in order to manufacture, use or sell
a Licensed Product in a country in the Territory, reasonably determines that it
must make a royalty payment to one or more third parties (a "Biogen Third Party
Payment") to obtain a license or similar right to manufacture, use or sell such
Licensed Product, Biogen may reduce the annual royalty payment due Ontogeny, on
a country-by-country basis, by the amount of such Biogen Third Party Payment,
provided, however, that such reductions set forth in (y) and (z) shall not
reduce the annual royalty payment otherwise due Ontogeny by more than [**].


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          (b) Royalty Payments to Biogen on Ontogeny Products.

          (i) Sales by Ontogeny and/or Ontogeny Affiliates. Ontogeny shall pay
Biogen earned royalties on the Net Sales of each Royalty Bearing Ontogeny
Product by Ontogeny and/or its Affiliates at the following rates:

               Net Sales of Royalty
                      Bearing
              Ontogeny Product in the             Royalty Rate
                     Territory          on Net Sales of Royalty Bearing
                in a Calendar Year              Ontogeny Product
                ------------------              ----------------

            less than $ [**] Million                  [**]

            [**] Million - $[**]
            Million                                   [**]

            greater than $[**] Million                [**]

      The applicable royalty rate with respect to a Royalty Bearing Ontogeny
Product for a given calendar year shall be determined by the total Net Sales of
such Royalty Bearing Ontogeny Product in such year and shall be applied
retroactively to the first dollar of such Net Sales in such year. Royalties
shall be paid to Biogen on a country-by-country basis from the date of the First
Commercial Sale of a Royalty Bearing Ontogeny Product in a country until (i)
[**] after such First Commercial Sale or (ii) for as long as such Royalty
Bearing Ontogeny Product, or its manufacture, use or sale, is covered by a Valid
Claim of any Biogen Patent Rights (and/or Collaboration Patent Rights solely or
jointly owned by Biogen in the case of Non-Royalty Bearing Ontogeny Products or
Outside the Field Products which are treated as Royalty Bearing Ontogeny
Products under Section 3.2(b) or 3.2(c)) whichever of (i) or (ii) is longer. In
no event shall more than one royalty be due Biogen for the sale of any Royalty
Bearing Ontogeny Product.

      Notwithstanding the foregoing, (y) the royalty rates set forth in the
above paragraph shall be reduced, on a country-by-country basis, by [**] on the
Net Sales of any Royalty Bearing Ontogeny Product which, or the manufacture, use
or sale of which, is not covered by a Valid Claim of any Biogen Patent Rights
(and/or Collaboration Patent Rights solely or jointly owned by Biogen in the
case of Non-Royalty Bearing Ontogeny Products or Outside the Field Products
which are treated as Royalty Bearing Ontogeny Products under Section 3.2(b) or
3.2(c)) in the country where such Royalty Bearing Ontogeny Product is
manufactured or sold, and (z) in the event that Ontogeny or its Affiliates, in
order to manufacture, use or sell an Royalty Bearing Ontogeny Product in a
country in the Territory, reasonably determines that it must make a royalty
payment to one or more third parties, other than under the Columbia License
Agreement and the Harvard License Agreement (an "Ontogeny Third Party Payment")
to obtain a license or similar rights to manufacture, use or sell such Royalty
Bearing Ontogeny Product, Ontogeny may reduce the annual royalty payment due
Biogen, on a country-by-country basis, by the amount of such Ontogeny Third
Party Payment, provided, however, that such reductions set forth in (y) and (z)
shall not reduce the annual royalty payment otherwise due Biogen by more than
[**].


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                Exchange Commission. Asterisks denote omissions.

          (ii) Sales by Ontogeny Sublicensees. In the event that Ontogeny grants
a sublicense to offer to sell and sell Royalty Bearing Ontogeny Product pursuant
to Section 3.5. Ontogeny shall pay Biogen [**] of any royalties and other income
that Ontogeny receives as a result of an Ontogeny Sublicensee's sale of any
Royalty Bearing Ontogeny Product ("Ontogeny Sublicense Income").

          (c) Royalty Reports and Payments. During the term of this Agreement
and for so long thereafter as Biogen or Ontogeny, as the case may be, is
required to report royalties payable under this Section 4.7, Biogen or Ontogeny
as the case may be, shall deliver to Ontogeny or Biogen, as the case may be,
within thirty (30) days after March 31, June 30, September 30 and December 31 of
each year a report indicating (i) Gross Sales for each Licensed Product or
Royalty Bearing Ontogeny Product, as the case may be, on a country-by-country
basis, (ii) Net Sales for each Licensed Product or Royalty Bearing Ontogeny
Product, as the case may be, on a country-by-country basis, including an
accounting of the deductions from Net Sales permitted by the definition thereof,
(iii) in the case of a report from Ontogeny, the Ontogeny, the Ontogeny
Sublicense Income and (iv) total royalties owed, provided, however, that no such
report shall be required prior to the First Commercial Sale of such Licensed
Product or Royalty Bearing Ontogeny Product, as the case may be. Simultaneously
with the delivery of each such report, Biogen or Ontogeny, as the case may be,
shall pay Ontogeny or Biogen, as the case may be, the royalty payment due under
this Agreement for the period covered by such report. If no royalties are due,
it shall be so reported.

      4.8 Payment Currency and Interest on Payments Past Due. All amounts due
under this Agreement shall be paid to the designated Party in United States
currency by wire transfer to an account in a United States bank specified by
such Party or in such other form and/or manner as such Party may reasonably
request. The payments due on sales in currencies other than United States
dollars shall be calculated using the appropriate exchange rate of such currency
quoted in the Wall Street Journal on the close of business on the last business
day of the calendar quarter for which such payment is made. Any amounts due
under this Agreement that are not paid when due shall bear interest at the
lesser of (i) an annualized rate of one and one-half percent (1.5%) over the
prime rate then in effect at BayBank and (ii) the highest rate permitted by
applicable law.

      4.9 Tax Withholding. Biogen and Ontogeny shall use all reasonable and
legal efforts to reduce tax withholding on payments made to either Party
hereunder. Notwithstanding such efforts, if the Parties conclude that tax
withholdings under the laws of any country in the Territory are required with
respect to payments to either party under this Article 4, the Party required to
withhold taxes (the "Withholding Party") shall withhold the required amount and
pay it to the appropriate governmental authority. In such case, the Withholding
Party shall promptly provide the other Party with original receipts or other
evidence sufficient to allow such other Party to obtain the benefits of such tax
withholdings.

      4.10 Records; Audits. For a period not less than three (3) years after the
relevant period, each Party shall keep full, true and accurate books of account
sufficient to determine the amounts payable pursuant to this Article 4. Each
Party shall have the right, not more than once during any calendar year, to have
the books and records of the other Party audited by a qualified independent
accounting firm of its choosing, under appropriate confidentiality provisions,
to


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                Exchange Commission. Asterisks denote omissions.

ascertain the accuracy of the reports and payments hereunder and compliance
by the other Party and its Affiliates and Sublicensees with their obligations
under this Agreement. Such audit shall be conducted upon at least thirty (30)
days' advance notice during normal business hours and in a manner that does not
interfere unreasonably with the business of the audited entity. If the audited
Party has underpaid or overbilled an amount due under this Agreement, the
audited Party shall promptly pay or refund the appropriate amount to the other
Party, and, if the amount is more than five percent (5%), the audited Party
shall also reimburse the other Party for the cost of such audit.

                           Article 5. Line of Credit

      5.1 Availability of Line of Credit. If Biogen exercises its Option
pursuant to Section 3.6 to initiate one or more Development Programs, it shall
make available to Ontogeny a line of credit of [**] for each Development Program
initiated by Biogen (each such [**] line of credit being referred to herein
individually as "a Line of Credit" and collectively as the "the Line of
Credit"). Each Line of Credit shall be made available to Ontogeny until the
earlier to occur of (i) the third anniversary of the date on which such Line of
Credit first became available under this Section or (ii) the date of notice of
termination of the Development Program to which such Line of Credit relates;
provided, that Biogen may cease making borrowings available under the Line of
Credit if Ontogeny is in default under the Note (as that term is defined below)
evidencing borrowings under such Line of Credit. If and to the extent Ontogeny
elects from time to time to borrow funds from Biogen under the Line of Credit,
it shall provide at least three days' notice of each borrowing, and Biogen
shall, within such three-day period, make the requested funds available to
Ontogeny by wire transfer to an account designated by Ontogeny. All borrowings
must be in increments of at least Fifty Thousand Dollars ($50,000) and shall be
evidenced by a promissory note substantially in the form attached hereto as
Schedule E (the "Note"). Interest on each borrowing under the Line of Credit
will accrue at a rate equal to the one-month LIBOR Rate in effect at the close
of business on the day prior to the date of such borrowing, as quoted in The
Wall Street Journal plus one hundred (100) basis points, and shall be paid on
the twelve (12) month anniversary date of such borrowing.

      5.2 Repayment. Ontogeny must repay all principal and accrued interest
under each Line of Credit no later than the earliest of (i) the third (3rd)
anniversary of the date on which such Line of Credit first became available
pursuant to Section 5.1, (ii) the second (2nd) anniversary of the termination of
the Development Program to which such Line of Credit relates, pursuant to
Section 2.2(b) and (iii) the second (2nd) anniversary of the termination of this
Agreement (the "Repayment Date"). Ontogeny may elect to repay the borrowings
under each Line of Credit in any one of the following three ways or in any
combination of the ways set forth in clauses (i) and (ii) below:

          (i) Cash. Ontogeny may elect to repay in cash the principal amount of,
and accrued interest on, the borrowings, then outstanding.

          (ii) Equity. Ontogeny may elect to issue to Biogen a number of shares
of its capital stock having a fair market value equal to the principal amount
of, and accrued interest on, the borrowings then outstanding. If Ontogeny is, at
the time of repayment, a public company whose Common Stock is registered under
Section 12 of the Securities Exchange Act of 1934,


                                       25
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such capital stock shall be Common Stock and fair market value thereof shall be
equal to the average closing price of the Common Stock on the Nasdaq National
Market (or other principal securities exchange on which the Common Stock is then
traded) during the ten (10) trading days ending on the day prior to the
Repayment Date. If Ontogeny is not then such a public company, such capital
stock shall be Corporate Partner Preferred Stock conveyed pursuant to a stock
purchase agreement substantially in the form of the Preferred Stock Purchase
Agreement, and the fair market value of such preferred stock shall be determined
by agreement of the Parties or, if no such agreement is reached within thirty
(30) days after the Repayment Date, by a mutually agreed upon investment banking
firm, provided, however, that if Ontogeny has sold shares of its preferred stock
with substantially similar rights within six (6) months prior to the Repayment
Date in a transaction resulting, in at least Five Hundred Thousand Dollars
($500,000) of proceeds, the price per share attributed to the shares issued as
repayment for borrowings under the Line of Credit shall not be lower than the
price in such transaction.

          (iii) Technology. Ontogeny may elect to license to Biogen specified
Technology owned by Ontogeny having a value equal to the principal amount of,
and accrued interest on, the borrowings being repaid. The value of such license
shall be determined by agreement of the Parties and the unpaid principal amount
of, and accrued interest on, borrowings under the Line of Credit shall be
credited against all or part of Biogen's payment obligation for such license. If
no agreement as to the value of such license specified by Ontogeny is reached
within thirty (30) days after the Repayment Date, and if Ontogeny does not, in
such event, elect to repay the outstanding borrowings then due under the Line of
Credit in cash or by issuance of shares under clauses (i) or (ii) above, Biogen
shall have the right solely to require that such borrowings be repaid in the
manner set forth in clause (ii) above.

                    Article 6. Commercialization Obligations

      6.1 General. In that event that Biogen exercises the Option pursuant to
Section 3.6 and initiates a Development Program, Biogen agrees to use
commercially reasonable efforts to conduct the required clinical development
activities and seek regulatory approval in all the Major Market Countries of at
least one (1) Licensed Product that comprises a Hedgehog-based Molecular Entity
based on the Ontogeny Hedgehog Protein that is the subject matter of the
Development Program. Such efforts shall not be less than the efforts expended by
Biogen in connection with its other development projects that are at a
comparable stage in the development process and are of comparable commercial
promise. Upon receipt of regulatory approval in a Major Market Country, Biogen
agrees to use commercially reasonable efforts to market and sell such Licensed
Product in such Major Market Country. In the event that Biogen initiates more
than one Development Program, the obligations set forth in this Section 6.1
shall attach to at least one (1) Licensed Product that comprises a
Hedgehog-based Molecular Entity based on each Ontogeny Hedgehog Protein that is
the subject matter of a Development Program. Notwithstanding the foregoing and
the provisions of Section 6.2 below, if two or more Ontogeny Hedgehog Proteins
that are the subject matter of a Development Programs are Comparable Proteins,
the obligations set forth in this Article 6 shall only apply to one of the
Comparable Proteins.

      6.2 Product Objectives. Without limiting the generality of the obligations
set forth in Section 6.1, Biogen agrees to use commercially reasonable efforts
to achieve each of the


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                Exchange Commission. Asterisks denote omissions.

following objectives for at least one Hedgehog-based Molecular Entity based on
each Ontogeny Hedgehog Protein that is the subject matter of a Development
Program:

      (1)   Within [**] of the date of the initiation of the Development
            Program, commence animal toxicity studies for a candidate Licensed
            Product that comprises such Hedgehog-based Molecular Entity (a
            "Candidate Licensed Product"), provided that Biogen may elect to
            extend such commencement of animal toxicity studies for any Non Lead
            Protein for either [**] or [**] by (i) providing written notice of
            such election to Ontogeny [**] of the initiation of the Development
            Program for such Non-Lead Protein and (ii) paying Ontogeny an
            extension fee of [**] per year of extension for each Non-Lead
            Protein that the extension shall apply to.

      (2)   Within [**] of commencement of animal toxicity studies of a
            Candidate Licensed Product, submit an IND based on a Candidate
            Licensed Product.

      (3)   Within [**] of being legally permitted to do so, initiate and
            diligently pursue clinical evaluation of a Candidate Licensed
            Product.

      (4)   Within [**] after commencement of clinical evaluation, submit an NDA
            based on a Candidate Licensed Product.

      6.3 Consequences of Failure to Meet Commercialization Objectives. In the
event that Biogen shall fail to satisfy its commercialization obligations as set
forth in Section 6.1 and/or Section 6.2, as agreed between the Parties or
determined pursuant to the dispute resolution process set forth in Section 11.4,
Ontogeny shall notify Biogen. In the event that Biogen has not reached the
objectives set forth in Section 6.2, but has used commercially reasonable
efforts to try to achieve such objectives, the Parties shall agree on a revised
schedule for achieving such objectives. In the event that Biogen has not reached
the objectives set forth in Section 6.2 and has not used commercially reasonable
efforts to try to achieve such objectives, then Biogen's license with respect to
the commercialization of Licensed Products that comprise any Hedgehog-based
Molecular Entity based on the relevant Ontogeny Hedgehog Protein and any
Comparable Protein shall terminate (a "Mandatory Termination"), as Ontogeny's
sole and exclusive remedy.

                    Article 7. Intellectual Property Rights

      7.1 Ownership.

          (a) Technology. Except as otherwise provided in this Agreement (i)
Biogen shall retain its rights to the Biogen Technology, Biogen Gene Therapy
Technology, the Biogen Intellectual Property Rights and the Biogen Gene Therapy
Intellectual Property Rights and (ii) Ontogeny shall retain its rights to the
Ontogeny Technology and the Ontogeny Intellectual Property Rights. Each Party
shall solely own all Collaboration Technology that is conceived and reduced to
practice exclusively by such Party ("Ontogeny's Solely-Owned Collaboration
Technology" or "Biogen's Solely-Owned Collaboration Technology", as the case may
be) and all intellectual property rights therein. The Parties shall jointly own
all Collaboration Technology that is conceived or reduced to practice jointly by
the Parties (the "Jointly-Owned Collaboration Technology") and all intellectual
property rights therein.


                                       27
<PAGE>

          (b) Trademarks. Biogen shall own all trademarks that Biogen adopts and
uses with respect to any Licensed Product or Biogen Non-Hedgehog Product.
Ontogeny shall own all trademarks that Ontogeny adopts and uses with respect to
any Ontogeny Product or Ontogeny Non-Hedgehog Product.

      7.2 Prosecution and Maintenance of Patent Right.

          (a) Responsibility of Biogen. Biogen shall, in its sole discretion,
prepare, file, prosecute and maintain all patent applications and patents
covering Biogen Technology, Biogen Gene Therapy Technology, Biogen's
Solely-Owned Collaboration Technology and the Jointly-Owned Collaboration
Technology. Biogen shall bear all costs incurred by it in carrying out the
foregoing responsibilities. Should Biogen elect not to prepare, file, prosecute
or maintain any patent or patent application covering Biogen's Solely-Owned
Collaboration Technology (other than Biogen Gene Therapy Technology) or the
Jointly-Owned Collaboration Technology, then Biogen shall (i) provide Ontogeny
with written notice in sufficient time to permit Ontogeny to prepare, provide
file, prosecute and maintain such patent of patent application, (ii) give
Ontogeny the right, at its election and sole expense, to prepare, file,
prosecute or maintain, in Biogen's name, such patent or patent application and
(iii) offer reasonable assistance to Ontogeny in connection with such
preparation, filing, prosecution or maintenance at no charge to Ontogeny except
for reimbursement of reasonable out-of-pocket expenses incurred in rendering
such assistance.

          (b) Responsibility of Ontogeny. Ontogeny shall, in its sole
discretion, prepare, file, prosecute and maintain all patent applications and
patents covering Ontogeny Technology and Ontogeny's Solely-Owned Collaboration
Technology. Ontogeny shall bear all costs incurred by it in carrying out the
foregoing responsibilities. Should Ontogeny elect not to prepare, file,
prosecute or maintain any patent or patent application covering Ontogeny's
Solely-Owned Collaboration Technology or Ontogeny Technology, then Ontogeny
shall (i) provide Biogen with written notice in sufficient time to permit Biogen
to prepare, file, prosecute and maintain such patent or patent application, (ii)
give Biogen the right, at its election and sole expense, to prepare, file,
prosecute or maintain, in Ontogeny's name, such patent or patent application and
(iii) offer reasonable assistance to Biogen in connection with such preparation,
filing, prosecution or maintenance at no charge to Biogen except for
reimbursement of reasonable out-of-pocket expenses incurred in rendering such
assistance.

          (c) Cooperation. Copies of all substantive communications to and from
patent offices regarding applications or patents relating to the Collaboration
Technology (other than Biogen Gene Therapy Technology) or Ontogeny Technology
shall be provided to the other Party promptly after the receipt thereof; copies
of proposed substantive communications to such patent offices shall be provided
to the other Party in sufficient time before the due date in order to give the
other Party an opportunity to comment on the content thereof. In the event that
comments made by one Party (the "Non-prosecuting Party") to the other Party (the
"Prosecuting Party") with respect to any substantive communications to or from
any patent office regarding applications or patents relating to the
Collaboration Technology are not accepted by the Prosecuting Party or if the
Parties disagree on a particular approach to take with respect to the filing or
prosecution of any application or patent relating to the Collaboration
Technology, the Non-prosecuting Party shall have the right to request that the
Prosecuting Party allow the Non-


                                       28
<PAGE>

prosecuting Party to take whatever action is possible to protect the interest(s)
of the Non-prosecuting Party, provided that the protection afforded the
Prosecuting Party is not diminished. By way of example, but not of limitation,
in the event that the Parties cannot agree on the scope of particular claims,
the Prosecuting Party, at the request of the Non Prosecuting Party, shall add
additional claims to the application as requested by the Non-prosecuting Party
to the extent that it is possible to add such additional claims. If it is not
possible to add such claims, the Prosecuting Party shall take whatever action is
reasonably necessary for the Non-prosecuting Party to prosecute such claims in a
continuation or divisional application. All expenses associated with the taking
of such additional actions requested by the Non-prosecuting Party shall be borne
by the Non-prosecuting Party.

      7.3 Infringement by Third Parties.

          (a) Reports of Infringement. Each Party shall promptly report in
writing to the other Party during the term of this Agreement any (i) known
infringement or suspected infringement in the Field of any Biogen Patent Rights,
Ontogeny Patent Rights or Collaboration Patents Rights or (ii) unauthorized use
or misappropriation in the Field of any Biogen Technology Ontogeny Technology or
Collaboration Technology by a third party of which it becomes aware, and shall
provide the other Party with all available evidence supporting said
infringement, suspected infringement or unauthorized use or misappropriation.

          (b) Right to Institute Suit. Except as provided in Section 7.3(d), the
Party owning or controlling the relevant patents or Technology (the "Owning
Party") shall have the right to initiate an infringement or other appropriate
suit against any third party who at any time has infringed, or is suspected of
infringing, any Biogen Patent Rights, Ontogeny Patent Rights or Collaboration
Patent Rights, as the case may be, or is using without proper authorization or
misappropriating all or any portion of the Biogen Technology, Ontogeny
Technology or Collaboration Technology, as the case may be. For the purpose of
this Section 7.3, both Biogen and Ontogeny shall be considered an Owning Party
for Jointly-Owned Collaboration Technology.

          (c) Conduct of Suit. An Owning Party who initiates an infringement or
other appropriate suit pursuant to Section 7.3(b) (the "Initiating Party") shall
have the sole and exclusive right to select counsel for any such suit. The
Initiating Party shall, except as provided below, pay all expenses of the suit,
including without limitation attorneys' fees and court costs, and keep all
damages, settlement fees or other consideration for past infringement received
as a result of such suit. In the case of any such suit, (i) the Initiating Party
shall keep the other Party (the "Non-Initiating Party") promptly informed of the
status of such suit and shall provide the Non-Initiating Party with copies of
all documents filed in, and all written communications relating to, such suit;
(ii) the Non-Initiating Party shall offer reasonable assistance to the
Initiating Party in connection with such suit at no charge to the Initiating
Party except for reimbursement of reasonable expenses incurred in rendering such
assistance; and (iii) if necessary, the Non-Initiating Party shall join as a
party to the suit but shall be under no obligation to participate except to the
extent that such participation is required as the result of its being a named
party to such suit. In the case of any suit, the Non-Initiating Party may, to
the extent such Party's sales of Licensed Product or Ontogeny Product, as the
case may be, are adversely affected by the infringing party's activities, within
sixty (60) days after its receipt of


                                       29
<PAGE>

notice from the Initiating Party of the commencement of such suit, elect to
contribute up to an amount not to exceed fifty percent (50%) of the costs of
such suit, and any damages settlement fees or other consideration for past
infringement received as a result of such suit shall be shared by the Initiating
Party and the Non-Initiating Party pro rata based on their respective sharing of
the costs of such suit.

          (d) Right of Non-Owning Party to Institute Suit. The Owning Party
shall promptly advise the Non-Owning Party of its intent not to initiate an
infringement or other appropriate suit pursuant to Section 7.3(b). In the event
that the Owning Party shall have advised the Non-Owning Party of its intent not
to initiate such suit or does not initiate such suit within sixty (60) days of
becoming aware of a known or suspected infringement or an unauthorized use or
misappropriation, then to the extent that the infringement or unauthorized use
or misappropriation affects the Non-Owning Party's development, marketing or
sale of a Hedgehog-based Molecular Entity, the Non-Owning Party, with the
consent of the Owning Party, which consent shall not unreasonably be withheld,
shall have the right to initiate an infringement or other appropriate suit. In
exercising its rights pursuant to this Section 7.3(d), the Non-Owning Party
shall have the sole and exclusive right to select counsel and shall pay all
costs of the suit including without limitation attorneys' fees and court costs,
provided, however, that the Owning Party, in its sole discretion, may elect,
within sixty (60) days after its receipt of notice from the Non-Owning Party of
the commencement of such suit, to contribute up to an amount not to exceed fifty
percent (50%) of such costs. Any damages, settlement fees or other consideration
for past infringement received as a result of such suit shall be shared by the
Non-Owning Party and the Owning Party pro rata based on their respective sharing
of the costs of such suit. If necessary, the Owning Party shall join as a party
to the suit and shall participate only to the extent that such participation is
required as a result of its being a named party to the suit or being the holder
of, or inventor under, any patent at issue or being the owner of any Technology
at issue. At the Non-Owning Party's request, the Owning Party shall offer
reasonable assistance to the Non-Owning Party in connection therewith at no
charge to the Non-Owning Party except for reimbursement of reasonable
out-of-pocket expenses incurred in rendering such assistance. The Owning Party
shall have the right to be represented in any such suit by its own counsel at
its own expense.

          (e) Biogen Gene Therapy Technology. This Section 7.3 shall not apply
to any suit against any third party alleging infringement solely of Biogen Gene
Therapy Patent Rights or use or misappropriation solely of Biogen Gene Therapy
Technology.

      7.4 Infringement of Third Party Rights. In the event that a third party at
any time provides written notice of a claim to, or brings an action, suit or
proceeding against, a Party or such Party's Affiliates or Sublicensees, claiming
infringement of its patent rights or copyrights or unauthorized use or
misappropriation of its Technology, based upon an assertion or claim arising out
of the development, manufacture, use or sale of a Licensed Product, Ontogeny
Product, Biogen Non-Hedgehog Product or Ontogeny Non-Hedgehog Product, such
Party shall promptly notify the other Party of the claim or the commencement of
such action, suit or proceeding, enclosing a copy of the claim and/or all papers
served.


                                       30
<PAGE>

              Article 8. Representations, Warranties and Covenants

      8.1 Representations, Warranties and Covenants of Ontogeny. Ontogeny
represents and warrants to Biogen that it has full right and authority to enter
into this Agreement, and is not subject to any restriction that would prevent or
impair the grant to Biogen of the licenses and sublicenses to be granted
hereunder or the exercise by Biogen of such licenses. Ontogeny covenants that
(a) it will not take any action that would in any way prevent Ontogeny from
granting to Biogen the licenses and sublicenses contemplated under Article 3 or
that would conflict with or alter the scope of the rights granted to Biogen
under this Agreement, (b) it will take all actions required to maintain the
Columbia License Agreement and the Harvard License Agreement in effect and
exclusive to Ontogeny with the right to grant sublicenses to Biogen, (c) it
shall immediately send to Biogen a copy of any notice of default or breach
received by Ontogeny under the Columbia License Agreement or the Harvard License
Agreement and (d) all persons who perform work for Ontogeny in connection with
Ontogeny's obligations under this Agreement will have assigned their rights in
any intellectual property arising from such work to Ontogeny.

      8.2 Representations, Warranties and Covenants of Biogen. Biogen represents
and warrants to Ontogeny that it has full right and authority to enter into this
Agreement, and is not subject to any restriction that would prevent or impair
the grant to Ontogeny of the licenses to be granted hereunder or the exercise by
Ontogeny of such licenses. Biogen covenants that (a) it will not take any action
that would in any way prevent Biogen from granting to Ontogeny the licenses
contemplated in Article 3 or that would conflict with the rights granted to
Ontogeny under this Agreement and (b) all persons who perform work for Biogen in
connection with obligations under this Agreement will have assigned their rights
in any intellectual property arising from such work to Biogen.

      8.3 Disclaimers. THE FOREGOING REPRESENTATIONS, WARRANTIES AND COVENANTS
ARE IN LIEU OF ALL OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS NOT EXPRESSLY
SET FORTH HEREIN. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING STATEMENT,
ONTOGENY AND BIOGEN DISCLAIM ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS
HEREUNDER, INCLUDING, WITHOUT LIMITATION, WHETHER THE LICENSED PRODUCTS,
ONTOGENY PRODUCTS, BIOGEN NON-HEDGEHOG PRODUCTS OR ONTOGENY NON-HEDGEHOG
PRODUCTS CAN BE SUCCESSFULLY DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE,
UTILITY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE LICENSED
PRODUCTS, ONTOGENY PRODUCTS, BIOGEN NON-HEDGEHOG PRODUCTS OR ONTOGENY
NON-HEDGEHOG PRODUCTS. EXCEPT AS PROVIDED IN SECTION 11.1 (PRODUCT LIABILITY
INDEMNIFICATION), NEITHER ONTOGENY NOR BIOGEN SHALL BE LIABLE FOR SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT
BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY.


                                       31
<PAGE>

                      Article 9. Confidential Information

      9.1 Treatment of Confidential Information. Each Party hereto shall
maintain the Confidential Information of the other Party in confidence, and
shall not disclose, divulge or otherwise communicate such Confidential
Information to others, or use it for any purpose, except pursuant to, and in
order to carry out, the terms and objectives of the Collaboration or to
effectuate any sublicenses permitted under this Agreement (provided that any
potential Sublicensee or Sublicensee shall be bound by an obligation to maintain
as confidential such Confidential Information). Each Party hereby agrees to
exercise reasonable precautions to prevent and restrain the unauthorized
disclosure of such Confidential Information by any of its directors, officers,
employees, consultants, subcontractors, licensees or agents. Neither Party shall
disclose, divulge or otherwise communicate the Collaboration Technology to
others, or use it for any purpose, except as permitted under the terms of this
Agreement or in order to carry out the terms and objectives of the
Collaboration.

      9.2 Release from Restrictions. The provisions of Section 9.1 shall not
apply to any Confidential Information disclosed hereunder which:

      (1)   was known or used by the receiving Party prior to its date of
            disclosure to the receiving Party; or

      (2)   either before or after the date of the disclosure to the receiving
            Party is lawfully disclosed to the receiving Party by sources other
            than the disclosing Party rightfully in possession of the
            Confidential Information: or

      (3)   either before or after the date of the disclosure to the receiving
            Party becomes published or generally known to the public through no
            fault or omission on the part of the receiving Party, its Affiliates
            or Sublicensees; or

      (4)   is independently developed by or for the receiving Party without
            reference to or reliance upon the Confidential Information; or

      (5)   is required to be disclosed by the receiving Party to comply with
            applicable laws, to defend or prosecute litigation or to comply with
            governmental regulations, provided that the receiving Party provides
            prior written notice of such disclosure to the other Party and takes
            reasonable and lawful actions to avoid and/or minimize the degree of
            such disclosure.

      In any event, both Parties shall be released from any confidential
obligations under Section 9.1 after a period of ten (10) years from the date of
receipt of the said Confidential Information.

                        Article 10. Term and Termination

      10.1 Term. This Agreement shall be effective as of the Effective Date.
Unless earlier terminated upon the mutual agreement of the Parties or in
accordance with the provisions of this Article 10, this Agreement shall continue
in force until the expiration of all royalty and other payment obligations under
Article 4 hereof.


                                       32
<PAGE>

      10.2 Termination by Biogen. Biogen may terminate this Agreement at any
time for any reason upon written notice to Ontogeny. This Agreement shall be
deemed to have been terminated by Biogen (i) in the event Biogen does not
initiate at least one Development Program on or prior to July 1, 2000 or (ii)
the termination by Biogen of the Commercialization Phase pursuant to Section
2.2(e)(ii).

      10.3 Termination for Breach. Each Party (the "non-breaching Party") shall
be entitled to terminate this Agreement by written notice to the other Party
(the "Breaching Party") in the event that the breaching Party is in default of
any of its material obligations hereunder and fails to remedy such default
within sixty (60) days after written notice thereof by the non-breaching Party,
provided, however, that if such default is a failure by the breaching Party to
pay the non-breaching Party any amount due under this Agreement, then the
non-breaching Party shall be entitled to terminate this Agreement if the
breaching Party fails to remedy such default within thirty (30) days after
written notice thereof by the non-breaching Party. Any such notice shall
specifically state that the non-breaching Party intends to terminate this
Agreement in the event that the breaching Party shall fail to remedy such
default.

      10.4 Consequences of Termination.

          (a) Termination for Breach. If this Agreement terminates pursuant to
Section 10.3 following an unremedied breach, the licenses and option granted
under this Agreement shall terminate, provided, however, that (i) in the event
that the breaching Party is Ontogeny, Biogen shall retain any licenses granted
to Biogen by Ontogeny pursuant to Section 3.2 or Section 3.3 prior to such
termination, subject to payment of the applicable royalty or other
consideration, if any, set forth in this Agreement and (ii) in the event that
the breaching Party is Biogen, Ontogeny shall retain any licenses granted to
Ontogeny by Biogen pursuant to Section 3.2 or Section 3.3 prior to such
termination, subject to payment of the applicable royalty or other
consideration, if any, set forth in this Agreement.

          (b) Termination by Biogen. If this Agreement is terminated by Biogen
pursuant to Section 10.2, the licenses and option granted under this Agreement
shall terminate, provided, however, that (i) Ontogeny shall retain any licenses
granted to Ontogeny by Biogen pursuant to Section 3.2 or Section 3.3, subject to
payment of the applicable royalty or other consideration, if any, set forth in
this Agreement and (ii) Biogen shall retain the license granted to Biogen by
Ontogeny pursuant to Section 3.3(a), subject to payment of the applicable
royalty or other consideration, if any, set forth in this Agreement.

      10.5 Survival of Rights and Obligations. The licenses granted pursuant to
Section 3.2 and Section 3.3 shall survive any termination of this Agreement,
other than a termination pursuant to Section 10.2 or Section 10.3 (in which case
the rights with respect to such licenses shall be in accordance with the terms
set forth in Section 10.4) and such licenses shall be deemed fully paid-up and
perpetual upon the satisfaction of all royalty and other payment obligations
hereunder, if any, with respect to such licenses. Notwithstanding any
termination of this Agreement, including any termination under Section 10.2 or
10.3, (a) neither Party shall be relieved of any obligations incurred prior to
such termination, and (b) the provisions of Section 2.3 (Accounting and Internal
Controls), Section 2.4(a) (Biogen Restrictions), Section 4.5 (Break-up Fee),
Section 4.10 (Records; Audits), Section 5.2 (Repayment), Section 7.1
(Ownership),


                                       33
<PAGE>

Section 8.3 (Disclaimers), Article 9 (Confidential Information), this Article 10
(Term and Termination) and Section 11.1 (Product Liability Indemnification)
shall survive and continue to be enforceable. Upon the earlier of (i) any
termination of this Agreement pursuant to Section 10.1, 10.2 or 10.3 and (ii)
the termination of the Collaboration, each Party shall promptly return to the
other Party all written Confidential Information, and all copies thereof, of
such other Party, provided, however, that to the extent that any license granted
hereunder survives any such termination, the licensee may retain such
Confidential Information as is reasonably necessary to practice such license,
and provided, further, that in the event that this Agreement is terminated by
Ontogeny as a result of an unremedied breach, Ontogeny is under no obligation to
return to Biogen copies of any documents, provided to Ontogeny pursuant to
Section 2.2(b), relating to the regulatory approval, manufacture and/or
marketing of product(s) comprising Hedgehog-based Molecular Entity(ies) that
were the subject of a Development Program.

                           Article 11. Miscellaneous

      11.1 Product Liability Indemnification.

          (a) Indemnification by Biogen. Biogen agrees to defend Ontogeny at
Biogen's cost and expense, and will indemnify and hold Ontogeny and its
directors, officers, employees and agents (the "Ontogeny Indemnified Parties")
harmless from and against any losses, costs, damages, fees or expenses arising
out of any claim by a third party relating to personal injury from the design,
manufacture, use, sale or other disposition of any Licensed Product or Biogen
Non-Hedgehog Product, except to the extent caused by the negligence or
intentional misconduct of any of the Ontogeny Indemnified Parties. In the event
of any such claim against the Ontogeny Indemnified Parties by any party,
Ontogeny shall promptly notify Biogen in writing of the claim and Biogen shall
manage and control, at its sole expense, the defense of the claim and its
settlement. The Ontogeny Indemnified Parties shall cooperate with Biogen and
may, at their option and expense, be represented in any such action or
proceeding. Biogen shall not be liable for any litigation costs or expenses
incurred by the Ontogeny Indemnified Parties without Biogen's written
authorization.

          (b) Indemnification by Ontogeny. Ontogeny agrees to defend Biogen at
Ontogeny's cost and expense, and will indemnify and hold Biogen and its
directors, officers, employees and agents (the "Biogen Indemnified Parties")
harmless from and against any losses, costs, damages, fees and expenses arising
out of any claim by a third party relating to personal injury from the design,
manufacture, use, sale or other disposition of any Ontogeny Product, Outside the
Field Product or Ontogeny Non-Hedgehog Product, except to the extent caused by
the negligence or intentional misconduct of any of the Biogen Indemnified
Parties. In the event of any such claim against the Biogen Indemnified Parties
by any party, Biogen shall promptly notify Ontogeny in writing of the claim and
Ontogeny shall manage and control, at its sole expense, the defense of the claim
and its settlement. The Biogen Indemnified Parties shall cooperate with Ontogeny
and may, at their option and expense, be represented in any such action or
proceeding. Ontogeny shall not be liable for any litigation costs or expenses
incurred by the Biogen Indemnified Parties without Ontogeny's written
authorization.

      11.2 Publicity. Except as otherwise required by law, neither Party shall
originate any publicity, news release or other public announcement, written or
oral, relating to this Agreement


                                       34
<PAGE>

without the prior written approval of the other Party, which approval shall not
be unreasonably withheld; provided, however that each Party shall have the
right, without obtaining the approval of the other Party, to confirm the
existence of this Agreement and to disclose the general scope of the
Collaboration.

      11.3 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.

      11.4 Dispute Resolution. Except as otherwise provided in this Agreement,
any dispute arising out of or relating to this Agreement or to a breach thereof,
including its interpretation, performance or termination, may be submitted by a
Party to a mediator, mutually agreed to by the Parties, for nonbinding
mediation. The Parties shall cooperate with the mediator in an effort to resolve
such dispute. If the dispute is not resolved within sixty (60) days of its
submission to the mediator, either Party may submit the dispute for binding
arbitration. The arbitration shall be conducted by three (3) arbitrators, one to
be appointed by Ontogeny, one to be appointed by Biogen and a third being
nominated by the two arbitrators so selected or, if they cannot agree on a third
arbitrator, by the President of the American Arbitration Association. The
arbitration shall be conducted in accordance with the commercial rules of the
American Arbitration Association, which shall administer the arbitration. The
arbitration, including the rendering of the award, shall take place in Boston,
Massachusetts, and shall be the exclusive forum for resolving such dispute. The
decision of the arbitrators shall be final and binding upon the Parties hereto,
and the expense of the arbitration shall be paid as the arbitrators determine.

      11.5 Waiver. The waiver by a Party of a breach or a default of any
provision of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of a Party to exercise or avail itself of any
right, power or privilege that it has or may have hereunder operate as a waiver
of any right, power or privilege by such Party.

      11.6 Notices. All notices, instructions and other communications hereunder
or in connection herewith shall be in writing and shall be (a) delivered
personally, (b) sent by registered or certified mail, return receipt requested,
postage prepaid, (c) sent via a reputable nationwide overnight courier service
or (d) sent by facsimile transmission, in each case to an address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered upon receipt if delivered by hand, three business days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid, one business days after it is sent via a reputable nationwide overnight
courier service, or when transmitted with electronic confirmation of receipt, if
transmitted by facsimile (if such transmission is on a business day; otherwise,
on the next business day following such transmission).


                                       35
<PAGE>

   Notices to Ontogeny



             shall be addressed to:  Ontogeny, Inc.
                                     45 Moulton Street
                                     Cambridge, MA 02138
                                     Attn: President and
                                     Chief Executive Officer

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

   Notices to Biogen

             shall be addressed to:  Biogen, Inc.
                                     14 Cambridge Center
                                     Cambridge, MA 02142
                                     Attn: Vice President-Sales,
                                     Marketing and Business Development

             with a copy to:         Vice President-General Counsel

   Either Party may change its address by giving notice to the other Party in
   the manner herein provided.

      11.7 No Agency. Nothing herein shall be deemed to constitute Ontogeny, on
the one hand, or Biogen, on the other hand, as the agent or representative of
the other, or as joint venturers or partners for any purpose.

      11.8 Entire Agreement. Ontogeny and Biogen acknowledge that (a) the
Research Phase shall be deemed to have continued uninterrupted since the date of
the Original Agreement, (b) the First Amendment, Second Amendment, Third
Amendment and Fourth Agreement operated as interim extensions of the Research
Phase, (c) Biogen has satisfied and is current in all funding obligations
embodied in the Original Agreement, First Amendment, Second Amendment, Third
Amendment and Fourth Amendment (except for the payment of the initial Follow-on
Research Support Fee), through November 30, 1998, (d) the terms contained in
this Agreement and the Schedules hereto (which Schedules are deemed to be a part
of this Agreement for all purposes) represent the full understanding of the
Parties with respect to the subject matter hereof and supersede all prior
understandings and writings relating thereto, including the terms of the
Original Agreement, as amended to date and (e) the provisions of the Original
Agreement are hereby terminated and of no further force and effect. No waiver,
alteration or modification of any of the provisions hereof shall be binding
unless made in writing and signed by the Parties.


                                       36
<PAGE>

      11.9 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.

      11.10 Severability. In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the validity
of the remaining provisions shall not be affected, and the Parties shall
negotiate a substitute provision that, to the extent possible, accomplishes the
original business purpose.

      11.11 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either Party without the prior written
consent of the other Party, except to an Affiliate of the assigning Party or to
any other party who acquires all or substantially all of the business of the
assigning Party by merger, sale of assets or otherwise, so long as such
Affiliate or other party agrees in writing to be bound by the terms of this
Agreement.

      11.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their successors and permitted
assigns.

      11.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of such together
shall constitute one and the same instrument.

      11.14 Force Majeure. Neither Party to this Agreement shall be responsible
to the other Party for nonperformance or delay in performance of the terms or
conditions of this Agreement due to acts of God, acts of governments, war,
riots, strikes, accidents in transportation, or other similar causes beyond the
reasonable control of such Party.

      IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed in their names by their properly and duly authorized officers or
representatives as of the date first above written.


ONTOGENY, INC.                           BIOGEN, INC.


By: /s/ Doros Platika                    By: /s/ James R. Tobin
    ------------------                   -------------------------------
   Name: Doros Platika                   Name: James R. Tobin
   Title:                                Title: Chief Executive Officer


                                       37
<PAGE>

                                   Schedule A

(Ontogeny Hedgehog Proteins)
<PAGE>

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

                                   Schedule A

Ontogeny, Inc.
--------------------------------------------------------------------------------

                              MOUSE DESERT HEDGEHOG

                               AMINO ACID SEQUENCE

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One Kendall Square, Building 600, Cambridge, MA 02139       Phone (617) 225-0086
                                                              Fax (617) 225-0096
<PAGE>

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

Ontogeny, Inc.
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                              MOUSE INDIAN HEDGEHOG

                               AMINO ACID SEQUENCE

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One Kendall Square, Building 600, Cambridge, MA 02139       Phone (617) 225-0086
                                                              Fax (617) 225-0096
<PAGE>

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

                              HUMAN SONIC HEDGEHOG

                               AMINO ACID SEQUENCE

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<PAGE>

                                   Schedule B

                   DISEASE INDICATIONS EXCEPTED FROM THE FIELD

Bone breaks or fractures
Bone degeneration (e.g., spinal problems)
Spinal disk problems
Spinal vertebral problems
Bone dislocation
Abnormal bone growth (e.g., bone spurs, inappropriate skeletal growth)
Cartilage degeneration
Implant fixation (e.g., osteoimplants, tooth implants, fixation devices,
  artificial joints)
Bone neoplasms (e.g., osteosarcoma, chondrosarcoma, Ewing's sarcoma)
Spina bifida
Clubfoot
Bone crushing injuries
Tendon disorders (tenosynovitis, de Quervain's disease, ganglions,
  tendonitis, synovitis)
Epicondylitis (tennis elbow)
Bursitis
Congenital musculoskeletal deformities
Osteoarthritis
Metabolic bone disease (e.g., osteoporosis, rickets, osteomalacia)
Paget's Disease
Hyperostosis (e.g., osteopetrosis, pyknodysostosis,
  osteomyclosclerosis)
Fibrous dysplasia
<PAGE>

                                   Schedule C

(Research Workplan)
<PAGE>

                                   Schedule D

                                THERAPEUTIC AREAS

Nutrition
Viral infectious diseases
Fungal infectious diseases
Bacterial infectious diseases
Disorders of the cardiovascular system
Disorders of the kidney and urinary tract
Disorders of the alimentary tract
Liver and biliary tract disease
Disorders of the pancreas
Disorders of the immune system
Hematology
Oncology
Endocrinology
Disorders of intermediary metabolism
Disorders of the central nervous system
Disorders of the peripheral nervous system
Disorders of muscle
Psychiatry
Environmental and occupational hazards
<PAGE>

                                   Schedule E

(Line of Credit Note)