<PAGE>   1
                                                                   Exhibit 10.27

                          LICENSE AND ROYALTY AGREEMENT

      This LICENSE AND ROYALTY AGREEMENT is entered into as of January 13, 1999
(the "Effective Date") by and between PFIZER INC, a Delaware corporation, having
an office at 235-East 42nd Street, New York, NY 10017 and its Affiliates
("Pfizer") and MICROCIDE PHARMACEUTICALS, INC. and its Affiliates ("Microcide"),
a California corporation, having an office at 850 Maude Avenue, Mountain View,
CA 94043.

      WHEREAS, Pfizer desires to obtain an exclusive license and sublicense to
Microcide's right, title and interest in the Patent Rights so that Pfizer can
manufacture, use, offer for sale, sell or import the Licensed Products; and

      WHEREAS, Microcide is willing to grant such license and sublicense;

      Therefore, in consideration of the mutual covenants and promises set forth
in this Agreement, the parties agree as follows:

1.    DEFINITIONS.

     The capitalized terms used in this Agreement and not defined elsewhere in
it shall have the meanings specified for such terms in this Section 1 and in the
Research Agreement.

      1.1 "RESEARCH AGREEMENT" means the Collaborative Research Agreement
between Pfizer and Microcide effective January 13, 1999.

      1.2 "NET SALES" means the gross amount invoiced by Pfizer and any
sublicensee of Pfizer for sales to a third party or parties of Licensed
Products, less normal and customary trade discounts actually allowed, rebates,
returns, credits, taxes the legal incidence of which is on the purchaser and
separately shown on Pfizer's or any sublicensee of Pfizer's invoices and
transportation, insurance and postage charges, if prepaid by Pfizer or any
sublicensee of Pfizer and billed on Pfizer's or any sublicensee of Pfizer's
invoices as a separate item.

      1.3 "LICENSED PRODUCT" means any product, the manufacture, use, offer for
sale, sale or import of which would infringe the Patent Rights in the absence of
a license or sublicense or which, if such Patent Rights are comprised of patent
applications alone, the manufacture, use, offer for sale, sale or import of such
Product would infringe a claim included in such applications as if such claim
were issued in a patent.

      1.4 "CLASS" means antibacterial agents having the same mechanism of action
or pharmacophores acting on a given target.

2.    GRANT OF LICENSE, TERM, RIGHTS AND OBLIGATIONS. 

      2.1 LICENSE GRANTED TO PFIZER UNDER THE PATENT RIGHTS.

     Subject to the terms and conditions of this Agreement, Microcide grants to
Pfizer the exclusive, worldwide license or sublicense, as the case may be,
including the right to grant sublicenses, to manufacture, use, offer for sale,
sell or import Licensed Products under all Microcide's right, title and interest
in the Patent Rights (the "License").

<PAGE>   2
      2.2 TERM OF LICENSE GRANT AND PAYMENT OF ROYALTIES. 

      Unless terminated earlier as provided below, the License shall commence on
the Effective Date of this Agreement and shall terminate on a country-by-country
basis on the expiration of the last to expire of the Patent Rights in each such
country.

      2.3  PFIZER OBLIGATIONS.

            2.3.1 Pfizer shall use reasonably diligent efforts to exploit
Licensed Products commercially.

            2.3.2 If Pfizer grants a sublicense pursuant to Section 2, Pfizer
shall guarantee that any sublicensee fulfills all of Pfizer's obligations under
this Agreement; provided, however, that Pfizer shall not be relieved of its
obligations pursuant to this Agreement. Pfizer shall provide Microcide a copy of
any such sublicense promptly following its execution.

     2.4  TECHNICAL ASSISTANCE.

     Microcide shall use reasonable efforts, consistent with its other
obligation and overall business strategy, to provide to Pfizer or any
sublicensee of Pfizer, at Pfizer's request and expense, any technical assistance
reasonably necessary to enable Pfizer or such sublicensee to manufacture, use,
offer for sale, sell or import each Licensed Product and to enjoy fully all the
rights granted to Pfizer pursuant to this Agreement at mutually convenient times
and places.

     2.5  [*].

3.   ROYALTIES, PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS,
     MILESTONE PAYMENTS.

     3.1 PATENT RIGHTS.

     Pfizer shall pay Microcide a royalty based on the Net Sales of each
Licensed Product. Such royalty shall be paid with respect to each country of the
world from the date of the first commercial sale (the date of the invoice of
Pfizer or any sublicensee of Pfizer with respect to such sale) of such Licensed
Product in each such country until the


--------------

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   3
expiration of the last Patent Right to expire with respect to each such country
and each such Licensed Product.

     3.2 [*]

     3.3 [*]

     3.4  PAYMENT DATES.

     Royalties shall be paid by Pfizer on Net Sales within sixty (60) days after
the end of each calendar quarter in which such Net Sales are made. Such payments
shall be accompanied by a statement showing the Net Sales of each Licensed
Product by Pfizer


--------------

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   4

and any sublicensee of Pfizer in each country, the applicable royalty rate for
such Licensed Product, and a calculation of the amount of royalty due.

     3.5 ACCOUNTING.

     The Net Sales used for computing the royalties payable to Microcide by
Pfizer shall be computed and paid in U.S. dollars by wire transfer to an account
designated by Microcide or other mutually acceptable means. For purposes of
determining the amount of royalties due, the amount of Net Sales in any foreign
currency shall be computed by (a) converting such amount into dollars at the
prevailing commercial rate of exchange for purchasing dollars with such foreign
currency as quoted by Citibank in New York on the last business day of the
calendar quarter for which the relevant royalty payment is to be made by Pfizer
and (b) deducting the amount of any governmental tax, duty, charge, or other fee
actually paid in respect of such conversion into, and remittance of dollars.

     3.6 RECORDS.

     Pfizer shall keep for three (3) years from the date of each payment of
royalties complete and accurate records of sales by Pfizer of each Licensed
Product in sufficient detail to allow the accruing royalties to be determined
accurately. Microcide shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties due and payable to
appoint at its expense an independent certified public accountant reasonably
acceptable to Pfizer to inspect the relevant records of Pfizer to verify such
report or statement. Pfizer shall make its records available for inspection by
such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from Microcide, to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales in any given period. Microcide agrees to
hold in strict confidence all information concerning royalty payments and
reports, and all information learned in the course of any audit or inspection.
The failure of Microcide to request verification of any report or statement
during said three-year period shall be considered acceptance of the accuracy of
such report, and Pfizer shall have no obligation to maintain records pertaining
to such report or statement beyond said three-year period. The results of each
inspection, if any, shall be binding on both parties.

     3.7 [*].

--------------

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   5
[*]

     3.8  RENEGOTIATION OF ROYALTY RATES.

     The parties acknowledge that the royalty rate set forth in Section 3.2 is
based on the premise that Products will be administered to animals orally by
tablets or capsules which deliver the drug by dissolving passively in the
gastrointestinal tract, or parenterally by standard intramuscular or
subcutaneous formulations ("Existing Dosage Forms"). If Pfizer identifies or
develops a different method of administration ("New Dosage Form") with respect
to a Product or Products which represents a commercial opportunity for Pfizer or
improves the safety or efficacy of such Product, the parties shall negotiate a
new royalty rate for such Product in such New Dosage Form to account for
development costs and changes in the cost of goods, selling price and projected
annual Net Sales.

     3.9  HUMAN HEALTH.

     The royalty rates and milestone payments set forth above shall apply to
Products for the treatment of animal bacterial diseases only. If Pfizer chooses
to develop a Licensed Product for the treatment of diseases in humans, the
parties agree that the royalty rates and milestones set forth in the License and
Royalty Agreement between the parties to this Agreement for human health
Products, dated March 1, 1996, shall apply to such Products.

4.   LEGAL ACTION.

     4.1 ACTUAL OR THREATENED DISCLOSURE OR INFRINGEMENT.

     When information comes to the attention of Pfizer to the effect that any
Patent Rights relating to a Licensed Product have been or are threatened to be
unlawfully infringed, Pfizer shall notify Microcide and Pfizer shall have the
right at Pfizer's expense, to take such action as it may deem necessary to
prosecute or prevent such unlawful infringement, including the right to bring or
defend any suit, action or proceeding involving any such infringement. Pfizer
shall notify Microcide promptly of the receipt of any such information and of
the commencement of any such suit, action or proceeding. If Pfizer determines
that it is necessary or desirable for Microcide to join any such suit,


--------------

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   6
action or proceeding, Microcide shall, at Pfizer's expense, execute all papers
and perform such other acts as may be reasonably required to permit Pfizer to
act in Microcide's name and Pfizer shall hold Microcide free, clear harmless
from any and all costs and expenses of such litigation, including attorneys
fees. If Pfizer brings a suit, it shall have the right first to reimburse itself
out of any sums recovered in such suit or in its settlement for all costs and
expenses, including attorney's fees, related to such suit or settlement, and
twenty-five percent (25%) of any funds that shall remain from said recovery
shall be paid to Microcide and the balance of such funds shall be retained by
Pfizer. If Pfizer does not, within one hundred twenty (120) days after giving
notice to Microcide of the above described information, notify Microcide of
Pfizer's intent to bring suit against any infringer, Microcide shall have the
right to bring suit for such alleged infringement, but it shall not be obligated
to do so, and may join Pfizer as party plaintiff, if appropriate, in which event
Microcide shall hold Pfizer free, clear and harmless from any and all costs and
expenses of such litigation, including attorney's fees, and any sums recovered
in any such suit or in its settlement shall belong to Microcide. However,
twenty-five percent (25%) of any such sums received by Microcide, after
deduction of all costs and expenses related to such suit or settlement,
including attorney's fees paid, shall be paid to Pfizer. Each party shall always
have the right to be represented by counsel of its own selection and at its own
expense in any suit instituted by the other for infringement under the terms of
this Section. If Pfizer lacks standing and Microcide has standing to bring any
such suit, action or proceeding, then Microcide shall do so at the request of
Pfizer and at Pfizer's expense.

     4.2 DEFENSE OF INFRINGEMENT CLAIMS.

     Microcide will cooperate with Pfizer at Pfizer's expense in the defense of
any suit, action or proceeding against Pfizer or any sublicensee of Pfizer
alleging the infringement of the intellectual property rights of a third party
by reason of the manufacture, use or sale of the Licensed Product. Pfizer shall
give Microcide prompt written notice of the commencement of any such suit,
action or proceeding or claim of infringement and will furnish Microcide a copy
of each communication relating to the alleged infringement. Microcide shall give
to Pfizer all authority (including the right to exclusive control of the defense
of any such suit, action or proceeding and the exclusive right after
consultation with Microcide, to compromise, litigate, settle or otherwise
dispose of any such suit, action or proceeding), information and assistance
necessary to defend or settle any such suit, action or proceeding; provided,
Pfizer shall not make any admission regarding the invalidity or unenforceability
of any aspect of the Microcide Patent Rights or Joint Patent Rights without the
prior written consent of Microcide. If the parties agree that Microcide should
institute or join any suit, action or proceeding pursuant to this Section,
Pfizer may, at Pfizer's expense, join Microcide as a defendant if necessary or
desirable, and Microcide shall execute all documents and take all other actions,
including giving testimony, which may reasonably be required in connection with
the prosecution of such suit, action or proceeding.

     4.3 HOLD HARMLESS.

     Microcide agrees to defend, protect, indemnify and hold harmless Pfizer and
any sublicensee of Pfizer, from and against any loss or expense arising from any
proved claim (i.e., established in a final judgment by a court of competent
jurisdiction, which judgment
<PAGE>   7
is unappealed or unappealable) of a third party that it has been granted rights
by Microcide that Pfizer or any sublicensee of Pfizer in exercising their rights
granted to Pfizer by Microcide pursuant to this Agreement, has infringed upon
such rights granted to such third party by Microcide.

     4.4  THIRD PARTY LICENSES.

     If the manufacture, use or sale by Pfizer of a Licensed Product in any
country would, in the opinion of both Pfizer and Microcide, infringe the patent
rights owned by a third party, Pfizer will attempt to obtain a license under
such patent rights or other intellectual property and shall pay all costs,
expenses and royalties due with respect to the acquisition and maintenance of
rights under any such third party license.

5.    REPRESENTATION AND WARRANTY.

     Microcide represents and warrants to Pfizer that it has the right to grant
the License granted pursuant to this Agreement, and that the License so granted
does not conflict with or violate the terms of any agreement between Microcide
and any third party.

6.   TREATMENT OF CONFIDENTIAL INFORMATION.

     6.1 CONFIDENTIALITY.

            6. 1.1 Pfizer and Microcide each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to Pfizer's rights and obligations pursuant to this Agreement, Pfizer
and Microcide each agree that during the term of the Research Agreement and for
five (5) years thereafter, it will keep confidential, and will cause its
Affiliates to keep confidential, all Microcide Confidential Information or
Pfizer Confidential Information, as the case may be, that is disclosed to it or
to any of its Affiliates pursuant to this Agreement.

            6.1.2 Pfizer and Microcide each agree that any disclosure of the
other's Confidential Information to any officer, employee or agent of the other
party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its rights and obligations under this Agreement and shall
be limited to the maximum extent possible consistent with such responsibilities.
Subject to Pfizer's rights and obligations pursuant to this Agreement, Pfizer
and Microcide each agree not to disclose the other's Confidential Information to
any third parties under any circumstance without written permission from the
other party except to the extent necessary to exercise its rights pursuant to
this Agreement or to comply with applicable law. Each party shall take such
action, and shall cause its Affiliates to take such action, to preserve the
confidentiality of each other's Confidential Information as it would customarily
take to preserve the confidentiality of its own Confidential Information. Each
party will return all the Confidential Information disclosed to the other party
pursuant to this Agreement, including all copies and extracts of documents,
within sixty (60) days of the request upon the termination of this Agreement
except for one (1) copy which may be kept for the sole purpose of determining a
party's continuing obligations pursuant to this Agreement.

     6.2 PUBLICITY.

     Except as required by law, neither party may disclose the terms of this
Agreement nor the research described in it without the written consent of the
other party, which

<PAGE>   8
consent shall not be unreasonably withheld; provided, however, that, upon
execution of this Agreement, the parties will issue a press release with respect
to its contents; and, further provided, that copies of this Agreement may be
disclosed in confidence by Microcide to prospective investors, banks and other
sources of financing.

7.   PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF PATENT
     RIGHTS.

      The following provisions relate to the filing, prosecution and maintenance
of Patent Rights during the term of this Agreement:

      7.1 FILING, PROSECUTION AND MAINTENANCE BY MICROCIDE. With respect to
Patent Rights in which Microcide employees or consultants, alone or together
with Pfizer employees or consultants are named as inventors, Microcide shall
have the exclusive right and obligation:

      (a) to file applications for letters patent; provided, however, that
Microcide shall consult with Pfizer regarding countries in which such patent
applications should be filed and shall file patent applications in those
countries where Pfizer requests that Microcide file such applications; and,
further provided, that Microcide, at its option and expense, may file in
countries where Pfizer does not request that Microcide file such applications;

       (b) to prosecute all pending and new patent applications included within
Patent Rights;

       (c) to respond to oppositions, nullity actions, re-examinations,
revocation actions and similar proceedings filed by third parties against the
grant of letters patent for such applications; and

      (d) to maintain in force any letters patent included in Patent Rights by
duly filing all necessary papers and paying any fees required by the patent laws
of the particular country in which such letters patent were granted.

      Microcide shall notify Pfizer in a timely manner of any decision to
abandon a pending patent application or an issued patent included in Patent
Rights. Thereafter, Pfizer shall have the option, at its expense, of continuing
to prosecute any such pending patent application or of keeping the issued patent
in force.

            7.1.1 COPIES OF DOCUMENTS. Microcide shall provide to Pfizer copies
of all patent applications that are part of Patent Rights prior to filing, for
the purpose of obtaining substantive comment of Pfizer patent counsel and
inclusion of reasonable claims suggested by such counsel. Microcide shall also
provide to Pfizer copies of all documents relating to prosecution of all such
patent applications in a timely manner and shall provide to Pfizer every six (6)
months a report detailing their status.

            7.1.2 REIMBURSEMENT OF COSTS FOR FILING, PROSECUTING AND MAINTAINING
PATENT RIGHTS. Within thirty (30) days of receipt of invoices from Microcide,
Pfizer shall reimburse Microcide for all the costs of filing, prosecuting,
responding to opposition and maintaining patent applications and patents in
countries where Pfizer requests that patent applications be filed, prosecuted
and maintained. Such reimbursement shall be in addition to payments made
pursuant to the Research Agreement. However, Pfizer may, upon sixty (60) days
notice, request that Microcide discontinue filing or prosecution of patent
applications in any country and discontinue reimbursing Microcide for the costs
of filing, prosecuting, responding to opposition or maintaining such patent
application or
<PAGE>   9
patent in any country. Microcide shall pay all costs in those countries in which
Pfizer does not request that Microcide file, prosecute or maintain patent
applications and patents, but in which Microcide, at its option, elects to do
so.

            7.1.3 PFIZER RIGHT TO PROSECUTE. Pfizer shall have the right to file
on behalf of and as an agent for Microcide all applications and take all actions
necessary to obtain patent extensions pursuant to 35 USC Section 156 and foreign
counterparts for Patent Rights described in this Section 6.1 licensed to Pfizer.
Microcide agrees to sign, at Pfizer's expense, such further documents and take
such further actions as may be requested by Pfizer in this regard.

      7.2 FILING, PROSECUTION AND MAINTENANCE BY PFIZER. With respect to Patent
Rights in which Pfizer employees or consultants alone are named as inventors,
Pfizer shall have those rights and duties ascribed to Microcide in Section 7. 1;
provided, Microcide shall have no obligation to reimburse Pfizer for the payment
of any expenses incurred in connection with such Patent Rights.

      7.3 DISCLAIMER. Neither party may disclaim a claim within Patent Right
without the consent of the other.

8.    OTHER AGREEMENTS.

      Concurrently with the execution of this Agreement, Microcide and Pfizer
shall enter into the Research Agreement. This Agreement, the Research Agreement
and the Confidentiality Agreement dated January 13, 1999 of are the sole
agreements with respect to the subject matter and supersede all other agreements
and understanding between the parties with respect to same.

9.   TERMINATION AND DISENGAGEMENT.

      9.1 Events of Termination. The following events shall constitute events of
termination ("Events of Termination"):

      (a) Any written representation or warranty by Microcide or Pfizer, or any
of its officers, made under or in connection with this Agreement shall prove to
have been incorrect in any material respect when made and concerning which the
declaring party knew or should have known the correct version.

       (b) Microcide or Pfizer shall fail in any material respect to perform or
observe any term, covenant or understanding contained in this Agreement or in
any of the other documents or instruments delivered pursuant to, or concurrently
with, this Agreement, and any such failure shall remain unremedied for sixty
(60) days after written notice to the failing party; provided, in the case of a
failure to pay any amount due hereunder, any failure to pay such amount within
ten (10) business days after written notice to the failing party shall be an
event of termination.

      9.2 Termination. Upon the occurrence of any Event of Termination, the
party not responsible may, by thirty (30) days notice to the other party,
terminate this Agreement.

      9.3 Termination of this Agreement by either party, with or without cause,
will not terminate the licenses granted pursuant to Section 5.2(b) of the
Research Agreement.

      9.4 Pfizer shall have the right at any time to terminate this Agreement in
whole or as to any portion of Patent Rights upon ninety (90) days notice.

      9.5 Termination of this Agreement for any reason shall be without
prejudice to:

<PAGE>   10
       (a) the rights and obligations of the parties provided in Sections 3, 6,
7 with respect to Joint Patent Rights, 10, 12 and 13;

       (b) Microcide's right to receive all royalty payments and other payments
accrued hereunder; or

       (c) any other remedies which either party may otherwise have.

10.   INDEMNIFICATION.

      Pfizer will indemnify, defend and hold Microcide and its Affiliates and
their respective directors, officers, employees and agents (the "Microcide
Indemnitees") harmless from and against any damages, liabilities, settlements,
costs, legal fees and other expenses incurred in connection with any claim
against the Microcide Indemnitees based on any action or omission of Pfizer or
its sublicensee and their respective agents or employees related to manufacture,
use, sale or other distribution of Licensed Products or other exercise of the
rights granted Pfizer under this Agreement including, without limitation, any
product liability claims; provided, however, that the foregoing shall not apply
(i) to any part of a claim which is found in a final judgment to be based upon
the negligence, recklessness or willful misconduct of Microcide, or (ii) if
Microcide fails to give Pfizer prompt notice of any claim it receives within
fifteen (15) days of such receipt and such failure materially prejudices Pfizer
with respect to any claim or action to which Pfizer's obligation pursuant to
this Section applies. Pfizer, in its sole discretion, shall choose legal
counsel, shall control the defense of such claim or action, and shall have the
right to settle same on such terms and conditions it deems advisable; provided,
however, that an Microcide Indemnitee shall have the right to retain its own
counsel, at its own cost, if representation of such Microcide Indemnitee by the
counsel retained by Pfizer would be inappropriate due to actual or potential
differing interests between Pfizer and any other party represented by such
counsel in such proceeding.

11. NOTICES.

      All notices shall be in writing mailed via certified mail, return receipt
requested, courier, or facsimile transmission addressed as follows, or to such
other address as may be designated from time to time:

If to Pfizer:      To Pfizer at its address as set forth at the beginning of
                   this Agreement
                   Attention: President, Central Research with
                   copy to: Office of the General Counsel

If to Microcide:   Microcide at its address as set forth at the beginning of
                   this Agreement
                   Attention: Chief Executive Officer with copy to:
                   Wilson, Sonsini, Goodrich & Rosati
                   650 Page Mill Road
                   Palo Alto, CA 94304
                   Attention:  Michael O'Donnell

<PAGE>   11
Notices shall be deemed given as of the date received.

12.   GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

13.   MISCELLANEOUS.

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

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

      13.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.

      13.4 AMENDMENT; WAIVER. This Agreement maybe amended, modified, superseded
or canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties
waiving compliance. The delay or failure of any party at any time or times to
require performance of any provisions shall in no manner affect the rights at a
later time to enforce the same. No waiver by any party of any condition or of
the breach of any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.

      13.5 NO THIRD PARTY BENEFICIARIES. No third party including any employee
of any party to this Agreement, shall be a third party beneficiary of this
Agreement or have or acquire any rights by reason of this Agreement. Nothing
contained in this Agreement shall be deemed to constitute the parties partners
with each other or any third party.

      13.6 ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.

      13.7 FORCE MAJEURE. Neither Pfizer nor Microcide shall be liable for
failure of or delay in performing obligations set forth in this Agreement, and
neither shall be deemed in breach of its obligations, if such failure or delay
is due to natural disasters or any causes reasonably beyond the control of
Pfizer or Microcide.

      13.8 SEVERABILITY. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the parties that the remainder of the
Agreement shall not be affected.

      13.10 PATENT MARKING. Pfizer agrees to mark and have its sublicensees
mark all Licensed Products they sell or distribute pursuant to this Agreement in
accordance with the applicable statute or regulations in the country or
countries of their manufacture and sale.

      13.12 COMPLIANCE WITH LAW. In exercising their rights under this
Agreement, the parties shall fully comply with the requirements of any and all
applicable laws,

<PAGE>   12
regulations, rules and orders of any governmental body having jurisdiction over
the exercise of rights under this Agreement.

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

PFIZER INC.                               MICROCIDE PHARMACEUTICALS, INC.

By:    /s/ George M. Milne, Jr.           By:    /s/  James E. Rurka
       ----------------------------              -------------------------------
Title: Vice President                     Title: CEO
       ----------------------------              -------------------------------
Date:  January 13, 1999                   Date:  January 13, 1999
       ----------------------------              -------------------------------

cc:   Pfizer Inc, Legal Division, Groton, CT 06340