<PAGE>

                                                                   Exhibit 10.25

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933.

                              PUBLIC HEALTH SERVICE

                     PATENT LICENSE AGREEMENT--NONEXCLUSIVE

                                   COVER PAGE

For PHS internal use only:

         License Number:

         Application Number:

         A-294-2003

         Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):

         United States Patent Serial Number 07/702,217 (PHS reference number
         E-163-1991/0-US-01) filed May 17, 1991;

         United States Patent Serial Number 08/109,187 (PHS reference number
         E-163-1991/1-US-01) filed August 19, 1993;

         United States Patent Serial Number 08/609,218 (PHS reference number
         E-163-1991/1-US-03) filed March 1, 1996;

         United States Patent Serial Number 08/905,280 (PHS reference number
         E-163-1991/2-US-01) filed August 1, 1997; and

         United States Patent Serial Number 09/810,502 (PHS reference number
         E-163-1991/2-US-02) filed March 16, 2001, all entitled, "A Method for
         reducing the immunogenicity of antibody variable domains," and all
         continuations, reissues, divisionals and corresponding foreign
         patent(s) or patent application(s)

         Licensee:

         Inhibitex
         1165 Sanctuary Parkway, Suite 400
         Alpharetta, GA 30004

         Cooperative Research and Development Agreement (CRADA) Number (if
         applicable):

         N/A

         Public Benefit(s):

         Development of antibodies for the prevention and treatment of bacterial
         and fungal infections. Availability of these therapeutic agents to
         qualified indigent patients.

This Patent License Agreement, hereinafter referred to as the "AGREEMENT",
consists of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix A
(List of Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan). The Parties to this
AGREEMENT are:

<PAGE>
         1)       The National Institutes of Health ("NIH"), the Centers for
                  Disease Control and Prevention ("CDC"), or the Food and Drug
                  Administration ("FDA"), hereinafter singly or
                  collectively referred to as "PHS", agencies of the United
                  States Public Health Service within the Department of Health
                  and Human Services ("DHHS"); and

         2)       The person, corporation, or institution identified above
                  and/or on the Signature Page, having offices at the address
                  indicated on the Signature Page, hereinafter referred to as
                  "LICENSEE".



                                  Page 2 of 24
<PAGE>

                   PHS PATENT LICENSE AGREEMENT--NONEXCLUSIVE

PHS and LICENSEE agree as follows:

1.       BACKGROUND

         1.01     In the course of conducting biomedical and behavioral
                  research, PHS investigators made inventions that may have
                  commercial applicability.

         1.02     By assignment of rights from PHS employees and other
                  inventors, DHHS, on behalf of the United States Government,
                  owns intellectual property rights claimed in any United States
                  and/or foreign patent applications or patents corresponding to
                  the assigned inventions. DHHS also owns any tangible
                  embodiments of these inventions actually reduced to practice
                  by PHS.

         1.03     The Secretary of DHHS has delegated to PHS the authority to
                  enter into this AGREEMENT for the licensing of rights to these
                  inventions.

         1.04     PHS desires to transfer these inventions to the private sector
                  through commercialization licenses to facilitate the
                  commercial development of products and processes for public
                  use and benefit.

         1.05     LICENSEE desires to acquire commercialization rights to
                  certain of these inventions in order to develop processes,
                  methods, and/or marketable products for public use and
                  benefit.

2.       DEFINITIONS

2.01     "BENCHMARKS" mean the performance milestones that are set forth in
         Appendix E.

         2.02     "COMMERCIAL DEVELOPMENT PLAN" means the written
                  commercialization plan attached as Appendix F.

         2.03     "FIRST COMMERCIAL SALE" means the initial transfer by or on
                  behalf of LICENSEE or its sublicensees of LICENSED PRODUCTS or
                  the initial practice of a LICENSED PROCESS by or on behalf of
                  LICENSEE or its sublicensees in exchange for cash or some
                  equivalent to which value can be assigned for the purpose of
                  determining NET SALES.

         2.04     "GOVERNMENT" means the Government of the United States of
                  America.

         2.05     "LICENSED FIELDS OF USE" means the fields of use identified in
                  Appendix B.

         2.06     "LICENSED PATENT RIGHTS" shall mean:

                  a)       Patent applications (including provisional patent
                           applications and PCT patent applications) and/or
                           patents listed in Appendix A, all divisions and
                           continuations of these applications, all patents
                           issuing from such applications, divisions, and
                           continuations, and any reissues, reexaminations, and
                           extensions of all such patents;

                  b)       to the extent that the following contain one or more
                           claims directed to the invention or inventions
                           disclosed in a) above: i) continuations-in-part of a)
                           above; ii) all divisions and continuations of these
                           continuations-in-part; iii) all patents issuing from
                           such continuations-in-part, divisions, and
                           continuations; iv) priority patent application(s) of
                           a) above; and v) any reissues, reexaminations, AND
                           EXTENSIONS OF ALL SUCH PATENTS;

                                  Page 3 of 24
<PAGE>

                  c)       to the extent that the following contain one or more
                           claims directed to the invention or inventions
                           disclosed in a) above: all counterpart foreign and
                           U.S. patent applications and patents to a) and b)
                           above, including those listed in Appendix A.

                  LICENSED PATENT RIGHTS shall not include b) or c) above to the
                  extent that they contain one or more claims directed to new
                  matter which is not the subject matter disclosed in a) above.

         2.07     "LICENSED PROCESS(ES)" means processes which, in the course of
                  being practiced would be within the scope of one or more
                  claims of the LICENSED PATENT RIGHTS that have not been held
                  unpatentable, invalid or unenforceable by an unappealed or
                  unappealable judgment of a court of competent jurisdiction.

         2.08     "LICENSED PRODUCT(S)" means tangible materials which, in the
                  course of manufacture, use, sale, or importation would be
                  within the scope of one or more claims of the LICENSED PATENT
                  RIGHTS that have not been held unpatentable, invalid or
                  unenforceable by an unappealed or unappealable judgment of a
                  court of competent jurisdiction.

         2.09     "LICENSED TERRITORY" means the geographical area identified in
                  Appendix B.

         2.10     "NET SALES" means the total gross receipts for sales of
                  LICENSED PRODUCTS or practice of LICENSED PROCESSES by or on
                  behalf of LICENSEE or its sublicensees, and from leasing,
                  renting, or otherwise making LICENSED PRODUCTS available to
                  others without sale or other dispositions, whether invoiced or
                  not, less returns and allowances, packing costs, insurance
                  costs, freight out, taxes or excise duties imposed on the
                  transaction (if separately invoiced), and wholesaler and cash
                  discounts in amounts customary in the trade to the extent
                  actually granted. No deductions shall be made for commissions
                  paid to individuals, whether they be with independent sales
                  agencies or regularly employed by LICENSEE, or sublicensees,
                  and on its payroll, or for the cost of collections. LICENSED
                  PRODUCTS given customers free of charge, and not for re-sale,
                  as promotional samples are specifically excluded from NET
                  SALES. Donations of LICENSED PRODUCT(S) under the indigent
                  patient access program specified in Paragraph 10.03 are
                  excluded from NET SALES.

         2.11     "PRACTICAL APPLICATION" means to manufacture in the case of a
                  composition or product, to practice in the case of a process
                  or method, or to operate in the case of a machine or system;
                  and in each case, under such conditions as to establish that
                  the invention is being utilized and that its benefits are to
                  the extent permitted by law or GOVERNMENT regulations
                  available to the public on reasonable terms.

3.       GRANT OF RIGHTS

         3.01     PHS hereby grants and LICENSEE accepts, subject to the terms
                  and conditions of this AGREEMENT, a nonexclusive license under
                  the LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make
                  and have made, to use and have used, to sell and have sold, to
                  offer to sell, and to import any LICENSED PRODUCTS in the
                  LICENSED FIELDS OF USE and to practice and have practiced any
                  LICENSED PROCESSES in the LICENSED FIELDS OF USE.

         3.02     This AGREEMENT confers no license or rights by implication,
                  estoppel, or otherwise under any patent applications or
                  patents of PHS other than LICENSED PATENT RIGHTS regardless of
                  whether such patents are dominant or subordinate to LICENSED
                  PATENT RIGHTS.

4.       SUBLICENSING

         4.01     LICENSEE has no right to sublicense.


                                  Page 4 of 24



<PAGE>

5.       STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

         5.01     Upon written request, and prior to the FIRST COMMERCIAL SALE,
                  LICENSEE agrees to provide PHS reasonable quantities of
                  LICENSED PRODUCTS or materials made through the LICENSED
                  PROCESSES for PHS research use.

         5.02     LICENSEE agrees that products used or sold in the United
                  States embodying LICENSED PRODUCTS or produced through use of
                  LICENSED PROCESSES shall be manufactured substantially in the
                  United States, unless a written waiver is obtained in advance
                  from PHS.

6.       ROYALTIES AND REIMBURSEMENT

         6.01     LICENSEE agrees to pay to PHS a, noncreditable, nonrefundable
                  license issue royalty as set forth in Appendix C.

         6.02     LICENSEE agrees to pay to PHS a nonrefundable minimum annual
                  royalty as set forth in Appendix C. The minimum annual royalty
                  is due and payable on January 1 of each calendar year and may
                  be credited against any earned royalties due for sales made in
                  that year. The minimum annual royalty due for the first
                  calendar year of this AGREEMENT may be prorated according to
                  the fraction of the calendar year remaining between the
                  effective date of this AGREEMENT and the next subsequent
                  January 1.

         6.03     LICENSEE agrees to pay PHS earned royalties as set forth in
                  Appendix C.

         6.04     LICENSEE agrees to pay PHS benchmark royalties as set forth in
                  Appendix C. Benchmark royalties are payable within thirty (30)
                  days from the date of completion of a Benchmark set forth in
                  Appendix C.

         6.05     A patent or patent application licensed under this AGREEMENT
                  shall cease to fall within the LICENSED PATENT RIGHTS for the
                  purpose of computing earned royalty payments in any given
                  country on the earliest of the dates that a) the application
                  has been abandoned and not continued, b) the patent expires or
                  irrevocably lapses, or c) the claim has been held to be
                  invalid or unenforceable by an unappealed or unappealable
                  decision of a court of competent jurisdiction or
                  administrative agency.

         6.06     No multiple royalties shall be payable because any LICENSED
                  PRODUCTS or LICENSED PROCESSES are covered by more than one of
                  the LICENSED PATENT RIGHTS.

         6.07     On sales of LICENSED PRODUCTS by LICENSEE to sublicensees or
                  on sales made in other than an arm's-length transaction, the
                  value of the NET SALES attributed under this Article 6 to such
                  a transaction shall be that which would have been received in
                  an arm's-length transaction, based on sales of like quantity
                  and quality products on or about the time of such transaction.

         6.08     With regard to expenses associated with the preparation,
                  filing, prosecution, and maintenance of all patent
                  applications and patents included within the LICENSED PATENT
                  RIGHTS incurred by PHS prior to the effective date of this
                  AGREEMENT, LICENSEE shall pay to PHS, as an additional
                  royalty, within sixty (60) days of PHS's submission of a
                  statement and request for payment to LICENSEE, an amount
                  equivalent to such patent expenses previously incurred by PHS.
                  LICENSEE's obligation is only related to unreimbursed payments
                  actually made by PHS and is a pro rata share of such expenses.
                  The pro rata share shall be based on the number of commercial
                  licensees granted rights under any of the LICENSED PATENT
                  RIGHTS and shall exclude any license(s) which are for internal
                  research use and/or for research reagents sales.


                                  Page 5 of 24

<PAGE>

         6.09     With regard to expenses associated with the preparation,
                  filing, prosecution, and maintenance of all patent
                  applications and patents included within the LICENSED PATENT
                  RIGHTS incurred by PHS on or after the effective date of this
                  AGREEMENT, PHS, at its sole option, may require LICENSEE:

                  (a) to pay PHS on an annual basis, within sixty (60) days of
                  PHS's submission of a statement and request for payment, a
                  royalty amount equivalent to a pro rata share of all such
                  patent expenses incurred during the previous calendar year(s);
                  or

                  (b) to pay such expenses directly to the law firm employed by
                  PHS to handle such functions. However, in such event, PHS and
                  not LICENSEE shall be the client of such law firm.

                  The pro rata share shall be based on the number of commercial
                  licensees granted rights under any of the LICENSED PATENT
                  RIGHTS and shall exclude any license(s) which are for internal
                  research use and/or for research reagents sales.

                  Under exceptional circumstances, LICENSEE may be given the
                  right but not the obligation to assume responsibility for the
                  preparation, filing, prosecution, or maintenance of any patent
                  application or patent included with the LICENSED PATENT
                  RIGHTS. In that event, LICENSEE shall directly pay the
                  attorneys or agents engaged to prepare, file, prosecute, or
                  maintain such patent applications or patents and shall provide
                  to PHS copies of each invoice associated with such services as
                  well as documentation that such invoices have been paid.

         6.10     LICENSEE may elect to surrender its rights in any country of
                  the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
                  sixty (60) days written notice to PHS and owe no payment
                  obligation under Article 6.09 for patent-related expenses
                  incurred in that country after the effective date of such
                  written notice.

7.       PATENT FILING, PROSECUTION, AND MAINTENANCE

         7.01     PHS agrees to take responsibility for the preparation, filing,
                  prosecution, and maintenance of any and all patent
                  applications or patents included in the LICENSED PATENT
                  RIGHTS.

8.       RECORD KEEPING

         8.01     LICENSEE agrees to keep accurate and correct records of
                  LICENSED PRODUCTS made, used, sold, or imported and LICENSED
                  PROCESSES practiced under this AGREEMENT appropriate to
                  determine the amount of royalties due PHS. Such records shall
                  be retained for at least five (5) years following a given
                  reporting period and shall be available during normal business
                  hours for inspection at the expense of PHS by an accountant or
                  other designated auditor selected by PHS for the sole purpose
                  of verifying reports and payments hereunder. The accountant or
                  auditor shall only disclose to PHS information relating to the
                  accuracy of reports and payments made under this AGREEMENT. If
                  an inspection shows an underreporting or underpayment in
                  excess of five percent (5%) for any twelve (12) month period,
                  then LICENSEE shall reimburse PHS for the cost of the
                  inspection at the time LICENSEE pays the unreported royalties,
                  including any late charges as required by Paragraph 9.07 of
                  this AGREEMENT. All payments required under this Paragraph
                  shall be due within thirty (30) days of the date PHS provides
                  LICENSEE notice of the payment due.

         8.02     LICENSEE agrees to have an audit of sales and royalties
                  conducted by an independent auditor at least every two (2)
                  years if annual sales of the LICENSED PRODUCT or LICENSED
                  PROCESSES are over thirty (30) million dollars. The audit
                  shall address, at a minimum, the amount of gross sales by or
                  on behalf of LICENSEE during the audit period, terms of the
                  license as to percentage or fixed royalty to be remitted to
                  the GOVERNMENT, the amount of royalty funds owed to the
                  GOVERNMENT under this AGREEMENT, and whether the royalty
                  amount owed has been paid to the GOVERNMENT and is


                                  Page 6 of 24
<PAGE>

                  reflected in the records of the LICENSEE. The audit shall also
                  indicate the PHS license number, product, and the time period
                  being audited. A report certified by the auditor shall be
                  submitted promptly by the auditor directly to PHS on
                  completion. LICENSEE shall pay for the entire cost of the
                  audit provided that it be in line with normal and customary
                  fees for such work throughout the industry.

9.       REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

         9.01     Prior to signing this AGREEMENT, LICENSEE has provided to PHS
                  the COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which
                  LICENSEE intends to bring the subject matter of the LICENSED
                  PATENT RIGHTS to the point of PRACTICAL APPLICATION. This
                  COMMERCIAL DEVELOPMENT PLAN is hereby incorporated by
                  reference into this AGREEMENT Based on this plan, performance
                  BENCHMARKS are determined as specified in Appendix E.

         9.02     LICENSEE shall provide written annual reports on its product
                  development progress or efforts to commercialize under the
                  COMMERCIAL DEVELOPMENT PLAN for each of the LICENSED FIELDS OF
                  USE within sixty (60) days after December 31 of each calendar
                  year. These progress reports shall include, but not be limited
                  to: progress on research and development, status of
                  applications for regulatory approvals, manufacturing,
                  marketing, importing, and sales during the preceding calendar
                  year, as well as plans for the present calendar year. PHS also
                  encourages these reports to include information on any of
                  LICENSEE's public service activities that relate to the
                  LICENSED PATENT RIGHTS. If reported progress differs from that
                  projected in the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS,
                  LICENSEE shall explain the reasons for such differences. In
                  any such annual report, LICENSEE may propose amendments to the
                  COMMERCIAL DEVELOPMENT PLAN, acceptance of which by PHS may
                  not be denied unreasonably. LICENSEE agrees to provide any
                  additional information reasonably required by PHS to evaluate
                  LICENSEE's performance under this AGREEMENT. LICENSEE may
                  amend the BENCHMARKS at any time upon written consent by PHS.
                  PHS shall not unreasonably withhold approval of any request of
                  LICENSEE to extend the time periods of this schedule if such
                  request is supported by a reasonable showing by LICENSEE of
                  diligence in its performance under the COMMERCIAL DEVELOPMENT
                  PLAN and toward bringing the LICENSED PRODUCTS to the point of
                  PRACTICAL APPLICATION.

         9.03     LICENSEE shall report to PHS the dates for achieving
                  BENCHMARKS specified in Appendix E and the FIRST COMMERCIAL
                  SALE in each country in the LICENSED TERRITORY within thirty
                  (30) days of such occurrences.

         9.04     Beginning after the first commercial sale, LICENSEE shall
                  submit to PHS within sixty (60) days after each calendar
                  half-year ending June 30 and December 31 a royalty report
                  setting forth for the preceding half-year period the amount of
                  the LICENSED PRODUCTS sold or LICENSED PROCESSES practiced by
                  or on behalf of LICENSEE in each country within the LICENSED
                  TERRITORY, the NET SALES, and the amount of royalty
                  accordingly due. With each such royalty report, LICENSEE shall
                  submit payment of the earned royalties due. If no earned
                  royalties are due to PHS for any reporting period, the written
                  report shall so state. The royalty report shall be certified
                  as correct by an authorized officer of LICENSEE and shall
                  include a detailed listing of all deductions made under
                  Paragraph 2.10 to determine NET SALES made under Article 6 to
                  determine royalties due.

         9.05     Royalties due under Article 6 shall be paid in U.S. dollars.
                  For conversion of foreign currency to U.S. dollars, the
                  conversion rate shall be the New York foreign exchange rate
                  quoted in The Wall Street Journal on the day that the payment
                  is due. All checks and bank drafts shall be drawn on United
                  States banks and shall be payable, as appropriate, to
                  "NIH/Patent Licensing." All such payments shall be sent to the
                  following address: NIH, P.O. Box 360120, Pittsburgh, PA
                  15251-6120. Any loss of exchange, value, taxes, or other
                  expenses incurred in the transfer or conversion to U.S.
                  dollars shall be paid entirely by LICENSEE. The royalty report
                  required by Paragraph 9.04 of this AGREEMENT shall accompany
                  each such payment, and a copy of such report shall also be
                  mailed to PHS at its address for notices indicated on the
                  Signature Page of this AGREEMENT.


                                  Page 7 of 24


<PAGE>

         9.06     LICENSEE shall be solely responsible for determining if any
                  tax on royalty income is owed by LICENSEE outside the United
                  States and shall pay any such tax and be responsible for all
                  filings with appropriate agencies of foreign governments. Any
                  foreign tax credits received relative to such payments are for
                  the account of LICENSEE.

         9.07     Interest and penalties may be assessed by PHS on any overdue
                  payments in accordance with the Federal Debt Collection Act.
                  The payment of such late charges shall not prevent PHS from
                  exercising any other rights it may have as a consequence of
                  the lateness of any payment.

         9.08     All plans and reports required by this Article 9 and marked
                  "confidential" by LICENSEE shall, to the extent permitted by
                  law, be treated by PHS as commercial and financial information
                  obtained from a person and as privileged and confidential, and
                  any proposed disclosure of such records by the PHS under the
                  Freedom of Information Act (FOIA), 5 U.S.C. Section 552 shall
                  be subject to the predisclosure notification requirements of
                  45 CFR Section 5.65(d).

10.      PERFORMANCE

         10.01    LICENSEE shall use its reasonable best efforts to bring the
                  LICENSED PRODUCTS and LICENSED PROCESSES to PRACTICAL
                  APPLICATION. "Reasonable best efforts" for the purposes of
                  this provision shall include adherence to the COMMERCIAL
                  DEVELOPMENT PLAN at Appendix F and performance of the
                  BENCHMARKS at Appendix E.

         10.02    Upon the FIRST COMMERCIAL SALE, until the expiration of this
                  AGREEMENT, LICENSEE shall use its reasonable best efforts to
                  make LICENSED PRODUCTS and LICENSED PROCESSES reasonably
                  accessible to the United States public.

         10.03    Within one year following regulatory approval for marketing
                  LICENSED PRODUCTS in the United States, and subject to the
                  availability of sufficient supplies of Licensed Product to
                  meet the current demands of the market place, LICENSEE agrees
                  to establish an indigent patient access program for LICENSED
                  PRODUCTS, or to include LICENSED PRODUCTS in an existing
                  indigent patient access program, such that LICENSED PRODUCTS
                  may be provided to qualified indigent citizens of the United
                  States who are not covered under any public or private health
                  plan. "Sufficient supplies" means that there is enough product
                  in the trade or in inventory to fill orders as they are
                  received and that no back-order situation exists. LICENSEE
                  further agrees, one year following regulatory approval for
                  marketing LICENSED PRODUCTS in the United States, and as part
                  of its marketing and product promotion, to develop written
                  educational materials (including, for example, brochures and
                  advertisements) directed to patients and physicians detailing
                  the LICENSED PRODUCTS and therapeutic uses thereof. At no time
                  will the value of LICENSED PRODUCT donated to indigent patient
                  access programs surpass 5% of the total of LICENSED PRODUCT
                  sold or donated by LICENSEE.

11.      INFRINGEMENT AND PATENT ENFORCEMENT

         11.01    PHS and LICENSEE agree to notify each other promptly of each
                  infringement or possible infringement of the LICENSED PATENT
                  RIGHTS, as well as any facts which may affect the validity,
                  scope, or enforceability of the LICENSED PATENT RIGHTS of
                  which either Party becomes aware.

         11.02    In the event that a declaratory judgment action alleging
                  invalidity of any of the LICENSED PATENT RIGHTS shall be
                  brought against PHS, PHS agrees to notify LICENSEE that an
                  action alleging invalidity has been brought. PHS does not
                  represent that it will commence legal action to defend against
                  a declaratory action alleging invalidity. LICENSEE shall take
                  no action to compel the GOVERNMENT either to initiate or to
                  join in any such declaratory judgment action. Should the
                  GOVERNMENT be made a party to any such suit by motion or any
                  other action of LICENSEE,


                                  Page 8 of 24
<PAGE>

                  LICENSEE shall reimburse the GOVERNMENT for any costs,
                  expenses, or fees which the GOVERNMENT incurs as a result of
                  such motion or other action. Upon LICENSEE's payment of all
                  costs incurred by the GOVERNMENT as a result of LICENSEE's
                  joinder motion or other action, these actions by LICENSEE will
                  not be considered a default in the performance of any material
                  obligation under this AGREEMENT.

12.      NEGATION OF WARRANTIES AND INDEMNIFICATION

         12.01    PHS offers no warranties other than those specified in
                  Article 1.

         12.02    PHS does not warrant the validity of the LICENSED PATENT
                  RIGHTS and makes no representations whatsoever with regard to
                  the scope of the LICENSED PATENT RIGHTS, or that the LICENSED
                  PATENT RIGHTS may be exploited without infringing other
                  patents or other intellectual property rights of third
                  parties.

         12.03    PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
                  SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
                  RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

         12.04    PHS does not represent that it will commence legal actions
                  against third parties infringing the LICENSED PATENT RIGHTS.

         12.05    LICENSEE shall indemnify and hold PHS, its employees,
                  students, fellows, agents, and consultants harmless from and
                  against all liability, demands, damages, expenses, and losses,
                  including but not limited to death, personal injury, illness,
                  or property damage in connection with or arising out of: a)
                  the use by or on behalf of LICENSEE, its directors, employees,
                  or third parties of any LICENSED PATENT RIGHTS; or b) the
                  design, manufacture, distribution, or use of any LICENSED
                  PRODUCTS, LICENSED PROCESSES or materials by LICENSEE, or
                  other products or processes developed in connection with or
                  arising out of the LICENSED PATENT RIGHTS. LICENSEE agrees to
                  maintain a liability insurance program consistent with sound
                  business practice.

13.      TERM, TERMINATION, AND MODIFICATION OF RIGHTS

         13.01    This AGREEMENT is effective when signed by all parties and
                  shall extend to the expiration of the last to expire of the
                  LICENSED PATENT RIGHTS unless sooner terminated as provided in
                  this Article 13.

         13.02    The terms and conditions of this AGREEMENT shall be considered
                  by PHS to be withdrawn from LICENSEE's consideration and the
                  terms and conditions of this AGREEMENT and the AGREEMENT
                  itself to be null and void, unless this AGREEMENT is executed
                  within sixty (60) days from the date of printing indicated at
                  the bottom of each page.

         13.03    In the event that LICENSEE is in default in the performance of
                  any material obligations under this AGREEMENT, including but
                  not limited to the obligations listed in Paragraph 13.06, and
                  if the default has not been remedied within ninety (90) days
                  after the date of notice in writing of such default, PHS may
                  terminate this AGREEMENT by written notice and pursue
                  outstanding amounts owed through procedures provided by the
                  Federal Debt Collection Act.

         13.04    In the event that LICENSEE becomes insolvent, files a petition
                  in bankruptcy, has such a petition filed against it,
                  determines to file a petition in bankruptcy, or receives
                  notice of a third party's intention to file an involuntary
                  petition in bankruptcy, LICENSEE shall immediately notify PHS
                  in writing. Furthermore, PHS shall have the right to terminate
                  this AGREEMENT immediately upon LICENSEE's receipt of written
                  notice.




                                  Page 9 of 24
<PAGE>

         13.05    LICENSEE shall have a unilateral right to terminate this
                  AGREEMENT in any country or territory by giving PHS sixty (60)
                  days written notice to that effect.

         13.06    PHS shall specifically have the right to terminate or modify,
                  at its option, this AGREEMENT, if PHS determines that the
                  LICENSEE: 1) is not executing the COMMERCIAL DEVELOPMENT PLAN
                  attached in Appendix E and the LICENSEE cannot otherwise
                  demonstrate to PHS's satisfaction that the LICENSEE has taken,
                  or can be expected to take within a reasonable time, effective
                  steps to achieve PRACTICAL APPLICATION of the LICENSED
                  PRODUCTS or LICENSED PROCESSES; 2) has not achieved the
                  BENCHMARKS as may be modified under Paragraph 9.02; 3) has
                  willfully made a false statement of, or willfully omitted, a
                  material fact in the license application or in any report
                  required by the license AGREEMENT; 4) has committed a material
                  breach of a covenant or agreement contained in the license; 5)
                  is not keeping LICENSED PRODUCTS or LICENSED PROCESSES
                  reasonably available to the public after commercial use
                  commences; 6) cannot reasonably satisfy unmet health and
                  safety needs; or 7) cannot reasonably justify a failure to
                  comply with the domestic production requirement of Paragraph
                  5.02 unless waived. In making this determination, PHS will
                  take into account the normal course of such commercial
                  development programs conducted with sound and reasonable
                  business practices and judgment and the annual reports
                  submitted by LICENSEE under Paragraph 9.02. Prior to invoking
                  this right, PHS shall give written notice to LICENSEE
                  providing LICENSEE specific notice of, and a ninety (90) day
                  opportunity to respond to, PHS's concerns as to the previous
                  items 1) to 7). If LICENSEE fails to alleviate PHS's concerns
                  as to the previous items 1) to 7) or fails to initiate
                  corrective action to PHS's satisfaction, PHS may terminate
                  this AGREEMENT.

         13.07    PHS reserves the right according to 35 U.S.C. Section
                  209(f)(4) to terminate or modify this AGREEMENT if it is
                  determined that such action is necessary to meet requirements
                  for public use specified by federal regulations issued after
                  the date of the license and such requirements are not
                  reasonably satisfied by LICENSEE.

         13.08    Within thirty (30) days of receipt of written notice of PHS's
                  unilateral decision to modify or terminate this AGREEMENT,
                  LICENSEE may, consistent with the provisions of 37 CFR 404.11,
                  appeal the decision by written submission to the designated
                  PHS official. The decision of the designated PHS official
                  shall be the final agency decision. LICENSEE may thereafter
                  exercise any and all administrative or judicial remedies that
                  may be available.

         13.09    Within ninety (90) days of expiration or termination of this
                  AGREEMENT under this Article 13, a final report shall be
                  submitted by LICENSEE. Any royalty payments, including those
                  incurred but not yet paid (such as the full minimum annual
                  royalty), and those related to patent expense, due to PHS
                  shall become immediately due and payable upon termination or
                  expiration. Unless otherwise specifically provided for under
                  this AGREEMENT, upon termination or expiration of this
                  AGREEMENT, LICENSEE shall return all LICENSED PRODUCTS or
                  other materials included within the LICENSED PATENT RIGHTS to
                  PHS or provide PHS with certification of the destruction
                  thereof.

14.      GENERAL PROVISIONS

         14.01    Neither Party may waive or release any of its rights or
                  interests in this AGREEMENT except in writing. The failure of
                  the GOVERNMENT to assert a right hereunder or to insist upon
                  compliance with any term or condition of this AGREEMENT shall
                  not constitute a waiver of that right by the GOVERNMENT or
                  excuse a similar subsequent failure to perform any such term
                  or condition by LICENSEE.

         14.02    This AGREEMENT constitutes the entire agreement between the
                  Parties relating to the subject matter of the LICENSED PATENT
                  RIGHTS, and all prior negotiations, representations,
                  agreements, and understandings are merged into, extinguished
                  by, and completely expressed by this AGREEMENT.



                                 Page 10 of 24
<PAGE>

         14.03    The provisions of this AGREEMENT are severable, and in the
                  event that any provision of this AGREEMENT shall be determined
                  to be invalid or unenforceable under any controlling body of
                  law, such determination shall not in any way affect the
                  validity or enforceability of the remaining provisions of this
                  AGREEMENT.

         14.04    If either Party desires a modification to this AGREEMENT, the
                  Parties shall, upon reasonable notice of the proposed
                  modification by the Party desiring the change, confer in good
                  faith to determine the desirability of such modification. No
                  modification shall be effective until a written amendment is
                  signed by the signatories to this AGREEMENT or their
                  designees.

         14.05    The construction, validity, performance, and effect of this
                  AGREEMENT shall be governed by Federal law as applied by the
                  Federal courts in the District of Columbia.

         14.06    All notices required or permitted by this AGREEMENT shall be
                  given by prepaid, first class, registered or certified mail or
                  by an express/overnight delivery service provided by a
                  commercial carrier, properly addressed to the other Party at
                  the address designated on the following Signature Page, or to
                  such other address as may be designated in writing by such
                  other Party. Notices shall be considered timely if such
                  notices are received on or before the established deadline
                  date or sent on or before the deadline date as verifiable by
                  U.S. Postal Service postmark or dated receipt from a
                  commercial carrier. Parties should request a legibly dated
                  U.S. Postal Service postmark or obtain a dated receipt from a
                  commercial carrier or the U.S. Postal Service. Private metered
                  postmarks shall not be acceptable as proof of timely mailing.

         14.07    This AGREEMENT shall not be assigned by LICENSEE except: a)
                  with the prior written consent of PHS, such consent not to be
                  withheld unreasonably; or b) as part of a sale or transfer of
                  substantially the entire business of LICENSEE relating to
                  operations which concern this AGREEMENT. LICENSEE shall notify
                  PHS within ten (10) days of any assignment of this AGREEMENT
                  by LICENSEE, and LICENSEE shall pay PHS, as an additional
                  royalty, one percent (1%) of the fair market value of any
                  consideration received for any assignment of this AGREEMENT
                  within thirty (30) days of such assignment.

         14.08    LICENSEE agrees in its use of any PHS-supplied materials to
                  comply with all applicable statutes, regulations, and
                  guidelines, including PHS and DHHS regulations and guidelines.
                  LICENSEE agrees not to use the materials for research
                  involving human subjects or clinical trials in the United
                  States without complying with 21 CFR Part 50 and 45 CFR Part
                  46. LICENSEE agrees not to use the materials for research
                  involving human subjects or clinical trials outside of the
                  United States without notifying PHS, in writing, of such
                  research or trials and complying with the applicable
                  regulations of the appropriate national control authorities.
                  Written notification to PHS of research involving human
                  subjects or clinical trials outside of the United States shall
                  be given no later than sixty (60) days prior to commencement
                  of such research or trials.

         14.09    LICENSEE acknowledges that it is subject to and agrees to
                  abide by the United States laws and regulations (including the
                  Export Administration Act of 1979 and Arms Export Control Act)
                  controlling the export of technical data, computer software,
                  laboratory prototypes, biological material, and other
                  commodities. The transfer of such items may require a license
                  from the cognizant Agency of the U.S. GOVERNMENT or written
                  assurances by LICENSEE that it shall not export such items to
                  certain foreign countries without prior approval of such
                  agency. PHS neither represents that a license is or is not
                  required or that, if required, it shall be issued.

         14.10    LICENSEE agrees to mark the LICENSED PRODUCTS or their
                  packaging sold in the United States with all applicable U.S.
                  patent numbers and similarly to indicate "Patent Pending"
                  status. All LICENSED PRODUCTS manufactured in, shipped to, or
                  sold in other countries shall be marked in such a manner as to
                  preserve PHS patent rights in such countries.



                                 Page 11 of 24
<PAGE>

         14.11    By entering into this AGREEMENT, PHS does not directly or
                  indirectly endorse any product or service provided, or to be
                  provided, by LICENSEE whether directly or indirectly related
                  to this AGREEMENT. LICENSEE shall not state or imply that this
                  AGREEMENT is an endorsement by the GOVERNMENT, PHS, any other
                  GOVERNMENT organizational unit, or any GOVERNMENT employee.
                  Additionally, LICENSEE shall not use the names of NIH, CDC,
                  PHS, or DHHS or the GOVERNMENT or their employees in any
                  advertising, promotional, or sales literature without the
                  prior written consent of PHS.

         14.12    The Parties agree to attempt to settle amicably any
                  controversy or claim arising under this AGREEMENT or a breach
                  of this AGREEMENT, except for appeals of modifications or
                  termination decisions provided for in Article 13. LICENSEE
                  agrees first to appeal any such unsettled claims or
                  controversies to the designated PHS official, or designee,
                  whose decision shall be considered the final agency decision.
                  Thereafter, LICENSEE may exercise any administrative or
                  judicial remedies that may be available.

         14.13    Nothing relating to the grant of a license, nor the grant
                  itself, shall be construed to confer upon any person any
                  immunity from or defenses under the antitrust laws or from a
                  charge of patent misuse, and the acquisition and use of rights
                  pursuant to 37 CFR Part 404 shall not be immunized from the
                  operation of state or Federal law by reason of the source of
                  the grant.

         14.14    Paragraphs 8.01, 9.06-9.08, 12.01-12.05, 13.07, 13.08, 13.09,
                  and 14.12 of this AGREEMENT shall survive termination of this
                  AGREEMENT.

                          SIGNATURES BEGIN ON NEXT PAGE


                                 Page 12 of 24
<PAGE>

                   PHS PATENT LICENSE AGREEMENT--NONEXCLUSIVE

                                 SIGNATURE PAGE

For PHS:

/s/ Steven M. Ferguson                                                 3/2/04
-------------------------                                              ---------
Steven M. Ferguson                                                     Date
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health

Mailing Address for Notices:

Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland  20852-3804  U.S.A.

For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):

by:

/s/ William D. Johnston                                     3/2/04
________________________________________                    _______________
Signature of Authorized Official                            Date

William D. Johnston
________________________________________
Printed Name

President and CEO
________________________________________
Title

Official and Mailing Address for Notices:

1165 Sanctuary Parkway, Suite 400

Alpharetta, GA 30004


Any false or misleading statements made, presented, or submitted to the
GOVERNMENT, including any relevant omissions, under this AGREEMENT and during
the course of negotiation of this AGREEMENT are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fine(s) and/or imprisonment).

                                 Page 13 of 24

<PAGE>

                 APPENDIX A--PATENT(S) OR PATENT APPLICATION(S)

PATENT(S) OR PATENT APPLICATION(S):

United States Patent Serial Number 07/702,217 (PHS reference number
E-163-1991/0-US-01) filed May 17, 1991;

United States Patent Serial Number 08/109,187 (PHS reference number
E-163-1991/1-US-01) filed August 19, 1993;

United States Patent Serial Number 08/609,218 (PHS reference number
E-163-1991/1-US-03) filed March 1, 1996;

United States Patent Serial Number 08/905,280 (PHS reference number
E-163-1991/2-US-01) filed August 1, 1997; and

United States Patent Serial Number 09/810,502 (PHS reference number
E-163-1991/2-US-02) filed March 16, 2001, all entitled, "A Method for reducing
the immunogenicity of antibody variable domains," and all continuations,
reissues, divisionals and corresponding foreign patent(s) or patent
application(s).

                                 Page 14 of 24

<PAGE>

                APPENDIX B--LICENSED FIELDS OF USE AND TERRITORY

LICENSED FIELDS OF USE:

         For use in monoclonal antibodies for the prophylactic and therapeutic
treatment of bacterial and fungal infections.

LICENSED TERRITORY:

         Worldwide

                                 Page 15 of 24

<PAGE>

                              APPENDIX C--Royalties

Royalties:

I.   Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
     royalty in the amount of [ *** ] as follows: [ *** ] due at the time of
     execution of this Agreement, [ *** ] due six months from execution of the
     Agreement and [ *** ] due one year from execution of the Agreement.

II.  Licensee agrees to pay to PHS a nonrefundable minimum annual royalty in the
     amount of Twenty-Five Thousand Dollars ($25,000.00).

III. Licensee agrees to pay PHS earned royalties on Net Sales by or on behalf of
     Licensee as follows: [ *** ] per annum, subject to adjustment under
     sub-paragraph a. below.

     a.   If it is necessary for Licensee to license technologies owned by third
          parties in order to make and have made, to use and have used, to sell
          and have sold, to offer to sell, or to import any Licensed Product(s)
          in the Licensed Field(s) of Use, and the royalties due to such third
          parties exceeds [ *** ], Licensee may reduce such royalty due to PHS
          by [ *** ] for each [ *** ] in excess of [ *** ] due to such third
          parties, provided that in no event shall the royalty paid by Licensee
          to PHS be less than [ *** ].

IV.  Licensee agrees to pay PHS benchmark royalties as follows:

<TABLE>
<S>                                                              <C>
Filing of an IND for each Licensed Product                       $[  ***  ]
Enrollment of 1st patient in the first Phase II Clinical Trial   $[  ***  ]
  for each Licensed Product
Enrollment of 1st patient in the first Phase III Clinical        $[  ***  ]
  Trial for each Licensed Product
Filing of a BLA NDA for each Licensed Product                    $[  ***  ]
Marketing Approval for each Licensed Product                     $[  ***  ]
</TABLE>

                                 Page 16 of 24


<PAGE>

                           APPENDIX D--MODIFICATIONS

PHS and LICENSEE agree to the following modifications to the Articles and
Paragraphs of this AGREEMENT:

All modifications are incorporated into the body and other appendices of this
AGREEMENT.


                                 Page 17 of 24

<PAGE>

                     APPENDIX E--BENCHMARKS AND PERFORMANCE

LICENSEE agrees to the following Commercial Development BENCHMARKS for its
performance under this AGREEMENT and, within thirty (30) days of achieving a
BENCHMARK, shall notify PHS that the BENCHMARK has been achieved.

First patient enrolled in Aurexis Phase II Clinical Trial      [  ***  ]

First patient enrolled in Aurexis Phase III Clinical Trial     [  ***  ]

BLA submission for Aurexis                                     [  ***  ]

First Commercial Sale                                          [  ***  ]


                                 Page 18 of 24

<PAGE>

                     APPENDIX F--Commercial Development Plan

                           Commercial Plan For Aurexis

Overview

     We are a biopharmaceutical company that specializes in the development and
commercialization of novel antibody-based products for the prevention and
treatment of serious bacterial infections in the hospital setting. Utilizing our
proprietary MSCRAMM protein technology, we are currently focused on developing a
portfolio of first-in-field product candidates that we believe can address unmet
medical needs or can improve upon existing therapies related to
hospital-acquired bacterial infections, particularly those caused by
staphylococcal organisms.

     We currently have two product candidates in clinical development. We have
recently completed a Phase II trial for our lead product candidate, Veronate,
which we are developing for the prevention of the most prevalent
hospital-acquired staphylococcal infections in premature, very low birth weight
infants. We have also completed a Phase I clinical trial for our second product
candidate, Aurexis, which is the subject of this license. We anticipate
initiating a Phase II clinical trial for Aurexis in early 2004 to evaluate its
potential to improve the treatment of serious Staphylococcus aureus bloodstream
infections in the general patient population, in combination with antibiotics.

     We intend to independently develop, commercialize and sell Veronate in the
United States. We believe the relevant market for Veronate is concentrated in
approximately 1,000 hospitals. Due to this concentration, we believe we can
effectively promote and sell Veronate in the United States with a small,
hospital-focused sales force of approximately 30-40 representatives. If
established, we also intend to utilize this sales force to market and sell
Aurexis in the U.S.A. Due to the increased number of possible uses for Aurexis
and the large number of doctors that make up the audience for Aurexis, we intend
to enter into a partnership(s) or collaboration(s) with other companies in order
to help us develop, commercialize and sell Aurexis in the United States and in
foreign countries.

The Market and Unmet Need

     Hospital-acquired, or nosocomial, infections refer to infections that
patients acquire while being treated or cared for in the hospital setting.
According to statistics gathered from the CDC, the United States Census Bureau
and the Eurostat Yearbook, in 2003, there will be almost six million
hospital-acquired infections in the United States, Europe and Japan, the vast
majority of which are caused by bacteria. The CDC estimates that approximately
2.1 million of these infections will occur in the United States, and that these
infections will ultimately be implicated in approximately 90,000 deaths. These
infections will also add over $4 billion to the cost of the national healthcare
system. Since the introduction of antibiotics over 60 years ago, many bacteria
have become antibiotic resistant, resulting in both an increase in the rate and
incidence of hospital-acquired infections.


                                 Page 19 of 24

<PAGE>


     The most prevalent organisms causing hospital-acquired infections in the
United States are as follows:

<TABLE>
<CAPTION>
Organism                   Types          % of Hospital Acquired Infections
--------                   -----          ---------------------------------
<S>                         <C>            <C>
Staphylococcus aureus      Bacteria       15%
Coagulase negative         Bacteria       15%
Staphylococci
Candida species            Fungi          13%
Pseudomonas aeruginosa     Bacteria       9%
Enterococci species        Bacteria       8%
Enterobacter species       Bacteria       5%
Other                      Various        35%
</TABLE>

     Staphylococcal organisms are bacteria that are the most common cause of
hospital-acquired infections worldwide, accounting for approximately 25-30% of
these infections in the United States and approximately 35-40% in both Europe
and Japan. Staphylococci cause diverse infections ranging from superficial skin
infections to invasive and potentially life-threatening infections such as
endocarditis.

     The vast majority of anti-bacterial agents available and used to treat
hospital-acquired bacterial infections are antibiotics, which are chemical
compounds, usually referred to as small molecules, whose purpose is to either
kill (i.e. bactericidal), or prohibit the reproduction and growth of (i.e.
bacteriastatic) bacteria. The increasing prevalence of drug-resistant bacteria
has made many antibiotic products ineffective, which is widely viewed as a
function of the use and, in many cases, overuse of antibiotics. Patterns of drug
resistance have been demonstrated against virtually every available antibiotic,
which has led to the increasing incidence of drug-resistant infections. Drug
resistance is the result of bacterium undergoing biochemical mutations and
successfully mounting defenses to the mechanisms of actions that generally allow
these antibiotics to work. Once a bacterium mounts a successful defense and is
no longer susceptible to the antibiotic, it can multiply and grow and become the
predominant pathogenic organism infecting the patient, and ultimately spread to
other patients.

     Examples of some of the most prevalent and virulent bacterial pathogens
that demonstrate significant patterns of drug resistance include
[methicillin-resistant S. epidermidis, or MRSE], methicillin-resistant S.
aureus, or MRSA, and vancomycin-resistant enterococci, or VRE. Most existing
antibiotics are no longer effective against these drug-resistant organisms and
the infections they cause are generally treated with vancomycin, an antibiotic
generally regarded as the drug of last resort for the treatment of serious
bacterial infections. Over the past several years, patterns of drug resistance
have been noted against vancomycin, called vancomycin-resisant S. aureus, or
VRSA, and have been documented in the United States and Japan.

Our Solution

     Due to the increased prevalence of and concern over hospital-acquired
infections, coupled with the lack of effective antibiotic therapies to address
these concerns, we believe there is a substantial opportunity to develop a
number of novel, antibody-based products that can address these unmet medical
needs and improve upon currently available therapies. We believe that antibodies
that target MSCRAMM proteins and immune-based therapies can effectively be used
to prevent and treat serious bacterial infections, including those caused by
drug-resistant organisms.

     Through our research and by utilizing our proprietary MSCRAMM protein
technology, we are developing a number of antibodies that we believe can prevent
and/or treat serious bacterial infections. MSCRAMM is an


                                 Page 20 of 24

<PAGE>

acronym for Microbial Surface Components Recognizing Adhesive Matrix Molecules.
MSCRAMM proteins are a family of proteins found on the surface of many
pathogens, including most bacteria and fungi, which enable these organisms to
initiate and maintain an infection by adhering to specific binding sites in
human tissues. We believe that the binding of these MSCRAMM proteins to human
tissue is the crucial first step in a series of coordinated events that leads to
colonization, a process often required for pathogenic organisms to initiate an
infection. Once these organisms adhere to the host tissue, a series of
biochemical changes begin, including the production of toxins and other factors
that can increase the severity of the infection. Additionally, bacteria often
colonize or coat implanted devices, forming a biofilm. A biofilm surrounding the
colonized organisms can significantly impact the ability of antibiotics to clear
the infection.

     We have identified antibodies which target MSCRAMM proteins, and like all
antibodies, they exhibit at least two important biological mechanisms of action.
First, by targeting and binding to the relevant MSCRAMM protein, these
antibodies can prevent the invading pathogenic organism from attaching to the
host tissues or implanted medical devices. Secondly, the relevant antibodies
will coat the invading pathogen, "marking" it for opsonization, or clearance, by
the immune system. Through these two mechanisms of action, we believe that
antibodies that target MSCRAMM proteins can reduce the incidence and severity of
bacterial and fungal infections.

     We believe that products based on our MSCRAMM technology may have the
following potential advantages over existing therapies:

     o    reduce the mortality and morbidity associated with the treatment of
          serious, life-threatening bacterial infections where currently
          available antibiotic therapies are ineffective;

     o    when used prophylactically our products may prevent serious
          hospital-acquired infections in high risk patients where concerns over
          patterns of drug resistance do not allow prophylactic measures with
          antibiotics;

     o    due to their specificity, antibody-based products generally produce
          fewer side effects than antibiotics, which can cause allergic
          reactions, lower blood pressure and suppression of the bone marrow;

     o    reduce the use of antibiotics, particularly vancomycin, in the
          intensive care setting, thereby reducing the potential for increased
          patterns of antibiotic resistance;

     o    bacteria are less likely to develop resistance to our antibody-based
          products as the mechanisms of action used by antibodies are
          significantly different from that of antibiotics and do not cause
          bacteria to mount the same biochemical defenses they exhibit against
          antibiotics; and

     o    reduce the overall costs related to hospital-acquired infections.

Our Strategy

     Our goal is to become a fully integrated, biopharmaceutical company that
develops and commercializes novel, antibody-based products to prevent and treat
serious bacterial infections in the hospital setting. In order to achieve this
goal, we are developing a novel approach to prevent and treat serious bacterial
infections, including those that are caused by antibiotic-resistant bacteria.
Despite the availability of antibiotics, these infections continue to be a
significant cause of morbidity and mortality. We are not aware of any approved
antibody-based products that are specifically targeted to prevent or treat
specific, acute bacterial infections. Our goal is to be the first company to
market these types of products to address specific bacterial infections, which
may result in new or improved standards of care where current clinical needs are
not being met.

     We intend to retain partial marketing and promotional rights in the United
States for Aurexis in markets or indications that we believe we can readily
address with the sales force we will establish to promote and sell


                                 Page 21 of 24

<PAGE>

Veronate. Outside of the United States, we intend to out-license the technology,
marketing and selling rights to Aurexis in countries or regions where we believe
it is strategically beneficial.

Aurexis the Product

     Aurexis is a humanized monoclonal antibody that is being developed for the
prevention and/or treatment of serious S. aureus infections. We intend to
initially develop Aurexis for use in combination with current standard of care
antibiotic therapy to treat serious S. aureus bloodstream infections. We are
developing Aurexis to be administered intravenously, as a single dose, in the
hospital setting. The unique mechanism of action of Aurexis allows it to be used
in both resistant and sensitive strains of the bacteria with equal efficacy.

Market for the Prevention or Treatment of S. aureus Infections

     S. aureus is one of the leading causes of hospital-acquired infections
worldwide and is the leading cause of mortality associated with these
infections. In 2002, there were an estimated 1.1 million hospital-acquired S.
aureus infections worldwide, of which approximately 300,000 occurred in the
United States. The most common hospital-acquired infections caused by S. aureus
are skin and soft tissue, bloodstream and pneumonia infections, which in 2002
accounted for approximately 126,000, 50,000 and 48,000, respectively.

     Aurexis is initially being developed to be used in combination with best
available antibiotics for bloodstream infections caused by S. aureus. We believe
the potential use for Aurexis, in this situation, will be independent of the
specific antibiotics used to treat S. aureus infections. We also believe that
the medical benefits of Aurexis, when used in combination with currently
available antibiotic therapy, will be based on its ability to improve treatment
outcomes, including reducing the number of days in the intensive care unit or
ICU, the rate of relapse of infection, frequency of complications of infection,
and mortality associated with serious S. aureus infections. We therefore believe
that the development of new, more expensive antibiotics that simply demonstrate
equivalent efficacy to existing therapies will not reduce or displace the
potential use of Aurexis.

     S. aureus organisms are generally categorized into two distinct groups:
those that are still susceptible to a number of orally or intravenously
delivered antibiotics which are referred to as methicillin-susceptible S.
aureus, or MSSA, and those which currently are not responsive to most
antibiotics and are only responsive to vancomycin. The latter are know as
methicillin resistant S. aureus or MRSA. Several recently published reports
indicate that the average mortality rate among patients with infections caused
by MSSA was 19%-23%. These studies, as well as others, also indicate that the
average mortality rate associated with MRSA infections was approximately 35%,
with specific studies reporting as high as 40% for certain types of MRSA
infections. In addition to this high rate of mortality, studies conducted at the
Duke University Medical Center in North Carolina and the Lewin Group in New York
City indicate that patients that acquire a MRSA bloodstream infection generally
require an additional 12 days of hospitalization, and the incremental cost to
treat the infection averages approximately $35,000. S. aureus is exhibiting an
increasing pattern of drug resistance. According to the CDC, the percentage of
hospital-acquired S. aureus infections in intensive care units in the United
States caused by MRSA doubled between 1989 and 2001, increasing from 30% to
nearly 60%. In Europe and Japan, the estimated incidence of MRSA among all S.
aureus strains in the hospital setting is currently 50% and 70%, respectively.
[during which year]

     Patients at high risk for serious S. aureus infections are generally
immunocompromised, and include those receiving hemodialysis, intravenous drug
users, diabetics, and patients with artificial heart valves, orthopedic
appliances, cardiac pacemakers, or other in-dwelling medical devices. S. aureus
is also implicated in the decline of respiratory function among patients with
cystic fibrosis.

     We believe that the high rate of mortality and the significant costs
associated with hospital-acquired S. aureus infections represent a significant
unmet medical need. We believe the worldwide revenue opportunity for Aurexis is
approximately $[ *** ], of which $[ *** ] is in the United States and $[ *** ]
in the rest of the world, primarily in Europe and Japan. A major independent
marketing research company has confirm this potential in a large primary
research study with doctors and opinion leaders in the US, Europe and Japan.


                                 Page 22 of 24

<PAGE>

Current Clinical Practices for S. aureus Infections

     The current clinical practice for the treatment of infections due to S.
aureus is dictated by the type or location of the infection, (i.e. surgical
site, bloodstream, etc.), the antibiotic-resistance pattern of the infecting
strain, and the clinical characteristics of the patient.

     In general, there are three decision points in the treatment of a S. aureus
infection. First, without the benefit of definitive tissue or blood cultures,
the clinician must make an initial diagnosis. The selection of standard of care
antibiotic(s) at this point is influenced by the seriousness of the infection
and the likelihood that S. aureus is the cause and if so, whether it is
resistant to one or more antibiotics. Non-life threatening skin and soft tissue
infections may be treated with oral antibiotics. Bloodstream infections and
serious pneumonias are typically treated with vancomycin, the antibiotic of last
resort, which can only be administered intravenously. The nature of the bacteria
are generally identified within one or two days. Once the S. aureus strain is
determined, the number and types of antibiotics may be modified. Additional
modifications to the regimen of antibiotic therapy can be made if the patient's
response is inadequate.

Aurexis Preclinical Results

     We have conducted a number of preclinical studies in animals to assess both
the safety and efficacy of Aurexis. These studies included using Aurexis both
prophylactically, as monotherapy to prevent, and in combination with vancomycin
to treat, MRSA infections. In these studies, no safety or toxicity issues were
observed. These studies further demonstrated that when used prophylactically, a
single dose of Aurexis, administered intravenously at 10mg/kg or 30 mg/kg,
provided statistically significant levels of protection against MRSA infections
as compared to the control. The therapeutic administration of Aurexis at 30
mg/kg, intravenously, in combination with vancomycin, significantly enhanced the
clearance of MRSA from the animals' critical organs as compared to vancomycin
alone. We believe that the preclinical models that yielded these results are
generally viewed by the scientific community as supportive, from both a safety
and an efficacy perspective, of how Aurexis would perform in human clinical
trials.

Clinical Trials

     Phase I. In June 2003, we completed the enrollment of a Phase I,
dose-escalating clinical trial in 18 healthy volunteers to assess the safety of
Aurexis and determine dose-related pharmacokinetics. In this open-label study,
four different doses of Aurexis were administered intravenously and studied: 2,
5, 10, and 20 mg/kg. These volunteers were followed for a period of 56 days
subsequent to the administration. Only one adverse event (a transitory headache)
that was considered possibly related to Aurexis was observed. Otherwise, no
safety issues were identified and no dose reached the protocol-specified
definition of maximum tolerated dose. Pharmacokinetic analysis demonstrated that
doses of 10mg/kg, or greater, achieved plasma levels of Aurexis associated with
therapeutic efficacy in preclinical animal models.

     Phase II. We are planning to initiate a Phase II clinical trial for Aurexis
in February 2004. We expect that it will be a randomized, double-blind,
placebo-controlled trial, conducted at 8 to 12 hospitals in the United States.
The purpose of this trial will be to obtain safety, pharmacokinetic and
preliminary efficacy data for Aurexis in hospitalized patients with a documented
S. aureus bloodstream infection, also referred to as S. aureus bacteremia. We
intend to enroll 60 patients in this trial. Subjects will then be randomized to
one of three cohorts:

     o    Standard of care antibiotic therapy plus Aurexis, 10.0 mg/kg as a
          single dose

     o    Standard of care antibiotic therapy plus Aurexis, 20.0 mg/kg as a
          single dose

     o    Standard of care antibiotic therapy plus placebo (normal saline) as a
          single dose

     The choice and duration of antibiotic therapy will be made by the
respective investigator at each participating site. Safety will be monitored by
physical examinations, clinical laboratory tests, and adverse event


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assessments. Efficacy will be assessed by comparing the duration of fever and
bacteremia, or how long the S. aureus organisms remain in the bloodstream, among
the treatment groups. We do not intend to design the study to achieve a
statistically significant efficacy endpoint.

     Several additional Phase II studies are being considered including patients
with cystic fibrosis, kidney failure, end stage renal disease and other complex
infections. Each of these will be separate studies with opinion leaders and
specialists in that particular area of disease.

     Phase III and BLA Submission. While it is too early to predict which
indications and applications of Aurexis will be successful in the Phase II
trials and, therefore, form the basis of confirmatory Phase III trials, it is
reasonable to expect that a Phase III trial will start by the end of 2005. The
Phase III trial will last about 18 months and another six months will be needed
to prepare the BLA. The BLA will therefore be filed in late 2007 with approval
and launch of the product in the first quarter of 2009.

Materials and Manufacturing

     Inhibitex does not own or operate any manufacturing facilities. We
currently outsource the manufacturing of our product candidates including
Aurexis to qualified contract manufacturers. We anticipate we will continue to
rely on these or other qualified contract manufacturers for the foreseeable
future. Our contract manufacturers are currently located in the United States,
although, in the future, we may consider using qualified manufacturers located
in Europe or other regions.

     We used a contract manufacturer to produce clinical trial materials for
Aurexis for use in Phase I and II clinical trials. We may contract with a
different contract manufacturer capable of producing Phase III clinical trial
material, and if Aurexis is approved for sale, commercial grade material. This
transition will require re-validation and may require further clinical trials
for Aurexis.

Sales and Marketing

     As previously mentioned, we intend to develop, and commercialize our lead
product, Veronate, independently in the United States. We believe that a
hospital-focused sales force of approximately 30-40 qualified individuals can
effectively promote Veronate in at least 1000 of the 6000 hospitals that exist
in the U.S.A. We intend to create such a sales force and build a commercial
infrastructure, including marketing, reimbursement, accounting, information
technology and management and administrative functions, which is capable of
supporting the independent commercialization of Veronate. Assuming Veronate is
approved for sale by the FDA, we will promote and sell Aurexis, through this
same hospital-focused sales force and may increase the size of this sales force
over time to cover additional hospitals and respond to sales demands. Depending
upon the indications that are approved by the FDA for Aurexis and the number of
different target doctor populations that Aurexis will address, we plan to seek a
partner with a large hospital sales force to assure that the total market
potential for Aurexis is covered. A partnership with a larger company for
Aurexis will probably include partner contributions in the areas of product and
clinical development, as well as, the sharing or commercial responsibilities. We
anticipate partnering or collaborating with other companies to develop and sell
Aurexis outside of the United States.


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