<PAGE>

                                                                   EXHIBIT 10.23

                                           *** TEXT OMITTED AND FILED SEPARATELY
                                    PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST
                                            UNDER 17 C.F.R. SECTION 200.80(b)(4)
                                               AND RULE 406 UNDER THE SECURITIES
                                                         ACT OF 1933, AS AMENDED

                             COLLABORATION AGREEMENT

      THIS COLLABORATION AGREEMENT (the "AGREEMENT") is effective as of August
1, 2003 (the "EFFECTIVE DATE") by and between STRUCTURAL GENOMIX, INC. a
Delaware corporation located at 10505 Roselle Street, San Diego, CA 92121
("SGX"), and OSI PHARMACEUTICALS, INC., and its Affiliates, a Delaware
corporation, with executive offices at 58 South Service Road, Melville, New York
11747 ("OSIP"). SGX and OSIP may be referred to herein individually as a "Party"
and collectively as the "Parties."

                                   BACKGROUND

      WHEREAS, SGX has expertise in the field of structure directed drug
discovery;

      WHEREAS, OSIP has expertise in the discovery, validation and development
of drugs for the treatment of cancer;

      WHEREAS, SGX and OSIP wish to enter into a collaborative research program
to perform high-throughput co-complex structure determination of OSIP drug
targets with compounds provided by OSIP.

      NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties hereby agree as follows:

1. DEFINITIONS

      1.1 "Affiliate" means, with respect to a Party hereto, a corporation,
company or other entity that is owned or controlled by such Party by virtue of
such Party's direct or indirect ownership or control of more than fifty percent
(50%) of the outstanding shares or securities (representing the right to vote
for the election of directors or other managing authority) of such corporation,
company or other entity, but such corporation, company or other entity shall be
deemed to be an Affiliate only so long as such ownership or control exists.

      1.2 "Co-Complex Structure" means the three dimensional atomic structure of
the bound combination of a OSIP Target with an OSIP Compound or Other Compound,
made in the course of the Collaboration, which has the following
characteristics: either (a) (i) [...***...] (i.e., the [...***...] or is
[...***...]); (ii) [...***...] in the [...***...]; (iii) [...***...]%[...***...]
and [...***...]% in the [...***...]; (iv) [...***...]; and (v) [...***...]; or
(b) (i) [...***...]; (ii) [...***...] in the [...***...]; (iii)
[...***...]%[...***...] and [...***...]% in the [...***...]; (iv) [...***...];
(v) [...***...]; and (vi) [...***...] in a [...***...] for the [...***...]
provided that the [...***...] of the [...***...] is [...***...] and [...***...].


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      1.3 "Collaboration" means the research collaboration performed by the
Parties pursuant to Section 2.1.

      1.4 "Collaboration Technology" means Patent Rights and Know-How which are
conceived or reduced to practice or otherwise developed by or on behalf of OSIP
or SGX or jointly by OSIP and SGX during and in the performance of the
Collaboration, including without limitation Co-Complex Structures; provided
however, Collaboration Technology does not include SGX Background Technology or
OSIP Background Technology.

      1.5 "Controls" or "Controlled" means possession of the ability to grant
the licenses or sublicenses as provided for herein, without violating the terms
of any agreement or other arrangement with a Third Party.

      1.6 "Know-How" means all ideas, inventions, instructions, designs,
processes, formulas, software, materials, methods, processes, techniques, and
data.

      1.7 "OSIP Background Technology" means all Patent Rights and Know-How
owned or Controlled by OSIP which are: (a) existing on the Effective Date or
developed during the Term of the Collaboration (i) outside of the Collaboration
or (ii) within the Collaboration but are of general application (for example,
have application to other proteins in addition to the OSIP Targets); and (b)
necessary for the conduct of the Collaboration.

      1.8 "OSIP Compound" means an active small molecule ligand that is provided
by OSIP to SGX for inclusion in the Collaboration that is not publicly known to
bind to, inhibit or modulate or to be likely to bind to, inhibit or modulate,
the OSIP Target to which it is intended to be bound under the Collaboration.

      1.9 "OSIP Materials" means OSIP Targets, OSIP Compounds, Other Compounds
and any protein, clone or vector used to express OSIP Targets in each case,
which are owned or Controlled by OSIP.

      1.10 "OSIP Target" means all forms of the target listed in the attached
Exhibit B, as may be amended from time to by agreement of the JSC in accordance
with Section 2.6.

      1.11 "Other Compound" means a small molecule ligand that the JSC agrees to
include in the Collaboration that is publicly known to bind to, inhibit or
modulate or to be likely to bind to, inhibit or modulate, the OSIP Target to
which it is intended to be bound under the Collaboration.

      1.12 "Patent Rights" means patent applications filed in any country
worldwide, including provisionals, utilities, continuations (in whole or in
part), divisionals, reissues, reexaminations and foreign counterparts thereof,
any patents issued on such applications and any extensions of term,
registrations or confirmations of such patents.

      1.13 "SGX Background Technology" means all Patent Rights and Know-How
owned or Controlled by SGX which are (a) existing on the Effective Date or
developed during the Term of the Collaboration (i) outside of the Collaboration
or (ii) within the Collaboration but are of general application (for example,
have application to other proteins in addition to the OSIP Targets); and (b)
necessary for the conduct of the Collaboration.

                                  Page 2 of 16


<PAGE>

      1.14 "SGX Materials" means the biological and chemical materials embodying
any Co-Complex Structure, any protein, clone, or vector used to express a
Co-Complex Structure, in each case which are owned or Controlled by SGX and are
developed in the course of the Collaboration.

      1.15 "Term of the Collaboration" shall have the meaning set forth in
Section 2.2.

      1.16 "Third Party or Third Parties" means any entity other than OSIP or
SGX or their respective Affiliates.

2. COLLABORATION.

      2.1 Collaboration. Subject to the terms and conditions of this Agreement
OSIP and SGX will use commercially reasonable efforts to conduct the
Collaboration in accordance with the collaboration plan attached to this
Agreement as Exhibit A ("Collaboration Plan").


      2.2 Term of the Collaboration. The term of the Collaboration commences on
the Effective Date and terminates eighteen (18) months thereafter, unless
extended by mutual agreement of the parties ("Term of Collaboration").


      2.3 Provision of OSIP Compounds.

            (a) Delivery of OSIP Compounds. Within three (3) months of the
inclusion of an OSIP Target in the Collaboration OSIP will deliver to SGX a
minimum of [...***...] ([...***...]) OSIP Compounds for such OSIP Target which
bind to, inhibit or modulate the OSIP Target to which they are intended to be
bound under the Collaboration; with each such OSIP Compound having: (i)
solubility [...***...]; (ii) molecular weight of [...***...]; and (iii) potency
againsT the OSIP Target of [...***...]; and being provided in volumes of at
least [...***...] ([...***...]) [...***...].

            (b) Consequences of Delay. On an OSIP Target by OSIP Target basis,
in the event that OSIP has not provided any OSIP Compounds as described in
Section 2.3(a) above, for such OSIP Target, during the Term of the
Collaboration, then OSIP's rights under Section 4.1(b) will not include any
structural data on such OSIP Target.

      2.4 Provision of OSIP Background Technology. Within 30 days following the
Effective Date and during the Term of the Collaboration OSIP will provide SGX
with reasonable quantities of such OSIP Materials and other OSIP Background
Technology which are necessary or useful for the conduct of the Collaboration by
SGX.

      2.5 Delivery of SGX Materials and Collaboration Technology. During the
Term of the Collaboration, upon reasonable request by OSIP, SGX will provide
OSIP with reasonable quantities of available SGX Materials and other
Collaboration Technology, to the extent necessary for OSIP to exercise its
rights under this Agreement.

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<PAGE>

      2.6 Designation of Additional Targets. During the Term of the
Collaboration the JSC may agree to include additional OSIP Targets in the
Collaboration and/or remove OSIP Targets from the Collaboration, provided
however, (i) there will be no more than [...***...] ([...***...]) OSIP Targets
included in the Collaboration at any one time, for which the Milestone in
Section 3.3(b) has not been achieved; and (ii) there will be no more than
[...***...] ([...***...]) OSIP Targets included in the Collaboration in total.

      2.7 Records; Reports. Monthly for the first six (6) months and quarterly
thereafter during the Term of the Collaboration the Parties will have the
obligation to prepare and provide to the JSC written reports summarizing the
progress of the work performed by such Party in the course of the Collaboration
during the preceding time period. Promptly upon completion of the Collaboration
SGX shall provide a final written report summarizing its activities during the
Collaboration and the results thereof.

      2.8 Joint Steering Committee.

            (a) Responsibilities. SGX and OSIP will establish a Joint Steering
Committee ("JSC") to oversee the strategic and tactical aspects of the
Collaboration.

            (b) Membership; Decisions. The JSC shall be comprised of two (2)
representatives from OSIP and two (2) representatives from SGX:

<TABLE>
<CAPTION>
          OSIP                                         SGX
---------------------------                  ---------------------------
<S>                                          <C>
[...***...], Ph.D.                           [...***...], Ph.D.
Vice President, [...***...]                  Vice President, [...***...]

[...***...],Ph.D.                            [...***...], Ph.D.
Vice President,  [...***...]                 Vice President, [...***...]
</TABLE>

Each Party may replace its JSC representatives at any time, with written notice
to the other Party. Each representative of SGX and OSIP shall have one vote on
the JSC, which vote may be cast by proxy. All decisions of the JSC shall be made
by unanimous vote. Any matter which the JSC is unable to agree shall be
submitted to the Chief Scientific Officer of SGX and the VP of Research of OSIP
for resolution.

            (c) Responsibilities. The JSC will review, direct and supervise the
performance of the Collaboration Plan. The JSC will be responsible for (i)
coordinating, monitoring and reporting research progress and ensuring open
exchange between the Parties with respect to Collaboration activities; (ii)
determining the research strategy and time lines for the Collaboration Plan;
(iii) confirming the achievement of Milestones under Section 3.3; and (iv)
including additional OSIP Targets or removing OSIP Targets from the
Collaboration in accordance with Section 2.6.

            (d) Meetings. The JSC shall meet via videoconference or in person,
monthly for the first six (6) months and on a quarterly basis thereafter
(alternating between San Diego, CA and Melville, NY or as the JSC may otherwise
agree), to discharge its responsibilities. Each Party will be responsible for
paying its own expenses in connection with participating in the meetings of the
JSC. The JSC shall prepare written minutes of each

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meeting and a written record of all JSC decisions, whether made at a JSC meeting
or otherwise.

3. CONSIDERATION

      3.1 Upfront Payment. Within ten (10) days of the Effective Date, OSIP will
pay to SGX the sum of $100,000.

      3.2 Research Funding. During the Term of the Collaboration, OSIP will pay
$60,000 per month, payable quarterly in advance, commencing on the Effective
Date.

      3.3 Research Milestone Payments. within thirty (30) days of the date of
achievement of the applicable milestone during the Term of the Collaboration,
OSIP will pay to SGX the following non-refundable milestone payments; provided
however, that OSIP will not be required to pay under this Section 3.3 for more
than [...***...] ([...***...]) milestones (i.e. $[...***...]) prior to the first
anniversary of the Effective Date; or an aggregate of [...***...] ([...***...])
milestones during the Term of the Collaboration (i.e. $[...***...]):


<TABLE>
<CAPTION>
MILESTONES                                                               AMOUNT
-------------------------------------------------------------------      ----------------------------
<S>                                                                      <C>
(a) Completion of the first Co-Complex Structure for an OSIP Target.     $[...***...] per OSIP Target

(b) Completion of each additional [...***...] Co-Complex Structures
aggregated across all OSIP Targets (not including the first              $[...***...] per [...***...] Co-Complex Structures
Co-Complex Structure for each OSIP Target).
</TABLE>


4. LICENSES

      4.1 License to OSIP. Subject to the terms and conditions of this
Agreement, SGX hereby grants to OSIP the following licenses:


            (a) an exclusive, worldwide, roylty-free license (with the right to
grant sublicenses in accordance with Section 4.3 below) under SGX'S interest in
Collaboration Technology covering Co-Complex Structures which contain OSIP
Compounds, to use such Collaboration Technology for any purpose.



            (b) a non-exclusive, worldwide, roylty-free license (with the right
to grant sublicenses in accordance with Section 4.3 below) under SGX'S interest
in Collaboration Technology other than that covering Co-Complex Structures
containing OSIP Compounds, to use such Collaboration Technology for any purpose.


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      4.2 Cross Licenses. Each Party hereby grants to the other, a
non-exclusive, non-transferable, royalty-free license to use and practice OSIP
Background Technology, SGX Background Technology and such Party's interest in
Collaboration Technology, solely to conduct the Collaboration.

      4.3 Sublicenses. OSIP may sublicense the rights granted in Section 4.1 to
its Affiliates and to Third Parties. Each such sublicense granted by OSIP shall
be consistent with all of the terms and conditions of this Agreement. OSIP as
the sublicensor, shall remain responsible for all of each such sublicensee's
obligations under this Agreement.

5. INTELLECTUAL PROPERTY

      5.1 Ownership of Technology.

            (a) Ownership by SGX. Title to all SGX Background Technology and all
Collaboration Technology made solely by SGX, shall be owned solely by SGX.

            (b) Ownership by OSIP. Title to all OSIP Background Technology, and
Collaboration Technology made solely by OSIP, shall be owned solely by OSIP.

            (c) Joint Ownership. Title to all Collaboration Technology made
jointly by OSIP and SGX in connection with the Collaboration shall be jointly
owned by OSIP and SGX. Each Party agrees to execute in a timely manner such
documents as the other Party may request to document and perfect joint ownership
of such Collaboration Technology.

            (d) Law. Inventorship of inventions and, subject to the terms of
this Agreement, ownership rights with respect thereto, shall be determined in
accordance with the patent laws of the United States.

      5.2 Patent Prosecution.

            (a) Background Technology. SGX shall be responsible, at its sole
discretion and expense, for the preparation, filing, prosecution and maintenance
of the patent applications and patents within Patent Rights within SGX
Background Technology, in countries selected by SGX, and for conducting any
interferences, reexaminations, reissues, oppositions, or request for patent term
extension relating thereto. OSIP shall be responsible, at its sole discretion
and expense, for the preparation, filing, prosecution and maintenance of the
patent applications and patents within Patent Rights within OSIP Background
Technology, in countries selected by OSIP, and for conducting any interferences,
reexaminations, reissues, oppositions, or request for patent term extension
relating thereto.


            (b) Collaboration Technology. OSIP shall be responsible, at its
expense and sole discretion, for the preparation, filing, prosecution and
maintenance of patent applications and patents claiming Collaboration Technology
covering Co-Complex Structures ("OSIP Patents"). SGX shall be responsible, at
its expense and sole discretion, for the preparation, filing, prosecution and
maintenance of patent applications and patents claiming Collaboration Technology
other than that covering Co-Complex Structures ("SGX


                                  Page 6 of 16

<PAGE>

Patents"). On an OSIP Target by OSIP Target basis, in the event that SGX elects
not to file a patent application for an SGX Patent within twelve (12) months of
determination of such structure, OSIP shall have the right to file, prosecute
and maintain such patent applications and SGX will reasonably assist OSIP in
such activities at OSIP's expense. Furthermore, in the event that SGX elects not
to pursue prosecution or maintenance of any patent applications or patents
claiming such Collaboration Technology, SGX shall give OSIP not less than sixty
(60) days notice before any relevant deadline or any permitted public
disclosure, and OSIP shall have the right to pursue, at its sole discretion and
expense, prosecution and maintenance of such patent applications or patents and
SGX will reasonably assist OSIP in such activities at OSIP's expense.

      5.3 Patent Enforcement. In the event either Party becomes aware of any
infringement or misappropriation of a patent filed in accordance with Section
5.2(b) (a "Collaboration Patent"), it shall promptly notify the other Party
hereto. OSIP shall have the sole right, at its sole discretion and expense, to
take any and all steps to abate infringement or misappropriation of OSIP
Patents. SGX shall have the sole right, at its sole discretion and expense, to
take any and all steps to abate infringement or misappropriation of SGX Patents.
The Parties will cooperate with each other, at the other's request, including
without limitation, by joining such proceeding as a party if required by
applicable law, with fees and costs specific to the litigation to be borne by
the Party responsible. In the event a Party elects not to pursue abatement of
infringement or misappropriation (the "Declining Party"), the Declining Party
shall give the other Party not less than sixty (60) days notice before any
relevant deadline and the other Party shall have the right to pursue, at its
sole discretion and expense, such activities. Should such other Party pursue
such activities, the Declining Party will cooperate with the other Party, at its
request, with fees and costs specific to the litigation to be borne by the other
Party.

6. CONFIDENTIALITY AND PUBLICITY

      6.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving Party, or any Affiliate thereof, shall not publish or
otherwise disclose and shall not use for any purpose, except as expressly
permitted herein any information or material furnished to it by the other Party
hereto pursuant to this Agreement which if disclosed in tangible form is marked
"Confidential" or with other similar designation to indicate its confidential or
proprietary nature, or if disclosed orally is confirmed as confidential or
proprietary by the Party disclosing such information at the time of such
disclosure or within thirty (30) days thereafter ("Confidential Information").
Notwithstanding the foregoing, it is understood and agreed that Confidential
Information shall not include information or material that, in each case as
demonstrated by written documentation:

            (a) was already known to the receiving Party, or an Affiliate
thereof, other than under an obligation of confidentiality, at the time of
disclosure;

            (b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

                                  Page 7 of 16

<PAGE>

            (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party, or an Affiliate thereof, in breach of this
Agreement; or

            (d) was subsequently lawfully disclosed to the receiving Party, or
an Affiliate thereof, by a person other than a Party hereto or independently
developed by the receiving Party or an Affiliate thereof without reference to
any Confidential Information disclosed by the disclosing Party.

      6.2 Permitted Disclosures. Notwithstanding the provisions of Section 6.1
above, each Party hereto may disclose the other's Confidential Information to
the extent such disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with
applicable governmental regulations, or submitting information to tax or other
governmental authorities, provided that if a Party is required to make any such
disclosure of another Party hereto's Confidential Information, to the extent it
may legally do so, it will give reasonable advance written notice to the other
Party of such disclosure so that the other Party may attempt to secure
confidential treatment of such Confidential Information prior to its disclosure
(whether through protective orders or otherwise).


      6.4 Publication. Any public disclosure (oral, written or graphic) by
either Party describing the scientific results of the Collaboration will require
prior review and approval of the other Party at least thirty (30) days prior to
its submission for publication or other public disclosure, PROVIDED HOWEVER, SGX
may publicly disclose information regarding the number of co-complex structures
completed under the Collaboration and methods utilized by SGX in the course OF
the Collaboration provided OSIP is given the opportunity to review in advance
any such disclosure to ensure that no Confidential Information of OSIP is
disclosed. If the reviewing Party so requests, the proposed public disclosure
will be delayed for forty-five (45) days from the date of each request for the
filing of patent application(s) related to the proposed public disclosure. The
Parties will jointly discuss and agree on any statements to the public regarding
the execution and subject matter of this Agreement, except with respect to
disclosures required by law or regulation and provided further that
notwithstanding the above, SGX will have the right to disclose the terms of this
Agreement (other than the identity of the OSIP Targets) in confidence to
potential investors or strategic partners bound by obligations of
confidentiality.


7. INDEMNIFICATION

      7.1 Indemnification of SGX. OSIP shall indemnify, defend, and hold
harmless SGX, the directors, officers, and employees of SGX and the successors
and assigns of any of the foregoing (the "SGX Indemnitee(s)") from and against
all claims, losses, costs, and liabilities (including, without limitation,
payment of reasonable attorneys' fees and other expenses of litigation), and
shall pay any damages (including settlement amounts) finally awarded, with
respect to any claim, suit or proceeding (any of the foregoing, a "Claim")
brought by Third Party against a SGX Indemnitee, arising out of or relating to:
(a) the exercise by OSIP of the rights granted OSIP under this Agreement
relating to the Collaboration Technology; (b) a breach of OSIP's representations
and warranties under

                                  Page 8 of 16
<PAGE>

Section 8; (c) any products developed, manufactured, used, sold or otherwise
distributed by or on behalf of OSIP, its Affiliates or permitted sublicensees,
utilizing any Collaboration Technology, (including without limitation, product
liability claims); (d) the gross negligence or willful misconduct of OSIP; (e)
the use, handling, transfer or storage of the SGX Materials received from SGX
hereunder; or (f) a claim that the use by SGX or by OSIP of an OSIP Target, DNA
coding for an OSIP Target, structures of OSIP Targets, Co-Complex Structures
(except if such claim arises solely from the use of SGX Background Technology),
OSIP Materials or an OSIP Compound, infringes the intellectual property rights
of a Third Party, except, in each case, to the extent caused by the gross
negligence or willful misconduct of a SGX Indemnitee.

      7.2 Indemnification of OSIP. SGX shall indemnify, defend and hold harmless
OSIP, the directors, officers, and employees of OSIP, and the licensors,
successors and assigns of any of the foregoing (the "OSIP Indemnitee(s)") from
and against all Claims, brought by Third Party against an OSIP Indemnitee,
arising out of or relating to: (a) a breach of SGX's representations and
warranties under Section 8; (b) the gross negligence or willful misconduct of
SGX; (c) the handling, transfer or storage of the OSIP Materials; or (d) a claim
that the use by OSIP of any Co-Complex Structures or SGX Materials infringes the
intellectual property rights of a Third Party if such claim arises solely from
the use of SGX Background Technology; except, in each case, to the extent due to
the gross negligence or willful misconduct of an OSIP Indemnitee.

      7.3 Indemnification Procedures. An Indemnitee that intends to claim
indemnification under this Article 7 shall promptly notify the other Party (the
"Indemnitor") in writing of any claim in respect of which the Indemnitee intends
to claim such indemnification, and the Indemnitor shall have sole control of the
defense and/or settlement thereof, provided that the indemnified Party may
participate in any such proceeding with counsel of its choice at its own
expense. The indemnity agreement in this Article 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 7 but the omission so to deliver written notice to
the Indemnitor shall not relieve the Indemnitor of any liability that it may
have to any Indemnitee other than under this Article 7. The Indemnitee under
this Article 7, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives and provide full information in the
investigation of any Claim covered by this indemnification. Neither Party shall
be liable for any costs or expenses incurred by the other Party without its
prior written authorization.

8. REPRESENTATIONS AND WARRANTIES

      8.1 Each Party. Each Party represents and warrants to the other (i) that
it has the legal power, authority and right to enter into this Agreement and to
perform its respective obligations under this Agreement; (ii) that it is not a
Party to any agreement or arrangement with any Third Party or under any
obligation or restriction which in any way limits or conflicts with its ability
to fulfill any of its obligations under this Agreement, (including without
limitation, the licenses granted in Article 4), and shall not enter into any
such

                                  Page 9 of 16
<PAGE>

agreement or arrangement during the term of this Agreement; (iii) each employee
or person engaged in the Collaboration on behalf of OSIP or SGX has entered into
a written agreement which provides for the assignment to OSIP or SGX,
respectively, of all inventions and discoveries made by such employee or person
during the course of his or her employment or engagement with OSIP or SGX.

      8.2 Disclaimer. SGX and OSIP specifically disclaim any guarantee that the
Collaboration will be successful, in whole or in part. The failure of the
parties to solve structures or to meet any of the estimated time lines in the
Collaboration Plan will not constitute a breach of any representation or
warranty or other obligation under this Agreement provided that a Party used
commercially reasonable efforts to conduct the Collaboration in accordance with
the collaboration plan. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, OSIP AND SGX MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, OR FITNESS
FOR A PARTICULAR PURPOSE OF THE SGX BACKGROUND TECHNOLOGY, OSIP BACKGROUND
TECHNOLOGY OR COLLABORATION TECHNOLOGY OF EACH PARTY, INCLUDING WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY OR OTHER RIGHTS OF ANY THIRD
PARTY.

9. TERM AND TERMINATION


      9.1 Term of the Agreement. Subject to Section 9.3, the term of this
Agreement shall commence on the Effective Date and unless terminated earlier,
will terminate upon the later of (i) expiration of the last to expire patent
within the Patent Rights that covers Collaboration Technology or (ii)
five years after the Effective Date.


      9.2 Termination for Cause. Either OSIP or SGX may terminate this Agreement
by written notice, stating such Party's intent to terminate in the event the
other Party shall have materially breached or defaulted in the performance of
any of its obligations hereunder, and such default shall have continued for
thirty (30) days after written notice thereof was provided to the breaching
Party by the nonbreaching Party.


      9.3 Termination by OSIP. OSIP may terminate this Agreement by written
notice given during the twelfth month following the Effective Date if OSIP has
delivered at least [...***...] ([...***...]) OSIP Compounds to SGX under Section
2.3 prior to the start of the ninth month of the Collaboration and if prior to
the date of notice of termination, SGX has not completed both (i) one Co-Complex
Structure for each of [...***...] OSIP Targets and (ii) twenty Co-Complex
Structures in total, and SGX fails to complete (i) and (ii) above within thirty
(30) days after receipt of such notification from OSIP.


      9.4 Effect of Termination.

            (a) Accrued Rights and Obligations. Termination of this Agreement
for any reason shall not release any Party hereto from any liability which, at
the time of such

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termination, has already accrued to the other Party or which is attributable to
a period prior to such termination nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement.

            (b) Return of Confidential Information. Upon any termination of this
Agreement, SGX and OSIP shall promptly return to the other Party or destroy at
the other parties' request all Confidential Information received from the other
Party, except to the extent required to exercise any continuing rights of such
Party (and in any event, except one copy of which may be retained solely for
archival purposes).

            (c) Licenses.


                  (i) In the event of termination of this Agreement by either
Party pursuant to this Article 9, the licenses granted to SGX and OSIP in
Section 4.2 shall terminate concurrently.




                  (ii) In the event of termination of this Agreement by the
non-breaching Party pursuant to Section 9.2, the licenses granted the breaching
Party under Article 4 will terminate concurrently.


            (d) Survival. The provisions of Articles 5, 6, 7, 8, and 10 shall
survive the expiration or termination of this Agreement for any reason.

10 MISCELLANEOUS

      10.1 Arbitration. If the Parties are unable to resolve any dispute,
controversy or claim between them arising out of or relating to the validity,
construction, enforceability or performance of this Agreement, including
disputes relating to alleged breach or to termination of this Agreement (each, a
"Dispute"), the Dispute shall be settled by binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association then in
effect by three (3) arbitrators appointed in accordance with such rules. The
decision and/or award rendered by the arbitrators shall be final and
nonappealable (except for an alleged act of corruption or fraud on the part of
the arbitrators) and may be entered in any court of competent jurisdiction. The
Parties agree that, any provision of applicable law notwithstanding, they will
not request, and the arbitrators shall have no authority to award, punitive or
exemplary damages against any Party. The arbitrators shall have the authority to
grant injunctive relief and order specific performance. The costs of any
arbitration, including administrative fees and fees of the arbitrators, shall be
shared equally by the Parties. Each Party shall bear the cost of its own
attorneys' fees and expert fees. Pending the establishment of the arbitral
tribunal or pending the arbitral tribunal's determination of the merits of the
controversy, either Party may seek from a court of competent jurisdiction any
interim or provisional relief that may be necessary to protect the rights or
property of that Party.

      10.2 Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without reference to rules of conflicts or choice of laws.

                                 Page 11 of 16
<PAGE>

      10.3 Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be sent by prepaid registered or certified mail, return
receipt requested, internationally recognized courier or personal delivery, or
by fax with confirming letter mailed under the conditions described above in
each case addressed to the other Party at the address shown below or at such
other address for which such Party gives notice hereunder. Such notice shall be
deemed to have been given when delivered:

      If to SGX:

      Structural Genomix, Inc.
      10505 Roselle Street,
      San Diego, CA 92121
      Attn:  Chief Executive Officer
      Copy to: Corporate Counsel

      If to OSIP:

      OSI Pharmaceuticals, Inc.
      58 South Service Road
      Melville, NY 11747
      Attn: Corporate Counsel
      Copy to: Vice President, Research

      10.4 Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses (except for payment obligations)
on account of failure of performance by the defaulting Party if the failure is
occasioned by war, strike, acts of terrorism, fire, Act of God, earthquake,
flood, lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers (including, without limitation, energy suppliers), or any other reason
where failure to perform is beyond the reasonable control and not caused by the
negligence, intentional conduct or misconduct of the nonperforming Party and the
nonperforming Party has exerted all reasonable efforts to avoid or remedy such
force majeure; provided, however, that in no event shall a Party be required to
settle any labor dispute or disturbance.

      10.5 No Implied Rights. Only the rights granted pursuant to the express
terms of this Agreement shall be of any legal force or effect. No other rights
shall be created by implication, estoppel or otherwise.

      10.6 Assignment. This Agreement shall not be assignable by either Party to
any third Party hereto without the written consent of the other Party hereto,
except either Party may assign this Agreement, without such consent, to (i) an
Affiliate or (ii) an entity that acquires all or substantially all of the
business or assets of such Party to which this Agreement pertains, whether by
merger, reorganization, acquisition, sale, or otherwise.

      10.7 Partial Invalidity. If any provision of this Agreement is held to be
invalid by a court of competent jurisdiction, then the remaining provisions
shall remain, nevertheless, in full force and effect. The Parties agree to
renegotiate in good faith any provision held invalid

                                 Page 12 of 16
<PAGE>

and to be bound by the mutually agreed substitute provision in order to give the
most approximate effect originally intended by the Parties

      10.8 Independent Contractors. The relationship of OSIP and SGX established
by this Agreement is that of independent contractors, and nothing contained in
this Agreement shall be construed to (i) give either Party the power to direct
or control the day-to-day activities of the other, (ii) constitute the Parties
as partners, joint venturers, co-owners or otherwise as participates in a joint
or common undertaking, or (iii) allow a Party to create or assume any obligation
on behalf of the other Party for any purpose whatsoever.

      10.9 No Waiver. No waiver of any term or condition of this Agreement shall
be valid or binding on either Party unless agreed in writing by the Party to be
charged. The failure of either Party to enforce at any time any of the
provisions of the Agreement, or the failure to require at any time performance
by the other Party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect the validity of either Party to enforce each and every such provision
thereafter.

      10.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

      10.11 Entire Agreement; Amendment. This Agreement, including the Exhibit
attached hereto, constitutes the entire agreement of the Parties with respect to
the subject matter hereof, and supersedes all prior or contemporaneous
understandings or agreements, whether written or oral, between OSIP and SGX with
respect to such subject matter. No amendment or modification hereof shall be
valid or binding upon the parties unless made in writing and signed by the duly
authorized representatives of both Parties.

      IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of OSIP and SGX as applicable.

OSI PHARMACEUTICALS, INC.                STRUCTURAL GENOMIX, INC.

By:  /s/ Robert L. Van Nostrand          By:  /s/ Tim Harris
    --------------------------------         -----------------------------------
Name:    Robert  L. Van Nostrand         Name:    Dr. Tim Harris

Title:   Vice President and CFO          Title:   CEO

                                 Page 13 of 16
<PAGE>

                         EXHIBIT A - COLLABORATION PLAN

          OSIP/SGX RESEARCH PLAN FOR CO-COMPLEX STRUCTURE DETERMINATION

-     The goal of the collaboration is to determine initial [...***...] and
      [...***...] for OSIP Targets.

-     SGX will apply its structure determination capabilities to [...***...]
      targets in parallel, up to a maximum of [...***...] targets over an
      [...***...]-month period (targets listed in Exhibit B). Appendix A
      provides a model for the progression of structure determination activities
      over this time period.

-     Collaboration progress will be managed by a Joint Steering Committee
      (JSC). The model in Appendix A is intended only as a guideline and will be
      subject to overall management and modification by the JSC.

-     The first [...***...] months of the Collaboration will be spent conducting
      [...***...] for [...***...] OSIP Targets, as listed in Exhibit B.

-     At the end of the [...***...] month period, and based upon the outcome
      of these studies, the JSC will select [...***...] targets for [...***...]
      with the goal of [...***...] of each [...***...] as rapidly as possible.

-     Initial [...***...] activities are expected to take from [...***...]
      months from the conclusion of [...***...]. In certain cases, [...***...]
      may not be successful, or changes in status may result in decreased
      priority, in which case projects may be [...***...] ("[...***...]" in the
      [...***...]).

-     With the exception of the [...***...], no more than [...***...] projects
      will be active at SGX at any one time. The JSC may place an OSIP target
      [...***...] if [...***...] within [...***...] of commencing the
      [...***...] and this is the [...***...] to the OSIP target. Placing
      certain targets [...***...], or the [...***...] on a target, will
      [...***...] OSIP Targets to be [...***...], as modeled in Appendix A.

-     For each OSIP Target, OSIP will provide [...***...] to SGX as specified in
      [...***...] of the Agreement.

-     As determined by the JSC, [...***...] with [...***...] of [...***...] with
      which [...***...] and/or [...***...] to be transferred to SGX. As
      available, [...***...] will also [...***...] to enable the [...***...] of
      [...***...] by [...***...] for [...***...].

-     It is anticipated that determination of each [...***...] will be followed
      by a period of approximately [...***...] during which OSIP will
      [...***...], [...***...] and [...***...]. These [...***...] will be
      provided to [...***...], [...***...] with the targets and [...***...]. As
      above, these [...***...] will be tested for [...***...] of the [...***...]

-     The JSC may place OSIP Targets [...***...] while an [...***...] is being
      developed. Specific targets for which [...***...] earlier in the program
      may be [...***...] once [...***...] emerge from the [...***...] and
      [...***...]. Placing certain targets [...***...], or the

                                 Page 14 of 16

                                             ***CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
              [...***...] on a target, will allow for [...***...] OSIP Targets
              to be [...***...], as modeled in Appendix A.

        -     Dependent upon the progress of OSIP Targets [...***...], OSIP
              Targets [...***...] will be entered into the Collaboration and
              also subjected to a [...***...]. The timing of this work will be
              managed by the JSC.

        -     In certain cases [...***...] for a given target may [...***...],
              including certain [...***...] of the target (e.g. [...***...]). In
              such cases the first [...***...] that is determined will result in
              a [...***...] SGX. Subsequent [...***...] will be counted to
              towards the aggregate [...***...].

        -     Structures will be delivered to [...***...] in a format consistent
              with [...***...] to the [...***...] and will include a
              [...***...], [...***...], [...***...], [...***...] (OSIP Target
              and [...***...]),[...***...] and will
              [...***...],[...***...],[...***...],[...***...] outside the
              allowed [...***...] and any [...***...] and [...***...].

        -     Over the first [...***...] months of the Collaboration it is
              anticipated that at least [...***...] and [...***...] will be
              determined.

APPENDIX A - COLLABORATION MODEL

                                  [...***...]

                                 Page 15 of 16

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<PAGE>

                            EXHIBIT B - OSIP TARGETS

INITIAL [...***...] TARGETS

[...***...]

TARGETS [...***...]

To be nominated by OSI during collaboration and approved by JSC

                                 Page 16 of 16

                                             ***CONFIDENTIAL TREATMENT REQUESTED