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                                                                    EXHIBIT 99.7


                   RESEARCH AND DEVELOPMENT SERVICE AGREEMENT


         THIS RESEARCH AND DEVELOPMENT SERVICE AGREEMENT (this "Agreement") is
entered into as of the 6th day of June, 2000 by and among ICOS CORPORATION, a
Delaware corporation ("ICOS"), TEXAS BIOTECHNOLOGY CORPORATION, a Delaware
corporation ("TBC"), and ICOS-TEXAS BIOTECHNOLOGY L.P., a Delaware limited
partnership (the "Partnership").

                                    RECITALS

         WHEREAS, the Partnership intends to develop a Research Program for the
purpose of researching and developing Endothelin Products for the [ * ];

         WHEREAS, the Partnership is interested in having TBC and ICOS perform
certain research and development services under the Research Program for the
Partnership; and

         WHEREAS, the Partnership, ICOS and TBC believe that each party can
bring significant and complementary strengths to the Research Program and wish
to proceed in accordance with the terms of this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants of the
parties, each to the other, and of good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         Capitalized terms used herein shall have the following meanings:

         1.1 "AFFILIATE" has the meaning as set forth in the Partnership
Agreement, except the parties shall not be deemed to be Affiliates of each
other.

         1.2 "BACKGROUND TECHNOLOGY" has the meaning set forth in the Endothelin
License Agreement of even date herewith between TBC and the Partnership.

         1.3 "DEVELOPMENT PLAN" means a plan to be developed and revised from
time to time by the Product Team pursuant to Section 3.2 for the purpose of
achieving the goals of the Research Program.

         1.4 "ENDOTHELIN AGENT" means [ * ].

         1.5 "ENDOTHELIN PROJECT INVENTIONS" has the meaning set forth in
Section 7.1.


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         1.6 "ENDOTHELIN PRODUCT" means [ * ].

         1.7 "ENDOTHELIN RECEPTOR" means [ * ].

         1.8  "FIELD" means [ * ].

         1.9 "FTE" means a full-time equivalent person (calendar year or [ *
]/calendar year or [ * ]/calendar quarter or [ * ]/calendar month) within each
party's respective research and development organizations for R & D Services
carried out by the employees of the parties (specifically excluding R & D
Services carried out by third parties including, without limitation, R & D
Services carried out by consultants, outside contractors and temporary
employees). The FTE rate for R & D Services carried out under this Agreement
during the 2000 calendar year shall be [ * ].

         1.10 "ICOS ENABLING TECHNOLOGY" means (a) any patent, patent
application, trade secret, know-how or other information that is necessary or
useful to use, make or sell an Endothelin Agent or Product that ICOS, in its
sole discretion, elects to include within the scope of the Research Program and
that is owned or controlled by ICOS or its Affiliates, with right to license (or
sublicense) and (b) any patent, patent application, trade secret, know-how or
other information that (i) is owned or controlled by ICOS or its Affiliates,
with right to license (or sublicense), (ii) was developed or discovered outside
the Research Program or not included in the Endothelin Project Inventions, (iii)
was, in rendering R & D Services, incorporated in the development of an
Endothelin Agent or Endothelin Product, including, without limitation, their use
or method of manufacture, and (iv) covers or relates to the composition, use or
method of making an Endothelin Agent or Product.

         1.11 "PARTNERSHIP AGREEMENT" means the Agreement of Limited Partnership
of ICOS-TEXAS BIOTECHNOLOGY L.P. among ICOS-ET-GP LLC, a Washington limited
liability company, and TBC-ET, Inc., a Delaware corporation, as general
partners, and ICOS-ET-LP LLC, a Washington limited liability company, and TBC,
as limited partners, dated as of the date hereof.

         1.12 "PARTNERSHIP TECHNOLOGY" means (a) Background Technology and (b)
 any technology (including, without limitation, any patent, patent application,
 trade secret, know-how or other information) owned or controlled by the
 Partnership, with right to license (or sublicense), including, without
 limitation, ICOS Enabling Technology, TBC Enabling Technology and the
 Endothelin Project Inventions.

         1.13 "PRODUCT TEAM" means the team consisting of ICOS and TBC personnel
assigned by ICOS and TBC to carry out the Research Program, as further described
in Section 3.1.

         1.14 "PRODUCT TEAM LEADER" means such person mutually designated by
ICOS and TBC as the Product Team Leader as described in Section 3.1. The Product
Team Leader shall be responsible for, among other things, coordinating the
activities of the Product Team.


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         1.15 "R & D SERVICES" means the services rendered and to be rendered by
ICOS and TBC for and on behalf of the Partnership pursuant to this Agreement
that are reasonably necessary to carry out the Research Program, except
accounting and similar administrative services.

         1.16 "REGULATORY APPROVAL" means all authorizations by the appropriate
governmental entity or entities necessary for commercial sale of any Endothelin
Product, including, without limitation, approval of labeling, price,
reimbursement and manufacturing.

         1.17 "RESEARCH PROGRAM" means the research and development program
under which ICOS, TBC and third parties may perform services for and on behalf
of the Partnership, as contemplated under this Agreement. The primary goals of
the Research Program are generally described on Exhibit A to this Agreement, and
the details of how the parties will conduct the Research Program shall be set
forth in the Development Plan.

         1.18 "TBC ENABLING TECHNOLOGY" means (a) any patent, patent
 application, trade secret, know-how or other information that is necessary or
 useful to use, make or sell an Endothelin Agent or Product that TBC, in its
 sole discretion, elects to include within the scope of the Research Program and
 that is owned or controlled by TBC or its Affiliates, with right to license (or
 sublicense) and (b) any patent, patent application, trade secret, know-how or
 other information that (i) is owned or controlled by TBC or its Affiliates,
 with right to license (or sublicense), (ii) was developed or discovered outside
 the Research Program or not included in the Endothelin Project Inventions,
 (iii) was, in rendering R & D Services, incorporated in the development of an
 Endothelin Agent or Endothelin Product, including, without limitation, their
 use or method of manufacture, and (iv) covers or relates to the composition,
 use or method of making an Endothelin Agent or Product. TBC Enabling Technology
 does not include Background Technology.

                                    ARTICLE 2
                                SCOPE OF SERVICES

         Consistent with the terms described herein, the Partnership wishes to
engage ICOS and TBC to provide R & D Services for and on behalf of the
Partnership, and ICOS and TBC agree to collaborate in rendering such R & D
Services to the Partnership. ICOS and TBC shall each use diligent efforts in
carrying out the services it will provide to the Partnership under this
Agreement, shall cooperate with each other on matters related thereto, and shall
carry out all services in accordance with the Development Plan. [ * ].

                                    ARTICLE 3
                         PRODUCT TEAM AND RESEARCH PLAN

3.1      PRODUCT TEAM

         The parties agree that operation of the Research Program will be
managed by the Product Team, which will develop the Development Plan in
accordance with Section 3.2. The Product


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Team will carry out the Development Plan as it deems necessary; provided,
however, that the Partnership shall be the ultimate authority with respect to
all matters and activities under this Agreement and, therefore, to the extent it
deems appropriate, it may at any time accept, reject or modify any proposal of
the Product Team for providing R & D Services as well as, without limitation,
discontinue or modify the Research Program, disband or redirect the Product Team
or terminate this Agreement.

         3.1.1    COMPOSITION OF PRODUCT TEAM

                  The Product Team shall consist of such number of TBC and ICOS
personnel as such parties reasonably deem necessary to carry out the R & D
Services in accordance with the Development Plan; provided, however, that ICOS
and TBC agree that each will, to the extent practicable, make good faith efforts
to minimize changes to the Product Team so as to promote continuity of certain
functional members. ICOS and TBC shall jointly designate one member of the
Product Team as the Product Team Leader. ICOS and TBC will have reasonable
access on an informal basis to the other's personnel assigned to the Product
Team.

         3.1.2    MEETINGS AND DECISIONS OF THE PRODUCT TEAM

                  Unless otherwise directed by the Partnership, the Product Team
shall meet (including meeting by teleconference) at least on a monthly basis to
discuss the status of the Research Program and matters related thereto.
Decisions of the Product Team shall be made by consensus regarding matters
related to R & D Services, including, without limitation, matters such as which
party (ICOS, TBC or a third party) should carry out a particular R & D Service
as contemplated under this Agreement and the Development Plan. If the Product
Team fails to agree on a particular matter, such matter shall be referred to the
Partnership for resolution.

3.2      DEVELOPMENT PLAN

         Within thirty (30) days after the date of this Agreement, and no less
frequently than quarterly thereafter, the Product Team shall meet to formulate a
detailed plan for development projects to be performed by ICOS or TBC, or both,
during the course of the Development Plan. The parties anticipate that the
Development Plan will include, without limitation:

                  (a)      [ * ]

                  (b)      [ * ]

                  (c)      [ * ]

         The Product Team shall make a copy of the Development Plan, as revised
from time to time, a part of this Agreement; provided, that such plan may be
modified or amended at any time by the Partnership.


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3.3.     REPORTS

         In addition to the Development Plan, the Product Team shall provide to
the Partnership (a) quarterly status reports, which shall include, without
limitation, the progress to date and any other matters that the Partnership may
deem appropriate, (b) monthly status reports, which shall include, without
limitation, important events, personnel changes, learning points and other
matters that the Product Team may deem appropriate that occurred during the
month at issue, and (c) such other reports as requested by the Partnership. In
addition to the foregoing, ICOS and TBC may each consult with the other from
time to time on the progress of the Research Program, and any ongoing
development and Research Programs being conducted thereunder, and shall permit
the other party to visit its laboratories to observe the development work, to
the extent reasonably required to coordinate and effectively conduct related
development work.

3.4      NO DEBARMENT

         ICOS and TBC each represent and warrant to the other that it will
comply at all times with the provisions of the Generic Drug Enforcement Act of
1992 and, upon request, will certify in writing to the other party that neither
such party, its employees nor any person providing services on behalf of such
party in connection with the R & D Services contemplated by this Agreement has
been debarred under the provisions of such act.

                                    ARTICLE 4
                             PROJECT SERVICE FUNDING

4.1      FTE FUNDING, REIMBURSEMENT OF THIRD PARTY EXPENSES

         4.1.1    FTE FUNDING

                  The Partnership agrees to pay ICOS and/or TBC, as applicable,
for R & D Services rendered on behalf of the Partnership in accordance with the
Research Program and directed by the Product Team or as otherwise requested by
the Partnership. Except as otherwise provided in this Article 4, payment by the
Partnership hereunder shall be based on the FTE rate set forth in Section 1.9.

         4.1.2    REIMBURSEMENT OF THIRD PARTY COSTS

                  In the event that third parties are utilized with respect to
the Research Program, the Partnership shall only reimburse [ * ].

                  Except as set forth in this Section 4.1.2 or to the extent
third party costs are used in determining the FTE rate, ICOS and TBC [ * ] in
connection with R & D Services rendered hereunder. Notwithstanding the
foregoing, the parties hereby acknowledge that to the extent third party costs
are included in determining the FTE rate under this Agreement, such third party
cost shall not be reimbursable under this Section 4.1.2.


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                  With respect to ongoing third-party contracts previously
established by TBC, the Partnership shall promptly review such contracts and [ *
]. The parties will seek to establish a reasonable basis for allocation of the
costs that accrue immediately before and after the date hereof and are not
segregated by the third party on an invoice.

         [ * ]

4.2      MONTHLY REPORT/INVOICE

         Within [ * ] following the end of each calendar month, ICOS and TBC
each shall provide the Partnership with a report ("Invoice"), with a copy sent
to the other party for review, detailing any costs incurred as described in
Section 4.1, together with the [ * ]. If an objection by a party with respect to
an Invoice is not raised within [ * ] of receipt thereof, such Invoice will be
deemed approved (such approval shall not be construed as a waiver of any audit
or other rights related thereto). The parties agree to attempt to resolve all
objections amicably and as soon as possible after such objection is raised;
provided, however, that the Partnership will pay all undisputed amounts in
accordance with Section 4.3. All approved Invoices will be paid by the
Partnership in accordance with Section 4.3.

4.3      PAYMENTS

         The Partnership shall make the payments due under this Article 4 on a
monthly basis due to ICOS and TBC, net fifteen (15) days after approval
(including a deemed approval) of an invoice as described in Section 4.2.

4.4      CAPITAL EXPENDITURES FOR RESEARCH PROGRAM PURPOSES

         ICOS and TBC each shall be [ * ]. Any deviation from this Section 4.4
must be approved in writing by the Partnership.

4.5      SUBCONTRACTING PERMITTED

         The Partnership acknowledges and agrees that portions of the work
involved in the Research Program may be performed on behalf of the Partnership
by third parties hired by ICOS and/or TBC; provided that for any significant
subcontract (a) the Partnership shall have the right to approve the hiring of a
third party to handle such matter and the costs associated therewith and (b) the
subcontractor will first provide to the Partnership a written confidentiality
agreement and written assignment of all patent rights and know-how that such
subcontractor may develop by reason of work performed under this Agreement.
Further, each subcontractor, as applicable based on the services to be
performed, shall be required to conduct such services in accordance with current
Good Manufacturing Practices ("cGMP"), Good Laboratory Practices ("cGLP") and
Good Clinical Practices ("cGCP").


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                                    ARTICLE 5
                            RECORD-KEEPING AND AUDITS

5.1      RECORDS RETENTION

         Each party shall record, to the extent practical, all information
relating to the Research Program in written form. To the extent practical, such
written records shall be kept separately from written records documenting other
research and development of such party. All such written records of each party
shall be maintained in a form sufficient to satisfy regulatory authorities. Each
party shall require its employees and consultants to disclose any inventions
relating to the Research Program in writing promptly after conception.
Furthermore, the parties, as applicable, shall keep complete and accurate
records pertaining to the R & D Services rendered by such party in sufficient
detail to permit the other parties to confirm such R & D Services.

         Except as the Partnership may otherwise require, records shall be
maintained for the following periods:

                  (a) Accuracy of Billing. For those records maintained for the
sole purpose of verifying the accuracy of any payment due hereunder, such
records shall be maintained for a [ * ] period following the year in which any
such R & D Services were rendered hereunder.

                  (b) R&D Records. For all records pertaining to information
regarding R & D Services conducted hereunder, such records shall be maintained
for a [ * ] year period following the year in which any such R & D Services were
made hereunder, unless a longer period of retention is necessary to comply with
any applicable regulatory requirements.

                  (c) Regulatory Filings. For those records pertaining to
regulatory filings and other regulatory commitments (e.g., manufacturing
tickets, manufacturing procedures, etc.), such records shall be held for such
period as is mutually agreed upon between the parties in writing that is
reasonably necessary to comply with regulatory requirements.

5.2      GENERAL AUDIT REQUEST

         Each of the parties shall have the right to request an audit of such
records (to the extent relevant to the issue at hand), at its own expense and on
an annual basis, to determine, with respect to any of the [ * ], the correctness
of any report or payment made under this Agreement. If a party desires to audit
such records, it shall utilize an independent, certified public accountant of
the auditing party's choice to examine such records. Such accountant shall be
instructed to provide the party desiring the audit a report on the findings of
the agreed upon procedures which verifies any previous report made or payment
submitted by the audited party during such period. Any information received by a
party pursuant to this Section 5.2 shall be deemed to be confidential
information hereunder.


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         Upon expiration of [ * ] following the end of any calendar year, the
audit right hereunder shall expire with respect to such calendar year and the
calculation of amounts payable with respect to such calendar year shall be
binding and conclusive upon both parties, and each party shall be released from
any liability or accountability with respect to payments for such year.

5.3      QUALITY ASSURANCE AUDIT REQUEST

         Except as the parties may otherwise agree in writing, ICOS and TBC
shall each have the right to conduct reasonable quality assurance audits with
respect to all facilities, operations and laboratories where R & D Services are
conducted and to verify their conformance with applicable cGMP, cGLP and cGCP
and other regulatory requirements. Such audits shall be conducted upon
reasonable notice during reasonable business hours.

5.4      SURVIVAL

         This Section 5 shall survive for [ * ] after termination of this
Agreement.

                                    ARTICLE 6
                                    LICENSES

6.1      LICENSE FROM PARTNERSHIP TO ICOS

         The Partnership hereby grants to ICOS [ * ] license to use the
Partnership Technology but only to the extent useful or necessary to fulfill R &
D Service obligations under this Agreement.

6.2      LICENSE FROM PARTNERSHIP TO TBC

         The Partnership hereby grants to TBC [ * ] license to use the
Partnership Technology but only to the extent useful or necessary to fulfill R &
D Services obligations under this Agreement.

6.3      LICENSE FROM ICOS TO PARTNERSHIP

         ICOS hereby grants to the Partnership [ * ] license to use the ICOS
Enabling Technology for the sole purposes of developing, testing, making,
storing, using and offering for sale any Endothelin Products.

6.4      LICENSE FROM TBC TO PARTNERSHIP

         TBC hereby grants to the Partnership [ * ] license to use the TBC
Enabling Technology for the sole purposes of developing, testing, making,
storing, using and offering for sale any Endothelin Products. This license shall
not be construed as limiting the license agreement of even date herewith between
TBC and the Partnership.


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                                    ARTICLE 7
                              INTELLECTUAL PROPERTY

7.1      OWNERSHIP OF INVENTIONS

         All data, inventions and discoveries (including, without limitation,
any patent, patent application, trade secret, know-how or other information)
acquired or developed solely and/or jointly by employee(s) or agents of ICOS,
TBC or their Affiliates in the course of rendering R & D Services (the
"Endothelin Project Inventions") shall be the property of the Partnership. Each
party hereby assigns to the Partnership such Endothelin Project Inventions and
shall cooperate with each other in pursuing intellectual property protection,
including patents, relating thereto, and in executing and delivering any
additional instruments required to assign, convey or transfer to the Partnership
its interest in Endothelin Project Inventions.

         Except as the parties may otherwise agree in writing, all data,
inventions and discoveries acquired or developed solely and/or jointly by
employee(s) or agents of ICOS, TBC or their Affiliates to the extent not related
to Endothelin Agents during the course of rendering R & D Services
("Non-Endothelin Project Inventions") shall be owned by the inventor as
determined in accordance with the United States law of inventorship.

         To the extent it is practical to do so, patent applications involving
Endothelin Project Inventions shall be separately defined and prosecuted so as
to solely relate to such Endothelin Project Invention. In the event it is not
practical to do so, the parties shall cooperate with each other in completing
any patent application that relates to both Endothelin Project Inventions and
Non-Endothelin Project Inventions ("Co-Mingled Inventions"). In connection with
a Co-Mingled Invention, the Partnership and the owner(s) of the applicable
Non-Endothelin Project Invention shall equally share all costs incurred in
connection with preparing, filing, maintaining and prosecuting the patent
application and patent associated therewith.

7.2      PATENT FILINGS INVOLVING ENDOTHELIN PROJECT INVENTIONS AND OTHER
         INVENTIONS OWNED BY THE PARTNERSHIP

         At the direction of the Partnership, the Product Team shall establish,
in conjunction with appropriate legal advice, an overall strategy for filing and
prosecuting patent applications and otherwise protecting intellectual property
of the Partnership, including, without limitation, an appropriate publication
strategy as more fully described in Article 8 together with addressing other
pertinent matters that will maximize patent protection for the Endothelin Agents
and Endothelin Products.

         Unless the patent strategy established by the Product Team and approved
by the Partnership provides otherwise, or as the Partnership may otherwise
determine, the Partnership, through the Product Team, will prepare, file,
prosecute, maintain and defend patents and patent applications covering
Endothelin Project Inventions and other patents and patent applications owned or
controlled by the Partnership. The Product Team will endeavor to ensure that
such patent applications are filed before any public disclosure by either party
hereto in order to


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maintain the validity of patent applications filed outside of the United States.
In the event that either ICOS and/or TBC prepare, file, prosecute and/or
maintain a particular patent application for an Endothelin Project Invention or
for other inventions owned or controlled by the Partnership, at least [ * ]
prior to the contemplated filing date, such filing party shall submit to the
Product Team a substantially completed draft of such patent application and
will, in good faith, take into account, with appropriate advice of legal
counsel, the Product Team's suggestions regarding such draft. The Product Team
will copy ICOS and/or TBC with any official actions and submissions in such
patents and patent applications. The Partnership shall [ * ] under this Section
7.2 for Endothelin Project Inventions and other inventions owned or controlled
by the Partnership.

         Unless the Partnership determines otherwise, should the Partnership
elect not to file, prosecute, maintain or issue any patent application, or
maintain a patent issuing from any such patent application, for an Endothelin
Project Invention or any other patent that it may own or control in any
particular country, the Partnership will so notify ICOS and TBC of its
intentions. Under such circumstances, ICOS and/or TBC (either individually or
jointly) shall then have the right to file, prosecute, maintain or issue any
such patent or patent application at its own expense and the Partnership shall
grant to ICOS and/or TBC (either individually or jointly, as the case may be)
any necessary authority to file, prosecute, issue and maintain such patent
application or maintain such patent in the name of ICOS and/or TBC (either
individually or jointly, as the case may be). If ICOS and/or TBC elect to file,
prosecute, maintain or issue any such patent or patent application at its own
expense, the Partnership shall assign such patent or patent application to ICOS
and/or TBC, and such patent or patent application shall [ * ] notwithstanding
any license agreement to the contrary. In the event that either ICOS or TBC is
assigned various rights as described in this Section 7.2, such assignee party
shall grant the Partnership [ * ] license to practice any and all rights so
assigned to use, make and sell Endothelin Agents and Endothelin Products.

7.3      [ * ]

7.4      NOTICE OF CERTIFICATION

         Each party hereto shall immediately give notice to the other parties of
any certification filed under the U.S. Drug Price Competition and Patent Term
Restoration Act of 1984 claiming that a Partnership Patent is invalid or that
any infringement will not arise from the manufacture, use, import, offer for
sale or sale of any product by a third party. [ * ]For this purpose, the
Partnership shall execute such legal papers necessary for the prosecution of
such suit as may be reasonably requested by the party bringing suit.

                                    ARTICLE 8
                                  PUBLICATIONS

         A publication strategy will be developed by the Product Team.
Publications whether written and/or oral, including, without limitation,
abstracts, posters and manuscripts (collectively, the "Public Disclosures") must
be submitted to the Product Team for its approval prior to


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external dissemination thereof. The Product Team or its designee shall review
each such proposed publication in order to avoid the unauthorized disclosure of
a party's confidential information and to preserve the patentability of
inventions and data package exclusivity arising from the research and
development performed in the course of this Agreement, as well as to ensure
compliance with the Partnership's publications strategy.

                                    ARTICLE 9
                                 INDEMNIFICATION

9.1      INDEMNIFICATION BY THE PARTNERSHIP

         Subject to Section 9.5, the Partnership agrees to indemnify, defend and
hold TBC and ICOS harmless from and against any losses, including product
liability, which arise from any claim, lawsuit or other action by a third party
arising out of the manufacture of an Endothelin Product, the breach by the
Partnership of its warranties or obligations under this Agreement, or the
negligence or willful misconduct of the Partnership, its employees or its
agents, except to the extent such losses result from (i) the breach by TBC
and/or ICOS of their respective warranties or obligations hereunder or (ii) the
negligence or willful misconduct of TBC and/or ICOS, their respective employees
or their respective agents.

9.2      INDEMNIFICATION BY TBC

         Subject to Section 9.5, TBC agrees to indemnify, defend and hold the
Partnership and ICOS harmless from and against any losses which arise from any
claim, lawsuit or other action by a third party arising out of the breach by TBC
of its warranties or obligations under this Agreement, or the negligence or
willful misconduct of TBC, its employees or its agents, except to the extent
such losses result from (i) the breach by the Partnership and/or ICOS of their
respective warranties or obligations hereunder or (ii) the negligence or willful
misconduct of the Partnership and/or ICOS, their respective employees or their
respective agents.

9.3      INDEMNIFICATION BY ICOS

         Subject to Section 9.5, ICOS agrees to indemnify, defend and hold the
Partnership and TBC harmless from and against any losses which arise from any
claim, lawsuit or other action by a third party arising out of the breach by
ICOS of its warranties or obligations under this Agreement, or the negligence or
willful misconduct of ICOS, its employees or its agents, except to the extent
such losses result from (i) the breach by the Partnership and/or TBC of their
respective warranties or obligations hereunder or (ii) the negligence or willful
misconduct of the Partnership and/or TBC, their respective employees or their
respective agents.

9.4      INDEMNIFICATION PROCEDURES

         The party seeking indemnification hereunder ("Indemnified Party") shall
give written notice to the indemnifying party ("Indemnifying Party") of its
indemnification claims hereunder, specifying the amount and nature of the claim,
and giving the Indemnifying Party the right to


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contest any such claim represented by counsel of its choice; if any such claim
is made hereunder by the Indemnified Party and such claim arises from the claims
of a third party against the Indemnified Party and the Indemnifying Party does
not elect to undertake the defense thereof by written notice within [ * ] after
receipt of the original notice from the Indemnified Party, the Indemnified Party
shall be entitled to indemnity pursuant to the terms of this Agreement to the
extent of its payment in respect of such claim. To the extent that the
Indemnifying Party undertakes the defense of such claim in good faith by
proceeding diligently at its expense, and without materially impairing the
financial conditions or operations of the Indemnified Party, the Indemnified
Party shall be entitled to indemnity hereunder only if, and to the extent that,
such defense is unsuccessful as determined by a final judgment of a court of
competent jurisdiction or is settled with the consent of the Indemnifying Party.
The party defending a third-party claim shall have the right to choose its own
counsel.

9.5      LIMITATION OF LIABILITY

         No party shall be liable to another for indirect, incidental,
consequential or special damages, including, but not limited to, lost profits,
arising from or relating to any breach of this Agreement, regardless of any
notice of the possibility of such damages.

                                   ARTICLE 10
                        TERM AND TERMINATION OF AGREEMENT

10.1     TERM

         This Agreement shall become effective on the Effective Date and shall
continue in effect until the Partnership is dissolved or this Agreement is
terminated earlier as described hereunder or by written agreement of the
parties.

10.2     TERMINATION FOR MATERIAL BREACH

         Either party shall have the right to terminate this Agreement after [ *
] written notice to the other in the event the other is in material breach of
this Agreement, unless the other party cures the breach before the expiration of
such period of time. Such notice shall set forth in reasonable detail the
specifics of the breach.

10.3     VOLUNTARY TERMINATION BY THE PARTNERSHIP

         The Partnership may terminate this Agreement for any reason at any
time, and such termination shall be effective on [ * ] written notice to each
party. During such [ * ], each party shall appropriately commence wind down
efforts including reasonable termination of its efforts under the Research
Program, and the Partnership shall be responsible for costs incurred under the
Research Program for such period; but only to the extent that such costs are
unavoidable costs and expenditures, including necessary expenses associated with
personnel, non-cancelable commitments and cash outlays in connection with the
Research Program that cannot be avoided, including, without limitation, all
equipment ordered therefor which is non-cancelable or non-


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


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<PAGE>   13
returnable, even if such costs and expenditures are paid after such [ * ] period
provided such costs and expenses arise out of commitments incurred prior to
termination.

10.4     TERMINATION UPON INSOLVENCY

         This Agreement may be terminated by a party hereto upon notice to the
other parties should a party (a) become insolvent or (b) file a petition under
any bankruptcy or insolvency law or have any such petition filed against it
which has not been stayed within [ * ] of such filing.

10.5     PARTNERSHIP OWNERSHIP CHANGE

         Except under circumstances that are described in Section 12.4 of the
Partnership Agreement (which shall be handled in accordance with the provisions
thereunder), either party shall have the right, but not the obligation, to
terminate this Agreement if ICOS-ET-GP LLC, ICOS-ET-LP LLC, TBC-ET, Inc. or TBC
ceases to be a Partner (as defined in the Partnership Agreement) of the
Partnership. Termination under this Section 10.5 shall be effective upon [ * ]
written notice from the party that desires to exercise such termination rights
to the other party.

10.6     SURVIVAL

         In addition to the survival clause of Section 5.4, termination of this
Agreement shall not affect (a) any accrued rights or obligations of either party
or (b) the enforceability of the provisions in Sections 6.3, 6.4 and 10.2, as
well as the last sentence of Section 7.2.

                                   ARTICLE 11
                            MISCELLANEOUS PROVISIONS

11.1     NOTICES

         Any notice, request, instruction or other document to be given
hereunder to a party hereto shall be in writing, delivered in person, or mailed
by certified or registered mail, return receipt requested, or transmitted by
facsimile transmission with electronic confirmation of receipt to the
addressee's address or facsimile number set forth below (or such other address
or facsimile number as the party changing its address specifies in a notice to
the other parties):

         If to ICOS:                     ICOS Corporation
                                         22021 - 20th Avenue S.E.
                                         Bothell, WA 98021
                                         Attention:    President
                                         Phone:        (425) 485-1900
                                         Facsimile:    (425) 485-1911

                  with a copy to:        Perkins Coie LLP
                                         1201 Third Avenue, Suite 4800
                                         Seattle, WA 98101-3099
                                         Attention:    James R. Lisbakken, Esq.
                                         Phone:        (206) 583-8888
                                         Facsimile:    (206) 583-8500


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


                                       13
<PAGE>   14
         If to TBC:                         Texas Biotechnology Corporation
                                            7000 Fannin, 20th Floor
                                            Houston, TX 77030
                                            Attention:    President
                                            Phone:        (713) 796-8822
                                            Facsimile:    (713) 796-8232

                  with a copy to:           Porter & Hedges, L.L.P.
                                            700 Louisiana, 35th Floor
                                            Houston, TX 77002-2764
                                            Attention:    Robert G. Reedy, Esq.
                                            Phone:        (713) 226-0674
                                            Facsimile:    (713) 226-0274

         Notices shall be deemed to have been given on the date of service, if
served personally on the party to whom notice is to be given, or on the first
day after transmission by facsimile transmission, if transmitted by facsimile as
set forth above, or on the fifth day after mailing, if mailed as set forth
above.

11.2     WAIVER

         No waiver of any breach of the terms of this Agreement shall be
effective unless such waiver is in writing and signed by the party against whom
such waiver is claimed. No waiver of any breach shall be deemed to be a waiver
of any other or subsequent breach.

11.3     SEVERABILITY

         If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

11.4     GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the choice of law
provisions of the State of Delaware or any other jurisdiction.

11.5     COUNTERPARTS

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


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


                                       14
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11.6     LIMITATION ON RIGHTS OF OTHERS

         This Agreement is entered into between the parties for the exclusive
benefit of the parties and their successors and permitted assigns. This
Agreement is not intended for the benefit of any creditor of any party.

11.7     ENTIRETY OF AGREEMENT

         This Agreement and its exhibits set forth the entire agreement and
understanding of the parties relating to the subject matter contained herein and
merges all prior discussions and agreements between them. No party shall be
bound by any representation other than as expressly stated in this Agreement, or
by a written amendment to this Agreement signed by authorized representatives of
all parties.

11.8     DISCLAIMER OF AGENCY

         This Agreement shall not constitute any party the legal representative
or agent of another, nor shall any party have the right or authority to assume,
create, or incur any third party liability or obligation of any kind, express or
implied, against or in the name of or on behalf of another, except as expressly
set forth in this Agreement. Accordingly, it is understood and agreed that ICOS
and TBC shall each have the status of an independent contractor under this
Agreement.

11.9     ASSIGNMENT

         Except as otherwise expressly provided herein, neither this Agreement
nor any interest hereunder shall be assignable by any party without the prior
written consent of the other; provided, however, that any party may assign this
Agreement to any wholly-owned subsidiary or to any successor by merger or sale
of substantially all of its business unit to which this Agreement relates in a
manner such that the assignor shall remain liable and responsible for the
performance and observance of all its duties and obligations hereunder. This
Agreement shall be binding upon the parties' successors and permitted assignees.

11.10    HEADINGS; CONSTRUCTION

         The headings contained in this Agreement have been added for
convenience only and shall not be construed as limiting. This Agreement has been
submitted to the scrutiny of, and has been negotiated by, all parties hereto and
their counsel and shall be given a fair and reasonable interpretation in
accordance with the terms hereof, without consideration or weight being given to
its having been drafted by any party hereto or its counsel.


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


                                       15
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11.11    COMPLIANCE WITH LAWS

         Each party shall comply in all material respects with all federal,
state, local and foreign laws, statutes, rules and regulations applicable to the
parties and their respective activities under this Agreement.

11.12    RIGHTS AND REMEDIES

         The rights and remedies provided by this Agreement are cumulative, and
the use of any one right or remedy shall not preclude or waive the right to use
any or all other remedies. These rights and remedies are given in addition to
any other rights the parties may have by law, statute, ordinance or otherwise.

11.13    ATTORNEYS' FEES

         In the event of a dispute between the parties arising out of this
Agreement that is arbitrated or litigated, the nonprevailing party shall pay the
reasonable costs and attorneys' fees of the prevailing party, including the
reasonable costs and attorneys' fees incurred in the appeal of any final or
interlocutory judgment.

11.14    USE OF TRADEMARKS

         Use of one party's trademarks by another party shall be pursuant to a
trademark license agreement in form and substance to be agreed upon by the
parties.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


                                       16
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                                           ICOS CORPORATION

                                           By: /s/ Paul Clark
                                              ----------------------------------
                                           Name: Paul Clark
                                                --------------------------------
                                           Title: Chairman & CEO
                                                 -------------------------------


                                           TEXAS BIOTECHNOLOGY CORPORATION

                                           By: /s/ David B. McWilliams
                                              ----------------------------------
                                           Name: David B. McWilliams
                                                --------------------------------
                                           Title: President/CEO
                                                 -------------------------------


                                           ICOS-TEXAS BIOTECHNOLOGY L.P.
                                           BY ICOS-ET-GP LLC, AS GENERAL PARTNER

                                           By: /s/ Paul Clark
                                              ----------------------------------
                                           Name: Paul Clark
                                                --------------------------------
                                           Title: Chairman & CEO
                                                 -------------------------------


                                           BY TBC-ET, INC., AS GENERAL PARTNER

                                           By: /s/ David B. McWilliams
                                              ----------------------------------
                                           Name: David B. McWilliams
                                                --------------------------------
                                           Title: President
                                                 -------------------------------


[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


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<PAGE>   18
                                    EXHIBIT A
                                RESEARCH PROGRAM



         The goals of the Research Program shall be as follows:

         [ * ]




















[*]  DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
     REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.


                                       18