<PAGE>

                                                                   Exhibit 10.40

                                ESCROW AGREEMENT

     THIS ESCROW AGREEMENT is made as of April 12, 2001 (the "Effective Date"),
by and among SPINE WAVE, INC., a Delaware corporation ("Company"), and PROTEIN
POLYMER TECHNOLOGIES, INC., a Delaware corporation ("PPTI"), and the party
identified on Exhibit A attached hereto ("Escrow Agent").

     WHEREAS, in connection with the License Agreement between Company and PPTI
("License Agreement") and Supply and Services Agreement between PPTI and Company
("Supply Agreement"), PPTI has agreed to enter into this Escrow Agreement
pursuant to which PPTI shall deposit into escrow, when required (i) the "Gene
Construction Technology Escrow Materials" described on Schedule 1 attached
hereto; (ii) the "Biomechanical Standard Formulation(s) Escrow Materials"
described on Schedule 2 attached hereto; (iii) the "Commercial Production Escrow
Materials" described on Schedule 3 attached hereto; and (iv) the "Protein
Polymer Design and Supply Escrow Materials" described on Schedule 4 attached
hereto (Gene Construction Technology Escrow Materials, Biomechanical Standard
Formulation(s) Escrow Materials, Commercial Production Escrow Materials, and
Protein Polymer Design and Supply Escrow Materials are collectively referred to
as the "Escrow Materials");

     NOW, THEREFORE, the parties hereto agree as follows:

     1.   Appointment of Escrow Agent. Within thirty (30) days after the
          ---------------------------
Effective Date, Company shall select and appoint an Escrow Agent, which
appointment shall be subject to the consent of PPTI, such consent not to be
unreasonably withheld, conditioned or delayed. The Escrow Agent must certify to
the parties that it has and will have at all times during the term of the escrow
liquid nitrogen storage capabilities and that it will use such capabilities to
hold the cell bank samples which are part of the Escrow Materials. Upon such
appointment, the Escrow Agent shall execute a copy of Exhibit A (duly filled in
with the information specified thereon), whereupon the Escrow Agent shall become
a party to this Agreement.

     2.   Deposit by PPTI.
          ---------------

          (a)  In accordance with the requirements set forth in the applicable
Schedules attached hereto, and provided that the Escrow Agent has been
appointed, executed a copy of Exhibit A and has become a party to this
Agreement, PPTI will (i) deposit in escrow with the Escrow Agent the applicable
Escrow Materials to be held subject to the terms and conditions of this Escrow
Agreement and (ii) provide to Company a schedule of Escrow Materials so
deposited. The schedule shall itself constitute Know-How (as defined in the
License Agreement) and shall be kept confidential. PPTI shall, upon placing each
cell bank sample into escrow, so notify Company of such deposit in writing. PPTI
agrees to replace the deposited cell bank samples with a newly-generated set of
cell bank samples if PPTI, based on quality control testing of Product
manufactured from cognate cells shall determine that the cells in the cell bank
sample are not viable, in which case Company shall give its written instructions
pursuant to Section 4 hereof. PPTI shall, upon each replacement of a cell bank
sample, so notify Company of such deposit in writing.

                                       1

<PAGE>

          (b)  PPTI shall promptly and regularly update the Escrow Materials **
with any information and other materials developed, discovered or determined
subsequent to the Initial Deposit and within the scope of the Escrow Materials
as described on the Schedules, and deposit a written copy of such updated
material with the Escrow Agent to become, upon deposit, part of the Escrow
Materials and to be held pursuant to the terms of this Agreement. Company, at
its own expense, may designate a neutral third party who shall audit the Escrow
Materials on deposit with the Escrow Agent for purposes of determining whether
PPTI has fulfilled its deposit obligations and whether such Escrow Materials
provide sufficient Know-How to Company to construct genes, manufacture protein
polymers and perform other similar objectives in the manner contemplated under
this Agreement, the Supply Agreement or any agreement contemplated by the Supply
Agreement. PPTI shall promptly correct any deficiency disclosed by the audit
(and where appropriate, the term "Escrow Materials" shall include any such
updated materials from time-to-time). PPTI shall, upon each updating of the
Escrow Materials, so notify Company of such fact in writing, and give it the
same verification opportunity as is provided above. Company may, at its sole
cost and expense, obtain such insurance as it deems reasonable and necessary
regarding the Escrow Materials.

     3.   Representation. PPTI represents and warrants to Company that the
          --------------
Escrow Materials, when deposited, are and will be accurate and complete in all
material respects, that in its reasonable opinion the Escrow Materials, when
deposited, will be sufficiently complete, clear and detailed so that they can be
readily followed and carried out by a trained scientist in order to allow
Company to exercise its rights under the License Agreement. PPTI further
represents and warrants to Company that any deposited cell bank samples
(including any replacement cell bank samples deposited pursuant to Section 2)
will be free of material defects and will be viable at the time of deposit.

     4.   Custody; Access. Escrow Agent agrees to accept deposit of Escrow
          ---------------
Materials and to act as its custodian until the escrow is terminated pursuant to
the terms of this Escrow Agreement. Except as otherwise provided in this Escrow
Agreement, Escrow Agent shall not permit (i) any party access to the Escrow
Materials and (ii) any copies to be made of the Escrow Materials deposited
hereunder. Escrow Agent shall not open the sealed receptacles containing cell
bank samples forming a part of the Escrow Materials, except upon receipt of
mutual written instructions from PPTI and Company.

     5.   Release of Escrow Materials.
          ---------------------------

          (a)  To Company. Escrow Agent shall release and deliver the Escrow
               ----------
Materials to Company upon the occurrence of any of the following events;
provided, that if PPTI disputes the release event under this Section, then
Escrow Agent shall not release the Escrow Materials until the dispute is
resolved pursuant to Section 9(c) hereof:

               (i)   Upon the written instructions of PPTI;

               (ii)  Upon delivery to the Escrow Agent of (A) a copy of an
order, judgment or decree adjudicating PPTI bankrupt or insolvent; (B) written
notice that PPTI has commenced any case, proceeding or other action relating to
it in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment

** Material is confidential and has been omitted and filed separately with the
   Securities and Exchange Commission.

                                       2

<PAGE>

of its debts, or for any other relief, under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition, readjustment
of debt or other similar act or law of any jurisdiction, domestic or foreign,
now or hereafter existing; (C) PPTI has applied for a receiver, custodian or
trustee of it or for all or a substantial part of its property, made an
assignment for the benefit of its creditors; or (D) written notice that a case,
proceeding or other action has been commenced against PPTI in bankruptcy, or
seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts, or any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing; or if a receiver,
custodian or trustee of PPTI or for all or substantially all of its properties
shall be appointed; or if a warrant of attachment, execution or distraint, or
similar process, shall be issued against any substantial part of the property of
PPTI; and if in each such case in this clause (D) such condition shall continue
for a period of ** undismissed, undischarged or unbonded;

               (iii)  With respect to relevant Commercial Production Escrow
Materials only, upon delivery to Escrow Agent of written notice that PPTI has
failed to exercise its manufacturing option or PPTI and Company fail to reach
agreement on the terms of a manufacturing supply arrangement pursuant to Section
2.2 of the License Agreement;

               (iv)   With respect to Biomechanical Standard Formulation(s),
Commercial Production and Protein Polymer Design and Supply Services Escrow
Materials only, ** after Company delivers to both Escrow Agent and PPTI a letter
or certificate signed by the President of Company indicating that it is entitled
to such Escrow Materials as a result of a material breach by PPTI of the Supply
Agreement (which breach was not cured in accordance with the applicable
provisions thereof);

               (v)    With respect to relevant Commercial Production Escrow
Materials only, ** after Company delivers to both Escrow Agent and PPTI a letter
or certificate signed by the President of Company indicating that it is entitled
to such Escrow Materials as a result of a material breach by PPTI of a
manufacturing supply agreement entered into pursuant to Section 2.2 of the
License Agreement; provided that PPTI shall be deemed to be in material breach
of any such agreement in the event that **;

               (vi)   ** after Company delivers to both Escrow Agent and PPTI a
letter or certificate signed by the President of Company indicating that it is
entitled to the Escrow Materials as a result of a material breach by PPTI of the
License Agreement (which breach was not cured in accordance with the applicable
provisions thereof);

               (vii)  With respect to Gene Construction Technology Escrow
Materials only, ** after Company delivers to both escrow Agent and PPTI a letter
or certificate signed by the President of Company indicating the completion of
**; or

               (viii) With respect to Protein Polymer Design and Supply Escrow
Materials, and on a relevant culture-by-culture and protein specific basis, **
after Company delivers to both Escrow Agent and PPTI a letter or certificate
signed by the President of Company of (i) initiation of internal Design Services
efforts (as provided in the Supply

** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.

                                       3

<PAGE>

Agreement) specifying materials that are reasonably required for such efforts or
(ii) initiation of Design Services by a third party following PPTI's election
not to provide Design Services under its Design Services rights under the Supply
Agreement.

          (b)  To PPTI. Escrow Agent shall release and deliver all of the Escrow
               -------
Materials to PPTI within ten (10) business days after PPTI delivers to Escrow
Agent and the Company a letter or certificate signed by the President of PPTI
indicating that it is entitled to the Escrow Materials as a result of
termination or expiration of the License Agreement; provided, that if Company
disputes the release event under this Section, then Escrow Agent shall not
release the Escrow Materials until the dispute is resolved pursuant to Section
9(c) hereof.

          (c)  Company agrees that Company shall not, by virtue of the release
of Escrow Materials to Company, have any license or ownership rights in and to
the Escrow Materials other than the rights expressly agreed upon by the parties
in the License Agreement or other agreement between the parties.

     6.   Termination of Escrow. The escrow shall terminate upon the earliest to
          ---------------------
occur of the following events:

          (a)  mutual written agreement of the parties; or

          (b)  delivery of all the Escrow Materials to Company or PPTI, as the
case may be, in accordance with the terms of Section 5 hereof.
                                             ---------.

     7.   Escrow Agent Fees. In consideration for performing its function as
          -----------------
escrow agent, Escrow Agent shall be paid solely by Company the charge for any
duties required in connection with this Escrow Agreement.

     8.   Escrow Agent.
          ------------

          (a)  The obligations of the Escrow Agent are those specifically
provided in this Escrow Agreement, and the Escrow Agent shall have no liability
hereunder, or duty to inquire into the terms and provisions of, any other
agreement including, without limitation, the License Agreement. The duties of
the Escrow Agent are purely ministerial in nature, and it shall not incur any
liability whatsoever, except for willful misconduct, gross negligence or breach
of Section 8(d).
   ------------

          (b)  The Escrow Agent shall not have any responsibility for the
genuineness or validity of any document or other item deposited with it or of
any signature thereon and shall not have any liability for acting in accordance
with any written instructions or certificates given to it hereunder and believed
by it to be signed by the proper parties. If the Escrow Agent shall receive
conflicting instructions, it shall advise Company and PPTI of such fact. Company
and PPTI shall have ** to resolve the conflicting instructions and jointly
notify the Escrow Agent. If the Escrow Agent is not timely jointly notified, it
may at any time thereafter submit such conflict to arbitration in accordance
with the provisions of Section 9(c).
                       ------------

          (c)  The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving at least 30 days' notice of such resignation to
Company and PPTI,

** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.

                                       4

<PAGE>

specifying a date upon which such resignation shall take effect; provided,
however, that the Escrow Agent shall continue to serve until its successor
accepts the appointment as new Escrow Agent. Upon receipt of such notice, a
successor escrow agent shall be appointed by Company and PPTI, such successor
escrow agent to become the Escrow Agent hereunder on the resignation date
specified in such notice. If an instrument of acceptance by a successor escrow
agent shall not have been delivered to the Escrow Agent within 40 days after the
giving of such notice of resignation, the resigning Escrow Agent may at the
expense of Company request that an arbitrator appoint a successor escrow agent
in accordance with the provisions of Section 9(c). Company and PPTI, acting
                                     ------------
jointly, may at any time substitute a new escrow agent by giving 10 days' notice
thereof to the current Escrow Agent then acting and paying all expenses of the
current Escrow Agent.

          (d)  The Escrow Agent hereby agrees:

               (i)    to maintain the Escrow Material under this Escrow
Agreement in strictest confidence and secrecy;

               (ii)   not to make use of the Escrow Materials other than for the
performance of its obligations under this Escrow Agreement and shall not
disclose or release the same to any party other than in accordance with the
terms hereof; and

               (iii)  that the obligations imposed hereunder shall continue,
notwithstanding release of the Escrow Materials or termination of this Escrow
Agreement, until or unless as the Escrow Materials falls within the public
domain, through no fault of the Escrow Agent.

     9.   Miscellaneous.
          -------------

          (a)  Notices. All notices, claims, certificates, requests, demands and
               -------
other communications hereunder shall be in writing and shall be delivered
personally or sent by facsimile transmission, air courier, or registered or
certified mail, return receipt requested, addressed as follows:

     If to PPTI to:
     -------------

          Protein Polymer Technologies, Inc.
          10655 Sorrento Valley Road
          San Diego, California 92121
          Fax: (619) 558-6477
          Attention: President

     with a copy to:

          Piper Marbury Rudnick & Wolfe
          203 North LaSalle Street
          Chicago, IL 60601
          Fax: (312) 630-5322
          Attention: John H. Heuberger

                                       5

<PAGE>

     If to Company to:
     ----------------

          Spine Wave, Inc.
          12230 El Camino Real, Suite 300
          San Diego, California 92130
          Attention: David Coats
          Fax: (858) 350-7951

     with a copy to:

          Brobeck, Phleger & Harrison LLP
          12390 El Camino Real
          San Diego, California 92130
          Attention: Faye H. Russell, Esq.
          Fax: (858) 720-2555

     If to Escrow Agent to: to the address specified on Exhibit A attached
     ---------------------
hereto.

or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
communication shall be deemed to have been delivered (i) when delivered, if
delivered personally, (ii) when sent (with confirmation received), if sent by
facsimile transmission on a business day, (iii) on the first business day after
dispatch (with confirmation received), if sent by facsimile transmission on a
day other than a business day, (iv) on the third business day after dispatch, if
sent by air courier, and (v) on the fifth business day after mailing, if sent by
registered or certified mail.

          (b)  Severability. In the event that any provision of this Escrow
               ------------
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Escrow
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Escrow Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

          (c)  Governing Law; Dispute Resolution. Any controversy or claim
               ---------------------------------
arising out of or relating to the Escrow Agreement, or the parties' decision to
enter into this Escrow Agreement, or the breach hereof, shall be settled by
arbitration in accordance with the International Arbitration Rules of the
American Arbitration Association ("AAA"), and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the forgoing to the contrary or in the arbitration rules invoked
or in this Section 9(c), the parties retain the right to request a judicial
           ------------
authority to invoke interim measures of protection, and such request shall not
be deemed incompatible with this agreement to arbitrate or a waiver of the right
to arbitrate.

                                       6

<PAGE>

     The arbitration shall be held in either (i) San Diego or (ii) the city in
which the Company's principal place of business is located, at the discretion of
the party against whom the arbitration is sought, and the arbitrator shall apply
the substantive law of the State of California, except that the interpretation
and enforcement of this arbitration provision shall be governed by the Federal
Arbitration Act. There shall be one (1) arbitrator to be mutually agreed upon by
the parties and to be selected from the Regional Panel of Distinguished
Neutrals. If the parties are unable to agree upon such an arbitrator who is
willing to serve within ten (10) days of receipt of a demand to arbitrate by the
other party, then the AAA shall appoint an arbitrator willing to serve from the
stated panel, or if no such panel exists, the parties shall within three (3)
days select one of the five (5) largest international accounting firms
(excluding those providing services for the parties) and engage the managing
partner or senior officer of its office located in the county in which the
Company's principal place of business is located to designate a partner of such
firm to serve as the arbitrator. Failing that, then the AAA shall appoint an
arbitrator willing to serve from the Regional Panel of Distinguished Neutrals,
or if no such panel exists, then from an appropriate AAA panel. It shall be the
duty of the arbitrator to set dates for preparation and hearing of any dispute
and to expedite the resolution of such dispute. Recognizing that the release of
Escrow Materials is time critical, the parties do hereby direct any arbitrator
hereunder to reach a decision regarding the release of Escrow Materials (which
may be a temporary or preliminary decision subject to such conditions as the
arbitrator may, in its sole discretion, order) within 30 days following his or
her engagement or appointment.

     It shall be the duty of the arbitrator to set dates for preparation and
hearing of any dispute and to expedite the resolution of such dispute. The
arbitrator shall permit and facilitate discovery, which will be conducted in
accordance with the Federal Rules of Civil Procedure, taking into account the
needs of the parties and the desirability of making discovery expeditious and
cost-effective. The arbitrator will set a discovery schedule with which the
parties will comply and attend depositions if requested by either party. The
arbitrator will entertain such presentation of sworn testimony or evidence,
written briefs and/or oral argument as the parties may wish to present; however,
no testimony or exhibits will be admissible unless the adverse party was
afforded an opportunity to examine such witness and to inspect and copy such
exhibits during the pre-hearing discovery phase. The arbitrator shall among his
other powers and authorities, have the power and authority to award interim or
preliminary relief. The arbitrator shall not be empowered to award either party
exemplary or punitive damages or any enhanced damages for willful infringement
and the parties shall be deemed to have waived any right to such damages.

     A qualified court reporter will record and transcribe the proceedings. The
decision of the arbitrator will be in writing and judgment upon the award by the
arbitrator may be entered into any court having jurisdiction thereof. Prompt
handling and disposal of the issue is important. Accordingly, the arbitrator is
instructed to assume adequate managerial initiative and control over discovery
and other aspects of the proceeding to schedule discovery and other activities
for substantially continuous work, thereby expediting the arbitration as much as
is deemed reasonable to him, but in all events to effect a final award within
365 days of the arbitrator's selection or appointment and within 20 days of the
close of evidence.

     The proceedings shall be confidential and the arbitrator shall issue
appropriate protective orders to safeguard both parties' confidential
information and the Escrow Materials. The fees of

                                       7

<PAGE>

the arbitrator and the AAA shall be paid as designated by the arbitrator or, if
he shall not so designate, they shall be split equally between the parties.

          (d)  Binding Effect; Benefits; Assignment. This Escrow Agreement shall
               ------------------------------------
inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Nothing contained herein shall give
to any other person any benefit or any legal or equitable right, remedy or
claim. This Escrow Agreement shall not be assignable by PPTI without the prior
written consent of Company, which consent may be withheld in the sole discretion
of Company. Notwithstanding the foregoing, no consent of Company shall be
required if such assignment is in connection with the sale or transfer of all or
substantially all of the assets of PPTI or the merger or consolidation of PPTI
with or into any other business entity. Company shall be permitted to assign
this Escrow Agreement upon written notice to PPTI to any party to which it
assigns all of its rights under the License Agreement or sells or transfers all
or substantially all of its assets. No such assignment shall relieve the
assigning party of its underlying obligations under this Escrow Agreement.

          (e)  Entire Escrow Agreement; Amendments. This Escrow Agreement and
               -----------------------------------
the other writings referred to herein or delivered pursuant hereto which form a
part hereof contain the entire understanding of the parties with respect to its
subject matter. This Escrow Agreement may be amended only by a written
instrument duly executed by the parties hereto.

          (f)  Waivers. It is further understood and agreed that no failure or
               -------
delay by either party hereto in exercising any right, power or privilege under
this Escrow Agreement shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege hereunder.

          (g)  Counterparts. This Escrow Agreement may be executed in any number
               ------------
of counterparts, and execution by each of the parties of any one of such
counterparts will constitute due execution of this Escrow Agreement. Each such
counterpart hereof shall be deemed to be an original instrument, and all such
counterparts together shall constitute but one agreement.

          (h)  Headings. The article and section headings contained in this
               --------
Escrow Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Escrow Agreement.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       8

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
signed by authorized persons, whereupon it became binding on the parties as of
the date first above written.

SPINE WAVE, INC.                       PROTEIN POLYMER TECHNOLOGIES, INC.



By:  ___________________________       By: _____________________________________
     David Coats                           J. Thomas Parmeter, President and CEO
     President and
     Chief Executive Officer

                                       9

<PAGE>

                                    EXHIBIT A
                                    ---------

     The undersigned party hereby agrees to be the Escrow Agent, and perform all
duties and fulfill all obligations of the Escrow Agent, pursuant to and under
that certain Escrow Agreement dated as of __________, 2001 between Protein
Polymer Technologies, Inc. and Spine Wave, Inc.

                                      ESCROW AGENT:

                                      Name:_____________________________________

                                      Address:__________________________________

                                      Telephone:________________________________

                                      Fax:______________________________________


                                      By:_______________________________________

                                      Name:_____________________________________

                                      Title:____________________________________

                                      Date:_____________________________________


                                   EXHIBIT A

<PAGE>

                                   SCHEDULE 1
                                   ----------

                  GENE CONSTRUCTION TECHNOLOGY ESCROW MATERIALS
                  ---------------------------------------------


Gene Construction Technology Escrow Materials:
---------------------------------------------
**.

Initial Deposit:
---------------
** following delivery of notice to PPTI from Company that biomechanical standard
has been met.

Release to Company:
------------------
Upon request after completion of **.


** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.


                                   SCHEDULE 1

<PAGE>

                                   SCHEDULE 2
                                   ----------

             BIOMECHANICAL STANDARD FORMULATION(S) ESCROW MATERIALS
             ------------------------------------------------------


Biomechanical Standard Formulation(s) Escrow Materials:
------------------------------------------------------
**.

Initial Deposit:
---------------
** following delivery of notice to PPTI from Company that biomechanical standard
has been met.

Release to Company:
------------------
PPTI material breach (uncured) of Supply Agreement.


** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.


                                   SCHEDULE 2

<PAGE>

                                   SCHEDULE 3
                                   ----------

                     COMMERCIAL PRODUCTION ESCROW MATERIALS
                     --------------------------------------


Commercial Production Escrow Materials:
--------------------------------------
**.

Initial Deposit:
---------------
** following delivery of notice to PPTI from Company that IDE (or, for updates,
manufacturing supplement or marketing approval submission) has received
regulatory approval.

Release to Company:
------------------
Release on a product by product basis upon notice of (1) commercial
manufacturing of Product by persons other than PPTI following PPTI's election
not to commercially manufacture Product under its commercial manufacturing
rights; (2) PPTI material breach (uncured) of any commercial supply agreement;
or (3) PPTI material breach (uncured) of Supply Agreement.


** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.


                                   SCHEDULE 3

<PAGE>

                                   SCHEDULE 4
                                   ----------

               PROTEIN POLYMER DESIGN AND SUPPLY ESCROW MATERIALS
               --------------------------------------------------


Protein Polymer Design and Supply Escrow Materials:
--------------------------------------------------
**.

Initial Deposit:
---------------
** following delivery of notice to PPTI from Company that biomechanical standard
has been met.

Release to Company:
------------------
Release on a relevant culture-by-culture and protein specific basis, upon (1)
Company notice to PPTI of initiation of internal Design Services effort (as
provided in the Supply Agreement) specifying needed materials; or (2) notice of
Design Services by persons other than PPTI following PPTI's election not to
supply Design Services under its Design Services rights under the Supply
Agreement.

Release of all Protein Polymer Design and Supply Escrow Materials if PPTI
material breach (uncured) of Supply Agreement.


** Material is confidential and has been omitted and filed separately with the
Securities and Exchange Commission.


                                   SCHEDULE 4