Document:

<PAGE>

                                                                Exhibit 10.7

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

           LETTER AMENDMENT TO THE OMEGA INTERFERON LICENSE AGREEMENT

BioMedicines, Inc.
1301 Marina Village Parkway
Suite 200
Alameda, CA  94501
U.S.A.

                                                                21 February 2000

Dear Sirs:

Under an Agreement dated July 17, 1998, Boehringer Ingelheim International GmbH
("BII") has granted BioMedicines, Inc. ("BMI") certain rights to formulations of
Omega Interferon (the "Agreement") and BMI is commencing clinical trials with
one such formulation. This letter Amendment is to confirm the agreement between
BII and BMI to more specifically define the rights granted in relation to new
dosage forms and indications.

Therefore, BII and BMI hereby agree as follows:

A.       Definitions: All capitalised items not otherwise defined in this letter
         Amendment shall have the meaning given to them in the Agreement.

B.       Section 1.3 is amended to read as follows: "1.3 "FIELD" shall mean the
         treatment of humans by the administration of Licensed Product for
         diseases, disorders, conditions and the like except multiple
         sclerosis."

C.       Section 1.6 is amended to read as follows: "1.6 "LICENSED PRODUCT"
         shall mean one or more pharmaceutical products initially developed by
         BII and containing Omega Interferon (which is described more fully in
         Appendix A), including all such products suitable for administration
         [ * ] whether or not initially developed by BII, and for use in the
         Field, including new formulations, if any, developed by BII or BMI
         after the Effective Date."

D.       A new Section 2.4 is added as follows: "2.4 BII agrees to inform BMI in
         advance before BII grants rights to any [ * ] of Omega Interferon to
         any third party and to discuss any possible conflict between BMI and
         such third party. BII agrees to exclude the indications [ * ] from any
         such rights granted to a third party. Any agreement between BII and
         such third party will provide for a fair compensation to BMI in the
         event such third party benefits from [ * ] at BMI's expense under the
         R&D Agreement."

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

E.       The beginning of the first sentence of Section 5.2.3 is amended to read
         as follows: "5.2.3 "RIGHTS OF FIRST REFUSAL" Within thirty (30) days
         after receiving from BMI the final clinical trial report for one of the
         clinical studies described in Appendix D..."

         The definition of "Reversion Terms" in Section 5.2.3 is extended by
         adding a new sentence as follows: "Reversion Terms" shall also apply to
         development of the [ * ] referred to in Section 5.2.4 (new) and the
         [ * ] referred to in Section 5.2.5 (new) as the case may be."

F.       New Sections 5.24. and 5.2.5 are added:

         "5.2.4 "[ * ]" If BMI develops an [ * ] of Licensed Product, than
         within thirty (30) days after receiving from BMI both the final
         preclinical report for a study reporting the results of [ * ] testing
         in an [ * ] of Omega Interferon and the results of one of the clinical
         trials pursuant to Section 5.2.3, BII shall inform BMI in writing
         whether it wishes to negotiate the reversion of some or all of the
         rights granted to BMI under this Agreement in the countries of the
         Territory except for countries where BMI has granted a Sublicense under
         Clause 5.2.2. If BII does so wish, then both BMI and BII agree to
         negotiate in good faith for no more than an additional sixty (60) days
         the Reversion Terms. Until the expiration of this sixty (60) day
         period, BMI may not conclude a Sublicense agreement with any third
         party except for countries in Asia pursuant to Section 3.2. Discussions
         shall then continue as described in paragraphs 2 and 3 of Clause
         5.2.3."

         "5.2.5 "[ * ]" If BMI develops a [ * ] for Licensed Product, then
         within thirty (30) days after receiving from BMI both the final [ * ]
         report referred to in Appendix F and the results of one of the clinical
         trials pursuant to Section 5.2.3, BII shall inform BMI in writing
         whether it wishes to negotiate the reversion of some or all of the
         rights granted to BMI under this Agreement in the countries of the
         Territory except for countries where BMI has granted a Sublicense under
         Clause 5.2.2. If BII does so wish, then both BMI and BII agree to
         negotiate in good faith for no more than an additional sixty (60) days
         the Reversion Terms. Until the expiration of this sixty (60) day
         period, BMI may not conclude a Sublicense agreement with any third
         party except for countries in Asia pursuant to Section 3.2. Discussions
         shall then continue as described in paragraphs 2 and 3 of Clause
         5.2.3.".

G.       Section 5.3 is revised as follows: "5.3 "ONE-TIME RIGHTS" Both BII and
         BMI agree that the reversion rights described in Section 5.2.3, 5.2.4
         and 5.2.5 shall be "one-time" rights only and shall expire following
         the earliest of the following independent and mutually exclusive
         events:

                             a.  the decision by BII to decline to review the
                                 report regarding one of the clinical studies of
                                 Appendix D or the preclinical reports of
                                 Sections 5.2.4 or 5.2.5 as the case may be; or

                             b.  the end of the thirty (30)-day period referred
                                 to in Section 5.2.3, 5.2.4 or 5.2.5 as the case
                                 may be but then if, and only if, BII has not
                                 yet

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

                                 informed BMI in writing of BII's wish to
                                 negotiate Reversion Terms; or

                             c.  the end of the sixty (60)-day negotiation
                                 period referred to in Section 5.2.3, 5.2.4 or
                                 5.2.5 as the case may be but then if, and only
                                 if, BII and BMI have not yet agreed on said
                                 Reversion Terms."

H.       A new sentence is added at the end of Section 6.2: "The obligation to
         provide such written reports shall also apply to [ * ] of Omega
         Interferon developed by BMI during the term of this Agreement."

I.       Wherever the word "trial" appears in Section 7.1., 7.2 and 7.3 it is
         replaced by the word "trials."

J.       The second sentence of Section 7.4 is amended to read as follows: "BII
         through its Affiliate BI Austria (formerly Bender and Co. GmbH) or BI
         Pharma KG, agrees to supply BMI at mutually agreed intervals, to be
         laid down in the R&D Agreement, additional [ * ] of Licensed Product or
         matching Placebo subject for each batch of [ * ] to the stability and
         release for clinical trials of the Omega Interferon drug substance
         batches which were available at BI Austria on the Effective Date."

K.       New Sections 7.6 and 7.7 are added:

         "7.6 "BULK DRUG SUBSTANCE." BII shall supply to BMI [ * ] of Omega
         Interferon bulk substance. BMI agrees to use such bulk substance
         exclusively for [ * ] as described in Appendix E and a [ * ] as
         described in Appendix F. BMI acknowledges that this bulk drug substance
         has not been released for use in humans."

         7.7 "ADDITIONAL SUPPLIES OF BULK DRUG SUBSTANCE." One completion of
         the [ * ] studies described in Appendices E and F and the clinical
         trials in Appendix D, BMI will inform BII in each case of its
         interest in proceeding with the development of each [ * ] BMI shall
         inform BII on the proposed changes with respect to bulk drug
         substance and final [ * ] supply requirements, based on the results
         from such studies. Within sixty days upon receiving such information
         BII or BI Pharma KG shall prepare a proposal on further drug supply
         for the support of clinical trials. If appropriate, BMI shall
         negotiate with BII or BI Pharma KG in good faith the terms for BII
         or BI Pharma KG to supply BMI with committed quantities of bulk drug
         substance and drug product for further development. BMI and BI
         Pharma KG will also agree on a new project plan and on the
         conditions of supply in terms of feasibility, time, costs and
         workscope to be laid down as an Amendment to the R&D Agreement.
         Notwithstanding the second paragraph of Section L, BMI and BI Pharma
         KG will also agree to the terms for the transfer of BI Pharma KG's
         rights and obligations to manufacture sustained release injectable
         drug product to BMI and/or a third party.

L.       A new Section 7.8 is added as follows: "7.8 "[ * ]." Within sixty (60)
         days after BMI has provided BII with all relevant information regarding
         its plans for development of a [ * ] including product requirements,
         expected market size and manufacturing technology, the

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

         Parties will negotiate in good faith the basic terms of a supply
         agreement including prices for commercial supplies, minimum orders,
         reserved capacity at BII and commitments to purchase by BMI. A detailed
         supply agreement will be concluded at the latest [ * ] prior to the
         launch of each Licensed Product.

         At its sole discretion, BI Pharma KG may decide to exercise its rights
         to manufacture [ * ] under Section 9 of the R&D Agreement by describing
         the CMC information for regulatory submissions in the form of a master
         file. BMI agrees to ensure that such BI Pharma KG rights are
         acknowledged in any BMI agreements with third parties on the
         development of new dosage forms."

M.       Appendix D is updated and consists of the 3 BMI protocols dated
         19.04.1999, 15.09.1999 and 18.09.1999.

N.       Two new Appendices are added:

                  "E.      Development of [ * ]

                  F.       Development of [ * ]"

Best regards
Boehringer Ingelheim
International GmbH
pps.

/s/ Dr. D. Mitchard

Dr. C. Hauke Dr. D. Mitchard

Please acknowledge your agreement to the above letter Amendment by signing below
where indicated.

BioMedicines, Inc.

By: /s/ S M Moran
    --------------

Name: SM Moran, M.D.
      --------------

Title: Chief Executive Officer
       -----------------------
[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>
         24 FEBRUARY 2000

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

                                   APPENDIX E

                               [ * ] RESEARCH PLAN

BioMedicines, Inc. (BMI) and [ * ] have executed an agreement to explore the
feasibility of developing an [ * ] of omega interferon. [ * ] will utilize
patented technology to [ * ] to produce [ * ]:

[ * ]

After generating up to [ * ] representative [ * ] will be examined with the
BM8233 commercial assay for quantitating omega interferon. BMI will supply the
assay and methodology. [ * ] will establish the assay in its facilities.

In addition, these [ * ] will be assayed for bioactivity. Currently, the two
companies intend to develop the A549-EMCV bioassay utilizing cells and virus
obtained from the U.S. ATCC and methods to be developed by the two companies. It
is anticipated, however, that the assay system will be established in a
Biohazard 3 capable laboratory extrinsic to both companies. The most probable
sites are [ * ]. Final selection of a bioassay laboratory will be made at a
later date.

If a suitable [ * ] can be identified which is both [ * ], the molecule will be
[ * ] to permit testing of [ * ]. Currently, [ * ] is utilizing a rodent model
developed collaboratively with [ * ]. In addition, BMI is now negotiating with [
* ].

The overview described above is necessarily brief and will be expanded during
the course of detailed planning and execution. Subsequent, more detailed plans
can be made available as they are developed. Currently, [ * ] and BMI expect to
pursue the activity-timetable shown on the following page.

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

                            [ * ] ACTIVITY TIMETABLE

[ * ]

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

                                   APPENDIX F

                               [ * ] RESEARCH PLAN

Bio-Medicines, Inc. (BMI) and [ * ] have a non-binding agreement to explore the
[ * ] of omega interferon. [ * ] will utilize patented technology to produce
both a [ * ].

[ * ] has certain rights under license from the Alza Corporation. Currently the
[ * ] to develop a [ * ] will need to be obtained from [ * ]. BMI and [ * ] have
agreed upon a structure for the [ * ] and subsequent commercialization duties
and rewards, if any, for the [ * ].

The two companies have agreed in principle that a formal proposal will be made
to [ * ] once it is established that the [ * ] can be executed. BMI will provide
[ * ] and conduct the appropriate [ * ]. [ * ] will be responsible for
developing a [ * ] that is compatible with [ * ], will be responsible for [ * ]
will be conducted [ * ] to include a maximum of [ * ] will be the responsibility
of BMI. The principal goal will be to determine if omega [ * ].

The overview described above is necessarily brief and will be expanded during
the course of detailed planning and execution. Subsequent, more detailed plans
can be made available as they are developed. Currently, [ * ] and BMI expect to
pursue the activity-timetable shown on the following page.

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>

                            [ * ] ACTIVITY TIMETABLE

[ * ]

[ * ]CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.<PAGE>
                                                                  EXHIBIT 10.8

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

                  CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT

                                       ON

                          INTERFERON-OMEGA (IFN-OMEGA)

<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                                                                                               PAGE
<S>                                                                                                            <C>

1.       DEFINITIONS..............................................................................................1

         1.1      "Affiliate".....................................................................................1

         1.2      "BioMedicines"..................................................................................1

         1.3      "BI Pharma KG"..................................................................................2

         1.4      "BioMedicines Confidential Information".........................................................2

         1.5      "Cell Line(s)"..................................................................................2

         1.6      "Certificate of Analysis".......................................................................2

         1.7      "Effective Date"................................................................................2

         1.8      "GMP"...........................................................................................2

         1.9      "License Agreement".............................................................................2

         1.10     "Master Cell Bank (MCB)"........................................................................2

         1.11     "Manufacturers Working Cell Bank(s) (MWCB)".....................................................2

         1.12     "Phase I".......................................................................................3

         1.13     "Phase II"......................................................................................3

         1.14     "Process".......................................................................................3

         1.15     "Product".......................................................................................3

         1.16     "Project".......................................................................................3

         1.17     "Project Fee"...................................................................................3

         1.18     "Project Manager"...............................................................................3

         1.19     "Project Team"..................................................................................3

         1.20     "Start Date"....................................................................................3

         1.21     "Sublicensee"...................................................................................3

         1.22     "BI Pharma KG Confidential Information".........................................................3

         1.23     "Specifications"................................................................................4

2.       COOPERATION BETWEEN THE PARTIES IN THE COURSE OF THE PROJECT.............................................4

         2.1      Designation of Project Manager..................................................................4

         2.2      Cooperation.....................................................................................4

3.       BIOMEDICINES RESPONSIBILITIES............................................................................4

         3.1      General.........................................................................................4
</TABLE>

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       i
<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                                                               PAGE
<S>      <C>                                                                                                   <C>

         3.2      Specific........................................................................................4

4.       BI PHARMA KG RESPONSIBILITIES............................................................................4

         4.1      Master Projectplan including Project Timeline...................................................4

         4.2      Documentation...................................................................................5

         4.3      Additional Work.................................................................................5

5.       PROJECT TO BE CONDUCTED ON FIXED-FEE BASIS...............................................................5

6.       PROJECT FEE..............................................................................................5

7.       PROGRESS TO PHASE II.....................................................................................6

         7.1      Start of a Possible Phase II....................................................................6

8.       OWNERSHIP OF/LICENSE TO PROJECT DATA.....................................................................6

         8.1      Transfer of Project Data........................................................................6

         8.2      Interim Reports.................................................................................6

         8.3      License for the Use of Project Data.............................................................6

9.       COMMERCIAL PRODUCTION AND SUPPLY.........................................................................6

         9.1      BI Pharma KG's Right and Obligation to Commercial Production and Supply.........................6

         9.2      Terms and Conditions............................................................................6

         9.3      BI Pharma KG's Inability to Manufacture.........................................................6

         9.4      BioMedicines Forecast/Capacities/Exceeding Quantities...........................................7

         9.5      Pricing.........................................................................................7

10.      REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION..........................................................7

         10.1     BioMedicines....................................................................................7

         10.2     BI Pharma KG....................................................................................8

         10.3     No Additional Warranty..........................................................................8

11.      LIABILITY................................................................................................9

         11.1     Limitation of Liability.........................................................................9

         11.2     Special Limitation of Liability.................................................................9

         11.3     Maximum Amount..................................................................................9

12.      CONFIDENTIALITY..........................................................................................9

         12.1     BI Pharma KG....................................................................................9

</TABLE>

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       ii
<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                                                               PAGE
<S>      <C>                                                                                                   <C>

         12.2     BioMedicines...................................................................................10

         12.3     Exceptions to Confidentiality..................................................................10

         12.4     Others.........................................................................................10

13.      TERM AND TERMINATION....................................................................................10

         13.1     Term...........................................................................................10

         13.2     Right to Terminate.............................................................................11

         13.3     Termination with Immediate Effect..............................................................11

         13.4     Effect of Termination..........................................................................11

14.      FORCE MAJEURE...........................................................................................12

15.      PUBLICITY...............................................................................................12

16.      NOTICES.................................................................................................12

17.      APPLICABLE LAW..........................................................................................12

18.      COMPLIANCE WITH LAWS....................................................................................12

19.      INDEPENDENT CONTRACTORS.................................................................................13

20.      WAIVER..................................................................................................13

21.      SEVERABILITY............................................................................................13

22.      ENTIRETY................................................................................................13

23.      ASSIGNMENT..............................................................................................13

APPENDICES.......................................................................................................14
</TABLE>

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                      iii
<PAGE>

         THIS CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT ("Agreement") is made
effective as of 17 July, 1998 ("Effective Date"), by and among BIOMEDICINES,
INC. ("BioMedicines), a incorporated in the state of Delaware in the United
States of America, having its principal business offices at 909 Marina Village
Parkway No. 583, Alameda, CA 94501, and BOEHRINGER INGELHEIM PHARMA KG ("BI
Pharma KG") a German corporation having a place of business at Birkendorfer
Strasse 65, 88397 Biberach an der Riss, Federal Republic of Germany.

                                   BACKGROUND

         BioMedicines has a license to certain proprietary rights in
INTERFERON-OMEGA ("IFN-OMEGA") from Boehringer Ingelheim International GmbH
("BII"), a German corporation, under a separate agreement dated 17 July, 1998
and which is referenced in toto hereby.

         BI Pharma KG owns all of the appropriate and specialized cell culture,
processing, protein purification aseptic filling and lyophilisation equipment,
as well as suitable packaging and labeling facilities that are necessary and
sufficient for the production of IFN-OMEGA, and, furthermore, employs personnel
who have the requisite experience, knowledge, and expertise in production of
proteins by cell culture and purification processes, as well as in the
development and registration of biopharmaceutical products.

         BioMedicines desires to have BI Pharma KG personnel evaluate the
performance of the IFN-OMEGA production processes and sterile liquid filling of
the resulting product in BI Pharma KG's facilities and according to the
provisions of this Agreement hereinafter to manufacture IFN-OMEGA for clinical
trial and commercial purposes.

                                    AGREEMENT

         IN CONSIDERATION OF the mutual covenants set forth in this Agreement,
BI Pharma KG and BioMedicines hereby agree as follows:

1.   DEFINITIONS

1.1      "AFFILIATE" shall mean any corporation or business entity controlled
         by, controlling or under common control with either BI or B/M, as the
         case may be. For this purpose, control shall mean any of the
         following:

         (a)  direct or indirect beneficial ownership of more than fifty percent
              (50%) of the voting stock of such entity;

         (b)  a fifty percent (50%) or greater interest in the income of such
              entity;

         (c)  a fifty percent (50%) or greater management control over a joint
              venture; or

         (d)  any other relationship that, in fact, constitutes actual control.

1.2      "BIOMEDICINES" shall mean BioMedicines Inc. as laid down first above.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       1.
<PAGE>

1.3  "BI PHARMA KG" shall mean Boehringer Ingelheim Pharma KG as laid down first
     above.

1.4  "BIOMEDICINES CONFIDENTIAL INFORMATION" shall mean all technical and other
     information relating to the Product that is disclosed or supplied to BI
     Pharma KG by BioMedicines pursuant to this Agreement whether patented or
     unpatented, including, without limitation, trade secrets, know-how,
     processes, concepts, experimental methods and results and business,
     scientific plans and financial information or data and shall retroactively
     include similar such BioMedicines confidential information previously
     provided to BII under confidentiality obligation that BII subsequently
     disclosed verbally or in writing to BI Pharma KG.

1.5  "CELL LINE(S)" shall mean a CHO DX B11-SS cell line currently designated
     2-1C4 (or any similar cell line designated differently) and any other cell
     line(s) developed pursuant to this Agreement.

1.6  "CERTIFICATE OF ANALYSIS" shall mean a document describing testing methods
     and results, the accuracy of which has been certified by a party, to be
     agreed upon between the parties in due time.

1.7  "EFFECTIVE DATE" shall mean the date first above written, which shall be
     the effective date of this Agreement.

1.8  "GMP" shall mean the regulatory requirements for good manufacturing
     practices promulgated by the United States Food and Drug Administration
     (FDA) under the Federal Food, Drug and Cosmetic Act, as amended, 21 C.F.R,
     Section 210 et seq. and 21 C.F.R. Section 600-610, as applicable, or any
     manufacturing standards set now or in the future by the FDA or by the
     currently applicable regulations, directives, or decisions of the European
     Union (as now published in the OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITY
     (EC) or its successor publication or directed specifically to BI Pharma KG
     by the appropriate regulatory authorities. Moreover, GMP shall be
     understood to be the higher or more stringent of the FDA or EC standards as
     mutually agreed by BI Pharma KG and BioMedicines.

1.9  "LICENSE AGREEMENT" Shall mean the License Agreement concluded between
     BioMedicines and BII regarding IFN- OMEGA.

1.10 "MASTER CELL BANK (MCB)" shall mean reference deposit or collection of
     ampoules of the Cell Line 2-1C4 (or other cell lines as described above in
     Section 1.5) and that has currently been designated MCB 054 Th, and any
     successor or substantially similar but differently designated cell line and
     cell lines created pursuant to the Agreement.

1.11 "MANUFACTURERS WORKING CELL BANK(S) (MWCB)" shall mean BI Pharma KG's
     collection of [ * ] serially subcultivated cells that will be derived from
     the MCB. The MWCB'(s) will be used to establish seed cultures of the Cell
     Line to initiate the Process.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       2.
<PAGE>

1.12 "PHASE I" shall mean all activities and work to be performed as laid down
     in the Master Projectplan attached hereto as Appendix 1 ("Master Project
     Plan Interferon Omega; Proposed Development Plan") which shall include
     manufacturing for purposes of commercialisation.

1.13 "PHASE II" shall mean the future research and development activities and
     work to be performed according to a future agreement of the parties hereto,
     but excluding manufacturing for purposes of commercialisation.

1.14 "PROCESS" shall refer to a BI Pharma KG developed and owned process for
     using the Cell Line, including defined procedures, equipment and analytical
     methodologies for in-process control, release testing and Product
     characterization, that has been used by BI Pharma KG to produce the Product
     at the [*] fermentation scale, or, if and when applicable, the modified
     process after adaptation to serum-free production by BI Pharma KG.

1.15 "PRODUCT" shall mean drug substance or final product of IFN-OMEGA produced
     by the Cell Line(s) in accordance with the Process.

1.16 "PROJECT" shall mean the Phase I program described herein, in which BI
     Pharma KG will establish, implement, upscale and evaluate the serum-free
     Process at the respective fermentation scale in BI Pharma KG's facility and
     equipment. The primary objectives of the Project will be to perform
     registration runs at commercial scale in the BI Pharma KG facility,
     successfully demonstrate that equivalent Product (i.e. Product meeting the
     Specifications) can be reproducibly manufactured in BI Pharma KG's
     facilities, and prepare the CMC part of a BLA registration dossier with all
     relevant data generated in the Project. A proposed timeline for the Project
     is included in Appendix 1.

1.17 "PROJECT FEE" shall have the meaning specified in Section 6 hereof.

1.18 "PROJECT MANAGER" shall have the meaning specified in Section 2.1 hereof.

1.19 "PROJECT TEAM" shall have the meaning specified in Section 2.2 hereof.

1.20 "START DATE" shall mean the date mutually agreed by BI Pharma KG and
     BioMedicines, which is anticipated to be on or about 1 August 1998.

1.21 "SUBLICENSEE" shall mean a person or legal entity to which BioMedicines
     grants a sublicense of some or all of the rights granted to BioMedicines
     according to the License Agreement.

1.22 "BI PHARMA KG CONFIDENTIAL INFORMATION" shall mean all technical and other
     information relating to the Cell Line, Process, Product and BI Pharma KG's
     facilities and associated technologies that is disclosed or supplied to, or
     used on behalf of, BioMedicines by BI Pharma KG pursuant to this Agreement,
     whether patented or unpatented, including, without limitation, trade
     secrets, know-how, processes, concepts, experimental methods and results
     and business and scientific plans.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       3.
<PAGE>

1.23 "SPECIFICATIONS" shall mean the specifications for the Product and the
     respective test methods for release of drug substance and drug product as
     mutually agreed by the Project Team, as such specifications may be amended
     from time to time by mutual agreement of BioMedicines and BI Pharma KG
     according to the further development of the Process and Product.

2.   COOPERATION BETWEEN THE PARTIES IN THE COURSE OF THE PROJECT

2.1  DESIGNATION OF PROJECT MANAGER. BI Pharma KG and BioMedicines shall each
     identify a Project Manager who will be responsible for communicating all
     instructions and information concerning the Project to the other party.
     Each Project Manager will be available on an agreed upon regular basis for
     consultation at pre-arranged times during the course of the Project. In the
     absence of the Project Manager, a substitute shall be appointed. Additional
     modes or methods of communication and decision making may be implemented
     with the mutual consent of each party.

2.2  COOPERATION. In the course of the Project, BI Pharma KG will at all times
     take into consideration and implement the recommendations of BioMedicines
     as long as they do not unreasonably and adversely influence other BI Pharma
     KG biotech operations; in the absence of explicit instructions from
     BioMedicines, BI Pharma KG shall be entitled to employ its reasonable
     judgment in carrying out the Project. BI Pharma KG shall be entitled to
     rely upon any instructions or directives provided by any BioMedicines
     representative and BI Pharma KG shall not be responsible for the failure to
     achieve any objective or the inability to adhere to any guideline if such
     failure or inability is caused by events beyond the reasonable control of
     BI Pharma KG or by instructions or directives provided by BioMedicines, if
     any.

     BI Pharma KG shall permit BioMedicines, from time to time upon at least
     thirty (30) days' prior notice to BI Pharma KG to conduct audits at BI
     Pharma KG's facilities used for the Project during BI Pharma KG's normal
     business hours and at a reasonable frequency. While at any BI Pharma KG
     facility, BioMedicines personnel shall comply with all applicable BI Pharma
     KG security and safety policies and procedures.

3.   BIOMEDICINES RESPONSIBILITIES.

3.1  GENERAL. BioMedicines will periodically and appropriately keep BI Pharma KG
     informed of the status of its activities around the Product as long as the
     same facilitate the development and manufacture of the Product according to
     this Agreement.

3.2  SPECIFIC. As far as not specified herein the responsibilities of
     BioMedicines are defined in the License Agreement and possibly other
     separate agreements between BioMedicines and Boehringer Ingelheim
     International GmbH (BII), BI Pharma KG, or other BII Affiliates as
     appropriate.

4.   BI PHARMA KG RESPONSIBILITIES

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       4.
<PAGE>

4.1  MASTER PROJECTPLAN INCLUDING PROJECT TIMELINE. In the course of this
     Agreement BI Pharma KG shall perform the work and tasks as laid down and
     detailed in the Master Projectplan including Project Timeline, attached as
     Appendix 1 hereto. Any third party contractors that BI Pharma KG intends to
     hire for the Project need the approval of BioMedicines, except for single
     quality control tasks. Such quality control tasks and vendors will be
     identified to BioMedicines.

4.2  DOCUMENTATION. As soon as the data and documents are available to BI Pharma
     KG and needed for registration, as mutually agreed upon in the project
     plan, BI Pharma KG shall provide BioMedicines with all CMC-parts of a
     United States FDA Biologics License Application (BLA) or similar
     document(s) for European Registration as may be required to enable and
     facilitate regulatory approval(s) to market IFN-OMEGA: Such CMC-documents
     shall be provided to BioMedicines in English, shall be complete and
     accurate, and shall contain all data required to enable and facilitate
     regulatory approval(s). The format(s) for such documents will be
     appropriate for the regulatory agency in question and mutually agreed.

4.3  ADDITIONAL WORK. On request of BioMedicines BI Pharma KG shall perform
     additional work to sustain the progress of the Project on conditions in
     terms of money, time and scope to be subject to mutual agreement of the
     parties hereto.

5.   PROJECT TO BE CONDUCTED ON FIXED-FEE BASIS

     The Project shall be conducted by BI Pharma KG for BioMedicines on fixed
     fee basis, in consideration of payment by BioMedicines of the Project Fee
     according to the Master Projectplan as laid down in Appendix 1.

     BioMedicines acknowledges that the Project is experimental in nature and
     that no favorable or useful result can be assured by BI Pharma KG.
     Accordingly, BI Pharma KG shall not be responsible to BioMedicines for any
     failure of fermentations except for

          contamination of (a) batch(es) due to BI Pharma KG's mishandling or
          inability to obtain useful yields (Definition) of Product

     and the Project Fee shall be payable in full regardless of result unless
     the Project is terminated prior to its scheduled completion pursuant to
     Section 13 hereof.

6.   PROJECT FEE

     Subject to Section 5 above, BioMedicines shall pay BI Pharma KG a Project
     Fee of [ * ] for the services provided in carrying out the Project. This
     fee includes all fees for BI Pharma KG's work according to Article 4
     hereof.

     Disposal of organic and hazardous waste is included in the Project Fee. The
     Project Fee shall be payable in installments, each non-refundable when
     paid, as provided for in the Master Projectplan (Appendix 1).

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       5.
<PAGE>

     Each invoice shall be payable within 30 days following receipt thereof.

7.   PROGRESS TO PHASE II

7.1  START OF A POSSIBLE PHASE II. If BioMedicines decides to conduct a Phase II
     the parties will have to agree on the conditions thereof (in terms of time
     and commercial conditions) in due time depending on the then prevailing
     capacity of BI Pharma KG.

8.   OWNERSHIP OF/LICENSE TO PROJECT DATA

8.1  TRANSFER OF PROJECT DATA. In consideration of the Project Fee, BI Pharma KG
     shall execute the Project in a timely manner (as further detailed in the
     Appendices) and shall make available to BioMedicines in a timely manner all
     information, data, or materials obtained or developed in the course of the
     Project necessary to evaluate, test, develop, register, market, or sell the
     Product.

8.2  INTERIM REPORTS. BI Pharma KG agrees to provide interim reports to
     BioMedicines on a reasonable basis (max. quarterly basis).

8.3  LICENSE FOR THE USE OF PROJECT DATA. BioMedicines, its Affiliates or
     Sublicensees shall have a worldwide, royalty-free, exclusive license, with
     the right to sublicense, to Product-specific information and a
     non-exclusive license to otherwise non-Product-specific information (i.e.,
     information that may also apply to other projects/products) to use BI
     Pharma KG Confidential Information that is used in carrying out the Process
     to evaluate, test, develop, register, market, and sell the Product. These
     licenses, and sublicenses if any, shall expire automatically at the same
     time when the License Agreement expires.

9.   COMMERCIAL PRODUCTION AND SUPPLY

9.1  BI PHARMA KG'S RIGHT AND OBLIGATION TO COMMERCIAL PRODUCTION AND SUPPLY.
     The parties acknowledge and agree that, in case BioMedicines decides to
     commercialize the Product, BI Pharma KG has an exclusive right and
     obligation to produce and supply commercial quantities of Product (in bulk
     drug, final product and/or finished product form) for BioMedicines within
     the respective capacity of BI Pharma KG and the parties shall negotiate in
     good faith and consummate a supply agreement at the earliest reasonable
     opportunity for the supply by BI Pharma KG of commercial quantities of the
     respective Product for the term of the License Agreement.

9.2  TERMS AND CONDITIONS. Such supply agreement shall contain terms and
     conditions customary for such a supply agreement and shall be concluded
     between BioMedicines and BI Pharma KG or, at the sole discretion of BI
     PHARMA KG, with BII or any other Affiliate of BI Pharma KG as the case may
     be, provided however, that the main production activities shall remain at
     BI Pharma KG.

9.3  BI PHARMA KG'S INABILITY TO MANUFACTURE. Should BI Pharma KG be unable for
     any reason to manufacture sufficient quantities of Product, BI Pharma KG
     will take all

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       6.
<PAGE>

     necessary or desirable steps to facilitate the manufacture of Product by
     BioMedicines or by a third party.

9.4  BIOMEDICINES FORECAST/CAPACITIES/EXCEEDING QUANTITIES. In Appendix 2
     BioMedicines has laid down its present forecast estimation of its, its
     Affiliates and Sublicensees total requirements of Product. This forecast is
     non-binding; however, BI Pharma KG's capacity planning for commercial
     supply is based on and limited by BioMedicines's forecast.

     If, for good reason, BI Pharma KG cannot produce and supply all requested
     commercial quantities of Product as outlined in BioMedicines forecast
     referenced above for whatever reason, BioMedicines will have the right to
     have the missing quantities, as long as BI Pharma KG is not able to produce
     and supply the respective quantities, produced elsewhere.

     Moreover, the supply agreement shall provide for minimum quantities as
     follows:

     per order for commercial supplies: [ * ] of Product and

     Per calendar year:        ________ [ * ] of Product (to be agreed upon
                                        between the parties at a later stage of
                                        the cooperation at the earliest
                                        reasonable opportunity and depending on
                                        BioMedicines's forecast for commercial
                                        supply and BI Pharma KG's capacity
                                        planning resulting therefrom.

     BI Pharma KG's will provide a reserved capacity for BioMedicines for a
     certain amount of Product per calendar year based on the product
     assumptions. This capacity may be increased by mutual agreement between the
     parties with a lead time of no more than [ * ].

9.5  PRICING. The pricing for the Product manufactured and supplied under the
     supply agreement to be concluded (see Section 9.1 above) shall take place
     in accordance with the License Agreement.

10.  REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.

10.1 BIOMEDICINES. BioMedicines hereby represents, warrants and agrees that:

     (a)  BioMedicines has full corporate authority to enter into this Agreement
          and this Agreement is binding upon BioMedicines in accordance with its
          terms; and

     (b)  BioMedicines shall indemnify, defend and hold BI Pharma KG, its
          affiliates, and their respective officers, employees and agents
          harmless from and against all losses, damages, costs and expenses
          (including, without limitation, reasonable attorneys' fees), including
          injury to persons or damage to property resulting from any breach of
          the representations and warranties made by BioMedicines under this
          Section, or as a result of any claim, except for willful or knowing
          violation of

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       7.
<PAGE>

          third party intellectual property rights by BI Pharma KG, of
          infringement of the intellectual property rights of a third party
          based upon BI Pharma KG's activities in implementing the Process or
          producing the Product in accordance with the instructions and
          documentation provided by BioMedicines or developed in the course of
          the Project.

10.2 BI PHARMA KG. BI Pharma KG hereby represents, warrants and agrees that:

     (a)  BI Pharma KG is the owner of the facilities and BI Pharma KG
          Confidential Information to be used for purposes set forth in this
          Agreement;

     (b)  BI Pharma KG is not aware of any special or unusual hazards that would
          arise as a result of its carrying out of the Project as planned;

     (c)  BI Pharma KG has full corporate authority to enter into this Agreement
          and this Agreement is binding upon BI Pharma KG in accordance with its
          terms; and

     (d)  BI Pharma KG shall indemnify, defend and hold BioMedicines and its
          officers, employees and agents harmless from and against all losses,
          damages, costs and expenses (including, without limitation, reasonable
          attorneys' fees), including injury to persons or damage to property,
          resulting from any breach of the representations and warranties made
          by BI Pharma KG under this Section, or as a result of any claim that
          BI Pharma KG has violated any local law, ordinance, or guideline in
          carrying out its biotechnical manufacturing responsibilities under
          this Agreement or as a result deliberate misconduct or gross
          negligence in the duties of BI Pharma KG under the terms of the
          Agreement.

     (e)  BI Pharma KG will not knowingly infringe upon the intellectual
          property rights of BioMedicines or any third party.

     (f)  BI Pharma KG will conduct all manufacture of Product for clinical
          phase III trials according to manufacturing standards set by the
          currently applicable regulations, directives or decisions of the
          European Union (as now published in the Official Journal of the
          European Community or its successor publication).

     (g)  BI Pharma KG has conducted the positive preliminary work with regard
          to the serum-free process.

     (h)  BI Pharma KG will conduct the Project as described to BioMedicines and
          that any documentation of Project results or procedures provided to
          BioMedicines by BI Pharma KG shall be accurate in all material
          respects.

10.3 NO ADDITIONAL WARRANTY. BI Pharma KG shall provide the results of the
     Project to BioMedicines without any additional warranty of any kind,
     express or implied, including, without limitation, any warranties of
     merchantability or fitness for a particular purpose.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       8.
<PAGE>

11.  LIABILITY

11.1 LIMITATION OF LIABILITY. Other than BI Pharma KG generally knowing that
     BioMedicines will be using the Product in clinical trials, BI Pharma KG has
     no knowledge or awareness of or control over the manner in which
     BioMedicines intends to use any Product or results obtained in the Project.
     BI Pharma KG shall not be liable to BioMedicines for any losses, damages,
     costs or expenses of any nature incurred or suffered by BioMedicines or by
     a third party, arising out of any dispute or other claims or proceedings
     made by or brought against BioMedicines in respect of the results of the
     Project, or the use of any Product by BioMedicines or by a third party
     (including, without limitation, product liability claims and claims by a
     third party alleging infringement of its intellectual property rights), nor
     shall BI Pharma KG be responsible in any way for dealing with any such
     disputes, claims or proceedings except insofar as such losses, damages,
     costs, expenses, claims or dealings shall be the result of actions by BI
     Pharma KG, its personnel, or its agents that represent deliberate
     misconduct or constitute gross negligence.

     Notwithstanding the foregoing, BI Pharma KG shall remain liable for its
     actions and the consequences thereof in the event that BI Pharma KG
     knowingly infringes upon the intellectual property rights of BioMedicines
     or any third party.

     BioMedicines shall indemnify, defend and hold BI Pharma KG, its Affiliates
     and their respective officers, employees and agents harmless from and
     against all such losses, damages, costs and expenses (including, without
     limitation, reasonable attorneys' fees) except insofar as such losses,
     damages, costs, expenses, claims or dealings shall be the result of actions
     by BI Pharma KG, its personnel, or its agents that represent deliberate
     misconduct or constitute gross negligence.

11.2 SPECIAL LIMITATION OF LIABILITY. Notwithstanding Art. 10.2/10.3 above, BI
     Pharma KG shall in no way be liable for the correctness, usefulness and
     operatability of material and data (such as cellbanks, reagents etc.)
     received from BioMedicines, if any.

11.3 MAXIMUM AMOUNT. BI Pharma KG undertakes to use its best efforts to perform
     the Project under the Master Projectplan and to meet the target dates set
     forth in Appendix 1 hereto. However, due to the biological nature of the
     work to be performed hereunder BI Pharma KG's liability under this
     Agreement shall in no event amount to more than [*] of the Project Fee due
     for the entire Project according to Articles 5 and 6 above. The maximum of
     [*] shall not apply to liabilities resulting from deliberate misconduct by
     BI Pharma KG.

12.  CONFIDENTIALITY

12.1 BI PHARMA KG. BI Pharma KG shall not disclose BioMedicines Confidential
     Information to any person other than its employees or employees of its
     Affiliates who have a need to know such information in order to perform
     their duties in carrying out the Project hereunder. All other disclosures
     need the prior approval of BioMedicines.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       9.
<PAGE>

12.2 BIOMEDICINES. BioMedicines shall not disclose any BI Pharma KG Confidential
     Information to any person other than its employees, directors, or
     consultants who are bound by similar obligations of confidentiality and who
     have a need to know such information in order to provide direction to BI
     Pharma KG or evaluate the results of the Project.

12.3 EXCEPTIONS TO CONFIDENTIALITY. The obligations of confidentiality
     applicable to BioMedicines Confidential Information and BI Pharma KG
     Confidential Information shall not apply to any information that is:

     (a)  known publicly or becomes known publicly through no fault of the
          recipient;

     (b)  learned by the recipient from a third party entitled to disclose it;

     (c)  developed by the recipient independently of information obtained from
          the disclosing party;

     (d)  already known to the recipient before receipt from the disclosing
          party, as shown by its prior written records;

     (e)  required to be disclosed by law, regulation or the order of a judicial
          or administrative authority (E.G. regulatory authorities, for example,
          the FDA, that require such information in order to review an IND or
          other regulatory filing); or

     (f)  released with the prior written consent of the disclosing party.

12.4 OTHERS. No right or license, either express or implied, under any patent or
     proprietary right is granted hereunder by virtue of the disclosure of
     BioMedicines Confidential Information or BI Pharma KG Confidential
     Information. Either party shall be entitled to injunctive relief in the
     event of a breach of this Agreement by the other party. The obligations of
     both parties under this Section 11 shall survive the expiration or
     termination of this Agreement. Both BioMedicines and BI Pharma KG shall use
     reasonable and customary precautions to safeguard BioMedicines Confidential
     Information and BI Pharma KG Confidential Information, including ensuring
     that all employees, consultants, directors, agents, or the like who are
     provided access to such information are informed of the confidential and
     proprietary nature of such information and understand that all such
     information is required to be maintained confidential.

13.  TERM AND TERMINATION

13.1 TERM. This Agreement shall, unless terminated earlier, commence as of the
     Effective Date and shall expire upon the date of payment of the last sum
     due hereunder, or upon the date when the last services required to be
     performed hereunder are performed, whichever date shall last occur.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       10.
<PAGE>

13.2 RIGHT TO TERMINATE. If it becomes apparent to either party at any stage of
     the Project that it will not be possible to carry out the Project for
     scientific or technical reasons or as a result of Force Majeure, the
     parties shall permit thirty (30) days for discussion to resolve, if
     possible, the scientific or technical issue giving rise to the problem. If
     the parties fail to resolve the problem, either party shall have the right
     to terminate this Agreement, effective upon written notice to the other. In
     the event of such termination, the amount due to BI Pharma KG hereunder
     shall include all expenses reasonably incurred by BI Pharma KG prior to
     such termination in respect of the purchase of supplies or raw materials,
     and an allocation of the balance of the Project Fee for the period prior to
     receipt of such termination by BI Pharma KG and for a period of [*]
     weeks thereafter. The amount to be paid per week in this case shall be
     calculated separately Phase by Phase by dividing the amount to be paid by
     BioMedicines for the respective entire Phase by the number of weeks of the
     respective Phase. Such the amount per week may vary if the six week period
     reaches into the next Phase. However, under no circumstances BioMedicines
     shall be obliged to pay more than the amount that would have been due
     ordinarily for the respective Phase.

13.3 TERMINATION WITH IMMEDIATE EFFECT. Either party may terminate this
     Agreement effective upon written notice if either of the following events
     occurs.

     (a)  The other party commits a breach of this Agreement and the breach is
          not remedied within 30 days after the receipt of notice identifying
          the breach and requiring its remedy; or

     (b)  The other party (I) becomes unable to pay its debts as they become
          due, (II) suspends payment of its debts, (III) enters into or becomes
          subject to corporate rehabilitation or bankruptcy proceedings or
          liquidation or dissolution, (IV) makes an assignment for the benefit
          of its creditors or (V) seeks relief under any similar laws for
          debtor's relief.

     (c)  If the License Agreement terminates for whatsoever reason.

13.4 EFFECT OF TERMINATION. Upon the expiration or termination of this
     Agreement:

     (a)  At the request of BioMedicines, BI Pharma KG shall promptly return all
          BioMedicines Confidential Information to BioMedicines; except for a
          single copy and/or sample of each material for documentation purposes
          only. BI Pharma KG's responsibility to keep and store the Cell Line
          and any other material shall terminate [*] months after expiration
          or termination of this Agreement; and

     (b)  BioMedicines shall promptly return all BI Pharma KG Confidential
          Information to BI Pharma KG, except for a single copy and/or sample
          for documentation purposes only.

     The respective rights of BI Pharma KG and BioMedicines to indemnification
     as set forth in Section 9 hereof shall survive termination of this
     Agreement with respect to any claims

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       11.
<PAGE>

     that relate to or derive from the Project, or any acts or failures to act,
     of either BI Pharma KG or BioMedicines in connection with the Project that
     occur prior to termination.

14.  FORCE MAJEURE. Neither party shall be in breach of this Agreement if there
     is any failure of performance under this Agreement (except for payment of
     any amounts due hereunder) occasioned by any act of God, fire, act of
     government or state, war, civil commotion, insurrection, embargo,
     prevention from or hindrance in obtaining energy or other utilities, labor
     disputes of whatever nature or any other reason beyond the control of
     either party.

15.  PUBLICITY. No press release or other form of publicity regarding the
     Project or this Agreement shall be permitted by either party to be
     published unless both parties have indicated their consent to the form of
     the release in writing.

16.  NOTICES. Any notice required or permitted to be given hereunder by either
     party shall be in writing and shall be (a) delivered personally, (b) sent
     by registered mail, return receipt requested, postage prepaid or (c)
     delivered by facsimile with immediate telephonic confirmation of receipt,
     to the addresses or facsimile numbers set forth below:

     If to BI Pharma KG:                    Boehringer Ingelheim Pharma KG
                                            Birkendorfer Strasse 65
                                            88397 Biberach an der Riss
                                            Federal Republic of Germany
                                            Attention: Prof.  Dr. Rolf G. Werner
                                            Fax: 0 73 51/54-51 31
                                            Phone 0 73 51/54-48 00

     If to BioMedicines:                    BioMedicines, Inc.
                                            909 Marina Village Parkway, No. 583
                                            Alameda, CA 94501 USA
                                            Fax:
                                                --------------------------------
                                            Phone:
                                                  ------------------------------

     Each notice shall be deemed given (a) on the date it is received if it is
     delivered personally, (b) 1 day after the date it is postmarked if it is
     sent by certified United States mail, return receipt requested, postage
     prepaid or by other commercial carrier such as DHL (c) on the date it is
     received if it is sent by facsimile with immediate telephonic confirmation
     of receipt. Notice to BioMedicines shall be deemed to constitute notice to
     and for purposes of this Agreement.

17.  APPLICABLE LAW

     This Agreement shall be governed by and construed in accordance with the
     laws of the place of domicile of BI Pharma KG and the courts of the place
     of domicile of BI Pharma KG shall have exclusive jurisdiction over all
     legal matters and proceedings hereunder.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       12.
<PAGE>

18.  COMPLIANCE WITH LAWS

     BI Pharma KG shall perform the work hereunder in conformance with GMP, as
     applicable, and all German laws, ordinances and governmental rules or
     regulations pertaining thereto.

19.  INDEPENDENT CONTRACTORS

     Each of the parties hereto is an independent contractor and nothing herein
     contained shall be deemed to constitute the relationship of partners, joint
     ventures, nor of principal and agent between the parties hereto. Neither
     party shall hold itself out to third persons as purporting to act on behalf
     of, or serving as the agent of, the other party.

20.  WAIVER

     No waiver of any term, provision or condition of this Agreement whether by
     conduct or otherwise in any one or more instances shall be deemed to be or
     construed as a further or continuing waiver of any such term, provision or
     condition or of any other term, provision or condition of this Agreement.

21.  SEVERABILITY

     If any provision of this Agreement is held to be invalid or unenforceable
     by a court of competent jurisdiction all other provisions shall continue in
     full force and effect.

22.  ENTIRETY

     This Agreement, including any exhibits and appendices attached hereto and
     referenced herein, constitutes the full understanding of the parties and a
     complete and exclusive statement of the terms of their agreement, and no
     terms, conditions, understandings or agreements purporting to modify or
     vary the terms thereof shall be binding unless it is hereafter made in
     writing and signed by both parties.

23.  ASSIGNMENT

     This Agreement shall be binding upon the successors and assigns of the
     parties and the name of a party appearing herein shall be deemed to include
     the names of its successors and assigns provided always that nothing herein
     shall permit any assignment by either party. However, BI Pharma KG may
     assign this Agreement to any suitably qualified Affiliate of BII.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       13.
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the Effective Date.

BIOMEDICINES, INC.               BOEHRINGER INGELHEIM PHARMA KG

By: /s/ S. M. MORAN              ppa.                       ppa.
   ---------------------------   /s/  Rolf Werner           /s/ Michelberger
Title: S.M. Moran, M.D.
       Chief Executive Officer   Prof. Dr. Rolf G. Werner   Dr. Michelberger
                                 (Head of Biotechnical      (Head of Legal Dept)
                                 Manufacture)
Date     23 July 1998            Date       July 17, 1998

APPENDICES:
Appendix 1        Master Projectplan including Project Timeline
Appendix 2        BioMedicines present forecast estimation of its
                  Affiliates and Sublicensees total requirements of Product

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       14.
<PAGE>

                                                     [BOEHRINGER INGELHEIM LOGO]

                                                                     APPENDIX 1
                                                                   (Page I of 3)
COST ESTIMATE OF THE MASTER PROJECT PLAN INTERFERON OMEGA

[*]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>

                                     [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>

                                     [ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>

                                                     [BOEHRINGER INGELHEIM LOGO]

                                                                    APPENDIX 2

BIOMEDICINES PRESENT FORECAST ESTIMATION OF ITS, ITS AFFILIATES AND
SUBLICENSEES TOTAL REQUIREMENTS OF PRODUCT

1.       [ * ] ug/[ * ]

2.       [ * ] per week per [ * ]-week treatment cycle

3.       [ * ] cycle per year per patient

4.       year 1:     [ * ] patients    =   [ * ] cycles   =    [ * ]

5.       year 2:     [ * ] patients    =   [ * ] cycles   =    [ * ]

6.       year 3:     [ * ] patients    =   [ * ] cycles   =    [ * ]

7.       In year 1, an additional                              [ * ]
         will be needed to provide
         a reserve of drug in the pharmacies;

         in year 2 an additional                               [ * ]
         will be needed to provide a reserve
         of drug in the pharmacies; and

         in year 3 an additional                               [ * ]
         will be needed to provide a reserve
         of drug in the pharmacies

8.       phase IV testing will require an additional [ * ] per year

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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