Document:

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                                                                   Exhibit 10.35

                                LICENSE AGREEMENT

         THIS LICENSE AGREEMENT (the "Agreement") is entered into and effective
as of October 15, 2001 (the "Effective Date"), by and between DIADEXUS,
INCORPORATED, a Delaware corporation having its principal place of business at
343 Oyster Point Boulevard, South San Francisco, California 94080-1913 U.S.A.
("diaDexus"), and QUEST DIAGNOSTICS, INCORPORATED, a Delaware corporation having
its principal place of business at One Malcolm Avenue, Teterboro, New Jersey
07608 ("Quest"). diaDexus and Quest are referred to herein individually as a
"Party" or, collectively, as "Parties."

                                    RECITALS

         WHEREAS, diaDexus has developed a blood test known as the Cathepsin K
ELISA Test (as defined below) to detect and quantify the Cathepsin K protein in
serum, and holds rights to certain intellectual property in and to the Cathepsin
K ELISA Test; and

         WHEREAS, Quest has expertise in performing laboratory tests and wishes
to license from diaDexus the rights to use the Cathepsin K ELISA Test for
clinical diagnostic "homebrew" testing and for research purposes, including
clinical trials, under the terms and conditions set forth herein; and

         WHEREAS, Quest has acquired certain rights from SmithKline Beecham
Clinical Laboratories by assignment pursuant to Amendment No. 3, dated July 28,
1999, to the Collaboration and License Agreement, dated September 2, 1997, as
amended, among diaDexus, SmithKline Beecham Corporation and Incyte
Pharmaceuticals ("Amendment No. 3"); and

         WHEREAS, Quest wishes to enter into this Agreement on the terms and
conditions set forth herein notwithstanding any contrary or different terms set
forth in Amendment No. 3.

         NOW, THEREFORE, in consideration of the promises and undertakings set
forth herein, the Parties agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

         Capitalized terms not otherwise defined herein will have the meaning
set forth below:

         1.1 "AFFILIATE" with respect to either Party, means any Person
controlling, controlled by, or under common control with such Party. For the
purposes of this Section 1.1 only, "control" refers to (a) the possession,
directly or indirectly, of the power to direct the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, or (b) the ownership, directly or indirectly, of at least fifty
percent (50%) (or, if less, the maximum ownership interest permitted by law) of
the voting securities or other ownership interest of a Person; provided that, if
local law requires a minimum percentage of local ownership, control will be
established by direct or indirect beneficial ownership of one hundred percent
(100%) of the maximum ownership percentage that may, under such local law, be
owned by foreign interests. Notwithstanding the foregoing, Quest's Affiliates
shall include, without limitation, Sonora Quest.
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         1.2 "ANTICIPATED TEST" shall have the meaning assigned to it in Section
4.2(c).

         1.3 "ASRS" means the analyte-specific reagents listed in Exhibit C.

         1.4 "CDX FIELD" means clinical diagnostic testing services performed by
a reference laboratory using a test on human samples, the results of which are
provided to hospitals, physicians, payers, and/or patients for use in the
clinical management of patients.

         1.5 "CATHEPSIN K ELISA TEST" means the test to detect and quantify
levels of cathepsin K in clinical samples and covered by the Licensed
Intellectual Property.

         1.6 "CLINICAL TRIAL" means a human clinical trial in any country that
is intended to evaluate the safety and/or efficacy of a therapeutic compound
and/or treatment, including, without limitation, trials that satisfy the
requirements of Title 21 of the United States Code of Federal Regulations, Part
312.21, or its foreign equivalent.

         1.7 "CONFIDENTIAL INFORMATION" means any scientific, technical, trade
or business information which is disclosed orally, in writing or other tangible
form by one party to the other, recipient party pursuant to this Agreement and
is identified as confidential at the time of disclosure and, if disclosed
orally, confirmed in writing to the receiving Party within thirty (30) days of
such disclosure. This Agreement imposes no obligation upon a recipient party
with respect to Confidential Information that falls within one or more of the
exceptions listed in Sections 8.1(a) through (e).

         1.8 "CONTROL" means, with respect to an item of Information or an
intellectual property right, possession of the ability, whether arising by
ownership or license, to grant a license or sublicense as provided for herein
under such item or right without violating the terms of any agreement or other
arrangements with any Third Party.

         1.9 "DIADEXUS KNOW-HOW" means all Confidential Information Controlled
by diaDexus as of the Effective Date and during the term of this Agreement that
relates to the diaDexus Patents and is necessary to use the Cathepsin K ELISA
Test, but excluding any Information that diaDexus is restricted from disclosing
due to confidentiality obligations to a Third Party.

         1.10 "DIADEXUS PATENTS" means all of the Patent Rights to the patents
set forth on Exhibit A

         1.11 "IMPROVEMENTS" shall mean any improvements or developments
(whether patentable or not) to technology included within the Licensed
Intellectual Property that are Controlled by diaDexus during the term of this
Agreement.

         1.12 "LICENSED INTELLECTUAL PROPERTY" shall mean the following: (a) the
diaDexus Patents; (b) the diaDexus Know-How; and (c) the Improvements.

         1.13 "INFORMATION" means any data, results, inventories, information,
know-how, processes, machines, trade secrets, techniques, methods, development,
material, or compositions of matter of any type or kind.
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         1.14 "NET REIMBURSED AMOUNT" means the gross revenue invoiced by Quest
and its Affiliates for serviced performed for Third Parties under the license
rights granted in Section 2.1, less the following deductions actually allowed or
taken: (a) the amount of any discounts, commissions, refunds, replacements,
allowances or credits allowed to purchasers, customers, Third Party payors or
otherwise (including, without limitation, in respect of invalid results or
retroactive price reductions), (b) the amount of any freight and postage
charges, insurance and other shipping charges; and (c) the amount of any sales,
use and transportation taxes, customs duties and any other governmental taxes or
charges, including, without limitation, value added taxes (but excluding income
taxes based on the income of Quest and its Affiliates). For purposes of
determining Net Reimbursed Amount, when a service is sold in combination with
other services, components, products or processes, then the computation of Net
Reimbursed Amount shall be based on the average price charged during the
applicable period for the service provided under this Agreement when such
service is separately invoiced or priced (and, in the event such service was not
separately invoiced or priced during the applicable period, the Net Reimbursed
Amount computation shall be based on the relative fair market prices which Quest
would have charged (in Quest's reasonable discretion) to an unrelated purchaser
in an arm's length transaction for the service at issue versus the other
services, components, products or processes involved).

         1.15 "PATENT RIGHT" means the Valid Claims of: (i) all issued and
existing letters patent, including any extensions, supplemental protection
certificates, registrations, confirmations, reissues, reexaminations or renewals
thereof; and (ii) all pending applications, including any provisional
applications, converted provisional applications, continuing prosecution
applications and continuation, divisional, or continuation-in-part applications
thereof, for any of the foregoing.

         1.16 "PERFORMED TEST" means a single test performed by Quest or any of
its Affiliates using the Cathepsin K ELISA Test within the cDx Field or rDx
Field on a single individual sample.

         1.17 "PERSON" means any natural person, corporation, firm, business
trust, joint venture, association, organization, company, limited liability
company, partnership or other business entity, or any government or agency or
political subdivision thereof.

         1.18 "RDX FIELD" means use in in vitro diagnostic testing services in
Clinical Trials.

         1.19 "TERRITORY" means Argentina, Brazil, Germany, Italy, Mexico, the
United Kingdom, and the United States.

         1.20 "THIRD PARTY" means any Person other than diaDexus, Quest or
Affiliates of either of them.

         1.21 "TRADEMARKS" means the trademarks and service marks listed in
Exhibit B (and as such Exhibit may be amended after the Effective Date in
writing by mutual agreement of the Parties), and any state, federal or other
registrations or applications pertaining thereto.

         1.22 "VALID CLAIM" means: (a) a claim of an issued and unexpired patent
in the Territory which patent has not lapsed or been abandoned and which claim
has not been canceled
<PAGE>
or declared invalid by an unreversed decision or judgment of a court or other
appropriate body of competent jurisdiction, and which has not been admitted to
be invalid or unenforceable through reissue, disclaimer or binding admission by
diaDexus or its Affiliates in a judicial or administrative proceeding; or (b) a
claim of a pending patent application in the Territory.

                                   ARTICLE 2.
                                 LICENSE GRANT

         2.1 COMMERCIAL LICENSE. Subject to the terms of this Agreement,
diaDexus hereby grants to Quest and its Affiliates an exclusive license (without
the right to grant sublicenses) in the Territory to the Licensed Intellectual
Property to: (a) confirm performance of the Cathepsin K ELISA Test pursuant to
Section 5.1; and (b) use the Cathepsin K ELISA Test to offer and provide
services within the cDx Field and the rDx Field.

         2.2 TRADEMARK LICENSE. Subject to the terms and conditions of this
Agreement, Quest and its Affiliates shall have the right to use the Trademarks,
solely in connection with the use of the Cathepsin K ELISA Test within the
rights set forth in Section 2.1, and in compliance with the trademark policy of
diaDexus. Quest shall submit all proposed representations of the Trademarks to
diaDexus for approval, which approval shall not be unreasonably withheld or
delayed.

         2.3 NO OTHER RIGHTS. Except for the rights expressly granted under this
Agreement, no right, title or interest of any nature whatsoever is granted by
either Party to the other Party.

                                   ARTICLE 3.
                                  CONSIDERATION

         3.1 PAYMENTS BY QUEST.

                  (a) LICENSE FEE. In partial consideration for the licenses
granted pursuant to Article 2, Quest shall pay diaDexus a license fee of Fifty
Thousand United States Dollars (US$50,000), payable as follows:

                           (1) Twenty-Five Thousand United States Dollars
(US$25,000) within five (5) business days after the Effective Date; and

                           (2) Twenty-five thousand United States Dollars
(US$25,000) within four (4) months of successful completion of the validation
testing pursuant to Section 5.1.

                  (b) REAGENT PRICING. In consideration for the ASRs supplied
pursuant to Section 4.1, Quest shall pay diaDexus Five United States Dollars
(US$5) per Anticipated Test; provided, however, that Quest shall not be required
to pay for that quantity of ASRs which is reasonably necessary to confirm
performance of the Cathepsin K ELISA Test pursuant to Section 5.1.

                  (c) ROYALTY. In addition to the payments set forth in Section
3.1 (a) and (b) above and in partial consideration for the licenses granted
pursuant to Article 2, Quest shall pay diaDexus royalties as follows:
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                           (1) ten percent (10%) of the Net Reimbursed Amount
generated by use in the cDx Field; and

                           (2) twenty percent (20%) on the Net Reimbursed Amount
generated by use in the rDx Field.

                  (d) THIRD PARTY ROYALTIES. If diaDexus deems it necessary, in
its good faith reasonable judgment, that it is necessary to obtain a license of
intellectual property from a Third Party in order to avoid or eliminate
infringement arising from the exercise of the rights granted in Article 2, then:
(i) diaDexus shall notify Quest in writing of such determination, and the basis
therefore; (ii) diaDexus shall use commercially reasonable efforts to obtain
such license (including sublicense rights); (iii) if successful in obtaining
such license, diaDexus shall sublicense such rights to Quest and its Affiliates,
in the Territory in the cDx Field and rDx Field, for the remainder of the term
of this Agreement and, in consideration for such sublicense, Quest shall pay
diaDexus, in addition to the payments set forth in Sections 3.1 (a) through (c),
one-half (1/2) of all consideration owed by diaDexus to such Third Party for
such license and arising from Quest's exercise of such rights; provided,
however, that if Quest's share of Third Party royalties is greater than five
percent (5%) and up to ten percent (10%), then the Parties will negotiate in
good faith to adjust the terms and conditions of this Agreement to make the
commercialization of the Cathepsin K ELISA Test profitable for both Parties;
and, provided further, that if Quest's share of Third Party royalties is greater
than ten percent (10%), Quest shall have the right to terminate this Agreement
upon thirty (30) days written notice to diaDexus.

                  (e) PAYMENT SCHEDULE; REPORTS. Quest shall make all payments
to diaDexus as follows: (i) payments pursuant to Section 3.1(b) within thirty
(30) days after receipt by diaDexus of the purchase order for ASRs as set forth
in Section 4.2(c); and (ii) payments pursuant to Sections 3.1(c) and 3.1(d) on a
semiannual basis within thirty (30) days after the last day of each calendar
period in which the applicable Net Reimbursed Amount occurred. Quest shall
provide diaDexus, with each such payment, a written report setting forth in
reasonable detail the calculation of the amounts due, including, without
limitation, the number of Anticipated Tests associated with each order of ASRs
and the number of Performed Tests completed during such quarter and whether each
such Performed Test was within the cDx Field or the rDx Field.

         3.2 PAYMENT TERM. The payments under Section 3.1 shall be due until the
earlier of: (i) the expiration or termination of this Agreement; or (ii) the
last to expire of any Valid Claim within the diaDexus Patents claiming the
Cathepsin K ELISA Test.

                                   ARTICLE 4.
                                     SUPPLY

         4.1 SUPPLY OF REAGENTS. Quest shall purchase from diaDexus, and
diaDexus agrees to use commercially reasonable efforts to sell to Quest, Quest's
requirements for the ASRs to perform each Anticipated Test. The pricing of the
ASRs shall be as specified in Section 3.1(b) and the price shall remain fixed
during the term of this Agreement, unless modified in writing by mutual
agreement of the Parties. Subject to the terms of this Agreement, including,
without limitation, Section 3.1(b), diaDexus shall use commercially reasonable
efforts to supply Quest
<PAGE>
with Quest's good faith requirements of ASRs solely as necessary for the
purposes of performing the tests permitted under Section 2.1; provided, however,
that Quest shall expend such ASRs in a commercially reasonable manner and solely
for the purpose of exercising the licenses granted pursuant to Section 2.1 of
this Agreement.

         4.2 ORDERS.

                  (a) ORDER PERIOD. diaDexus shall supply Quest with ASRs on a
quarterly basis.

                  (b) FORECASTS; ORDERS. Not less than thirty (30) days before
the first day of each calendar quarter (commencing on the first calendar quarter
in which Quest orders ASRs from diaDexus pursuant to Section 4.1), Quest shall
prepare and provide diaDexus with a written, rolling forecast of Quest's
requirements for each ASR for each of the subsequent four (4) quarters. In each
such forecast, the stated requirements for the first quarter shall be deemed an
order by Quest.

                  (c) FORM OF ORDER. Quest shall request ASRs under this Article
4 by submitting a forecast pursuant to Section 4.2(b) and a purchase order to
diaDexus. Each such purchase order shall be in writing in a form reasonably
acceptable to diaDexus, and shall specify, in addition to the quantity of each
ASR ordered, a good faith estimate of the number of tests that such ASRs can be
used for (each, an "Anticipated Test"), the place of delivery and the required
delivery date therefor, which date shall be not be less than thirty (30) days
after the date such forecast and purchase order is received by diaDexus. In the
event of a conflict between the terms and conditions of any purchase order and
this Agreement, the terms and conditions of this Agreement shall prevail.

         4.3 SHIPMENT. All ASRs supplied under this Agreement shall be packaged
by diaDexus in a commercially reasonable manner and shipped FOB diaDexus'
facilities, shipping prepaid and added to invoice. Title and risk of loss and
damages to the ASRs purchased by Quest hereunder shall pass to Quest upon
transfer of such ASRs to the carrier designated by Quest. Quest shall pay all
freight, insurance and inspection charges and fees applicable to the transport
of the ASRs under this Article 4.

         4.4 DELIVERY. diaDexus agrees to ship ASRs as set forth in Section
4.2(b). All deliveries shall be made consistent with the purchase order and
shall be accompanied by a packing slip identifying: (i) the items shipped with
corresponding manufacturer's product number(s); (ii) the quantities shipped; and
(iii) the Quest purchase order number.

         4.5 INSPECTION. Quest shall have the right to inspect ASRs upon
delivery. Any inspection, sampling or testing by Quest of ASRs prior to shipment
by diaDexus shall not be construed as acceptance of such ASRs by Quest.
Duplicate shipments and over shipments will be returned to diaDexus, at no cost
to Quest. ASRs that pass Quest's inspection standards shall be considered
accepted.

         4.6 REJECTION AND CURE. If a shipment of ASRs pursuant to this Article
4, or any portion thereof, is spoiled, damaged or defective, then Quest shall
have the right to reject such shipment or the portion thereof that fails so to
conform, as the case may be, within thirty (30)
<PAGE>
days of Quest's receipt of such ASRs. Quest shall give written notice to
diaDexus of its rejection hereunder within thirty (30) days after Quest's
receipt of such shipment, specifying the grounds for such rejection. Quest shall
hold such rejected shipment, or portion thereof, for disposition by diaDexus.
diaDexus shall use its commercially reasonable efforts to cure such rejection or
replace such rejected reagents within thirty (30) days after receipt of written
notice of rejection.

         4.7 USE OF REAGENTS. Quest shall use the ASRs supplied pursuant to
Article 4 in compliance with all applicable laws and regulations, including
without limitation any and all laws or regulations relating to the storage, use
and transportation or other authorized use of such reagents.

         4.8 WARRANTY. diaDexus warrants that all the ASRs delivered to Quest
pursuant to this Agreement shall: (i) be free from defects in material and
workmanship; (ii) be manufactured in accordance with applicable laws and
regulations; and (iii) comply with specifications provided by diaDexus to Quest,
including, without limitation, the package inserts for such ASRs.

         4.9 NOTIFICATION: PRODUCT DEFECTS, WARNINGS OR RECALLS. In the event
any ASRs do not comply with Section 4.8, Quest shall give written notice to
diaDexus of the claimed nonconformance. diaDexus shall promptly notify Quest
throughout the term of this Agreement regarding any and all material issues,
problems or concerns of which diaDexus is aware regarding the quality or
performance of the ASRs, including, but not limited to, product defects,
warnings or recalls, and communications from any government or regulatory agency
regarding such ASRs. diaDexus will be responsible for notifying Quest in writing
of any material issue, problem, or concern known to diaDexus regarding Quest's
purchases of ASRs under this Agreement. diaDexus agrees to cooperate with Quest
in discussing proposed corrective action plans and preventative measures to be
implemented for the future with respect to such issues, problems or concerns.

         4.10 REWORK REIMBURSEMENT. In the event that Quest determines, in good
faith and after consultation with diaDexus, that defects in the ASRs are such
that Quest must repeat tests already performed for Third Parties, diaDexus will
reimburse Quest for the cost of replacement ASRs reasonably necessary to perform
such repeat testing. Quest and diaDexus will review the actions necessary to
perform the rework and will negotiate in good faith a basis for calculating the
costs referred to above. This section 4.10 will also apply to ASRs subject to a
diaDexus initiated or governmental agency recall.

         4.11 TECHNICAL TELEPHONE SUPPORT. diaDexus shall maintain one (1) or
more sufficiently trained and qualified technical service personnel during the
term of this Agreement to provide, at no cost to Quest, reasonably available
technical support for ASRs purchased by Quest under this Agreement. Technical
support shall include, but not be limited to, phone access to a technical
representative of diaDexus during regular Pacific Time business hours.

         4.12 LIMITATION OF LIABILITY. Except as specifically set forth above:
DIADEXUS'S SOLE LIABILITY TO QUEST, AND QUEST'S SOLE REMEDY UNDER ARTICLE 4,
SHALL BE THE REJECTION AND REPLACEMENT OF NON-CONFORMING ASRs. IN NO EVENT SHALL
DIADEXUS BE LIABLE FOR LOSS OF PROFITS OR INCIDENTAL,
<PAGE>
SPECIAL OR CONSEQUENTIAL DAMAGES DIRECTLY OR INDIRECTLY ARISING OUT OF ITS
OBLIGATIONS UNDER SECTION 4.

         4.13 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, DIADEXUS MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
TO THE ASRs, AND DIADEXUS DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

                                   ARTICLE 5.
                               COMMERCIALIZATION

         5.1 PERFORMANCE CONFIRMATION. Quest shall confirm performance of the
Cathepsin K ELISA Test using proper scientific and laboratory procedures
applicable to such testing, and shall use commercially reasonable efforts to
complete such testing within sixty (60) days after Quest's receipt from diaDexus
of the ASRs and diaDexus Know-How reasonably necessary to perform such testing.
Within two (2) business days after completion by Quest of such testing, Quest
shall notify diaDexus in writing whether it believes such performance
confirmation was successful or unsuccessful and, if unsuccessful, shall provide
diaDexus any and all data and other Information upon which Quest bases such
conclusion. If the Parties disagree about whether such performance confirmation
has been successful or unsuccessful, the Parties agree to discuss in good faith
additional testing or other data or Information supplied by diaDexus.

         5.2 QUEST RESPONSIBILITIES - CLINICAL STUDIES AND REIMBURSEMENT
Assistance. Quest shall, using specimens and/or testing services provided by
Quest at its sole cost and expense, perform the following: (i) characterize new
biochemical markers against comparable, pre-existing biochemical markers; (ii)
provide samples of human tissues for clinical correlation by Quest; (iii) assist
in the design and execution of clinical studies necessary for clinical
validation of such markers; and (iv) use commercially reasonable efforts to
publish in appropriate scientific journals the results of such validations.
Quest shall perform a pharmacoeconomic analysis of the utility of the new
biochemical markers identified pursuant to this Section 5.2 and shall use
commercially reasonable efforts to obtain reimbursement codes for such markers.
Quest shall provide diaDexus any and all information generated from the
performance by Quest of its responsibilities set forth in this Section 5.2.

         5.3 QUEST RESPONSIBILITIES - MARKETING. Quest shall, at its sole cost
and expense, use commercially reasonable efforts to market the number of
Performed Tests that it performs each quarter, including, without limitation,
the following: (i) providing training regarding the scientific basis and utility
of the Cathepsin K ELISA Test to Quest sales personnel; (ii) positioning and
marketing the Cathepsin K ELISA Test to health management organizations; and
(iii) recruiting academic associates, specific sales and marketing personnel,
and committing sufficient resources, in order to educate the medical community
and create demand for the Cathepsin K ELISA Test, including, without limitation,
through domestic trade shows, medical specialty meetings, web portals, and sales
visits to physicians in all markets in the Territory.
<PAGE>
         5.4 INFORMATIONAL MATERIALS. diaDexus and Quest shall collaborate to
develop a informational materials for the Cathepsin K ELISA Test that are
reasonably acceptable to both Parties; provided, however, that such proposed
materials shall not be disclosed to any Third Party without diaDexus' prior
written consent, which shall not be unreasonably withheld or delayed.

         5.5 TRADEMARKS. Quest shall use the Trademarks when it markets the
Cathepsin K ELISA Test. diaDexus shall have the right to modify or change the
Trademarks, or add or delete Trademarks, in its sole discretion and upon written
notice to Quest.

         5.6 DILIGENCE. Quest shall meet the following milestones:

         (a)      Development and technical evaluation of the Cathepsin K ELISA
                  Test within three (3) months of Quest's receipt of the ASRs
                  and diaDexus Know-How set forth in Section 5.1;

         (b)      Completion of a benchmark study and preliminary clinical value
                  assessment of the Cathepsin K ELISA Test within six (6) months
                  of Quest's receipt of the ASRs and diaDexus Know-How set forth
                  in Section 5.1; and

         (c)      If both Parties agree, after good faith review of all
                  applicable data and information, that the milestone set forth
                  in Section 5.6(b) has been achieved and that the Cathepsin K
                  ELISA Test has reasonable clinical value, then Quest, with the
                  reasonable assistance and cooperation of diaDexus, shall start
                  a more complete evaluation of the Cathepsin K ELISA Test and
                  Quest will commence offering the Cathepsin K ELISA Test under
                  this Agreement.

                                   ARTICLE 6.
                               PAYMENT PROVISIONS

         6.1 MODE OF PAYMENT. All payments hereunder will be made by direct wire
transfer of United States Dollars in the requisite amount to such bank account
as diaDexus may from time to time designate by written notice to Quest. Payments
will be free and clear of any taxes (other than withholding and other taxes
imposed on the payee), fees or charges, to the extent applicable.

         6.2 RECORDS RETENTION. For three (3) years after the each report
provided to diaDexus pursuant to Section 3.1(b), Quest shall keep records of
such Performed Tests in sufficient detail to confirm the accuracy of any royalty
and other payment calculations hereunder. Such records shall be deemed the
Confidential Information of each Party.
<PAGE>
         6.3 AUDITS.

                  (a) AUDIT RIGHTS; PROCEDURE. Upon the written request of
diaDexus, and not more than once in each calendar year, Quest will permit an
independent certified public accounting firm selected by diaDexus, and
reasonably acceptable to Quest, at diaDexus's expense, to have access during
normal business hours, and upon reasonable prior written notice, to such of the
records of Quest as may be reasonably necessary to verify the accuracy of any
financial reports to diaDexus for any quarter's Performed Tests within the
preceding three (3) years.

                  (b) ADDITIONAL PAYMENTS; COST REIMBURSEMENT. If such
accounting firm concludes that additional royalties or other payments were owed
during such period, Quest will pay the additional royalties or other payments,
with interest from the date originally due at the prime rate, as published in
The Wall Street Journal (Eastern U.S. Edition) on the last business day
preceding such date, within thirty (30) days after the date Examiner delivers to
Examinee such accounting firm's written report. If the amount of the
underpayment is greater than five percent (5%) of the total amount owed, then
Quest will in addition reimburse diaDexus for its reasonable costs related to
such audit.

                  (c) CONFIDENTIALITY. The independent, certified public
accountant shall be required to maintain all information it reviews in
confidence, except that it may report the results of its audit to diaDexus.
diaDexus will treat all information subject to review under this Section 6.3 in
accordance with the confidentiality provisions of Article 8, and will cause its
accounting firm to enter into a confidentiality agreement reasonably acceptable
in form and substance to Quest, obligating such firm to retain all such
financial information in confidence pursuant to such confidentiality agreement.

                  (d) AUDIT DISPUTES. If Quest in good faith disputes the
conclusion of the accounting firm under subsection (b) above that Quest owes
additional royalties or other payments, or any specific aspect of the
conclusion, then Quest will inform diaDexus by written notice within sixty (60)
days of receiving a copy of the audit containing such conclusion, specifying in
detail the reasons for Quest's disputing such conclusion. The Parties will
promptly thereafter meet and negotiate in good faith a resolution to such
dispute. In the event that the Parties are unable to resolve such dispute within
sixty (60) days after such notice, the matter will be resolved pursuant to
Section 12.8, and interest will be payable on any additional royalties or other
payments determined to be due in the same manner as provided for in Section
3.1(b).

                                   ARTICLE 7.
                              INTELLECTUAL PROPERTY

         7.1 OWNERSHIP. diaDexus shall retain all of its right, title and
interest in and to any and all diaDexus Patents, diaDexus Know-How, and the
Trademarks.

         7.2 TITLE TO INVENTIONS. If Quest or its Affiliates, or any employees
or agents of either, conceive and/or reduce to practice any Improvements or
modifications (whether patentable or not) of the Cathepsin K ELISA Test (an
"Invention"), ownership of such Invention shall be determined by, and follow,
the rules for determining inventorship under the laws of the
<PAGE>
United States; provided, however, that, if any such Invention is owned solely by
Quest and/or any of its Affiliates, Quest shall promptly disclose such Invention
in writing to diaDexus and grant to diaDexus a royalty-free, fully paid-up,
perpetual, worldwide non-exclusive license, with rights to grant sublicenses
(subject to diaDexus payment to Quest of one-half (1/2) the fair market value,
in an arm's length transaction, of any and all payments received by diaDexus as
consideration solely for granting such sublicense only to such Inventions),
under any and all intellectual property rights claiming such Invention, to use
such Invention for any purpose; and, provided further, that Quest shall not
transfer, assign or license its rights to such Invention, other than as part of
the merger, sale or acquisition of substantially all of the business associated
with the subject matter of this Agreement, without the prior written notice of
such intent to diaDexus, after which notice Quest shall, at diaDexus' option if
exercised within thirty (30) days of such notice, negotiate in good faith
commercially reasonable terms for making such transfer, assignment or exclusive
license to diaDexus. Quest shall require its Affiliates and employees or agents
of either to assign inventions to Quest as reasonably necessary to implement
this Section 7.2.

         7.3 PATENT PROSECUTION. diaDexus Patents shall be prosecuted and
maintained solely by diaDexus at its option and its own expense; provided,
however, that diaDexus shall: (i) use counsel reasonably acceptable to Quest for
such prosecution and maintenance in the Territory; (ii) keep Quest or its
counsel informed with regard to all patent application prosecutions, maintenance
processes and other formal communications with patent offices in the Territory
with respect to the diaDexus Patents; and (iii) promptly deliver to Quest or its
counsel copies of all patent applications, amendments, office actions, related
correspondence and other related documents regarding the diaDexus Patents in the
Territory. Any and all Patent Rights claiming an Invention pursuant to Section
7.2 shall be prosecuted and maintained by Quest, at its sole cost and expense;
provided, however, that Quest shall provide any and all proposed patent
applications for such Inventions to diaDexus at least thirty (30) days before
filing.

         7.4 ENFORCEMENT. During the term of this Agreement, Quest shall have
the right, in its sole discretion and at its sole cost and expense, to initiate
and prosecute a suit or other legal proceeding in the Territory to enforce and
defend the Licensed Intellectual Property with respect to any infringement or
other unlawful use thereof in the Territory by a Third Party; provided, however,
that Quest shall have no obligation to bring such suit or other proceeding; and
provided further, that diaDexus shall have the right, at its sole cost and
expense, to join as a party in such suits or other legal proceedings. If Quest
fails diligently to enforce or defend the Licensed Intellectual Property,
diaDexus shall have the right to enforce or defend the Licensed Intellectual
Property. Subject to each Party's confidentiality obligations with Third
Parties, each Party shall promptly notify the other of any potential or actual
infringement of the Licensed Intellectual Property, any Patent Rights claiming
an Invention pursuant to Section 7.2, or any unlawful use of the Cathepsin K
ELISA Test, of which such Party becomes aware.

         7.5 THIRD PARTY PATENT RIGHTS. If any warning letter or other notice of
infringement is received by a Party, or action, suit or proceeding is brought
against a Party alleging infringement of a Patent Right of any Third Party in
the manufacture, use or sale of the Cathepsin K ELISA Test or exercise of the
license rights of Quest under any license granted pursuant to this Agreement,
the Party receiving notice of such alleged infringement shall promptly notify in
writing the other Party.
<PAGE>
                                   ARTICLE 8.
                                 CONFIDENTIALITY

         8.1 CONFIDENTIALITY OBLIGATIONS. Each Party agrees that, for the term
of this Agreement and for three (3) years thereafter, such Party will keep, and
will ensure that its officers, directors, employees and agents keep, completely
confidential and will not publish or otherwise disclose and will not use for any
purpose except as permitted hereunder any Confidential Information furnished to
it by the other Party pursuant to this Agreement (including, without limitation,
know-how of the disclosing Party). The foregoing obligations will not apply to
any information to the extent that it can be established by such receiving Party
that such information:

                  (a) was already known to the receiving Party as evidenced by
its written records, other than under an obligation of confidentiality, at the
time of disclosure;

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

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

                  (d) was subsequently lawfully disclosed to the receiving Party
by a Third Party other than in contravention of a confidentiality obligation of
such Third Party to the disclosing Party; or

                  (e) was developed or discovered by employees of the receiving
Party or its Affiliates who had no access to the Confidential Information of the
disclosing Party.

         8.2 PERMITTED DISCLOSURES. Each Party may disclose the other's
Confidential Information to the extent such disclosure is reasonably necessary
in filing or prosecuting patent applications, prosecuting or defending
litigation, advising investors and the investment community of the results of
the activities hereunder (subject to the prior written consent of the other
Party, which consent will not be unreasonably withheld or delayed), complying
with applicable governmental regulations, granting a permitted sublicense
hereunder or conducting clinical trials or otherwise in performing its
obligations or exercising its rights hereunder. If a Party is required to make
any such disclosure of the other Party's Confidential Information, it will give
reasonable advance notice to that other Party of such disclosure requirement,
will cooperate with the other Party in its efforts to secure confidential
treatment of such Confidential Information prior to its disclosure, and, save to
the extent inappropriate in the case of patent applications, will use all
reasonable efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or confidentiality agreements
or otherwise).

         8.3 PRESS RELEASES. Except to the extent required by law or as
otherwise permitted in accordance with this Section 8.3, neither Party will make
any public announcements concerning this Agreement or the terms hereof without
the prior written consent of the other, which will not
<PAGE>
be unreasonably withheld or delayed. Notwithstanding the foregoing, the Parties
may issue a press release announcing the execution of this Agreement and the
general subject matter hereof.

                                   ARTICLE 9.
                         REPRESENTATIONS AND WARRANTIES

         9.1 REPRESENTATIONS BY DIADEXUS. diaDexus represents and warrants to
Quest that, as of the Effective Date: (i) it is duly organized, validly existing
and in good standing under the laws of the state of its incorporation and has
full corporate power and authority to enter into this Agreement; (ii) it has
taken all corporate actions necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations under this Agreement;
(iii) it has the right to grant the licenses granted under Article 2 of this
Agreement; (iv) use of the Licensed Intellectual Property by Quest and its
Affiliates as contemplated hereby will not infringe the valid intellectual
property rights of any Third Party; (v) diaDexus has no actual knowledge of any
Third Party claiming to have, through diaDexus or otherwise, any title or
interest in or to any of the Licensed Intellectual Property in the Territory
(subject only to royalty-free, non-exclusive license rights of the federal
government of the United States of America); and (vi) diaDexus has not granted
any options, licenses, or assignments of any kind relating to the Licensed
Intellectual Property in the Territory in the cDx Field or rDx Field, and,
subject to Section 12.2, diaDexus will not grant any such options, licenses or
agreements to any Third Party with respect to use of any of the Licensed
Intellectual Property in the Territory in the cDx Field or rDx Field prior to
the termination or expiration of this Agreement, whichever is earlier.

         9.2 REPRESENTATIONS BY QUEST. Quest represents and warrants to diaDexus
that, as of the Effective Date: (i) it is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
full corporate power and authority to enter into this Agreement; and (ii) it has
taken all corporate actions necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations under this Agreement.

         9.3 PARTICIPATION IN FEDERALLY FUNDED HEALTHCARE PROGRAMS. Each party
to this Agreement represents that (i) it has not, as of the Effective Date, been
convicted of a criminal offense related to health care, or (ii) is not
currently, as of the Effective Date, listed by a federal agency as debarred,
excluded or otherwise ineligible for participation in federally funded health
care programs. Either party shall notify the other within five (5) days, in
writing, of any change in this representation if circumstances change to render
this representation false during the term of this Agreement. Such change in
circumstances shall constitute cause by the other party to immediately terminate
this Agreement. For purposes of this paragraph, a party is defined as the
entities entering into this contract, and/or its principals, directors and
officers.

         9.4 DISCLAIMER OF WARRANTIES. EXCEPT AS SPECIFICALLY SET FORTH HEREIN,
NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE, NON-INFRINGEMENT, AND ANY OTHER STATUTORY WARRANTIES.
<PAGE>
                                  ARTICLE 10.
                                 INDEMNIFICATION

         10.1 INDEMNIFICATION BY DIADEXUS. diaDexus shall indemnify, defend and
hold Quest and its Affiliates, agents, employees, officers and directors (the
"Quest Indemnitees") harmless from and against any and all liability, damage,
loss, cost or expense (including reasonable attorneys' fees) arising out of
Third Party claims or suits arising out of negligent and/or willful misconduct
by diaDexus with respect to: (a) diaDexus's performance of, or failure to
perform, its obligations under this Agreement; or (b) breach by diaDexus of its
representations and warranties under this Agreement. Notwithstanding the
foregoing, diaDexus' obligations pursuant to this Section 10.1 shall not apply
to the extent such claims or suits result from the gross negligence or willful
misconduct of any of the Quest Indemnitees and diaDexus shall have no obligation
to defend or indemnify the Quest Indemnitees with respect to Third Party claims
arising out of breach by Quest of its representations and warranties set forth
in this Agreement.

         10.2 INDEMNIFICATION BY QUEST. Quest shall indemnify, defend and hold
diaDexus and its Affiliates, agents, employees, officers and directors (the
"diaDexus Indemnitees") harmless from and against any and all liability, damage,
loss, cost or expense (including reasonable attorneys' fees) arising out of
Third Party claims or suits arising out of negligent and/or willful misconduct
by Quest with respect to: (a) Quest's performance of, or failure to perform, its
obligations under this Agreement; (b) breach by Quest of its representations and
warranties under this Agreement; or (c) personal injury, product liability or
property damage relating to or arising from the use or promotion of the
Cathepsin K ELISA Test by Quest or its Affiliates. Notwithstanding the
foregoing, Quest's obligations pursuant to this Section 10.2 shall not apply to
the extent such claims or suits result from the gross negligence or willful
misconduct of any of the diaDexus Indemnitees and Quest shall have no obligation
to defend or indemnify the diaDexus Indemnitees with respect to Third Party
claims arising out of breach by diaDexus of its representations and warranties
set forth in this Agreement.

         10.3 NOTIFICATION OF CLAIM; CONDITIONS TO INDEMNIFICATION OBLIGATIONS.
As a condition to a Party's right to receive indemnification under this Article
10, such Party shall: (i) promptly notify the other Party as soon as the Party
seeking indemnity becomes aware of a claim or action for which indemnification
may be sought pursuant hereto; (ii) cooperate with the indemnifying Party in the
defense of such claim or suit, at the expense of the indemnifying Party; and
(iii) permit the indemnifying Party to control the defense of such claim or
suit, including, without limitation, the right to select defense counsel. In no
event, however, may the indemnifying Party compromise or settle any claim or
suit in a manner which admits fault or negligence on the part of the indemnified
Party or that otherwise materially affects the indemnified Party's rights under
this Agreement without the prior written consent of the indemnified Party. The
indemnifying Party will have no liability under this Article 10 with respect to
claims or suits settled or compromised without its prior written consent.

                                  ARTICLE 11.
                           TERMINATION AND EXPIRATION

         11.1 TERM. This Agreement will commence upon the Effective Date and,
unless earlier terminated as provided herein, will expire three (3) years after
the Effective Date.
<PAGE>
         11.2 TERMINATION OF THE AGREEMENT UPON MATERIAL BREACH. Failure by a
Party to comply with any of its material obligations contained herein will
entitle the Party not in default to give to the Party in default notice
specifying the nature of the default, requiring it to make good or otherwise
cure such default, and stating its intention to terminate if such default is not
cured. If such default is not cured within thirty (30) days after the receipt of
such notice, the Party not in default shall be entitled, without prejudice to
any of its other rights conferred on it by this Agreement, and in addition to
any other remedies available to it by law or in equity, to terminate this
Agreement.

         11.3 TERMINATION FOR CONVENIENCE. Quest shall have the right to
terminate this Agreement, for any reason or no reason, upon one hundred twenty
(120) days written notice to the other Party; provided, however, that Quest's
rights under this Section 11.3 shall terminate upon successful completion of the
milestone set forth in Section 5.6(b).

         11.4 CONSEQUENCES OF TERMINATION OR EXPIRATION.

                  (a) RETURN OF MATERIALS. Upon termination or expiration of
this Agreement Quest will return to diaDexus any and all ASRs, Confidential
Information of diaDexus, and any other records and materials in its possession
or control containing or comprising the diaDexus Know-How or other Confidential
Information of diaDexus.

                  (b) EFFECT OF TERMINATION AND ACCRUED RIGHTS. Termination or
expiration of this Agreement for any reason will be without prejudice to any
rights that will have accrued to the benefit of a Party prior to such
termination or expiration. Such termination or expiration will not relieve a
Party from accrued payment obligations (subject to any offset for damages on
account of the other Party's breach) or from obligations which are expressly
indicated to survive termination or expiration of this Agreement.

                  (c) SURVIVAL. The following Articles and Sections of this
Agreement shall survive its termination or expiration: Articles 1, 6, 7, 8, 9,
10 and 12 and Sections 11.4.

                                  ARTICLE 12.
                               GENERAL PROVISIONS

         12.1 RELATIONSHIP OF THE PARTIES. Nothing in this Agreement is intended
or will be deemed to constitute a partnership, agency or employer-employee
relationship between the Parties. Neither Party will incur any debts or make any
commitments for the other.

         12.2 ASSIGNMENTS. Except as expressly provided herein, neither this
Agreement nor any interest hereunder will be assignable, nor any other
obligation delegable, by a Party without the prior written consent of the other;
provided, however, that a Party may assign this Agreement without consent to any
Affiliate or to any successor in interest by way of merger or sale of all or
substantially all of its assets in a manner such that the assignor will remain
liable and responsible for the performance and observance of all such Party's
duties and obligations hereunder, except that no intellectual property of any
Third Party acquiror of such Party will be included in the licenses granted
hereunder. This Agreement will be binding upon the successors and permitted
assigns of the Parties. Any assignment not in accordance with this Section 12.2
will be null and void.
<PAGE>
         12.3 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments and to do all such other acts as may be
necessary or appropriate in order to carry out the express provisions of this
Agreement.

         12.4 FORCE MAJEURE. Neither Party will be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time and to the extent such failure or delay is caused by
earthquake, riot, civil commotion, war, strike, flood, or governmental acts or
restriction that is beyond the control of the respective Party. The Party
affected by such force majeure will provide the other Party with full
particulars thereof as soon as it becomes aware of the same (including its best
estimate of the likely extent and duration of the interference with its
activities), and will use commercially reasonable efforts to overcome the
difficulties created thereby and to resume performance of its obligations as
soon as practicable. If the performance of any obligation under this Agreement
is delayed owing to a force majeure for any continuous period of more than
ninety (90) days, the Parties hereto will consult with respect to an equitable
solution, including the possibility of the mutual termination of this Agreement.

         12.5 ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement
constitutes and contains the entire understanding and agreement of the Parties
respecting the subject matter hereof and cancels and supersedes any and all
prior or contemporaneous negotiations, correspondence, understandings and
agreements between the Parties, whether oral or written, regarding such subject
matter. No waiver, modification or amendment of any provision of this Agreement
will be valid or effective unless made in writing and signed by a duly
authorized officer of each Party.

         12.6 CAPTIONS. The captions to this Agreement are for convenience only,
and are to be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

         12.7 GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of California, without regard to its
principles of conflicts of law.

         12.8 DISPUTE RESOLUTION. Any claim or controversy arising out of or
related to this Agreement or any breach hereof shall be submitted to any court
of competent jurisdiction within the State of California, and each Party hereby
consents to the jurisdiction and venue of such courts for such disputes.

         12.9 NOTICES AND DELIVERIES. Any notice, request, delivery, approval or
consent required or permitted to be given under this Agreement will be in
writing and will be deemed to have been sufficiently given if delivered in
person, transmitted by telecopier (receipt verified) or by express courier
service (signature required) or five (5) days after it was sent by registered
letter, return receipt requested (or its equivalent), to the Party to which it
is directed at its address or facsimile number shown below or such other address
or facsimile number as such Party will have last given by notice to the other
Parties.

         If to diaDexus, addressed to:
<PAGE>
                  diaDexus, Inc.
                  343 Oyster Point Blvd.
                  South San Francisco, CA 94080-1913
                  Attn.:  Chief Executive Officer
                  Fax: (650) 246-6499

         If to Quest, addressed to:

                  Quest Diagnostics Incorporated
                  One Malcolm Avenue
                  Teterboro, New Jersey 07608

                  Attn.:  General Counsel
                  Fax:  (201) 462-4795

                  With a copy to Chief Intellectual Property Counsel

                  Quest Diagnostics Incorporated
                  33608 Ortega Highway
                  San Juan Capistrano, California
                  Attn: Chief Intellectual Property Counsel

         12.10 NO CONSEQUENTIAL DAMAGES. EXCEPT PURSUANT TO ARTICLE 10, IN NO
EVENT WILL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE
OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR
REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH
DAMAGES.

         12.11 WAIVER. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance will not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement will be cumulative and none of them will be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.

         12.12 SEVERABILITY. When possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement. The Parties will make a good faith effort to replace the invalid
or unenforceable provision with a valid one which in its economic effect is most
consistent with the invalid or unenforceable provision.
<PAGE>
         12.13 COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, any one of which need not contain the signature of
more than one Party but all such counterparts taken together will constitute one
and the same agreement.

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the Effective Date,
each copy of which will for all purposes be deemed to be an original.

DIADEXUS, INC.                           QUEST DIAGNOSTICS INCORPORATED

By: /s/ Mohan S. Iyer                    By: /s/ Jorge A. Leon
   ------------------------                 ---------------------------

Name: Mohan S. Iyer                      Name: Jorge A. Leon
     ----------------------                   -------------------------

Title: VP, Business Development          Title: VP, Applied Genomics
      -------------------------               -------------------------

Date: October 15, 2001                   Date: October 15, 2001
     ----------------------                   -------------------------
<PAGE>
                                    EXHIBIT A

                                DIADEXUS PATENTS
<TABLE>
<CAPTION>
                DATE OF
U.S. PATENT #    PATENT    INVENTOR NAME             ASSIGNED TO
<S>             <C>        <C>                       <C>
5,861,298        1/19/99   Mark Adams et al.         GlaxoSmithKline plc
5,501,969        3/26/96   Gregg Hastings et al.     Human Genome Sciences Inc.
</TABLE>
<PAGE>
                                    EXHIBIT B

                                   TRADEMARKS

DIADEXUS(R), INC.
[DIADEXUS LOGO]

                        Other trademarks to be announced
<PAGE>
                                    EXHIBIT C

                            ANALYTE-SPECIFIC REAGENTS

         Each ASR shipment will contain the following bulk packaged components
with appropriate labeling:

         1.       Enzyme/antibody conjugate

         2.       Antibody coated 96-well microtiter plate containing a minimum
                  of 80 (eighty) testable wells.

         3.       Calibrator set containing all required levels

         4.       Proprietary buffers, solutions or reagents as required<PAGE>
                                                                   Exhibit 10.36

                                LICENSE AGREEMENT

         THIS LICENSE AGREEMENT (the "Agreement") is entered into and effective
as of October 24, 2001 (the "Effective Date"), by and between DIADEXUS,
INCORPORATED, a Delaware corporation having its principal place of business at
343 Oyster Point Boulevard, South San Francisco, California 94080-1913 U.S.A.
("diaDexus"), and QUEST DIAGNOSTICS, INCORPORATED, a Delaware corporation having
its principal place of business at One Malcolm Avenue, Teterboro, New Jersey
07608 ("Quest"). diaDexus and Quest are referred to herein individually as a
"Party" or, collectively, as "Parties."

                                    RECITALS

         WHEREAS, diaDexus has developed a blood test known as the Colon 101
ELISA Test (as defined below) to detect and quantify the Colon 101 protein in
serum, and holds rights to certain intellectual property in and to the Colon 101
ELISA Test; and

         WHEREAS, Quest has expertise in performing laboratory tests and wishes
to license from diaDexus the rights to use the Colon 101 ELISA Test for clinical
diagnostic "homebrew" testing and for research purposes, including clinical
trials, under the terms and conditions set forth herein; and

         WHEREAS, Quest has acquired certain rights from SmithKline Beecham
Clinical Laboratories by assignment pursuant to Amendment No. 3, dated July 28,
1999, to the Collaboration and License Agreement, dated September 2, 1997, as
amended, among diaDexus, SmithKline Beecham Corporation and Incyte
Pharmaceuticals ("Amendment No. 3"); and

         WHEREAS, Quest wishes to enter into this Agreement on the terms and
conditions set forth herein notwithstanding any contrary or different terms set
forth in Amendment No. 3.

         NOW, THEREFORE, in consideration of the promises and undertakings set
forth herein, the Parties agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

         Capitalized terms not otherwise defined herein will have the meaning
set forth below:

         1.1 "AFFILIATE" with respect to either Party, means any Person
controlling, controlled by, or under common control with such Party. For the
purposes of this Section 1.1 only, "control" refers to (a) the possession,
directly or indirectly, of the power to direct the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, or (b) the ownership, directly or indirectly, of at least fifty
percent (50%) (or, if less, the maximum ownership interest permitted by law) of
the voting securities or other ownership interest of a Person; provided that, if
local law requires a minimum percentage of local ownership, control will be
established by direct or indirect beneficial ownership of one hundred percent
(100%) of the maximum ownership percentage that may, under such local law, be
owned by foreign interests. Notwithstanding the foregoing, Quest's Affiliates
shall include, without limitation, Sonora Quest.
<PAGE>
         1.2 "ANTICIPATED TEST" shall have the meaning assigned to it in Section
4.2(c).

         1.3 "ASRS" means the analyte-specific reagents listed in Exhibit C.

         1.4 "CDX FIELD" means clinical diagnostic testing services performed by
a reference laboratory using a test on human samples, the results of which are
provided to hospitals, physicians, payers, and/or patients for use in the
clinical management of patients.

         1.5 "COLON 101 ELISA TEST" means the test to detect and quantify levels
of Colon 101 in clinical samples and covered by the Licensed Intellectual
Property.

         1.6 "CLINICAL TRIAL" means a human clinical trial in any country that
is intended to evaluate the safety and/or efficacy of a therapeutic compound
and/or treatment, including, without limitation, trials that satisfy the
requirements of Title 21 of the United States Code of Federal Regulations, Part
312.21, or its foreign equivalent.

         1.7 "CONFIDENTIAL INFORMATION" means any scientific, technical, trade
or business information which is disclosed orally, in writing or other tangible
form by one party to the other, recipient party pursuant to this Agreement and
is identified as confidential at the time of disclosure and, if disclosed
orally, confirmed in writing to the receiving Party within thirty (30) days of
such disclosure. This Agreement imposes no obligation upon a recipient party
with respect to Confidential Information that falls within one or more of the
exceptions listed in Sections 8.1(a) through (e).

         1.8 "CONTROL" means, with respect to an item of Information or an
intellectual property right, possession of the ability, whether arising by
ownership or license, to grant a license or sublicense as provided for herein
under such item or right without violating the terms of any agreement or other
arrangements with any Third Party.

         1.9 "DIADEXUS KNOW-HOW" means all Confidential Information Controlled
by diaDexus as of the Effective Date and during the term of this Agreement that
relates to the diaDexus Patents and is necessary to use the Colon 101 ELISA
Test, but excluding any Information that diaDexus is restricted from disclosing
due to confidentiality obligations to a Third Party.

         1.10 "DIADEXUS PATENTS" means all of the Patent Rights to the patents
set forth on Exhibit A

         1.11 "IMPROVEMENTS" shall mean any improvements or developments
(whether patentable or not) to technology included within the Licensed
Intellectual Property that are Controlled by diaDexus during the term of this
Agreement.

         1.12 "LICENSED INTELLECTUAL PROPERTY" shall mean the following: (a) the
diaDexus Patents; (b) the diaDexus Know-How; and (c) the Improvements.

         1.13 "INFORMATION" means any data, results, inventories, information,
know-how, processes, machines, trade secrets, techniques, methods, development,
material, or compositions of matter of any type or kind.
<PAGE>
         1.14 "NET REIMBURSED AMOUNT" means the gross revenue invoiced by Quest
and its Affiliates for serviced performed for Third Parties under the license
rights granted in Section 2.1, less the following deductions actually allowed or
taken: (a) the amount of any discounts, commissions, refunds, replacements,
allowances or credits allowed to purchasers, customers, Third Party payors or
otherwise (including, without limitation, in respect of invalid results or
retroactive price reductions), (b) the amount of any freight and postage
charges, insurance and other shipping charges; and (c) the amount of any sales,
use and transportation taxes, customs duties and any other governmental taxes or
charges, including, without limitation, value added taxes (but excluding income
taxes based on the income of Quest and its Affiliates). For purposes of
determining Net Reimbursed Amount, when a service is sold in combination with
other services, components, products or processes, then the computation of Net
Reimbursed Amount shall be based on the average price charged during the
applicable period for the service provided under this Agreement when such
service is separately invoiced or priced (and, in the event such service was not
separately invoiced or priced during the applicable period, the Net Reimbursed
Amount computation shall be based on the relative fair market prices which Quest
would have charged (in Quest's reasonable discretion) to an unrelated purchaser
in an arm's length transaction for the service at issue versus the other
services, components, products or processes involved).

         1.15 "PATENT RIGHT" means the Valid Claims of: (i) all issued and
existing letters patent, including any extensions, supplemental protection
certificates, registrations, confirmations, reissues, reexaminations or renewals
thereof; and (ii) all pending applications, including any provisional
applications, converted provisional applications, continuing prosecution
applications and continuation, divisional, or continuation-in-part applications
thereof, for any of the foregoing.

         1.16 "PERFORMED TEST" means a single test performed by Quest or any of
its Affiliates using the Colon 101 ELISA Test within the cDx Field or rDx Field
on a single individual sample.

         1.17 "PERSON" means any natural person, corporation, firm, business
trust, joint venture, association, organization, company, limited liability
company, partnership or other business entity, or any government or agency or
political subdivision thereof.

         1.18 "RDX FIELD" means use in in vitro diagnostic testing services in
Clinical Trials.

         1.19 "TERRITORY" means Argentina, Brazil, Germany, Italy, Mexico, the
United Kingdom, and the United States.

         1.20 "THIRD PARTY" means any Person other than diaDexus, Quest or
Affiliates of either of them.

         1.21 "TRADEMARKS" means the trademarks and service marks listed in
Exhibit B (and as such Exhibit may be amended after the Effective Date in
writing by mutual agreement of the Parties), and any state, federal or other
registrations or applications pertaining thereto.

         1.22 "VALID CLAIM" means: (a) a claim of an issued and unexpired patent
in the Territory which patent has not lapsed or been abandoned and which claim
has not been canceled
<PAGE>
or declared invalid by an unreversed decision or judgment of a court or other
appropriate body of competent jurisdiction, and which has not been admitted to
be invalid or unenforceable through reissue, disclaimer or binding admission by
diaDexus or its Affiliates in a judicial or administrative proceeding; or (b) a
claim of a pending patent application in the Territory.

                                   ARTICLE 2.
                                  LICENSE GRANT

         2.1 COMMERCIAL LICENSE. Subject to the terms of this Agreement,
diaDexus hereby grants to Quest and its Affiliates an exclusive license (without
the right to grant sublicenses) in the Territory to the Licensed Intellectual
Property to: (a) confirm performance of the Colon 101 ELISA Test pursuant to
Section 5.1; and (b) use the Colon 101 ELISA Test to offer and provide services
within the cDx Field and the rDx Field.

         2.2 TRADEMARK LICENSE. Subject to the terms and conditions of this
Agreement, Quest and its Affiliates shall have the right to use the Trademarks,
solely in connection with the use of the Colon 101 ELISA Test within the rights
set forth in Section 2.1, and in compliance with the trademark policy of
diaDexus. Quest shall submit all proposed representations of the Trademarks to
diaDexus for approval, which approval shall not be unreasonably withheld or
delayed.

         2.3 NO OTHER RIGHTS. Except for the rights expressly granted under this
Agreement, no right, title or interest of any nature whatsoever is granted by
either Party to the other Party.

                                   ARTICLE 3.
                                  CONSIDERATION

         3.1 PAYMENTS BY QUEST.

                  (a) LICENSE FEE. In partial consideration for the licenses
granted pursuant to Article 2, Quest shall pay diaDexus a license fee of Fifty
Thousand United States Dollars (US$50,000), payable as follows:

                           (1) Twenty-Five Thousand United States Dollars
(US$25,000) within five (5) business days after the Effective Date; and

                           (2) Twenty-five thousand United States Dollars
(US$25,000) within four (4) months of successful completion of the validation
testing pursuant to Section 5.1.

                  (b) REAGENT PRICING. In consideration for the ASRs supplied
pursuant to Section 4.1, Quest shall pay diaDexus Five United States Dollars
(US$5) per Anticipated Test; provided, however, that Quest shall not be required
to pay for that quantity of ASRs which is reasonably necessary to confirm
performance of the Colon 101 ELISA Test pursuant to Section 5.1.

                  (c) ROYALTY. In addition to the payments set forth in Section
3.1 (a) and (b) above and in partial consideration for the licenses granted
pursuant to Article 2, Quest shall pay diaDexus royalties as follows:
<PAGE>
                           (1) ten percent (10%) of the Net Reimbursed Amount
generated by use in the cDx Field; and

                           (2) twenty percent (20%) on the Net Reimbursed Amount
generated by use in the rDx Field.

                  (d) THIRD PARTY ROYALTIES. If diaDexus deems it necessary, in
its good faith reasonable judgment, that it is necessary to obtain a license of
intellectual property from a Third Party in order to avoid or eliminate
infringement arising from the exercise of the rights granted in Article 2, then:
(i) diaDexus shall notify Quest in writing of such determination, and the basis
therefore; (ii) diaDexus shall use commercially reasonable efforts to obtain
such license (including sublicense rights); (iii) if successful in obtaining
such license, diaDexus shall sublicense such rights to Quest and its Affiliates,
in the Territory in the cDx Field and rDx Field, for the remainder of the term
of this Agreement and, in consideration for such sublicense, Quest shall pay
diaDexus, in addition to the payments set forth in Sections 3.1 (a) through (c),
one-half (1/2) of all consideration owed by diaDexus to such Third Party for
such license and arising from Quest's exercise of such rights; provided,
however, that if Quest's share of Third Party royalties is greater than five
percent (5%) and up to ten percent (10%), then the Parties will negotiate in
good faith to adjust the terms and conditions of this Agreement to make the
commercialization of the Colon 101 ELISA Test profitable for both Parties; and,
provided further, that if Quest's share of Third Party royalties is greater than
ten percent (10%), Quest shall have the right to terminate this Agreement upon
thirty (30) days written notice to diaDexus.

                  (e) PAYMENT SCHEDULE; REPORTS. Quest shall make all payments
to diaDexus as follows: (i) payments pursuant to Section 3.1(b) within thirty
(30) days after receipt by diaDexus of the purchase order for ASRs as set forth
in Section 4.2(c); and (ii) payments pursuant to Sections 3.1(c) and 3.1(d) on a
semiannual basis within thirty (30) days after the last day of each calendar
period in which the applicable Net Reimbursed Amount occurred. Quest shall
provide diaDexus, with each such payment, a written report setting forth in
reasonable detail the calculation of the amounts due, including, without
limitation, the number of Anticipated Tests associated with each order of ASRs
and the number of Performed Tests completed during such quarter and whether each
such Performed Test was within the cDx Field or the rDx Field.

         3.2 PAYMENT TERM. The payments under Section 3.1 shall be due until the
earlier of: (i) the expiration or termination of this Agreement; or (ii) the
last to expire of any Valid Claim within the diaDexus Patents claiming the Colon
101 ELISA Test.

                                   ARTICLE 4.
                                     SUPPLY

         4.1 SUPPLY OF REAGENTS. Quest shall purchase from diaDexus, and
diaDexus agrees to use commercially reasonable efforts to sell to Quest, Quest's
requirements for the ASRs to perform each Anticipated Test. The pricing of the
ASRs shall be as specified in Section 3.1(b) and the price shall remain fixed
during the term of this Agreement, unless modified in writing by mutual
agreement of the Parties. Subject to the terms of this Agreement, including,
without limitation, Section 3.1(b), diaDexus shall use commercially reasonable
efforts to supply Quest
<PAGE>
with Quest's good faith requirements of ASRs solely as necessary for the
purposes of performing the tests permitted under Section 2.1; provided, however,
that Quest shall expend such ASRs in a commercially reasonable manner and solely
for the purpose of exercising the licenses granted pursuant to Section 2.1 of
this Agreement.

         4.2 ORDERS.

                  (a) ORDER PERIOD. diaDexus shall supply Quest with ASRs on a
quarterly basis.

                  (b) FORECASTS; ORDERS. Not less than thirty (30) days before
the first day of each calendar quarter (commencing on the first calendar quarter
in which Quest orders ASRs from diaDexus pursuant to Section 4.1), Quest shall
prepare and provide diaDexus with a written, rolling forecast of Quest's
requirements for each ASR for each of the subsequent four (4) quarters. In each
such forecast, the stated requirements for the first quarter shall be deemed an
order by Quest.

                  (c) FORM OF ORDER. Quest shall request ASRs under this Article
4 by submitting a forecast pursuant to Section 4.2(b) and a purchase order to
diaDexus. Each such purchase order shall be in writing in a form reasonably
acceptable to diaDexus, and shall specify, in addition to the quantity of each
ASR ordered, a good faith estimate of the number of tests that such ASRs can be
used for (each, an "Anticipated Test"), the place of delivery and the required
delivery date therefor, which date shall be not be less than thirty (30) days
after the date such forecast and purchase order is received by diaDexus. In the
event of a conflict between the terms and conditions of any purchase order and
this Agreement, the terms and conditions of this Agreement shall prevail.

         4.3 SHIPMENT. All ASRs supplied under this Agreement shall be packaged
by diaDexus in a commercially reasonable manner and shipped FOB diaDexus'
facilities, shipping prepaid and added to invoice. Title and risk of loss and
damages to the ASRs purchased by Quest hereunder shall pass to Quest upon
transfer of such ASRs to the carrier designated by Quest. Quest shall pay all
freight, insurance and inspection charges and fees applicable to the transport
of the ASRs under this Article 4.

         4.4 DELIVERY. diaDexus agrees to ship ASRs as set forth in Section
4.2(b). All deliveries shall be made consistent with the purchase order and
shall be accompanied by a packing slip identifying: (i) the items shipped with
corresponding manufacturer's product number(s); (ii) the quantities shipped; and
(iii) the Quest purchase order number.

         4.5 INSPECTION. Quest shall have the right to inspect ASRs upon
delivery. Any inspection, sampling or testing by Quest of ASRs prior to shipment
by diaDexus shall not be construed as acceptance of such ASRs by Quest.
Duplicate shipments and over shipments will be returned to diaDexus, at no cost
to Quest. ASRs that pass Quest's inspection standards shall be considered
accepted.

         4.6 REJECTION AND CURE. If a shipment of ASRs pursuant to this Article
4, or any portion thereof, is spoiled, damaged or defective, then Quest shall
have the right to reject such shipment or the portion thereof that fails so to
conform, as the case may be, within thirty (30)
<PAGE>
days of Quest's receipt of such ASRs. Quest shall give written notice to
diaDexus of its rejection hereunder within thirty (30) days after Quest's
receipt of such shipment, specifying the grounds for such rejection. Quest shall
hold such rejected shipment, or portion thereof, for disposition by diaDexus.
diaDexus shall use its commercially reasonable efforts to cure such rejection or
replace such rejected reagents within thirty (30) days after receipt of written
notice of rejection.

         4.7 USE OF REAGENTS. Quest shall use the ASRs supplied pursuant to
Article 4 in compliance with all applicable laws and regulations, including
without limitation any and all laws or regulations relating to the storage, use
and transportation or other authorized use of such reagents.

         4.8 WARRANTY. diaDexus warrants that all the ASRs delivered to Quest
pursuant to this Agreement shall: (i) be free from defects in material and
workmanship; (ii) be manufactured in accordance with applicable laws and
regulations; and (iii) comply with specifications provided by diaDexus to Quest,
including, without limitation, the package inserts for such ASRs.

         4.9 NOTIFICATION: PRODUCT DEFECTS, WARNINGS OR RECALLS. In the event
any ASRs do not comply with Section 4.8, Quest shall give written notice to
diaDexus of the claimed nonconformance. diaDexus shall promptly notify Quest
throughout the term of this Agreement regarding any and all material issues,
problems or concerns of which diaDexus is aware regarding the quality or
performance of the ASRs, including, but not limited to, product defects,
warnings or recalls, and communications from any government or regulatory agency
regarding such ASRs. diaDexus will be responsible for notifying Quest in writing
of any material issue, problem, or concern known to diaDexus regarding Quest's
purchases of ASRs under this Agreement. diaDexus agrees to cooperate with Quest
in discussing proposed corrective action plans and preventative measures to be
implemented for the future with respect to such issues, problems or concerns.

         4.10 REWORK REIMBURSEMENT. In the event that Quest determines, in good
faith and after consultation with diaDexus, that defects in the ASRs are such
that Quest must repeat tests already performed for Third Parties, diaDexus will
reimburse Quest for the cost of replacement ASRs reasonably necessary to perform
such repeat testing. Quest and diaDexus will review the actions necessary to
perform the rework and will negotiate in good faith a basis for calculating the
costs referred to above. This section 4.10 will also apply to ASRs subject to a
diaDexus initiated or governmental agency recall.

         4.11 TECHNICAL TELEPHONE SUPPORT. diaDexus shall maintain one (1) or
more sufficiently trained and qualified technical service personnel during the
term of this Agreement to provide, at no cost to Quest, reasonably available
technical support for ASRs purchased by Quest under this Agreement. Technical
support shall include, but not be limited to, phone access to a technical
representative of diaDexus during regular Pacific Time business hours.

         4.12 LIMITATION OF LIABILITY. Except as specifically set forth above:
DIADEXUS'S SOLE LIABILITY TO QUEST, AND QUEST'S SOLE REMEDY UNDER ARTICLE 4,
SHALL BE THE REJECTION AND REPLACEMENT OF NON-CONFORMING ASRs. IN NO EVENT SHALL
DIADEXUS BE LIABLE FOR LOSS OF PROFITS OR INCIDENTAL,
<PAGE>
SPECIAL OR CONSEQUENTIAL DAMAGES DIRECTLY OR INDIRECTLY ARISING OUT OF ITS
OBLIGATIONS UNDER SECTION 4.

         4.13 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, DIADEXUS MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
TO THE ASRs, AND DIADEXUS DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

                                   ARTICLE 5.
                                COMMERCIALIZATION

         5.1 PERFORMANCE CONFIRMATION. Quest shall confirm performance of the
Colon 101 ELISA Test using proper scientific and laboratory procedures
applicable to such testing, and shall use commercially reasonable efforts to
complete such testing within sixty (60) days after Quest's receipt from diaDexus
of the ASRs and diaDexus Know-How reasonably necessary to perform such testing.
Within two (2) business days after completion by Quest of such testing, Quest
shall notify diaDexus in writing whether it believes such performance
confirmation was successful or unsuccessful and, if unsuccessful, shall provide
diaDexus any and all data and other Information upon which Quest bases such
conclusion. If the Parties disagree about whether such performance confirmation
has been successful or unsuccessful, the Parties agree to discuss in good faith
additional testing or other data or Information supplied by diaDexus.

         5.2 QUEST RESPONSIBILITIES - CLINICAL STUDIES AND REIMBURSEMENT
Assistance. Quest shall, using specimens and/or testing services provided by
Quest at its sole cost and expense, perform the following: (i) characterize new
biochemical markers against comparable, pre-existing biochemical markers; (ii)
provide samples of human tissues for clinical correlation by Quest; (iii) assist
in the design and execution of clinical studies necessary for clinical
validation of such markers; and (iv) use commercially reasonable efforts to
publish in appropriate scientific journals the results of such validations.
Quest shall perform a pharmacoeconomic analysis of the utility of the new
biochemical markers identified pursuant to this Section 5.2 and shall use
commercially reasonable efforts to obtain reimbursement codes for such markers.
Quest shall provide diaDexus any and all information generated from the
performance by Quest of its responsibilities set forth in this Section 5.2.

         5.3 QUEST RESPONSIBILITIES - MARKETING. Quest shall, at its sole cost
and expense, use commercially reasonable efforts to market the number of
Performed Tests that it performs each quarter, including, without limitation,
the following: (i) providing training regarding the scientific basis and utility
of the Colon 101 ELISA Test to Quest sales personnel; (ii) positioning and
marketing the Colon 101 ELISA Test to health management organizations; and (iii)
recruiting academic associates, specific sales and marketing personnel, and
committing sufficient resources, in order to educate the medical community and
create demand for the Colon 101 ELISA Test, including, without limitation,
through domestic trade shows, medical specialty meetings, web portals, and sales
visits to physicians in all markets in the Territory.
<PAGE>
         5.4 INFORMATIONAL MATERIALS. diaDexus and Quest shall collaborate to
develop a informational materials for the Colon 101 ELISA Test that are
reasonably acceptable to both Parties; provided, however, that such proposed
materials shall not be disclosed to any Third Party without diaDexus' prior
written consent, which shall not be unreasonably withheld or delayed.

         5.5 TRADEMARKS. Quest shall use the Trademarks when it markets the
Colon 101 ELISA Test. diaDexus shall have the right to modify or change the
Trademarks, or add or delete Trademarks, in its sole discretion and upon written
notice to Quest.

         5.6 DILIGENCE. Quest shall meet the following milestones:

         (a)      Development and technical evaluation of the Colon 101 ELISA
                  Test within three (3) months of Quest's receipt of the ASRs
                  and diaDexus Know-How set forth in Section 5.1;

         (b)      Completion of a benchmark study and preliminary clinical value
                  assessment of the Colon 101 ELISA Test within six (6) months
                  of Quest's receipt of the ASRs and diaDexus Know-How set forth
                  in Section 5.1; and

         (c)      If both Parties agree, after good faith review of all
                  applicable data and information, that the milestone set forth
                  in Section 5.6(b) has been achieved and that the Colon 101
                  ELISA Test has reasonable clinical value, then Quest, with the
                  reasonable assistance and cooperation of diaDexus, shall start
                  a more complete evaluation of the Colon 101 ELISA Test and
                  Quest will commence offering the Colon 101 ELISA Test under
                  this Agreement.

                                   ARTICLE 6.
                               PAYMENT PROVISIONS

         6.1 MODE OF PAYMENT. All payments hereunder will be made by direct wire
transfer of United States Dollars in the requisite amount to such bank account
as diaDexus may from time to time designate by written notice to Quest. Payments
will be free and clear of any taxes (other than withholding and other taxes
imposed on the payee), fees or charges, to the extent applicable.

         6.2 RECORDS RETENTION. For three (3) years after the each report
provided to diaDexus pursuant to Section 3.1(b), Quest shall keep records of
such Performed Tests in sufficient detail to confirm the accuracy of any royalty
and other payment calculations hereunder. Such records shall be deemed the
Confidential Information of each Party.
<PAGE>
         6.3 AUDITS.

                  (a) AUDIT RIGHTS; PROCEDURE. Upon the written request of
diaDexus, and not more than once in each calendar year, Quest will permit an
independent certified public accounting firm selected by diaDexus, and
reasonably acceptable to Quest, at diaDexus's expense, to have access during
normal business hours, and upon reasonable prior written notice, to such of the
records of Quest as may be reasonably necessary to verify the accuracy of any
financial reports to diaDexus for any quarter's Performed Tests within the
preceding three (3) years.

                  (b) ADDITIONAL PAYMENTS; COST REIMBURSEMENT. If such
accounting firm concludes that additional royalties or other payments were owed
during such period, Quest will pay the additional royalties or other payments,
with interest from the date originally due at the prime rate, as published in
The Wall Street Journal (Eastern U.S. Edition) on the last business day
preceding such date, within thirty (30) days after the date Examiner delivers to
Examinee such accounting firm's written report. If the amount of the
underpayment is greater than five percent (5%) of the total amount owed, then
Quest will in addition reimburse diaDexus for its reasonable costs related to
such audit.

                  (c) CONFIDENTIALITY. The independent, certified public
accountant shall be required to maintain all information it reviews in
confidence, except that it may report the results of its audit to diaDexus.
diaDexus will treat all information subject to review under this Section 6.3 in
accordance with the confidentiality provisions of Article 8, and will cause its
accounting firm to enter into a confidentiality agreement reasonably acceptable
in form and substance to Quest, obligating such firm to retain all such
financial information in confidence pursuant to such confidentiality agreement.

                  (d) AUDIT DISPUTES. If Quest in good faith disputes the
conclusion of the accounting firm under subsection (b) above that Quest owes
additional royalties or other payments, or any specific aspect of the
conclusion, then Quest will inform diaDexus by written notice within sixty (60)
days of receiving a copy of the audit containing such conclusion, specifying in
detail the reasons for Quest's disputing such conclusion. The Parties will
promptly thereafter meet and negotiate in good faith a resolution to such
dispute. In the event that the Parties are unable to resolve such dispute within
sixty (60) days after such notice, the matter will be resolved pursuant to
Section 12.8, and interest will be payable on any additional royalties or other
payments determined to be due in the same manner as provided for in Section
3.1(b).

                                   ARTICLE 7.
                              INTELLECTUAL PROPERTY

         7.1 OWNERSHIP. diaDexus shall retain all of its right, title and
interest in and to any and all diaDexus Patents, diaDexus Know-How, and the
Trademarks.

         7.2 TITLE TO INVENTIONS. If Quest or its Affiliates, or any employees
or agents of either, conceive and/or reduce to practice any Improvements or
modifications (whether patentable or not) of the Colon 101 ELISA Test (an
"Invention"), ownership of such Invention shall be determined by, and follow,
the rules for determining inventorship under the laws of the
<PAGE>
United States; provided, however, that, if any such Invention is owned solely by
Quest and/or any of its Affiliates, Quest shall promptly disclose such Invention
in writing to diaDexus and grant to diaDexus a royalty-free, fully paid-up,
perpetual, worldwide non-exclusive license, with rights to grant sublicenses
(subject to diaDexus payment to Quest of one-half (1/2) the fair market value,
in an arm's length transaction, of any and all payments received by diaDexus as
consideration solely for granting such sublicense only to such Inventions),
under any and all intellectual property rights claiming such Invention, to use
such Invention for any purpose; and, provided further, that Quest shall not
transfer, assign or license its rights to such Invention, other than as part of
the merger, sale or acquisition of substantially all of the business associated
with the subject matter of this Agreement, without the prior written notice of
such intent to diaDexus, after which notice Quest shall, at diaDexus' option if
exercised within thirty (30) days of such notice, negotiate in good faith
commercially reasonable terms for making such transfer, assignment or exclusive
license to diaDexus. Quest shall require its Affiliates and employees or agents
of either to assign inventions to Quest as reasonably necessary to implement
this Section 7.2.

         7.3 PATENT PROSECUTION. diaDexus Patents shall be prosecuted and
maintained solely by diaDexus at its option and its own expense; provided,
however, that diaDexus shall: (i) use counsel reasonably acceptable to Quest for
such prosecution and maintenance in the Territory; (ii) keep Quest or its
counsel informed with regard to all patent application prosecutions, maintenance
processes and other formal communications with patent offices in the Territory
with respect to the diaDexus Patents; and (iii) promptly deliver to Quest or its
counsel copies of all patent applications, amendments, office actions, related
correspondence and other related documents regarding the diaDexus Patents in the
Territory. Any and all Patent Rights claiming an Invention pursuant to Section
7.2 shall be prosecuted and maintained by Quest, at its sole cost and expense;
provided, however, that Quest shall provide any and all proposed patent
applications for such Inventions to diaDexus at least thirty (30) days before
filing.

         7.4 ENFORCEMENT. During the term of this Agreement, Quest shall have
the right, in its sole discretion and at its sole cost and expense, to initiate
and prosecute a suit or other legal proceeding in the Territory to enforce and
defend the Licensed Intellectual Property with respect to any infringement or
other unlawful use thereof in the Territory by a Third Party; provided, however,
that Quest shall have no obligation to bring such suit or other proceeding; and
provided further, that diaDexus shall have the right, at its sole cost and
expense, to join as a party in such suits or other legal proceedings. If Quest
fails diligently to enforce or defend the Licensed Intellectual Property,
diaDexus shall have the right to enforce or defend the Licensed Intellectual
Property. Subject to each Party's confidentiality obligations with Third
Parties, each Party shall promptly notify the other of any potential or actual
infringement of the Licensed Intellectual Property, any Patent Rights claiming
an Invention pursuant to Section 7.2, or any unlawful use of the Colon 101 ELISA
Test, of which such Party becomes aware.

         7.5 THIRD PARTY PATENT RIGHTS. If any warning letter or other notice of
infringement is received by a Party, or action, suit or proceeding is brought
against a Party alleging infringement of a Patent Right of any Third Party in
the manufacture, use or sale of the Colon 101 ELISA Test or exercise of the
license rights of Quest under any license granted pursuant to this Agreement,
the Party receiving notice of such alleged infringement shall promptly notify in
writing the other Party.
<PAGE>
                                   ARTICLE 8.
                                 CONFIDENTIALITY

         8.1 CONFIDENTIALITY OBLIGATIONS. Each Party agrees that, for the term
of this Agreement and for three (3) years thereafter, such Party will keep, and
will ensure that its officers, directors, employees and agents keep, completely
confidential and will not publish or otherwise disclose and will not use for any
purpose except as permitted hereunder any Confidential Information furnished to
it by the other Party pursuant to this Agreement (including, without limitation,
know-how of the disclosing Party). The foregoing obligations will not apply to
any information to the extent that it can be established by such receiving Party
that such information:

                           (a) was already known to the receiving Party as
evidenced by its written records, other than under an obligation of
confidentiality, at the time of disclosure;

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

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

                           (d) was subsequently lawfully disclosed to the
receiving Party by a Third Party other than in contravention of a
confidentiality obligation of such Third Party to the disclosing Party; or

                           (e) was developed or discovered by employees of the
receiving Party or its Affiliates who had no access to the Confidential
Information of the disclosing Party.

         8.2 PERMITTED DISCLOSURES. Each Party may disclose the other's
Confidential Information to the extent such disclosure is reasonably necessary
in filing or prosecuting patent applications, prosecuting or defending
litigation, advising investors and the investment community of the results of
the activities hereunder (subject to the prior written consent of the other
Party, which consent will not be unreasonably withheld or delayed), complying
with applicable governmental regulations, granting a permitted sublicense
hereunder or conducting clinical trials or otherwise in performing its
obligations or exercising its rights hereunder. If a Party is required to make
any such disclosure of the other Party's Confidential Information, it will give
reasonable advance notice to that other Party of such disclosure requirement,
will cooperate with the other Party in its efforts to secure confidential
treatment of such Confidential Information prior to its disclosure, and, save to
the extent inappropriate in the case of patent applications, will use all
reasonable efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or confidentiality agreements
or otherwise).

         8.3 PRESS RELEASES. Except to the extent required by law or as
otherwise permitted in accordance with this Section 8.3, neither Party will make
any public announcements concerning this Agreement or the terms hereof without
the prior written consent of the other, which will not
<PAGE>
be unreasonably withheld or delayed. Notwithstanding the foregoing, the Parties
may issue a press release announcing the execution of this Agreement and the
general subject matter hereof.

                                   ARTICLE 9.
                         REPRESENTATIONS AND WARRANTIES

         9.1 REPRESENTATIONS BY DIADEXUS. diaDexus represents and warrants to
Quest that, as of the Effective Date: (i) it is duly organized, validly existing
and in good standing under the laws of the state of its incorporation and has
full corporate power and authority to enter into this Agreement; (ii) it has
taken all corporate actions necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations under this Agreement;
(iii) it has the right to grant the licenses granted under Article 2 of this
Agreement; (iv) use of the Licensed Intellectual Property by Quest and its
Affiliates as contemplated hereby will not infringe the valid intellectual
property rights of any Third Party; (v) diaDexus has no actual knowledge of any
Third Party claiming to have, through diaDexus or otherwise, any title or
interest in or to any of the Licensed Intellectual Property in the Territory
(subject only to royalty-free, non-exclusive license rights of the federal
government of the United States of America); and (vi) diaDexus has not granted
any options, licenses, or assignments of any kind relating to the Licensed
Intellectual Property in the Territory in the cDx Field or rDx Field, and,
subject to Section 12.2, diaDexus will not grant any such options, licenses or
agreements to any Third Party with respect to use of any of the Licensed
Intellectual Property in the Territory in the cDx Field or rDx Field prior to
the termination or expiration of this Agreement, whichever is earlier.

         9.2 REPRESENTATIONS BY QUEST. Quest represents and warrants to diaDexus
that, as of the Effective Date: (i) it is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
full corporate power and authority to enter into this Agreement; and (ii) it has
taken all corporate actions necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations under this Agreement.

         9.3 PARTICIPATION IN FEDERALLY FUNDED HEALTHCARE PROGRAMS. Each party
to this Agreement represents that (i) it has not, as of the Effective Date, been
convicted of a criminal offense related to health care, or (ii) is not
currently, as of the Effective Date, listed by a federal agency as debarred,
excluded or otherwise ineligible for participation in federally funded health
care programs. Either party shall notify the other within five (5) days, in
writing, of any change in this representation if circumstances change to render
this representation false during the term of this Agreement. Such change in
circumstances shall constitute cause by the other party to immediately terminate
this Agreement. For purposes of this paragraph, a party is defined as the
entities entering into this contract, and/or its principals, directors and
officers.

         9.4 DISCLAIMER OF WARRANTIES. EXCEPT AS SPECIFICALLY SET FORTH HEREIN,
NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE, NON-INFRINGEMENT, AND ANY OTHER STATUTORY WARRANTIES.
<PAGE>
                                  ARTICLE 10.
                                 INDEMNIFICATION

         10.1 INDEMNIFICATION BY DIADEXUS. diaDexus shall indemnify, defend and
hold Quest and its Affiliates, agents, employees, officers and directors (the
"Quest Indemnitees") harmless from and against any and all liability, damage,
loss, cost or expense (including reasonable attorneys' fees) arising out of
Third Party claims or suits arising out of negligent and/or willful misconduct
by diaDexus with respect to: (a) diaDexus's performance of, or failure to
perform, its obligations under this Agreement; or (b) breach by diaDexus of its
representations and warranties under this Agreement. Notwithstanding the
foregoing, diaDexus' obligations pursuant to this Section 10.1 shall not apply
to the extent such claims or suits result from the gross negligence or willful
misconduct of any of the Quest Indemnitees and diaDexus shall have no obligation
to defend or indemnify the Quest Indemnitees with respect to Third Party claims
arising out of breach by Quest of its representations and warranties set forth
in this Agreement.

         10.2 INDEMNIFICATION BY QUEST. Quest shall indemnify, defend and hold
diaDexus and its Affiliates, agents, employees, officers and directors (the
"diaDexus Indemnitees") harmless from and against any and all liability, damage,
loss, cost or expense (including reasonable attorneys' fees) arising out of
Third Party claims or suits arising out of negligent and/or willful misconduct
by Quest with respect to: (a) Quest's performance of, or failure to perform, its
obligations under this Agreement; (b) breach by Quest of its representations and
warranties under this Agreement; or (c) personal injury, product liability or
property damage relating to or arising from the use or promotion of the Colon
101 ELISA Test by Quest or its Affiliates. Notwithstanding the foregoing,
Quest's obligations pursuant to this Section 10.2 shall not apply to the extent
such claims or suits result from the gross negligence or willful misconduct of
any of the diaDexus Indemnitees and Quest shall have no obligation to defend or
indemnify the diaDexus Indemnitees with respect to Third Party claims arising
out of breach by diaDexus of its representations and warranties set forth in
this Agreement.

         10.3 NOTIFICATION OF CLAIM; CONDITIONS TO INDEMNIFICATION OBLIGATIONS.
As a condition to a Party's right to receive indemnification under this Article
10, such Party shall: (i) promptly notify the other Party as soon as the Party
seeking indemnity becomes aware of a claim or action for which indemnification
may be sought pursuant hereto; (ii) cooperate with the indemnifying Party in the
defense of such claim or suit, at the expense of the indemnifying Party; and
(iii) permit the indemnifying Party to control the defense of such claim or
suit, including, without limitation, the right to select defense counsel. In no
event, however, may the indemnifying Party compromise or settle any claim or
suit in a manner which admits fault or negligence on the part of the indemnified
Party or that otherwise materially affects the indemnified Party's rights under
this Agreement without the prior written consent of the indemnified Party. The
indemnifying Party will have no liability under this Article 10 with respect to
claims or suits settled or compromised without its prior written consent.

                                  ARTICLE 11.
                           TERMINATION AND EXPIRATION

         11.1 TERM. This Agreement will commence upon the Effective Date and,
unless earlier terminated as provided herein, will expire three (3) years after
the Effective Date.
<PAGE>
         11.2 TERMINATION OF THE AGREEMENT UPON MATERIAL BREACH. Failure by a
Party to comply with any of its material obligations contained herein will
entitle the Party not in default to give to the Party in default notice
specifying the nature of the default, requiring it to make good or otherwise
cure such default, and stating its intention to terminate if such default is not
cured. If such default is not cured within thirty (30) days after the receipt of
such notice, the Party not in default shall be entitled, without prejudice to
any of its other rights conferred on it by this Agreement, and in addition to
any other remedies available to it by law or in equity, to terminate this
Agreement.

         11.3 TERMINATION FOR CONVENIENCE. Quest shall have the right to
terminate this Agreement, for any reason or no reason, upon one hundred twenty
(120) days written notice to the other Party; provided, however, that Quest's
rights under this Section 11.3 shall terminate upon successful completion of the
milestone set forth in Section 5.6(b).

         11.4 CONSEQUENCES OF TERMINATION OR EXPIRATION.

                           (a) RETURN OF MATERIALS. Upon termination or
expiration of this Agreement Quest will return to diaDexus any and all ASRs,
Confidential Information of diaDexus, and any other records and materials in its
possession or control containing or comprising the diaDexus Know-How or other
Confidential Information of diaDexus.

                           (b) EFFECT OF TERMINATION AND ACCRUED RIGHTS.
Termination or expiration of this Agreement for any reason will be without
prejudice to any rights that will have accrued to the benefit of a Party prior
to such termination or expiration. Such termination or expiration will not
relieve a Party from accrued payment obligations (subject to any offset for
damages on account of the other Party's breach) or from obligations which are
expressly indicated to survive termination or expiration of this Agreement.

                           (c) SURVIVAL. The following Articles and Sections of
this Agreement shall survive its termination or expiration: Articles 1, 6, 7, 8,
9, 10 and 12 and Sections 11.4.

                                  ARTICLE 12.
                               GENERAL PROVISIONS

         12.1 RELATIONSHIP OF THE PARTIES. Nothing in this Agreement is intended
or will be deemed to constitute a partnership, agency or employer-employee
relationship between the Parties. Neither Party will incur any debts or make any
commitments for the other.

         12.2 ASSIGNMENTS. Except as expressly provided herein, neither this
Agreement nor any interest hereunder will be assignable, nor any other
obligation delegable, by a Party without the prior written consent of the other;
provided, however, that a Party may assign this Agreement without consent to any
Affiliate or to any successor in interest by way of merger or sale of all or
substantially all of its assets in a manner such that the assignor will remain
liable and responsible for the performance and observance of all such Party's
duties and obligations hereunder, except that no intellectual property of any
Third Party acquiror of such Party will be included in the licenses granted
hereunder. This Agreement will be binding upon the successors and permitted
assigns of the Parties. Any assignment not in accordance with this Section 12.2
will be null and void.
<PAGE>
         12.3 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments and to do all such other acts as may be
necessary or appropriate in order to carry out the express provisions of this
Agreement.

         12.4 FORCE MAJEURE. Neither Party will be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time and to the extent such failure or delay is caused by
earthquake, riot, civil commotion, war, strike, flood, or governmental acts or
restriction that is beyond the control of the respective Party. The Party
affected by such force majeure will provide the other Party with full
particulars thereof as soon as it becomes aware of the same (including its best
estimate of the likely extent and duration of the interference with its
activities), and will use commercially reasonable efforts to overcome the
difficulties created thereby and to resume performance of its obligations as
soon as practicable. If the performance of any obligation under this Agreement
is delayed owing to a force majeure for any continuous period of more than
ninety (90) days, the Parties hereto will consult with respect to an equitable
solution, including the possibility of the mutual termination of this Agreement.

         12.5 ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement
constitutes and contains the entire understanding and agreement of the Parties
respecting the subject matter hereof and cancels and supersedes any and all
prior or contemporaneous negotiations, correspondence, understandings and
agreements between the Parties, whether oral or written, regarding such subject
matter. No waiver, modification or amendment of any provision of this Agreement
will be valid or effective unless made in writing and signed by a duly
authorized officer of each Party.

         12.6 CAPTIONS. The captions to this Agreement are for convenience only,
and are to be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

         12.7 GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of California, without regard to its
principles of conflicts of law.

         12.8 DISPUTE RESOLUTION. Any claim or controversy arising out of or
related to this Agreement or any breach hereof shall be submitted to any court
of competent jurisdiction within the State of California, and each Party hereby
consents to the jurisdiction and venue of such courts for such disputes.

         12.9 NOTICES AND DELIVERIES. Any notice, request, delivery, approval or
consent required or permitted to be given under this Agreement will be in
writing and will be deemed to have been sufficiently given if delivered in
person, transmitted by telecopier (receipt verified) or by express courier
service (signature required) or five (5) days after it was sent by registered
letter, return receipt requested (or its equivalent), to the Party to which it
is directed at its address or facsimile number shown below or such other address
or facsimile number as such Party will have last given by notice to the other
Parties.

         If to diaDexus, addressed to:
<PAGE>
                  diaDexus, Inc.
                  343 Oyster Point Blvd.
                  South San Francisco, CA 94080-1913
                  Attn.:  Chief Executive Officer
                  Fax: (650) 246-6499

      If to Quest, addressed to:

                  Quest Diagnostics Incorporated
                  One Malcolm Avenue
                  Teterboro, New Jersey 07608

                  Attn.:  General Counsel
                  Fax:  (201) 462-4795

                  With a copy to Chief Intellectual Property Counsel

                  Quest Diagnostics Incorporated
                  33608 Ortega Highway
                  San Juan Capistrano, California
                  Attn: Chief Intellectual Property Counsel

         12.10 NO CONSEQUENTIAL DAMAGES. EXCEPT PURSUANT TO ARTICLE 10, IN NO
EVENT WILL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE
OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR
REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH
DAMAGES.

         12.11 WAIVER. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance will not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement will be cumulative and none of them will be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.

         12.12 SEVERABILITY. When possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement. The Parties will make a good faith effort to replace the invalid
or unenforceable provision with a valid one which in its economic effect is most
consistent with the invalid or unenforceable provision.
<PAGE>
         12.13 COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, any one of which need not contain the signature of
more than one Party but all such counterparts taken together will constitute one
and the same agreement.

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the Effective Date,
each copy of which will for all purposes be deemed to be an original.

DIADEXUS, INC.                           QUEST DIAGNOSTICS INCORPORATED

By: /s/ Mohan S. Iyer                    By: /s/ Lucia Luce Quinn
   ------------------------                 ---------------------------

Name: Mohan S. Iyer                      Name: Lucia Luce Quinn
     ----------------------                   -------------------------

Title: V.P. Business Development         Title: Sr. VP - Advanced Diagnostics
      --------------------------               ------------------------------

Date: 10/30/01                           Date: 10-29-01
     ----------------------                   -------------------------
<PAGE>
                                   EXHIBIT A

                                DIADEXUS PATENTS

ISSUED PATENTS

<TABLE>
<CAPTION>
                DATE OF
 PATENT #        ISSUE   INVENTOR NAME             ASSIGNED TO
<S>             <C>      <C>                       <C>
US 6,080,722    6/27/00  Patrick Dillon et al.     Human Genome Sciences Inc.
US 5,861,494    1/19/99  Patrick Dillon et al.     Human Genome Sciences Inc.
</TABLE>

PATENT APPLICATIONS
<TABLE>
<CAPTION>
                    DATE OF
 PATENT #        APPLICATION     INVENTOR NAME             APPLICANT
<S>              <C>             <C>                       <C>
WO 01/22920         4/05/01      Steven Barash et al.      Human Genome Sciences Inc.
WO 00/20640         4/13/00      Roberto Macina            diaDexus, Inc.
Sequences 1&2
</TABLE>
<PAGE>
                                    EXHIBIT B

                                   TRADEMARKS

                               DIADEXUS(R), INC.
                                [DIADEXUS LOGO]

                        Other trademarks to be announced
<PAGE>
                                    EXHIBIT C

                            ANALYTE-SPECIFIC REAGENTS

         Each ASR shipment will contain the following bulk packaged components
with appropriate labeling:

         1.       Enzyme/antibody conjugate

         2.       Antibody coated 96-well microtiter plate containing a minimum
                  of 80 (eighty) testable wells.

         3.       Calibrator set containing all required levels

         4.       Proprietary buffers, solutions or reagents as required

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