Document:

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                       COLLABORATIVE RESEARCH, DEVELOPMENT

                              AND LICENSE AGREEMENT

                                      AMONG

                          ACADIA PHARMACEUTICALS INC.,

                                       AND

                                 ALLERGAN, INC.

                                       AND

                ALLERGAN PHARMACEUTICALS (IRELAND) LIMITED, INC.

                                       AND

                              ALLERGAN SALES, INC.

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                                            TABLE OF CONTENTS
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                                                                                                    PAGE
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1.       Definitions...................................................................................1

2.       Scope of Collaboration; Development Responsibilities; Exclusivity and Governance..............6
         2.1      Scope of Collaboration...............................................................6
         2.2      Development Responsibilities.........................................................6
         2.3      Exclusivity of the Collaboration.....................................................6
         2.4      Research Management Committee........................................................7
         2.5      Research Management Committee Functions And Powers...................................7
         2.6      Information And Reports..............................................................8
         2.7      RMC Dispute Resolution...............................................................8

3.       Technology Transfer and Identification of Active Compounds....................................8
         3.1      Transfer of ACADIA Technology........................................................8
         3.2      Transfer of Allergan Technology......................................................8
         3.3      Identification of Active Compounds...................................................9

4.       Compound Testing And Selection................................................................9
         4.1      Testing To Identify Active Compounds.................................................9
         4.2      Selection of Designated Compounds....................................................9
         4.3      Selection of Collaboration Lead Compounds...........................................11

5.       Product Development Manufacturing and Supply.................................................12
         5.1      Development of Collaboration Lead Compounds.........................................12
         5.2      Disclosure of Study Data on Collaboration Lead Compounds............................12
         5.3      Manufacture and Supply..............................................................12

6.       License Grants; Failure to Pursue Development in Japan.......................................12
         6.1      License Grants for Collaborative Research...........................................12
         6.2      License Grant for Development and Commercial Purposes...............................13
         6.3      Sublicensing Rights.................................................................13
         6.4      Diligence Obligations...............................................................13
         6.5      Failure to Pursue Development in Japan..............................................13

7.       Fees and Payments............................................................................14
         7.1      Up-front Fee........................................................................14
         7.2      Research Funding....................................................................14
         7.3      Milestone Payments..................................................................15
         7.4      Royalties...........................................................................16

8.       Payments; Records; Audits....................................................................18
         8.1      Payment; Reports....................................................................18
         8.2      Exchange Rate; Manner and Place of Payment..........................................18
         8.3      Late Payments.......................................................................18
         8.4      Records and Audits..................................................................18

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         8.5      Withholding of Taxes................................................................19
         8.6      Exchange and Royalty Rate Controls..................................................19

9.       Intellectual Property........................................................................19
         9.1      Ownership of Technology.............................................................19
         9.2      Patent Prosecution..................................................................19
         9.3      Cooperation of the Parties..........................................................20
         9.4      Infringement by Third Parties.......................................................20
         9.5      Infringement of Third Party Rights..................................................21
         9.6      Trademarks..........................................................................22
         9.7      Patent Labeling.....................................................................22

10.      Representations and Warranties...............................................................22
         10.1     Representations and Warranties......................................................22
         10.2     ACADIA Representations and Warranties...............................................22
         10.3     Allergan Representations and Warranties.............................................23
         10.4     Disclaimer Concerning Technology....................................................23

11.      Confidentiality; Publication.................................................................24
         11.1     Confidentiality.....................................................................24
         11.2     Exceptions..........................................................................24
         11.3     Terms of Agreement..................................................................24
         11.4     Authorized Disclosure...............................................................24
         11.5     Publications........................................................................25

12.      Term and Termination.........................................................................26
         12.1     Term of the Agreement...............................................................26
         12.2     Termination by Mutual Agreement.....................................................26
         12.3     Termination by Allergan.............................................................26
         12.4     Termination for Cause...............................................................26
         12.5     Accrued Rights, Surviving Obligations...............................................26

13.      Indemnity....................................................................................28
         13.1     Indemnification.....................................................................28
         13.2     Control of Defense..................................................................28
         13.3     Insurance...........................................................................28

14.      Governing Law; Dispute Resolution............................................................29
         14.1     Governing Law.......................................................................29
         14.2     Dispute Resolution..................................................................29
         14.3     Jurisdiction and Venue..............................................................29

15.      General Provisions...........................................................................29
         15.1     Notices.............................................................................29
         15.2     Force Majeure.......................................................................30
         15.3     Entirety of Agreement...............................................................30
         15.4     Non-Waiver..........................................................................30

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         15.5     Disclaimer of Agency................................................................30
         15.6     Severability........................................................................30
         15.7     Affiliates; Assignment..............................................................30
         15.8     Headings............................................................................31
         15.9     Limitation of Liability.............................................................31
         15.10    Counterparts........................................................................31
         15.11    Bankruptcy..........................................................................31
         15.12    Public Disclosure...................................................................32
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                                      Confidential Treatment Requested
                                      Under 17 C.F.R. Sections 200.80(b)(4),
                                      200.83 and 230.406

                       COLLABORATIVE RESEARCH, DEVELOPMENT

                              AND LICENSE AGREEMENT

         THIS COLLABORATIVE RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT (this
"Agreement"), entered into as of July 26, 1999 (the "Effective Date") by and
among ACADIA PHARMACEUTICALS INC., a Delaware corporation ("ACADIA"), with
offices at 3911 Sorrento Valley Blvd., San Diego, California 92121 and ALLERGAN
PHARMACEUTICALS (IRELAND) LIMITED, INC. a Panamanian corporation with offices at
Castlebar road Westport, County Mayo, Ireland, ALLERGAN SALES, INC. a California
corporation with offices at 2525 Dupont Drive, Irvine, California 92612 and
ALLERGAN, INC., a Delaware corporation, with offices at 2525 Dupont Drive,
Irvine, California 92612 (hereinafter collectively "Allergan"),

                              W I T N E S S E T H:

         WHEREAS, ACADIA has discovered compounds that are potent agonists
selective for the m1 muscarinic receptor which agonists may be useful in the
treatment of ocular disease such as glaucoma; and

         WHEREAS Allergan is engaged in the research, development, marketing,
manufacture and sale of therapeutic products for the treatment of ocular
disease; and

         WHEREAS, ACADIA and Allergan desire to enter into a collaborative
relationship to conduct research with the goal of designating two [***] specific
muscarinic receptor ligands as lead drug development compounds for development
and commercialization by Allergan for the treatment of ocular disease:

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
premises contained in this Agreement, the parties agree as follows:

         1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:

         1.1 "ACADIA DESIGNATED COMPOUND" shall mean any one (1) of up to
[***] Active Compounds and their respective [***] (to the extent such [***]
are included in the mixture tested) and salts thereof, at any one time
selected as a drug candidate by ACADIA pursuant to Section 4.3(b).

         1.2 "ACADIA KNOW-HOW" shall mean all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical results, physical, chemical or biological material, and other
information and data on or relating to all [***] Muscarinics that (a) ACADIA
owns, controls or to which it has a license with the right to sublicense on
the Effective Date or (b) are independently developed by ACADIA or its
Affiliates during the Research Term and, in each case, any replication or any
part of such information or material.

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         1.3 "ACADIA PATENTS" shall mean, to the extent useful for the purposes
of the Collaboration and any subsequent commercialization of Allergan Products,
all foreign and domestic: (a) patents existing as of the Effective Date or
issued during the Research Term; and (b) patents issuing from patent
applications that are pending as of the Effective Date or during the Research
Term (including provisionals, divisionals, continuations and
continuations-in-part of such applications); and (c) substitutions, extensions,
reissues, renewals and inventors certificates relating to the foregoing patents,
which ACADIA owns or controls or to which ACADIA has a license (with the right
to sublicense). ACADIA Patents shall also mean any patents solely owned by
ACADIA pursuant to Section 9.1 hereof. ACADIA Patents existing as of the
Effective Date are the patents and applications listed in Exhibit C attached
hereto.

         1.4 "ACADIA Pool Compounds" shall have the meaning set forth in Section
4.2.

         1.5 "ACADIA PRODUCT" shall mean any product containing a Collaboration
Lead Compound which receives Regulatory Approval for commercial marketing and
sale for use in the Field and is commercialized in the Field by ACADIA, its
Affiliates or its sublicensees; including all formulations, line extensions and
modes of administration thereof.

         1.6 "ACADIA TECHNOLOGY" shall mean the ACADIA Patents and the ACADIA
Know-How.

         1.7 "ACTIVE COMPOUNDS" shall mean any M1 Muscarinic that demonstrates
the requisite activity levels in the Assays pursuant to the Research Plan, as
such activity levels may be amended from time to time by the RMC.

         1.8 "AFFILIATE" shall mean any company or entity controlled by,
controlling, or under common control with a party hereto and shall include any
company of which greater than fifty percent (50%) of whose voting stock or
participating profit interest is owned or controlled, directly or indirectly, by
a party, and any company which owns or controls, directly or indirectly, greater
than fifty percent (50%) of the voting stock of a party.

         1.9 "ALLERGAN DESIGNATED COMPOUND" shall mean any one (1) of up to
[***] Active Compounds, [***], at any one time selected as a drug candidate
by Allergan pursuant to Section 4.3(a) hereof for research and development in
the Field.

         1.10 "ALLERGAN KNOW-HOW" shall mean all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information and data on or relating to all [***] Muscarinics that are
independently developed by Allergan or its Affiliates during the Research Term
and, in each case, any replication or any part of such information or material.

         1.11 "ALLERGAN PATENTS" shall mean any patents solely owned by Allergan
pursuant to Section 9.1 hereof.

         1.12 "Allergan Pool Compounds" shall have the meaning set forth in
Section 4.2.

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         1.13 "ALLERGAN PRODUCT" shall mean any product containing a
Collaboration Lead Compound which receives Regulatory Approval for commercial
marketing and sale for use in the Field and is commercialized in the Field by
Allergan, its Affiliates or its sublicensees; including all formulations, line
extensions and modes of administration thereof.

         1.14 "ALLERGAN TECHNOLOGY" shall mean the Allergan Patents and Allergan
Know-How.

         1.15 "ASSAYS" shall mean R-SAT-TM- assays used to measure activity at
all muscarinic receptors and other IN VITRO molecular assays as determined by
the RMC.

         1.16 "COLLABORATION" shall mean the programs of collaborative
research and development under this Agreement for the discovery, selection,
synthesis, investigation, and preclinical and clinical development of [***]
Muscarinics for use in the Field.

         1.17 "COLLABORATION KNOW-HOW" shall mean any and all tangible or
intangible know-how, trade secrets, inventions (whether or not patentable),
data, preclinical results, physical, chemical or biological material, and
other information and data that is (a) useful for purposes of the
Collaboration and/or that relates to [***] Muscarinics, Allergan Designated
Compounds, Allergan Pool Compounds or Collaboration Lead Compounds, but
excluding ACADIA Designated Compounds and ACADIA Pool Compounds and (b) that
is derived from or developed pursuant to activities undertaken by either
party, including their consultants or collaborators in the conduct of the
Collaboration, and, in each case, any replication or any part of such
information or material.

         1.18 "COLLABORATION LEAD COMPOUND" shall mean [***]Compound selected
by Allergan pursuant to Section 4.5 hereof as [***] and commercialization for
use in the Field.

         1.19 "COLLABORATION PATENTS" shall mean all foreign and domestic
patents (including substitutions, extensions, reissues, renewals and inventors
certificates relating thereto) that issue from patent applications including
provisionals, divisionals, continuations and continuations-in-part of such
applications that claim inventions in the Collaboration Know-How and that are
filed by one or both of the parties on behalf of one or both of the parties
hereto.

         1.20 "COLLABORATION TECHNOLOGY" shall mean the Collaboration Patents
and the Collaboration Know-How.

         1.21 "CONFIDENTIAL INFORMATION" shall mean all information, inventions,
know-how or data disclosed by a party to the other pursuant to this Agreement
including, without limitation, manufacturing, marketing, financial, personnel,
scientific and other business information and plans, and the material terms of
this Agreement, whether in oral, written, graphic or electronic form.

         1.22 "FIELD" shall mean the prevention or treatment of ocular disease.

         1.23 "FIRST COMMERCIAL SALE" of an Allergan Product or an ACADIA
Product shall mean the first sale for use or consumption of such Allergan
Product or such ACADIA Product in a country after Regulatory Approval has been
granted by the governing health regulatory

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authority of such country. Sale to an Affiliate or sublicensee shall not
constitute a First Commercial Sale unless the Affiliate or sublicensee is the
end user of the Allergan Product or ACADIA Product.

         1.24 "FTE" shall mean full-time equivalent scientific personnel.

         1.25 "IND" shall mean an Investigational New Drug Application filed
with the United States Food and Drug Administration, or the equivalent
application or filing necessary to commence human clinical trials in another
country, as applicable.

         1.26 "[***] MUSCARINICS" shall mean all [***] muscarinic receptor
ligands (i) in ACADIA's possession as of the Effective Date, (ii) synthesized
during the Research Term pursuant to the Research Plan or in any other ACADIA
program which selectively targets activation of the [***] muscarinic
receptor, or (iii) acquired from Third Parties during the Research Term
pursuant to the Research Plan or in conjunction with any other ACADIA program
which selectively targets activation of the [***] muscarinic receptor.

         1.27 "MAJOR MARKET" shall mean the [***].

         1.28 "NDA" shall mean a New Drug Application, Product License
Application or equivalent application filed with the United States Food and
Drug Administration, or the equivalent community application filed in [***],
or the equivalent application filed as a national application in [***].

         1.29 "NET SALES" shall mean, with respect to any Allergan Product or
ACADIA Product, the amount invoiced by Allergan or ACADIA, their Affiliates
or sublicensees to Third Parties which are not Affiliates or sublicensees of
the selling party, unless such Affiliates or sublicensees are the end users
of such Allergan Product or ACADIA Product in which case the amount billed
therefor shall be deemed to be the amount that would be invoiced to a Third
Party in an arm's length transaction, for the sale of such products less (i)
cash discounts and/or quantity discounts allowed; (ii) credits and allowances
of returns, rejections and recalls; (iii) charges for freight, insurance and
transportation specifically included in the amount invoiced; (iv) sales and
use taxes, duties or other governmental tariffs and other similar taxes
incurred and government mandated rebates, (v) accruals for estimated
wholesaler chargebacks, contract rebates and bid rebates and Medicaid and
other similar government mandated rebates as Allergan or ACADIA may be
required to pay from time to time, all of which shall be determined in
accordance with such party's standard accounting methods. In the event an
Allergan Product or an ACADIA Product is sold in a combination product with
other biologically active components, Net Sales, for purposes of royalty
payments on the combination product, shall be calculated by multiplying the
Net Sales of that combination by the fraction A/B, where A is the gross
selling price of the Allergan Product or ACADIA Product sold separately and B
is the gross selling price of the combination product. In the event that no
such separate sales are made, Net Sales for royalty determination shall be
calculated by multiplying Net Sales of the combination by the fraction
C/(C+D), where C is the fully allocated cost of the active ingredient
(Collaboration Lead Compound) in the Allergan Product or ACADIA Product and D
is the fully allocated cost of such other biologically active components. In
no event shall Net Sales of any

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Allergan Product or ACADIA Product calculated under this provision with
respect to any combination product be less than [***] of the Net Sales of
such combination product. In the event an Allergan Product or an ACADIA
product is sold in a capitated arrangement or with other products (a
"Combination") then Net Sales shall be calculated by multiplying the Net
Sales of that Combination by the fraction A/B, where A is the gross selling
price of the Allergan Product or ACADIA Product sold separately and B is the
gross selling price of the Combination. In the event that no such separate
sales are made, Net Sales for royalty determination shall be calculated by
multiplying Net Sales of the Combination by the fraction C/(C+D), where C is
the fully allocated cost of the Allergan Product or ACADIA Product and D is
the fully allocated cost of the other products in the Combination. From time
to time, but not less often than annually, the party owing any royalty with
respect to Net Sales will determine the actual amount of rebates paid under
clauses (iv) and (v) above and any differences between the estimates accrued
under (v) above and the actual amounts paid will be treated as adjustments to
Net Sales subject to royalty in the period in which such differences are so
determined.

         1.30 "PROOF OF CONCEPT IN GLAUCOMA PATIENTS" shall have the meaning
stated in Exhibit A hereto.

         1.31 "REGULATORY APPROVAL" shall mean any and all approvals (including
price and reimbursement approvals), licenses, registrations, or authorizations
of the United States or European Union or any country, federal, state or local
regulatory agency, department, bureau or other government entity that is
necessary for the manufacture, use, storage, import, transport and/or sale of an
Allergan Product or an ACADIA Product in such jurisdiction.

         1.32 "RESEARCH MANAGEMENT COMMITTEE" or "RMC" shall mean the committee
formed pursuant to Section 2.4.

         1.33 "RESEARCH PLAN" shall mean the plan for conducting the research
under the Collaboration, as amended from time to time by the RMC. The initial
Research Plan agreed upon by the parties hereto is attached to this Agreement as
Exhibit B. Any amendments or revisions to the Research Plan shall be in writing
and shall require unanimous approval of the RMC.

         1.34 "RESEARCH PROGRAM" shall mean a collaborative research program in
the Field under this Agreement with the goal of designating two Collaboration
Lead Compounds for development and commercialization in the Field.

         1.35 "RESEARCH TERM" shall mean [***] following the Effective Date
and one additional [***] renewal period upon written notice from Allergan no
less than [***] prior to the anniversary of the Effective Date, if Allergan
has not selected two Collaboration Lead Compounds during the [***] period
following the Effective Date. The Research Term may be further extended upon
terms to be agreed upon by the parties in good faith negotiations.

         1.36 "ROYALTY TERM" shall mean, in the case of each Allergan Product or
ACADIA Product, in any country, the period of time commencing on the First
Commercial Sale and ending upon the later of (a) ten (10) years from the date of
First Commercial Sale in such

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country, or (b) the expiration of the last to expire Valid Claim covering
such Allergan Product or ACADIA Product in such country.

         1.37 "TERM OF THE AGREEMENT" shall have the meaning ascribed in Section
12.1.

         1.38 "TERRITORY" shall mean all countries of the world.

         1.39 "THIRD PARTY" shall mean any entity other than Allergan or ACADIA
or an Affiliate of Allergan or ACADIA.

         1.40 "VALID CLAIM" shall mean a claim of an unexpired patent included
within the patent rights licensed hereunder, which has not been held
unenforceable, unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction unappealable or unappealed within
the time allowed for appeal and which has not been admitted to be invalid or
unenforceable through reexamination, reissue or disclaimer.

         2. SCOPE OF COLLABORATION; DEVELOPMENT RESPONSIBILITIES; EXCLUSIVITY
AND GOVERNANCE.

         2.1 SCOPE OF COLLABORATION. The parties hereby agree to establish and
conduct, during the Research Term, a collaborative research program in
accordance with the Research Plan and the terms of this Agreement. The initial
Research Plan for conducting such research program is attached to this Agreement
as Exhibit B. Pursuant to the Collaboration, the parties will collaborate in
identifying Active Compounds with the goal of designating two Collaboration Lead
Compounds for development and commercialization.

         2.2 DEVELOPMENT RESPONSIBILITIES. ACADIA will be primarily
responsible for providing all medicinal, computational and synthetic
chemistry and m1 muscarinic R-SAT-TM- analysis and other IN VITRO molecular
assays selected by the RMC. ACADIA will also be primarily responsible for
providing sufficient quantities [***] of non-GMP Allergan Designated
Compounds to Allergan for pre-IND animal proof of concept testing. Allergan
will be primarily responsible for the IN VIVO testing in relevant disease
models, the preclinical development of Allergan Designated Compounds in the
Field including, but not limited to; pharmaceutics, ADME, toxicology, process
chemistry and manufacturing scale up, and the further preclinical and
clinical development of Collaboration Lead Compounds.

         2.3 EXCLUSIVITY OF THE COLLABORATION. During the Research Term, the
Research Program shall be the parties' exclusive means of collaborating
and/or conducting research and development on [***] muscarinics in the Field.
Other than pursuant to the terms of this Agreement, at the end of the
Research Term for as long as Allergan is developing, and until Allergan has
commercialized a Collaboration Lead Compound, Allergan shall not: (a)
collaborate with any Third Party for the purpose of discovering, developing
and/or commercializing any compounds for use in the Field that produce the
intended therapeutic effects principally by selective activation of the [***]
muscarinic receptor (b) license in or acquire from any Third Party any
compound and/or product for use in the Field that produces the intended
therapeutic effects principally by selective activation of the [***]
muscarinic receptor or (c) conduct any research and/or development for the
purpose of identifying compounds for use in the Field that produce the
intended therapeutic effects principally by selective activation of the [***]
muscarinic receptor.

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For the purposes of the forgoing, ("selective") shall mean as set forth in
the initial Research Plan attached as Exhibit B activity at the [***]
muscarinic receptor at least [***] the activity at the [***] muscarinic
receptor. At the end of the Research Term: if Allergan is developing a
Collaboration Lead Compound in the Field, then (x) so long as Allergan is
actively developing a Collaboration Lead Compound or commercializing an
Allergan Product as permitted under this Agreement ACADIA shall not develop,
itself, or with a Third Party any Allergan Designated Compound or ACADIA
Designated Compound in the Field or any Collaboration Lead Compound in any
field, and (y) for [***] after the end of the Research Term, only if Allergan
continues to develop a Collaboration Lead Compound during such [***] period,
ACADIA shall not develop any Allergan Designated Compound, itself, or with a
Third Party, in any field, and (z) for [***] after the end of the Research
Term, only if Allergan continues to develop a Collaboration Lead Compound
during such [***] period, ACADIA shall not develop any [***] muscarinic,
itself, or with a Third Party, in the Field.

         2.4 RESEARCH MANAGEMENT COMMITTEE. Promptly after the Effective
Date, the parties will form a Research Management Committee ("RMC") comprised
of three (3) representatives of each of ACADIA and Allergan. One member of
the RMC shall be selected to act as the chairperson of the RMC, with each
chairperson acting for a term of [***]. The chairperson shall be selected
alternately by Allergan and ACADIA, and ACADIA shall designate the first
chairperson. The RMC shall determine the specific goals for the
Collaboration, shall manage the ongoing research conducted under the
Collaboration, and shall monitor the progress and results of such work. All
decisions of the RMC shall be unanimous. The RMC shall meet on a quarterly
basis or at such other frequency as the RMC agrees. The parties shall agree
upon the time and place of meetings. Within [***] after each meeting, the RMC
chairperson will provide the parties with a written report describing, in
reasonable detail, the status of the Collaboration, a summary of the results
and progress to date, the issues requiring resolution, and the agreed
resolution of previously reported issues. A reasonable number of additional
representatives of a party may attend meetings of the RMC in a non-voting
capacity.

         2.5 RESEARCH MANAGEMENT COMMITTEE FUNCTIONS AND POWERS. The RMC shall
encourage and facilitate ongoing cooperation between the parties, establish,
update, review and approve the Research Plan and other plans for accomplishing
the Collaboration goals, allocate tasks and coordinate activities required to
perform the Collaboration, monitor progress of the Collaboration and the
parties' diligence in carrying out their responsibilities thereunder, oversee
the conduct of all patent matters, determine the IN VITRO data and information
that must be provided to Allergan and to ACADIA on each Active Compound to
enable Allergan and ACADIA to determine their interest in selecting such Active
Compound as an Allergan Pool Compound or an ACADIA Pool Compound and carry out
the other duties and responsibilities described for it in this Agreement. The
RMC shall also be responsible for developing and approving an annual research
budget for activities to be performed by the parties pursuant to the Research
Plan for [***] of the Research Term (including any renewal or extension
thereof), subject to the minimum funding levels provided in Section 7.2. Such
budget shall set forth the research funding to be provided by Allergan to
ACADIA, which shall be determined based on the number of FTEs required for
ACADIA to perform its activities under the Research Plan.

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         In addition, the RMC shall maintain and, on a regular basis, update and
provide to the parties a list or lists of the following: Active Compounds,
ACADIA Designated Compounds, ACADIA Pool Compounds, Allergan Designated
Compounds, Allergan Pool Compounds, and Collaboration Lead Compounds.

         2.6 INFORMATION AND REPORTS. Except as otherwise provided in this
Agreement, the parties will make available and disclose to one another all
results of the work conducted pursuant to the Collaboration prior to and in
preparation for RMC meetings, in the form and format to be designated by the
RMC.

         2.7 RMC DISPUTE RESOLUTION. If the RMC is unable to decide or
resolve an issue unanimously, the issue shall be referred to the Chief
Scientific Officer of ACADIA and the President, Research and Development of
Allergan. Such officers of the parties will meet promptly thereafter and
shall negotiate in good faith to resolve such issue. If they cannot resolve
the issue within [***] of commencing such negotiations then the issue shall
be resolved as provided in Section 14.2.

         3. TECHNOLOGY TRANSFER AND IDENTIFICATION OF ACTIVE COMPOUNDS.

         3.1 TRANSFER OF ACADIA TECHNOLOGY. Commencing promptly after the
Effective Date and from time to time thereafter, ACADIA shall disclose to
Allergan such of the ACADIA Technology and relevant information with respect to
ACADIA Designated Compounds as is reasonably necessary to enable Allergan to
perform its Collaboration activities hereunder in accordance with the Research
Plan and otherwise to exercise fully the licenses granted to Allergan hereunder,
provided, however, that with respect to information relating to ACADIA
Designated Compounds, ACADIA shall only be required to disclose such information
to the extent that it is permitted to do so and Allergan shall only have the
right to use such information for research purposes. During the Term of the
Agreement, ACADIA will provide Allergan with reasonable technical assistance
relating to the use of such ACADIA Know-How and the practice of such ACADIA
Patents in the Field solely to the extent permitted under the licenses granted
to Allergan herein. In the event that ACADIA provides any materials to Allergan
pursuant to the Research Plan, the parties will enter into a Materials Transfer
Agreement in the form attached hereto as Exhibit D with respect to such
materials.

         3.2 TRANSFER OF ALLERGAN TECHNOLOGY. Commencing promptly after the
Effective Date and from time to time thereafter, Allergan shall disclose to
ACADIA such of the Allergan Technology as is reasonably necessary to enable
ACADIA to perform its Collaboration activities hereunder in accordance with the
Research Plan and otherwise to exercise fully the licenses granted to ACADIA
hereunder. For the avoidance of doubt, Allergan shall have no obligation to
disclose to ACADIA clinical data related to Collaboration Lead Compounds other
than as required pursuant to Section 5.2, unless ACADIA exercises its right to
develop and commercialize collaboration Lead Compounds pursuant to Section 6.5,
12.5(b) or 12.5(c). In addition, Allergan shall make available all data and
information existing as of the Effective Date generated by Allergan, its
Affiliates or its collaborators under the Confidential Disclosure Agreement
dated March 1, 1998 between ACADIA and Allergan. During the Term of the
Agreement, Allergan will provide ACADIA with reasonable technical assistance
relating to the use of such Allergan Know-How and the practice of such Allergan
Patents solely to the extent

                                      8

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

permitted under the license granted to ACADIA herein. In the event that
Allergan provides any materials to ACADIA pursuant to the Research Plan, the
parties will enter into a Materials Transfer Agreement in the form attached
hereto as Exhibit D with respect to such materials.

         3.3 IDENTIFICATION OF ACTIVE COMPOUNDS. During the Research Term,
the parties shall collaborate in accordance with the Research Plan to perform
research to identify Active Compounds with the potential to become Allergan
Designated Compounds or ACADIA Designated Compounds. The parties shall report
the results of such research promptly to the RMC.

         4. COMPOUND TESTING AND SELECTION.

         4.1 TESTING TO IDENTIFY ACTIVE COMPOUNDS.

         (a) COMPOUNDS FOR TESTING. During the Research Term, ACADIA will
make all [***] Muscarinics available for testing in the Assays pursuant to
the Research Plan. ACADIA will promptly provide to the RMC any information in
ACADIA's possession regarding the chemical structure and properties of such
compounds. In addition, the RMC may agree to have ACADIA synthesize
additional compounds and to obtain from Third Parties rights to screen
compounds owned or controlled by Third Parties; PROVIDED, HOWEVER, that if
there would be any amounts payable to such Third Party for testing such
compounds or making, using or selling products containing such compounds, no
such Third Party compounds will be procured and screened without the consent
of both parties.

         (b) TESTING. ACADIA shall use commercially reasonable efforts to
conduct the testing in the Assays of [***] Muscarinics pursuant to the
Research Plan or selected for testing under Section 4.1(a). The primary goal
of the testing is to determine the activity of such selected compounds to
identify Active Compounds.

         (c) IDENTIFICATION OF ACTIVE COMPOUNDS. Promptly after completing
the testing of a batch of compounds under this Section 4.1 in the Assays,
ACADIA will provide to the RMC the results of such testing. The RMC will
review such Assay results promptly after receipt and will determine which of
the screened compounds meet the requirements established in the Research Plan
for designation as Active Compounds, as such requirements may be modified by
the RMC. Upon designating Active Compounds, the RMC shall add such compounds
to the list of all Active Compounds, which shall be maintained by the RMC,
and shall forward the updated list to each party.

         4.2 SELECTION OF POOL COMPOUNDS. The process for selection of
Active Compounds as Allergan Pool Compounds or as ACADIA Pool Compounds shall
be as set forth in this Section 4.2, and as such process may be amended by
the RMC from time to time.

         The parties shall meet on a quarterly basis, or more frequently, as
agreed to by the RMC, to select Active Compounds which have the potential of
becoming Allergan Designated Compounds or ACADIA Designated Compounds,
hereinafter defined as a "Compound Selection Meeting". Such Compound
Selection Meetings shall be scheduled contemporaneously with RMC meetings, to
the extent practicable. At least [***] before each Compound Selection Meeting
ACADIA shall provide to the RMC the Assay results on all [***] Muscarinics
tested since the last report describing such Assay results was delivered to
the RMC. The Assay

                                       9

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

results shall be provided in a form as agreed to by the RMC. Each Compound
Selection Meeting shall begin by reviewing the Assay results provided by
ACADIA prior to such Compound Selection Meeting and, pursuant to Section 4.1
(c), determining which of the screened compounds meet the requirements for
designation as Active Compounds.

         The selection of Active Compounds by ACADIA and by Allergan shall
take place at each Compound Selection Meeting in [***] and each such Active
Compound selected [***] shall hereinafter be defined as an Allergan Pool
Compound or ACADIA Pool Compound, [***]. [***] shall make the [***] the
initial Compound Selection Meeting [***]. The RMC shall record [***]. From
the date upon which each [***] Pool Compound is designated hereunder until
the end of the Research Term, [***] shall not [***] Pool Compounds. At the
end of the Research Term all rights to [***] Pool Compounds but not [***]
Designated Compounds or Collaboration Lead Compounds shall [***].

         4.3 SELECTION OF DESIGNATED COMPOUNDS.

         (a) SELECTION BY ALLERGAN. Allergan shall have the right, in
consultation with the RMC, to select up to [***] Allergan Pool Compounds that
appear promising for preclinical evaluation by Allergan for use in the Field.
At the time of such selection, such selected Allergan Pool Compounds shall be
designated as Allergan Designated Compounds. From time to time thereafter,
Allergan may designate additional Allergan Pool Compounds as Allergan
Designated Compounds or remove the designation from previously designated
Allergan Designated Compounds so long as the total number of Allergan
Designated Compounds shall not exceed [***] at any time.

         Allergan shall use reasonable efforts to conduct, at its own
expense, all preclinical testing and investigations necessary for Allergan to
select appropriate Allergan Designated Compounds to designate as
Collaboration Lead Compounds for further development. Such further
development may include, at Allergan's reasonable discretion, but not be
limited to, GLP toxicology studies, formulation and process development,
animal testing and other preclinical pharmaceutical development necessary to
prepare and file an IND and all additional animal testing and human clinical
testing necessary to file a NDA. Except as provided in Section 2.2, Allergan
will be responsible for providing, at its own expense, the supply of all
Allergan Designated Compounds and Collaboration Lead Compounds necessary for
preclinical and clinical development worldwide.

         Allergan shall provide promptly to the RMC the results of all work
it performs pursuant to this Section 4.3(a) during the Research Term.
Allergan shall use reasonable efforts to conduct such work in order to select
a Collaboration Lead Compound as soon as possible. From the date upon which
each Allergan Designated Compound is designated hereunder until the date that
is [***] following the end of the Research Term, ACADIA will not grant any
license

                                       10

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

to a Third Party under its interest in the Allergan Designated Compounds. On
the date that is [***] following the end of the Research Term all rights to
Allergan Designated Compounds (unless such Allergan Designated Compound has
been selected as a Collaboration Lead Compound and Allergan continues
development or commercialization of such Collaboration Lead Compound) shall
revert to ACADIA, subject to the provisions of Section 2.3 hereof.

         (b) SELECTION BY ACADIA. ACADIA shall have the right, in
consultation with the RMC, to select up to [***] ACADIA Pool Compounds for
use in ACADIA's own research programs or the research programs of Third
Parties selected by ACADIA. At the time of such selection, such selected
ACADIA Pool Compounds shall be designated as ACADIA Designated Compounds.
From time to time thereafter, ACADIA may designate additional ACADIA Pool
Compounds as ACADIA Designated Compounds or remove the designation from
previously designated ACADIA Designated Compounds so long as the total number
of ACADIA Designated Compounds shall not exceed [***] at any time.

         4.4 SUBSTITUTION OF DESIGNATED COMPOUNDS

         In the event that Allergan elects to remove the designation from a
previously designated Allergan Designated Compound and replace such Allergan
Designated Compound with another Allergan Pool Compound, then Allergan shall
provide ACADIA notice of Allergan's intent to substitute such Allergan
Designated Compound and ACADIA shall have the right to select such previously
designated Allergan Designated Compound as an ACADIA Designated Compound. If
within [***] following such notice, ACADIA has not provided notice to
Allergan that it intends to select such previously designated compound as an
ACADIA Designated Compound then such previously designated Allergan
Designated Compound shall become an Allergan Pool Compound.

         In the event that ACADIA elects to remove the designation from a
previously designated ACADIA Designated Compound and replace such ACADIA
Designated Compound with another ACADIA Pool Compound, then ACADIA shall
provide Allergan notice of ACADIA's intent to substitute such ACADIA
Designated Compound and Allergan shall have the right to select such
previously designated ACADIA Designated Compound as an Allergan Designated
Compound. If within [***] following such notice, Allergan has not provided
notice to ACADIA that Allergan intends to select such previously designated
compound as an Allergan Designated Compound then such previously designated
ACADIA Designated Compound shall become an ACADIA Pool Compound.

         4.5 SELECTION OF COLLABORATION LEAD COMPOUNDS. Allergan shall have
the right to select and designate, by written notice to ACADIA and the RMC,
up to two (2) Collaboration Lead Compounds for clinical development. Allergan
shall use reasonable efforts to select a Collaboration Lead Compound prior to
the end of the Research Term. Upon selection of an Allergan Designated
Compound as a Collaboration Lead Compound, Allergan shall be entitled to
select another Allergan Pool Compound as an Allergan Designated Compound so
that it retains [***] Allergan Designated Compounds. Allergan may, at any
time, exchange a Collaboration Lead Compound for an Allergan Designated
Compound, which will then become a Collaboration Lead Compound.

                                       11

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         5. PRODUCT DEVELOPMENT MANUFACTURING AND SUPPLY.

         5.1 DEVELOPMENT OF COLLABORATION LEAD COMPOUNDS. After selection of
each Collaboration Lead Compound Allergan shall prepare and deliver to ACADIA
within a reasonable period, such period not to exceed [***] for a draft and
[***] for a final, thereafter, a written development plan for conducting
research and development on such Collaboration Lead Compound, describing the
activities and projected timing of the activities necessary to obtain
Regulatory Approval for such Collaboration Lead Compound. Each such
development plan shall be prepared by Allergan in a manner consistent with
commercially reasonable standards and practices in the industry. Allergan
shall have the sole responsibility for conducting preclinical and clinical
development of Collaboration Lead Compounds in accordance with the
development plan. Allergan agrees to use commercially reasonable efforts to
fund and perform such development in Major Markets.

         5.2 DISCLOSURE OF STUDY DATA ON COLLABORATION LEAD COMPOUNDS. At
least once every [***] from the date upon which Allergan designates a
Collaboration Lead Compound(s), Allergan shall provide to ACADIA prior to an
IND filing for such Collaboration Lead Compound, a report summarizing the
scientific results of studies on such Collaboration Lead Compound and,
subsequent to an IND filing for such Collaboration Lead Compound, the IND
update or equivalent report required by the United States Food and Drug
Administration for such Collaboration Lead Compound. In each such report,
Allergan shall provide ACADIA a description of the progress made during the
[***] towards obtaining Regulatory Approval of such Collaboration Lead
Compound and the plans for the [***]. Allergan shall have the right to modify
the development plan in the event that commercial, scientific or competitive
conditions or regulatory requirements change during the course of the
development and/or there are unanticipated results obtained in preclinical or
clinical studies.

         5.3 MANUFACTURE AND SUPPLY. Except as outlined in Section 2.2,
Allergan shall be responsible for providing, at its sole expense, the supply
of all Allergan Designated Compounds and Collaboration Lead Compounds
necessary for the preclinical and clinical development of such Allergan
Designated Compounds and Collaboration Lead Compounds and all Allergan
Products necessary for commercialization worldwide.

         6. LICENSE GRANTS; FAILURE TO PURSUE DEVELOPMENT IN JAPAN.

         6.1 LICENSE GRANTS FOR COLLABORATIVE RESEARCH.

         (a) GRANT BY ACADIA. During the Research Term and for [***]
thereafter with respect to Allergan Designated Compounds, ACADIA grants to
Allergan an exclusive (except as to ACADIA's rights expressly set forth in
this Agreement), worldwide, non-transferable (except as to Japan),
royalty-free license, with the right to sublicense only as it relates to
Japan, under the ACADIA Technology and ACADIA's interest in the Collaboration
Technology to use such technology solely to the extent necessary or
appropriate to carry out Allergan's research responsibilities under the
Collaboration in the Field. Allergan has the right to subcontract with Third
Parties for the performance of research and development activities, PROVIDED,
HOWEVER, that (i) the contracted Third Party shall enter into a
confidentiality agreement with Allergan; and (ii) Allergan shall supervise
such subcontract work.

                                       12

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         (b) GRANT BY ALLERGAN. During the Research Term, Allergan grants to
ACADIA a nonexclusive, worldwide, royalty-free license, under the Allergan
Technology and Allergan's interest in the Collaboration Technology, to use
such technology solely to the extent necessary or appropriate to carry out
ACADIA's research responsibilities under the Collaboration.

         6.2 LICENSE GRANT FOR DEVELOPMENT AND COMMERCIAL PURPOSES. Subject
to other provisions of this Agreement, ACADIA grants to Allergan the
following rights and licenses:

         (a) an exclusive, royalty-free license under the ACADIA Technology
and ACADIA's interest in the Collaboration Technology to make, have made, and
use Collaboration Lead Compounds in order to conduct necessary preclinical,
clinical and other development activities on such Collaboration Lead
Compounds to obtain Regulatory Approval for use in the Field as Allergan
Products;

         (b) an exclusive, royalty-bearing license under the ACADIA
Technology and ACADIA's interest in the Collaboration Technology to make,
have made, use and sell Allergan Products in the Field in the Territory.

         6.3 SUBLICENSING RIGHTS. Allergan shall have the right to sublicense
the rights granted by ACADIA in Section 6.2.

         6.4 DILIGENCE OBLIGATIONS. Allergan's development and
commercialization rights will be subject to development, manufacturing, and
commercial diligence obligations consistent with Allergan's practice for
products with similar commercial potential. Such diligence obligations shall
include, but not be limited to, diligent execution of a development plan
pursuant to Section 5.1 and diligently beginning the development of each
Collaboration Lead Compound [***] either itself, or through a Third Party.
Allergan shall give written notice to ACADIA no later than the time that
Allergan begins Phase III trials of such Collaboration Lead Compound in a
Major Market specifying whether Allergan intends to develop such
Collaboration Lead Compound [***] either by itself or in collaboration with a
Third Party. In the event that Allergan provides ACADIA with written notice
that Allergan will develop such Collaboration Lead Compound itself, Allergan
will deliver to ACADIA a development plan within [***] of such notice. Such
[***] development plan shall comply with the provisions of Section 5.1. In
the event that Allergan provides ACADIA with written notice that Allergan
will develop such Collaboration Lead Compound through a Third Party, Allergan
will use reasonable efforts to select and complete an Agreement with such
Third Party to develop said Collaboration Lead Compound and commercialize the
resulting Allergan Product in [***] within [***] of such notice.

         6.5 FAILURE TO PURSUE DEVELOPMENT IN [***]. If Allergan fails to
diligently begin the development of a Collaboration Lead Compound in [***] as
required in Section 6.4, Allergan will grant to ACADIA an exclusive (even as
to Allergan), perpetual and royalty-free right, with the right to sublicense,
under the Allergan Technology and Allergan's interest in the Collaboration
Technology to make, have made, use and sell Active Compounds, including
Allergan Designated Compounds, Allergan Pool Compounds and Collaboration Lead
Compounds, in the Field in [***] itself, or with any Third Party. Allergan
will release ACADIA from ACADIA's ophthalmology exclusivity requirement
pursuant to the September 24, 1997 Collaboration

                                       13

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

Agreement as it relates to ACADIA's right to make, have made, use and sell
Active Compounds, including Allergan Designated Compounds, Allergan Pool
Compounds and Collaboration Lead Compounds, in the Field in [***] itself or
with a Third Party. ACADIA will also have the royalty-free right to use all
Allergan Know-How and Collaboration Know-How to (a) make, have made, use and
sell Active Compounds, including Allergan Designated Compounds, Allergan Pool
Compounds and Collaboration Lead Compounds, in the Field in [***] and (b)
pursue regulatory approval to make, have made, use and sell Active Compounds,
including Allergan Designated Compounds, Allergan Pool Compounds and
Collaboration Lead Compounds, in the Field in [***].

         7. FEES AND PAYMENTS.

         7.1 UP-FRONT FEE. On the date of execution of this Agreement
Allergan shall pay ACADIA a one-time, non-refundable fee of [***].

         7.2 RESEARCH FUNDING. During the [***] of the Research Term,
Allergan agrees to pay ACADIA, on a quarterly basis in advance, payable no
later than the [***] of the quarter, research funding payments at an
annualized rate of [***] per ACADIA FTE devoted to the Research Program
during the [***] of the Research Term. Thereafter, such rate per ACADIA FTE
will be increased, if applicable, for the [***] of the Research Term by a
multiplier factor which reflects changes in the Pharmaceutical Manufacturers'
Producer Price Index for the United States (or its successor Index) as
reported as of the date that is [***] prior to the anniversary of the
Effective Date when compared to the comparable statistic as of the date that
is [***] prior to the Effective Date, subject to a cap of [***] per ACADIA
FTE. Such funding shall be in such amounts as are set forth in the Research
Plan, provided that the Research Plan shall initially provide for at least a
total of [***] ACADIA FTEs for the longer of the first [***] of the Research
Term or until a Collaboration Lead Compound is designated by Allergan. Once a
Collaboration Lead Compound is designated by Allergan, the RMC will amend the
Research Plan and agree upon the amount of research funding to be paid by
Allergan to ACADIA during the final [***] or fraction thereof remaining
before the first anniversary date of this Agreement. Such research funding
shall support a minimum of [***] ACADIA FTEs. If the Research Term is
extended beyond the first anniversary of this Agreement the actual funding
level for such extension shall be agreed upon by the RMC; provided, however,
if such funding does not support a minimum of [***] ACADIA FTEs, then
Allergan shall not be able to select as an Allergan Designated Compound or a
Collaboration Lead Compound any compound that was not an Allergan Pool
Compound on the [***] anniversary date of this Agreement.

         It is intended that, as determined by the RMC, Allergan will provide
sufficient research funding to ACADIA during the Research Term (and any
renewal or extension thereof) to support the number of FTEs required to
pursue the activities set forth in the Research Plan in accordance with
Exhibit B hereto, as the Research Plan is developed and approved by the RMC,
in accordance with the research budget developed and approved by the RMC as
described in Section 2.5, and subject to the limitations, including the
minimum funding levels, set forth above. The first and last quarter payments
shall be prorated, with the first quarter payment due

                                       14

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

[***] after the Effective Date. ACADIA shall give notice to Allergan in the
event that the total FTEs for its muscarinic program drop below [***] FTEs.

         7.3 MILESTONE PAYMENTS.

         (a) Within [***] after achievement by Allergan, its Affiliates,
sublicensees, partners, collaborators or other Third Parties designated by
Allergan, of each of the following milestones with respect to each
Collaboration Lead Compound Allergan shall pay ACADIA the following
non-refundable milestones (provided, however, that if Allergan abandons
development of a Collaboration Lead Compound and replaces it with development
of another Collaboration Lead Compound, no duplicate milestone payments shall
be due for the replacement compound if such milestone payment was made with
respect to the compound it replaced):

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                MILESTONE EVENT                                          AMOUNT OF PAYMENT
-------------------------------------------------------------------------------------------------------------------
<S>      <C>                                                                             <C>
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------
[***]                                                                                    [***]
-------------------------------------------------------------------------------------------------------------------

</TABLE>

         (b) [***] of each milestone payment made by Allergan for Milestone
Events 5, 6, and 8 above shall be creditable against royalties owed on Net
Sales of Allergan Products, pursuant to Section 7.4, provided that in no
event shall ACADIA receive less than [***] of the royalties otherwise due to
it for such Collaboration Lead Compound in any given quarter.

                                       15

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         7.4 ROYALTIES.

         (a) ALLERGAN ROYALTY PAYMENTS TO ACADIA. Allergan shall pay to
ACADIA the following royalties on annual Net Sales: (a) [***] of Net Sales of
Allergan Products on all annual Net Sales up to [***]; and (b) [***] of
incremental annual Net Sales of Allergan Products in excess of [***] up to
[***] and (c) [***] of incremental annual Net Sales of Allergan Products in
excess of [***]; subject to any adjustment pursuant to Section 7.4 (c). For
purposes of the foregoing, annual Net Sales shall be determined on a calendar
year basis.

         (b) ACADIA ROYALTY PAYMENTS TO ALLERGAN. If Allergan files an IND
which is accepted by the FDA on a Collaboration Lead Compound, and this
Agreement is later terminated by Allergan (other than for breach by ACADIA),
and ACADIA, in collaboration with a Third Party licensee, uses Allergan
Technology and/or Collaboration Technology in connection with the development
or commercialization of such Collaboration Lead Compound for use in the Field
then ACADIA shall pay to Allergan, as applicable, an up-front fee and
milestone payment(s) (excluding equity investments) and a royalty equal to
the percentage appropriately applied from the following table multiplied by
the up-front fee and milestone payment(s) (excluding equity investments)
received by ACADIA and royalty payments received by ACADIA from such Third
Party licensee on Net Sales of ACADIA Products containing such Collaboration
Lead Compound, subject to any adjustment pursuant to Section 7.4 (c).

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                                                                         Percentage of ACADIA
         Last Event Completed Prior to Termination by Allergan           royalty, upfront fee
                                                                            and milestones
-----------------------------------------------------------------------------------------------
         <S>                                                              <C>
                          [***]                                                [***]
-----------------------------------------------------------------------------------------------
                          [***]                                                [***]
-----------------------------------------------------------------------------------------------
                          [***]                                                [***]
-----------------------------------------------------------------------------------------------
                          [***]                                                [***]
-----------------------------------------------------------------------------------------------

</TABLE>

         In the event that ACADIA uses Allergan Technology and/or
Collaboration Technology in connection with the development or
commercialization of such Collaboration Lead Compound for use in the Field
and ACADIA commercializes such Collaboration Lead Compound itself, rather
than outlicensing rights to such Collaboration Lead Compound to a Third
Party, then ACADIA shall pay to Allergan, as applicable, an upfront fee and
milestone payment(s) (excluding equity investments) and a royalty on Net
Sales of ACADIA Products containing such Collaboration Lead Compound (which
royalty shall not be less than [***] of Net Sales) which shall be negotiated
in good faith by the parties in light of the industry standards at that time
for deals executed at the stage of development last completed by Allergan
each multiplied by the applicable percentage from the table above subject to
any adjustment pursuant to Section 7.4 (c).

         Notwithstanding the foregoing, in the event that the total of all
upfront fee and milestone payments paid to Allergan by ACADIA pursuant to this
Section 7.4 (b) are less than the total

                                       16

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

upfront fee and milestones paid to ACADIA by Allergan prior to the
termination of this Agreement by Allergan, then ACADIA shall make a final
milestone payment to Allergan upon NDA Approval of an ACADIA Product
containing such Collaboration Lead Compound in a Major Market, the amount of
such final payment equal to the difference between the total of the upfront
fee and milestone payments paid by ACADIA to Allergan pursuant to this
Section 7.4 (b) and the actual total amount of the upfront fee and milestones
paid to ACADIA by Allergan prior to termination of this Agreement by Allergan.

         (c) ROYALTY RATE IN THE EVENT OF NO MARKET EXCLUSIVITY. In the event
that Allergan Products or ACADIA Products are sold in a Major Market, [***]
(hereinafter each of which individually is defined as a "Key Commercial
Country") in which (i) no Valid Claim exists, and (ii) unit sales of such
Allergan Product or ACADIA Product as measured by IMS, or its successor
database, in a calendar quarter in a Key Commercial Country are less than
[***] of the Total Market Units in such Key Commercial Country, in such
calendar quarter, then the royalty payment due to ACADIA or to Allergan, as
the case may be, for Net Sales of such Allergan Product or ACADIA Product in
such Key Commercial Country, as the case may be, [***]. For the purpose of
this Section 7.4(c), Total Market Units shall mean the sum of (i) the units
of the Allergan Product or ACADIA Product sold and (ii) the total number of
units sold of all generic products which contain the same active ingredient
as the Collaboration Lead Compound contained in such Allergan Product or
ACADIA Product and are approved for a similar therapeutic use as such
Allergan Product or ACADIA Product, each as measured by IMS or its successor
database. In the event that (x) a Valid Claim covering the Allergan Product
or ACADIA Product is established or re-established in such Key Commercial
Country, or (y) unit sales of such Allergan Product or ACADIA Product as
measured by IMS, or its successor database in such Key Commercial Country
become greater than [***] of the Total Market Units in such Key Commercial
Country, then the royalty payment due to ACADIA or to Allergan, as the case
may be, with respect to Net Sales of such Allergan Product or ACADIA Product
in such Key Commercial Country, as the case may be, after such date shall
revert to [***].

         In the event that Allergan Products or ACADIA Products are sold in a
country which is not a Key Commercial Country (hereinafter each such country
is individually defined as a "Non-Key Commercial Country") in which (i) no
Valid Claim exists, and (ii) there are commercial sales by a Third Party of a
generic product(s) which contains the same active ingredient as the
Collaboration Lead Compound contained in such Allergan Product or ACADIA
Product and which generic product(s) is approved for a similar therapeutic
use as such Allergan Product or ACADIA Product, then the royalty payment due
to ACADIA or to Allergan, as the case may be, for Net Sales of such Allergan
Product or ACADIA Product in such Non-Key Commercial Country, as the case may
be, shall be [***]. In the event that (x) a Valid Claim covering the Allergan
Product or ACADIA Product is established or re-established in such Non-Key
Commercial Country, or (y) all such Third Parties shall cease sale of such
generic product(s) in such Non-Key Commercial Country, then the royalty
payment due to ACADIA or to Allergan, as the case may be, with respect to Net
Sales of such Allergan Product or ACADIA Product in such non-Key Commercial
Country, as the case may be, after such date shall [***].

                                      17

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         (d) ROYALTY TERM. Royalties for sales of each Allergan Product or
ACADIA Product in a given country shall be paid for a period equal to the
Royalty Term for such Allergan Product or ACADIA Product in such country.

         (e) CREDIT FOR THIRD PARTY ROYALTIES. In the event that a party
obligated to pay royalties under this Agreement must make royalty payments
under a license from a Third Party in respect of any patents that are
necessary to develop, make, have made, use, sell, have sold or import a
Collaboration Lead Compound, an Allergan Product or an ACADIA Product then
such party may reduce the royalty otherwise owing on Net Sales of such
product [***] of the royalty payments made under such Third Party license;
provided, however, that the royalty otherwise payable under the applicable
provision of this Agreement during any quarter shall not be reduced by more
than [***].

         8. PAYMENTS; RECORDS; AUDITS.

         8.1 PAYMENT; REPORTS. Royalty payments and reports for the sale of
Allergan Products or ACADIA Products shall be calculated and reported for
each calendar quarter. All royalty payments due to a party under this
Agreement shall be paid within [***] of the end of each calendar
quarter. Each payment of royalties shall be accompanied by a report of Net
Sales of Allergan Products or ACADIA Products, in sufficient detail to permit
confirmation of the accuracy of the royalty payment made, including, without
limitation, the number of each Allergan Product or ACADIA Product sold, the
gross sales and Net Sales of each Allergan Product or ACADIA Product, the
royalties, in U.S. dollars, payable, the exchange rates used and any other
information necessary to determine the appropriate amount of royalties due.

         8.2 EXCHANGE RATE; MANNER AND PLACE OF PAYMENT. All payments
hereunder shall be payable in U.S. dollars. With respect to each quarter, for
countries other than the United States, whenever conversion of payments from
any foreign currency shall be required, such conversion shall be calculated
using the same exchange rate(s) that the payor uses for its own U.S. dollar
financial statement reporting purposes prepared in accordance with GAAP. All
payments owed under this Agreement shall be made by wire transfer to a bank
and account designated in writing by the payee, unless otherwise specified by
such payee.

         8.3 LATE PAYMENTS. In the event that any payment, including royalty,
milestone and research payments, due hereunder is not made when due, the
payment shall accrue interest from the date due at the rate of [***];
provided, however, that in no event shall such rate exceed the maximum legal
annual interest rate, The payment of such interest shall not limit a party
from exercising any other rights it may have as a consequence of the lateness
of any payment.

         8.4 RECORDS AND AUDITS. During the Royalty Term and for a period of
[***] thereafter, each party shall keep complete and accurate records
pertaining to the development and sale or other disposition of Allergan
Products or ACADIA Products, in sufficient detail to permit the other party
to confirm the accuracy of all payments due hereunder. Each party shall have
the right to cause an independent, certified public accountant reasonably
acceptable to the other to audit such records to confirm Net Sales and
royalty and other payments for a period covering not more than the preceding
[***]. Such audits may be exercised during

                                       18

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

normal business hours [***] upon at least [***] prior written notice to the
other party. Prompt adjustments shall be made by the parties to reflect the
results of such audit. The party causing such audit shall bear the full cost
of such audit unless such audit discloses an underpayment of more than [***]
from the amount of royalties or other payments due under this Agreement. In
such case, the audited party shall bear the full cost of such audit.

         8.5 WITHHOLDING OF TAXES. Any withholding of taxes levied by tax
authorities outside the United States on the payments hereunder shall be
borne by the party receiving such payment and deducted by the party making
such payment from the sums otherwise payable by it hereunder for payment to
the proper tax authorities. The parties agree to cooperate with each other,
in the event a party claims exemption from such withholding or seeks
deductions under any double taxation or other similar treaty or agreement
from time to time in force, such cooperation to consist of providing receipts
of payment of such withheld tax or other documents reasonably available.

         8.6 EXCHANGE AND ROYALTY RATE CONTROLS. If at any time legal
restrictions prevent the prompt remittance of part or all royalties with
respect to any country where any Allergan Product or ACADIA Product is sold,
payment shall be made through such lawful means or methods as the party
making such payment may determine. When in any country the law or regulations
prohibit both the transmittal and deposit of royalties on sales in such a
country, royalty payments shall be suspended for as long as such prohibition
is in effect, and as soon as such prohibition ceases to be in effect, all
royalties that would have been obligated to be transmitted or deposited, but
for the prohibition, shall forthwith be deposited or transmitted promptly to
the extent allowable, as the case may be. If any royalty rate specified in
this Agreement should exceed the permissible rate established in any country,
the royalty rate for sales in such country shall be adjusted to the highest
legally permissible or government-approved rate.

         9. INTELLECTUAL PROPERTY.

         9.1 OWNERSHIP OF TECHNOLOGY. Inventorship with respect to inventions
made pursuant to work carried out under the Collaboration shall be determined
in accordance with United States rules of inventorship. Except as provided
below, each party shall own solely all inventions made solely by its
employees and agents, and the parties shall own jointly all inventions
jointly made hereunder.

         9.2 PATENT PROSECUTION. It is the intention of the parties to secure
broad patent protection for discoveries and inventions made in connection
with the Collaboration. Allergan shall be responsible for the filing,
prosecution and maintenance at Allergan's sole cost of all Allergan Patents,
and all Collaboration Patents or ACADIA Patents to the extent the claims
filed in the Collaboration Patents or ACADIA Patents are limited to the Field
or Collaboration Lead Compounds. Except for those patents or patent
applications described above, ACADIA shall be responsible for the filing,
prosecution and maintenance of all ACADIA Patents and all Collaboration
Patents. Allergan shall reimburse ACADIA for [***] of all reasonable out of
pocket legal expenses incurred by ACADIA that are associated with the filing
and prosecuting of (i) all Collaboration Patent(s) and (ii) any ACADIA
Patents having claims covering [***] Muscarinics that are useful in the
Field. In the event that ACADIA elects to

                                       19

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

assign, including an assignment pursuant to the provisions of Section 15.7,
its right to file, prosecute and maintain Collaboration Patents or ACADIA
Patents having claims covering Collaboration Lead Compounds or their use
thereof in the Field, then Allergan may, except in the case of an assignment
by ACADIA to any Affiliate, to a special purpose corporation or similar
entity which assignment is permitted under Section 15.7, assume
responsibility for the filing, prosecution and maintenance of such
Collaboration Patents and/or ACADIA Patents at Allergan's own expense,
provided, however, that if Allergan's assumption of such responsibilities
would impair a transaction permitted under Section 15.7 then Allergan shall
negotiate in good faith to remedy such impairment. Each party shall consider
in good faith the requests and suggestions of the other party with respect to
strategies for filing and prosecuting patent applications, and, in
particular, ACADIA agrees that, at Allergan's request, and to the extent
practicable and that such activities do not materially diminish ACADIA's
overall patent estate, patent applications for Collaboration Patents or
ACADIA Patents will be filed with claims limited to the Field or
Collaboration Lead Compounds, provided however, that in the event that
Allergan designates a Collaboration Lead Compound and provides notice to
ACADIA that Allergan desires to file a patent application for Collaboration
Patents or ACADIA Patents covering such Collaboration Lead Compound, Allergan
shall not make such filing for a period of [***] following such notice to
ACADIA, without prior written consent by ACADIA. Each party shall keep the
other party informed of progress with regard to the filing, prosecution and
maintenance of patent applications and patents subject to this Section 9.2.
In the event a party is responsible for the filing, prosecution and
maintenance of patent applications or patents hereunder, and elects, other
than as provided above, not to do so, it shall inform the other party at
least [***] before any relevant deadline for filing or other action and
transmit all information reasonable and appropriate relating to such patent
or patent application, and such other party shall then have the right to
file, prosecute and maintain such patent applications and patents at its own
expense, in which case the party declining to continue such patent
applications and patents shall assign its rights in such patent applications
and patents to the other party.

         9.3 COOPERATION OF THE PARTIES. Each party agrees to cooperate fully
in the preparation, filing, and prosecution of any patent rights under this
Agreement. Such cooperation includes, but is not limited to:

         (a) executing all papers and instruments, or requiring its employees
or agents, to execute such papers and instruments, so as to effectuate the
ownership of patent rights set forth in Section 9.1 above and to enable the
other party to apply for and to prosecute patent applications in any country;
and

         (b) promptly informing the other party of any matters coming to such
party's attention that may affect the preparation, filing, or prosecution of
any such patent applications.

         9.4 INFRINGEMENT BY THIRD PARTIES. ACADIA and Allergan shall
promptly notify the other in writing of any alleged or threatened
infringement of any patent included in the Allergan Patents, ACADIA Patents
or Collaboration Patents of which they become aware. Both parties shall use
their best efforts in cooperating with each other to terminate such
infringement without litigation with each party being responsible for its own
out-of-pocket costs, including legal costs. In the event any alleged or
threatened infringement by a Third Party in the Field cannot be terminated
without litigation, Allergan shall have the first right, but not the
obligation, to bring

                                       20

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

and control any action or proceeding with respect to infringement of a patent
included in the Allergan Patents or Collaboration Patents and ACADIA Patents
having claims limited to the Field or Collaboration Lead Compounds, at its
own expense and by counsel of its own choice. ACADIA shall have the first
right to bring and control any action or proceeding with respect to
infringements of a patent in the ACADIA Patents or Collaboration Patents not
referred to in the preceding sentence. The party not bringing the action
shall have the right, at its own expense, to be represented in any action
involving any patent covering inventions owned jointly by the parties by
counsel of its own choice. If either party fails to bring an action or
proceeding with respect to a patent covering inventions licensed hereunder
within: (a) [***] following the notice of alleged infringement or (b) [***]
before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, the other
party shall have the right to bring and control any such action at its own
expense and by counsel of its own choice, and the party initially declining
to bring such action shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. In the event a
party brings an infringement action, the other party shall cooperate fully,
including if required to bring such action, the furnishing of a power of
attorney. Neither party shall have the right to settle any patent
infringement litigation under this Section 9.4 in a manner that diminishes
the rights or interests of the other party without the consent of such other
party. Except as otherwise agreed to by the parties as part of a cost sharing
arrangement, any recovery realized as a result of such litigation, after
reimbursement of any litigation expenses of Allergan and ACADIA, shall be
divided between the parties in accordance with their relative economic
interests as directly related to the royalty payments described in Section
7.4 hereof.

         9.5 INFRINGEMENT OF THIRD PARTY RIGHTS. Each party shall promptly
notify the other in writing of any allegation by a Third Party that the
activity of either of the parties hereunder infringes or may infringe the
intellectual property rights of such Third Party.

         Allergan shall have the first right but not the obligation to control
any defense of any such claim involving alleged infringement of Third Party
rights by Allergan's activities under this Agreement at its own expense and
by counsel of its own choice, and ACADIA shall have the right but not the
obligation, at its own expense, to be represented in any such action by
counsel of its own choice. If Allergan fails to proceed in a timely fashion
with regard to such defense, ACADIA shall have the right but not the
obligation to control any such defense of such claim at its own expense and
by counsel of its own choice, and Allergan shall have the right but not the
obligation, at its own expense, to be represented in any such action by
counsel of its own choice.

         ACADIA shall have the first right but not the obligation to control
any defense of any such claim involving alleged infringement of Third Party
rights by ACADIA's activities under this Agreement at its own expense and by
counsel of its own choice, and Allergan shall have the right but not the
obligation, at its own expense, to be represented in any such action by
counsel of its own choice. If ACADIA fails to proceed in a timely fashion
with regard to such defense, Allergan shall have the right but not the
obligation to control any such defense of such claim at its own expense and
by counsel of its own choice, and ACADIA shall have the right but not the
obligation, at its own expense, to be represented in any such action by
counsel of its own choice.

                                       21

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         Neither party shall have the right to settle any patent infringement
litigation under this Section 9.5 in a manner that diminishes the rights or
interests of the other party without the consent of such party.

         9.6 TRADEMARKS. Allergan and ACADIA shall each obtain, own and
enforce its own trademarks with respect to Allergan Products or ACADIA
Products that each commercializes hereunder.

         9.7 PATENT LABELING. Allergan shall mark all Allergan Products or
their containers that are manufactured used or sold under the terms of this
Agreement in accordance with the appropriate patent markings laws.

         10. REPRESENTATIONS AND WARRANTIES.

         10.1 REPRESENTATIONS AND WARRANTIES. Each party represents to the
other that as of the Effective Date:

         (a) CORPORATE POWER. It is duly organized and validly existing under
the laws of its state of incorporation or formation, and has full corporate
power and authority to enter into this Agreement and to carry out the
provisions hereof

         (b) DUE AUTHORIZATION. It is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder, and the person or
persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action.

         (c) BINDING AGREEMENT. This Agreement is legally binding upon it,
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or regulation of any
court, governmental body or administrative or other agency having
jurisdiction over it.

         (d) GRANT OF RIGHTS; MAINTENANCE OF AGREEMENTS. It has not, and will
not during the term of this Agreement, grant any right to any third party
which would conflict with the rights granted to the other party hereunder. It
has (or will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements (including license
agreements) and filings (including patent filings) necessary to perform its
obligations hereunder,

         (e) VALIDITY. It is aware of no action, suit or inquiry or
investigation instituted by or before any court or governmental agency which
questions or threatens the validity of this Agreement or of any Allergan
Patents and ACADIA Patents.

         10.2 ACADIA REPRESENTATIONS AND WARRANTIES. ACADIA represents and
warrants that as of the Effective Date:

         (a) it is the sole and exclusive owner of the ACADIA Patents and
ACADIA Know-How and has sufficient rights and power to grant the licenses to
Allergan which it purports to grant herein, and no such rights granted to
Allergan hereunder are licensed by ACADIA from any Third Party;

                                       22

<PAGE>

         (b) the ACADIA Know-How and the ACADIA Patents are free of any
encumbrances, liens, judgments and/or security interests that would affect
the exercise by Allergan of its rights in the Field; provided, however, that
the Fund for Industrial Growth has a security interest in certain of the
ACADIA Technology, and, in ACADIA's rights under this Agreement, including
any moneys paid to ACADIA under this Agreement, and that, should the Fund for
Industrial Growth be assigned or assume ACADIA's rights under this Agreement
pursuant to such security interest rights, Allergan shall make all payments
otherwise due to ACADIA under this Agreement to the Fund for Industrial
Growth, in which case this Agreement and all of Allergan's rights hereunder
shall continue without interruption or impairment;

         (c) and to its actual knowledge there are no outstanding and
unresolved claims or accusations that any compounds or products manufactured,
used or sold by ACADIA and licensed hereunder or any methods or process
practiced by ACADIA infringe or may infringe any Third Party patent(s) or
other intellectual property rights and it has disclosed to Allergan any Third
Party patent(s) which it is aware that might be infringed by the manufacture,
use or sale of Allergan Products or the practice of any methods or processes
covered by the ACADIA Patents or included in the ACADIA Know-How by Allergan
its Affiliates or sublicensees;

         (d) all patents and patent applications included in the ACADIA
Patents are valid and in full force and effect, and are not the current
subject of any interference or opposition proceeding; and

         (e) and to its actual knowledge it is unaware of any publications or
activities including without limitation, patents, articles and public uses or
sales, by it or others which would or might invalidate any claim(s) of any
patent or patent application included in the ACADIA Patents.

         (f) it has not conducted, nor has it commissioned the conducting of,
any formal or informal infringement or validity studies regarding any patent
or patent application included in the ACADIA Patents listed on Exhibit C that
it has not disclosed in writing to Allergan prior to the Effective Date.

         10.3 ALLERGAN REPRESENTATIONS AND WARRANTIES. Allergan represents
and warrants that as of the Effective Date:

         (a) Allergan owns the Allergan Know-How and has sufficient rights
and power to grant the licenses to ACADIA which it purports to grant herein;
and

         (b) and to its actual knowledge there are no outstanding and
unresolved claims or accusations that any methods or process practiced by
Allergan as part of the Allergan Know-How infringe or may infringe any third
party patent(s).

         10.4 DISCLAIMER CONCERNING TECHNOLOGY. EXCEPT AS SPECIFICALLY SET
FORTH HEREIN, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS PROVIDED BY
EACH PARTY HEREUNDER IS PROVIDED "AS IS" AND EACH PARTY EXPRESSLY DISCLAIMS
ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES, OR ARISING FROM

                                       23

<PAGE>

A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT
THERETO. Without limiting the generality of the foregoing, each party
expressly does not warrant (a) the success of any study or test commenced
under the Collaboration or (b) the safety or usefulness for any purpose of
the technology it provides hereunder.

         11. CONFIDENTIALITY; PUBLICATION.

         11.1 CONFIDENTIALITY. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing by the parties, the parties
agree that, hereinafter and until the [***] anniversary of the completion of
the Royalty Term, the receiving party shall keep confidential and shall not
publish or otherwise disclose and shall not use for any purpose other than as
expressly provided for in this Agreement any Confidential Information
furnished to it by the other party pursuant to this Agreement. Each party may
use such Confidential Information only to the extent required to accomplish
the purposes of this Agreement. Each party will use at least the same
standard of care as it uses to protect proprietary or confidential
information of its own to ensure that its employees, agents, consultants and
other representatives do not disclose or make any unauthorized use of the
Confidential Information. Each party will promptly notify the other upon
discovery of any unauthorized use or disclosure of the Confidential
Information.

         11.2 EXCEPTIONS. Confidential Information shall not include any
information which the receiving party can prove by competent evidence:

         (a) is now, or hereafter becomes, through no act or failure to act
on the part of the receiving party, generally known or available;

         (b) is known by the receiving party at the time of receiving such
information, as evidenced by its records;

         (c) is hereafter furnished to the receiving party by a Third Party,
as a matter of right and without restriction on disclosure;

         (d) is independently developed by the receiving party without the
aid, application or use of Confidential Information of the disclosing party;
or

         (e) is the subject of a written permission to disclose provided by
the disclosing party.

         11.3 TERMS OF AGREEMENT. The parties agree that this Agreement and
the terms hereof will be considered Confidential Information of both parties.
Notwithstanding the foregoing, either party may disclose such terms as are
required to be disclosed under strictures of confidentiality to bona fide
potential sublicensees or for fund raising efforts to investors and potential
investors or as otherwise required pursuant to applicable law.

         11.4 AUTHORIZED DISCLOSURE. Each party may disclose Confidential
Information belonging to the other party to the extent such disclosure is
reasonably necessary in the following instances:

         (a) filing or prosecuting patents relating to the Collaboration;

                                       24

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         (b) regulatory filings;

         (c) prosecuting or defending litigation;

         (d) complying with applicable court orders or governmental regulations;

         (e) conducting pre-clinical or clinical trials of Collaboration Lead
Compounds; and

         (f) disclosure to Affiliates, sublicensees, employees, consultants,
agents or other Third Parties in connection with due diligence or similar
investigations by such Third Parties, in each case who agree to be bound by
similar terms of confidentiality and non-use at least equivalent in scope to
those set forth in this ARTICLE 11.

         Notwithstanding the foregoing, in the event a party is required to
make a disclosure of the other party's Confidential Information pursuant to
this Section 11.4, it will seek to secure confidential treatment of such
information at least as diligently as such party would use to protect its own
confidential information. In addition, ACADIA shall not be entitled to
disclose Confidential Information related to Allergan Designated Compounds or
Collaboration Lead Compounds to Third Parties, without the prior written
approval of Allergan, such approval not to be unreasonably withheld; however,
ACADIA shall be entitled to disclose all data and information related to that
certain compound covered under the Confidential Disclosure Agreement dated
March 1, 1998 described in Section 3.2. The parties will consult with each
other on the provisions of this Agreement to be redacted in any filings made
by the parties with the Securities and Exchange Commission or as otherwise
required by law.

         Nothing in this Agreement shall prevent ACADIA from disclosing
Confidential Information on [***] Muscarinics (but not Allergan Designated
Compounds, Allergan Pool Compounds or Collaboration Lead Compounds) to any
Third Party with which ACADIA has entered into an agreement for [***]
muscarinics outside the Field.

         11.5 PUBLICATIONS. Each party to this Agreement recognizes that the
publication of papers regarding results of and other information regarding
the Collaboration, including oral presentations and abstracts, may be
beneficial to both parties provided such publications are subject to
reasonable controls to protect Confidential Information. Accordingly, each
party shall have the right to review and approve any paper proposed for
publication by the other party, including oral presentations and abstracts,
which utilizes data generated from the Collaboration and/or includes
Confidential Information of the other party. Before any such paper is
submitted for publication, the party proposing publication shall deliver a
complete copy to the other party at least [***] prior to submitting the paper
to a publisher. Such other party shall review any such paper and give its
comments to the publishing party within [***] of its receipt of such paper.
With respect to oral presentation materials and abstracts, the reviewing
party shall make reasonable efforts to expedite review of such materials and
abstracts, and shall return such items as soon as practicable to the
publishing party with appropriate comments, if any, but in no event later
than [***] from the date of receipt by the reviewing party. The publishing
party shall comply with the reviewing party's request to delete references to
the other party's Confidential Information in any such paper and agrees to
withhold publication of

                                       25

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

same for an additional [***] in order to permit the parties to obtain patent
protection, if either of the parties deems it necessary, in accordance with
the terms of this Agreement.

         12. TERM AND TERMINATION.

         12.1 TERM OF THE AGREEMENT. The term of the collaborative activities
of the parties pursuant to the Research Program shall commence on the
Effective Date and continue until expiration of the Research Term, unless
earlier terminated pursuant to Section 12.2, 12.3 or 12.4, or extended by
mutual agreement of the parties. The term of this Agreement (the "Term of the
Agreement") shall commence on the Effective Date and continue until six (6)
months after the expiration of the last Royalty Term for any Allergan Product
or ACADIA Product, unless earlier terminated pursuant to Section 12.2, 12.3
or 12.4 or extended upon terms mutually agreeable to both parties.
Notwithstanding the foregoing, this Agreement will expire upon the [***]
anniversary of the expiration of the Research Term if Allergan has not
designated a Collaboration Lead Compound.

         12.2 TERMINATION BY MUTUAL AGREEMENT. The parties may at any time
terminate this Agreement by written agreement executed by both Allergan and
ACADIA.

         12.3 TERMINATION BY ALLERGAN. Allergan may terminate this Agreement
by giving ninety (90) days prior written notice to ACADIA, but in no event
may Allergan terminate this Agreement pursuant to this Section 12.3 prior to
the first anniversary of the Effective Date hereof.

         12.4 TERMINATION FOR CAUSE. Each party shall have the right to
terminate this Agreement upon [***] prior written notice to the other upon
the occurrence of any of the following:

         (a) Upon or after the bankruptcy, insolvency, dissolution or winding
up of the other party (other than a dissolution or winding up for the purpose
of reconstruction or amalgamation); or

         (b) Upon or after the breach of any material provision of this
Agreement by the other party if the breaching party has not cured such breach
within the [***] period following written notice of termination by the
non-breaching party.

         All licenses granted to the non-breaching party under Sections 6.1
and 6.2 of this Agreement shall survive such termination for so long as such
non-breaching party is not in breach of its obligations to the other party
under this Agreement.

         12.5 ACCRUED RIGHTS, SURVIVING OBLIGATIONS.

         (a) Expiration or termination of this Agreement shall not affect any
rights or obligations of either party accruing prior to such expiration or
termination. The terms of this Section 12.5 and Sections 7.4, 8, 9.1, 9.3,
10, 11.1, 11.2, 11.3, 11.4, 12.4, 13, 14 and 15 (except for Section 15.7) of
this Agreement shall survive expiration or termination of this Agreement.
Promptly after termination of this Agreement each party (other than a
non-breaching party that retains a license as described in Section 12.4)
shall return or dispose of any technology or know-

                                       26

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

how of the other in the accordance with the instructions of the other,
including without limitation any compounds, assays or other biological or
chemical materials.

         (b) Upon termination of the Agreement by Allergan for any reason,
other than breach by ACADIA, all rights to [***] Muscarinics hereunder will
revert to ACADIA and Allergan will release ACADIA from ACADIA's ophthalmology
exclusivity requirement pursuant to the September 24, 1997 Collaboration
Agreement as it relates to ACADIA's right to make, have made, use and sell
products that act by means of the [***] muscarinic receptor in the Field
itself or with a Third Party. Thereafter, Allergan will grant ACADIA a
royalty-free right under the Allergan Technology and Allergan's interest in
the Collaboration Technology to make, have made, use and sell jointly owned
compounds developed during the Collaboration that act at the [***] muscarinic
receptor, including, but not limited to Active Compounds, Allergan Designated
Compounds and Collaboration Lead Compounds in or outside of the Field itself
or with a Third Party of ACADIA's sole choice. ACADIA will also have the
exclusive, perpetual and royalty-free right to use all data and information
generated by Allergan as a result of the Collaboration that is related to the
[***] muscarinic receptor or compounds that act at the [***] muscarinic
receptor (but excluding proprietary data and information relating to the
scale up of the synthesis of Allergan Designated Compounds and Collaboration
Lead Compounds), by ACADIA or jointly by Allergan and ACADIA during the term
of this Agreement for any purpose. Notwithstanding the foregoing, in the
event that Allergan terminates the Agreement after successfully filing an IND
on a Collaboration Lead Compound in a Major Market, ACADIA's rights upon
termination, as set forth above relating to the use of all data and
information generated by Allergan on such Collaboration Lead Compound for use
in the Field, shall be royalty-bearing as set forth in Section 7.4(b).

         (c) Upon expiration of this Agreement at or after the end of the
Research Term, if Allergan has not selected a Collaboration Lead Compound,
all rights to [***] Muscarinics will [***]. Thereafter, Allergan will grant
ACADIA the right under the Allergan Technology and Allergan's interest in the
Collaboration Technology to make, have made, use and sell jointly owned
compounds that act by way of the [***] muscarinic receptor, including, but
not limited to, Active Compounds, Allergan Designated Compounds and
Collaboration Lead Compounds in the Field itself or with a Third Party of
ACADIA's sole choice. ACADIA will also have the exclusive and perpetual right
to use all data and information generated by Allergan as a result of the
Collaboration that is related to the [***] muscarinic receptor or compounds
that act at the [***] muscarinic receptor (but excluding proprietary data and
information relating to the scale up of the synthesis of Allergan Designated
Compounds and Collaboration Lead Compounds), by ACADIA or jointly by Allergan
and ACADIA during the Term of the Agreement for any purpose. In consideration
for Allergan granting such rights to ACADIA, ACADIA agrees to pay Allergan a
one-time fee in an amount equal to the total amount paid by Allergan to
ACADIA for research support (FTE support) during the Research Term provided,
however, that such payment shall only be due upon first Regulatory Approval
in a Major Market of an [***] Muscarinic in the Field and only if such [***]
Muscarinic was an Allergan Designated Compound or a Collaboration Lead
Compound at the time of expiration of this Agreement and ACADIA utilizes data
or information

                                       27

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

generated by Allergan on such Allergan Designated Compound or such
Collaboration Lead Compound to obtain such Regulatory Approval.

         (d) ALLERGAN FULLY PAID UP LICENSE. Upon expiration of the last
Royalty Term for any Allergan Product, Allergan shall have a fully-paid,
royalty free, non-exclusive perpetual license to use the ACADIA Know-How to
manufacture, use and sell such Allergan Product; provided however, that
Allergan shall have no right to sublicense outside the Field any ACADIA
Know-How which is Confidential Information.

         (e) ACADIA FULLY PAID UP LICENSE. Upon expiration of the last
Royalty Term for any ACADIA Product, ACADIA shall have a fully-paid, royalty
free, non-exclusive perpetual license to use the Allergan Know-How to
manufacture, use and sell such ACADIA Product; provided however, that ACADIA
shall have no right to sublicense any Allergan Know-How which is Confidential
Information.

         13. INDEMNITY.

         13.1 INDEMNIFICATION. Each party hereby agrees to save, defend and
hold the other party and its directors, officers, employees, and agents
harmless from and against any and all claims, suits, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expense and
attorneys' fees (collectively, "Claims") for damage to persons or property
resulting directly or indirectly from actions in connection with the
Collaboration by the indemnifying party, its Affiliates, agents or
sublicensees, but only to the extent such Claims result from the gross
negligence or willful misconduct of the indemnifying party or its Affiliates,
agents or sublicensees and do not result from the negligence of the party
seeking indemnification.

         13.2 CONTROL OF DEFENSE. Any entity entitled to indemnification
under this Section 13 shall give notice to the indemnifying party of any
Claims that may be subject to indemnification, promptly after learning of
such Claim, and the indemnifying party shall assume the defense of such
Claims with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed by the indemnifying party with counsel so selected, the
indemnifying party will not be subject to any liability for any settlement of
such Claims made by the indemnified party without its consent (but such
consent will not be unreasonably withheld or delayed), and will not be
obligated to pay the fees and expenses of any separate counsel retained by
the indemnified party with respect to such Claims.

         13.3 INSURANCE. Allergan, at its own expense, shall maintain product
liability insurance (or self-insure), in amounts consistent with industry
standards for other such pharmaceutical companies during the Term of the
Agreement and shall name ACADIA as an additional insured with respect to such
insurance. Allergan shall provide a certificate of insurance (or evidence of
self-insurance) evidencing such coverage.

         ACADIA, at its own expense, shall maintain liability insurance (or
self-insure) in amounts consistent with industry standards for other such
biotechnology companies during the Term of the Agreement. ACADIA shall
provide a certificate of insurance (or evidence of self-insurance) evidencing
such coverage.

                                       28

<PAGE>

         14. GOVERNING LAW; DISPUTE RESOLUTION.

         14.1 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of California as such laws are applied to contracts entered into or
to be performed entirely within such state.

         14.2 DISPUTE RESOLUTION. Except as provided in Section 2.6, and
except with respect to matters pertaining to injunctive relief, in the event
of any dispute, the parties shall refer such dispute to the Chief Executive
Officer of ACADIA and a Senior Executive of Allergan appointed by Allergan's
Chief Executive Officer for attempted resolution by good faith negotiations
within [***] after such referral is made. During such period of good faith
negotiations, any applicable time periods under this Agreement shall be
tolled. In the event such executives are unable to resolve such dispute
within such [***] period, the parties shall submit their dispute to binding
arbitration before a retired California Superior Court Judge at
J.A.M.S./Endispute located in Orange County, California, such arbitration to
be conducted pursuant to the J.A.M.S./Endispute procedure rules for
commercial disputes then in effect. The award of the arbitrator shall include
an award of reasonable attorneys' fees and costs to the prevailing party.

         14.3 JURISDICTION AND VENUE. Except as provided in Section 2.7 or
14.3 above, any claim or controversy arising out of or related to this
Agreement or any breach hereof (including claims for injunctive relief) shall
be adjudicated in the state and federal courts in Orange County having
jurisdiction over disputes arising in the State of California, and the
parties hereby consent to the jurisdiction and venue of such courts.

         15. GENERAL PROVISIONS.

         15.1 NOTICES. All notices required or permitted to be given under
this Agreement shall be in writing and shall be mailed by registered or
certified mail, Federal Express or other nationally recognized overnight
delivery service, addressed to the signatory to whom such notice is required
or permitted to be given and transmitted by facsimile to the number indicated
below. All notices shall be deemed to have been given when mailed, as
evidenced by the postmark at the point of mailing, or faxed.

<TABLE>

<S>                                        <C>
All notices to Allergan shall be           Allergan, Inc.
addressed as follows:                      2525 Dupont Drive
                                           Irvine, CA 92623
                                           Attn: President, Research and Development
                                           Fax:  (714) 246-6987

with a copy to:                            Allergan, Inc.
                                           2525 Dupont Drive Irvine, CA 92623
                                           Attn:  Allergan General Counsel
                                           Fax:  (714) 246-4774

</TABLE>

                                       29

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

<TABLE>

<S>                                        <C>
All notices to ACADIA shall be             ACADIA Pharmaceuticals Inc.
addressed as follows:                      3911 Sorrento Valley Blvd.
                                           San Diego, CA 92121
                                           Attn:  Chief Executive Officer
                                           Fax:  (619) 558-2872

with a copy to:                            Pillsbury Madison & Sutro LLP
                                           2550 Hanover Street
                                           Palo Alto, CA 94304-1115
                                           Attn:  John L. Donahue
                                           Fax:  (650) 233-4545

</TABLE>

         Any party may, by written notice to the other, designate a new
address or fax number to which notices to the party giving the notice shall
thereafter be mailed or fixed.

         15.2 FORCE MAJEURE. No party shall be liable for any delay or
failure of performance (other than payment obligations) to the extent such
delay or failure is caused by circumstances beyond its reasonable control and
that by the exercise of due diligence it is unable to prevent, provided that
the party claiming excuse uses its best efforts to overcome the same.

         15.3 ENTIRETY OF AGREEMENT. This Agreement embodies the entire,
final and complete agreement and understanding between the parties and
replaces and supersedes all prior discussions and agreements between them
with respect to its subject matter, except for the September 24, 1997
Collaboration Agreement and the Confidential Disclosure Agreement dated as of
March 1, 1998, which shall continue in accordance with its terms, except to
the extent specifically modified hereby. No modification or waiver of any
terms or conditions hereof shall be effective unless made in writing and
signed by a duly authorized officer of each party.

         15.4 NON-WAIVER. The failure of a party in any one or more instances
to insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of
the right to assert or rely upon any such terms or conditions on any future
occasion.

         15.5 DISCLAIMER OF AGENCY. Neither party is, or will be deemed to
be, the legal representative or agent of the other, nor shall either party
have the right or authority to assume, create, or incur any third party
liability or obligation of any kind, express or implied, against or in the
name of or on behalf of another except as expressly set forth in this
Agreement.

         15.6 SEVERABILITY. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either ACADIA or Allergan deems any
provision to be contrary to any laws, then that provision shall be severed
and the remainder of the Agreement shall continue in full force and effect.
To the extent possible, the parties shall revise such invalidated provision
in a manner that will render such provision valid without impairing the
parties' original intent.

         15.7 AFFILIATES; ASSIGNMENT. Except as otherwise provided herein,
neither party may assign its rights or delegate its duties under this
Agreement without the prior written consent of

                                       30
<PAGE>

the other party, not to be unreasonably withheld. Notwithstanding the
foregoing, each party may assign this Agreement to any of its Affiliates, to
a special purpose corporation or similar entity at least fifty percent (50%)
of the outstanding shares of any class or series of stock of which is owned
by such party in a manner such that the assignor will remain liable and
responsible for the performance and observance of all its duties and
obligations hereunder without the consent of the other party. In addition,
the consent of the other party will not be required in connection with a
merger involving either party or with respect to an assignment of this
Agreement in connection with, as the case may be, the acquisition, sale of
all or substantially all of the assets of either party, or a change of
control or similar transaction. This Agreement shall be binding upon the
successors and permitted assigns of the parties. Any attempted delegation or
assignment not in accordance with this Section 15.7 shall be of no force or
effect. Notwithstanding the foregoing provisions of this Section 15.7, or any
other provision of this Agreement, ACADIA may not assign or otherwise
transfer its rights hereunder, whether by merger, acquisition, sale of
assets, operation of law or otherwise, to Alcon, Bausch & Lomb, Ciba Vision
or Santen.

         15.8 HEADINGS. The headings contained in this Agreement are inserted
for reference only and shall not be deemed a part of the text hereof.

         15.9 LIMITATION OF LIABILITY. NO PARTY SHALL BE LIABLE TO ANOTHER
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES,
INCLUDING BUT NOT LIMITED TO LOST PROFITS, ARISING FROM OR RELATING TO ANY
BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH
DAMAGES. Nothing in this Section is intended to limit or restrict the
indemnification rights or obligations of any party.

         15.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

         15.11 BANKRUPTCY. All rights and licenses granted under this
Agreement will be considered for purposes of Section 365(n) of the Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section
101(56) of the Bankruptcy Code. The parties agree that a licensee of such
rights under this Agreement will retain and may fully exercise all of its
rights and elections under the Bankruptcy Code. In the event that a licensor
seeks or is involuntarily placed under the protection of the Bankruptcy Code,
and the trustee in bankruptcy rejects this Agreement, the licensee hereby
elects, pursuant to Section 365(n), to retain all rights granted to it under
this Agreement to the extent permitted by law.

                                       31

<PAGE>

         15.12 PUBLIC DISCLOSURE. Except for such disclosure as is deemed
necessary, in the reasonable judgment of a party, to comply with applicable
laws or regulations, no public announcement, news release, public statement
or publication relating to the existence of this Agreement, or the terms
hereof, will be made without the other party's prior written approval, which
approval shall not be unreasonably withheld. The parties agree that they will
use reasonable efforts to coordinate the initial announcement or press
release relating to the existence of this Agreement in the form attached as
Exhibit E, so that such initial announcement or press release by each is made
contemporaneously.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.

                 ACADIA PHARMACEUTICALS INC.

                 By /s/ Leonard R. Borrmann
                    -----------------------------------------------------------
                                  Leonard R. Borrmann, Pharm.D.,
                                      Chief Executive Officer

                 ALLERGAN, INC.

                 By /s/ George Panglay
                    -----------------------------------------------------------

                 Title  Corporate Vice President, Corporate Development
                       --------------------------------------------------------

                 ALLERGAN PHARMACEUTICALS (IRELAND) LIMITED, INC.

                 BY /s/ Jaqueline Schuca
                 --------------------------------------------------------------

                 Title  Vice President
                       --------------------------------------------------------

                 ALLERGAN SALES, INC.

                 By /s/ George Panglay
                    -----------------------------------------------------------

                 Title  Vice President
                       --------------------------------------------------------

                                       32

<PAGE>

                                    EXHIBIT A

               DEFINITION OF PROOF OF CONCEPT IN GLAUCOMA PATIENTS

                                       A-1

<PAGE>

                      PROOF OF CONCEPT IN GLAUCOMA PATIENTS

Proof of Concept in Glaucoma Patients shall be considered met if [***]:

[***]
                                       A-2

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                    EXHIBIT B

                                  RESEARCH PLAN

                                       B-1

<PAGE>

[***]

                                       B-2

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

[***]

                                       B-3

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                               EXHIBIT C

                                            ACADIA PATENTS

[***]

                                                   C-1

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                    EXHIBIT D

                      FORM OF MATERIALS TRANSFER AGREEMENT

                                       D-1

<PAGE>

                          MATERIALS TRANSFER AGREEMENT

         This Agreement is made as of ___________, 199_, by and between
ACADIA PHARMACEUTICALS INC., a Delaware corporation (ACADIA) and ALLERGAN,
INC., a Delaware corporation ("Allergan").

         [ACADIA/Allergan] (hereinafter, the Recipient") desires to receive
the materials described on Exhibit A attached hereto (the "Materials") from
[Allergan/ACADIA] (hereinafter, the "Provider") for the purpose of performing
certain studies pursuant to the Collaborative Research Development and
License Agreement by and between ACADIA and Allergan dated July _, 1999 (the
"Research Agreement") as described in detail in Exhibit B to the Research
Agreement (the "Project').

         The Recipient and the Provider hereby agree as follows:

1. USE OF MATERIALS.

         The Recipient will utilize its expertise and facilities to undertake
the Project and will use the Materials solely for the Project. The Recipient
shall not sell, transfer, disclose or otherwise provide access to the
Materials, any method or process relating thereto or any material that could
not have been made but for foregoing to any person or entity without the
prior written consent of the Provider, except that the Recipient may allow
access to the Materials to its employees or agents or permitted
subcontractors for purposes consistent with this Agreement. The Recipient
will take reasonable steps to ensure that such employees and agents or
permitted subcontractors will use the materials in a manner that is
consistent with the terms of this Agreement. The Recipient will destroy the
Materials or otherwise dispose of the Materials as mutually agreed by the
Provider and the Recipient upon expiration or termination of this Agreement.

2. PRECAUTIONS.

         The Recipient understands that the Materials may have unpredictable
and unknown biological and/or chemical properties, that they are to be used
with caution, and that they are not to be used for testing in or treatment of
humans. The Recipient will use the Materials in compliance with all
applicable laws and regulation, including those applicable to research
involving recombinant DNA and isotopes.

3. INTELLECTUAL PROPERTY.

         In performing the Projects, the Recipient may develop ideas,
inventions, techniques and other technology and associated intellectual
property (collectively "Inventions"). The parties agree that ownership of all
Inventions, including without limitation Inventions relating to the
Materials, their preparation or use, shall be governed by the provisions of
the Research Agreement relating to ownership of intellectual property.

                                       D-2

<PAGE>

4. REPORTS AND PUBLICATIONS.

         The Recipient shall keep accurate records of the results of the
Project and will promptly and fully disclose to the Provider such results in
such manner and at such time as determined by the Research Management
Committee under the Research Agreement. Publication of the Projects results
shall be governed by the provisions of the Research Agreement relating to
publication.

5. CONFIDENTIALITY.

         The parties agree that the terms of the Research Agreement relating
to Confidential Information shall apply to all information that one party
receives from the other party pursuant to this Agreement.

6. NO LICENSE.

         Nothing in this Agreement shall be construed as conferring on either
party any implied license or implied option to license any disclosed
Confidential Information, technology, or any patent or patent application
owned by the other party.

7. WARRANTY DISCLAIMER.

         THE MATERIALS ARE SUPPLIED TO THE RECIPIENT WITH NO WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR THAT THEY ARE FREE FROM THE RIGHTFUL
CLAIM OR ANY THIRD PARTY BY WAY OF INFRINGEMENT OR THE LIKE.

8. TERM AND TERMINATION.

         This Agreement will be effective as of the date first written above
and will continue until the Research Agreement terminates. The parties may
terminate this Agreement prior to such time or extend the term of this
Agreement by mutual written agreement as provided herein. Either party will
have the right to terminate this Agreement on [***] written notice for
material breach of this Agreement, which breach is not cured within such [***]
 period. Promptly upon any termination, the Recipient will deliver to the
Provider any remaining Materials, and any modifications, replications or
derivatives thereof and copies of all results of the Projects. Section 3, 4,
5, 6, 7 and 8 will survive the termination or expiration of this Agreement.

9. ENTIRE AGREEMENT, GOVERNING LAW.

         This Agreement sets forth complete and final agreements of the
parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, written or oral, between the parties
hereto which relate to the subject matter of this Agreement, other than the
Research Agreement. This Agreement may be amended only by a writing signed by
the parties. This Agreement shall be governed by the laws of the State of
California without regard to choice of law provisions.

                                       D-3

                                              *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         IN WITNESS WHEREOF, the parties have by duly authorized persons,
executed this Agreement as of the date first above written.

<TABLE>
<CAPTION>

ALLERGAN, INC.                         ACADIA PHARMACEUTICALS INC.
<S>                                    <C>
By:                                    By:
    ------------------------------         ------------------------------

Title:                                 Title:
       ---------------------------             --------------------------

</TABLE>

                                       D-4

<PAGE>

                                    EXHIBIT E

                              FORM OF PRESS RELEASE

                                       E-1

<PAGE>

FOR IMMEDIATE RELEASE             CONTACTS: ACADIA PHARMACEUTICALS
                                            THOMAS H. AASEN, VP AND CFO
                                            (619) 320-8640
                                            LEONARD R. BORRMANN, PHARM.D., CEO
                                            (619) 320-8614

                                            ALLERGAN INVESTOR RELATIONS
                                            VINCE SCULLIN, (714) 246-4636
                                            ALLERGAN MEDIA RELATIONS
                                            IRA HASKELL, (714) 246-4515

                ACADIA OUT-LICENSES NOVEL LEAD COMPOUNDS FOR
                     TREATMENT OF GLAUCOMA TO ALLERGAN

(SAN DIEGO, CALIFORNIA, COPENHAGEN, DENMARK AND IRVINE, CALIFORNIA JULY 27,
1999)--ACADIA Pharmaceuticals and Allergan (NYSE: AGN) announced today that
they have entered into a license and research collaboration agreement to
discover, develop and commercialize compounds for glaucoma, based on ACADIA's
proprietary and highly receptor subtype-selective muscarinic lead compounds.

Under the terms of the agreement, ACADIA will grant Allergan worldwide rights
to products based on these novel lead compounds for the treatment of ocular
disease. ACADIA will provide its expertise in medicinal chemistry and
high-throughput pharmacology to enable the final selection of up to two
development candidates for clinical development and commercialization by
Allergan. In exchange, ACADIA may receive up to nearly $19 million for the
first development candidate, in the form of up-front fees, research support,
and traditional milestone payments. ACADIA will also receive substantial
royalties on future product sales worldwide. Pursuant to the agreement,
Allergan also has the right to select a second development candidate, subject
to similar milestone and royalty payments to ACADIA.

<PAGE>

Discovered in one of ACADIA's internal drug discovery programs, these new
lead compounds are highly selective for a specific subtype of the muscarinic
receptor. Compounds with unprecedented receptor subtype selectivity were
initially identified from ACADIA's diverse chemical library using the
Company's patented Receptor Selection and Amplification Technology
(R-SAT-TM-). ACADIA scientists have synthesized numerous analogs and
performed precise pharmacological analysis using R-SAT-TM- to derive a
detailed Structure-Activity Relationship for this family of molecules.
Through these efforts, ACADIA has successfully discovered molecules that
selectively target the subtype of the muscarinic receptor responsible for the
lowering of intraocular pressure, while avoiding interaction with other
receptor subtypes believed to cause side effects commonly associated with
certain existing glaucoma therapies. In animal models of glaucoma, Allergan
has shown that ACADIA's initial chemical lead produces a sustainable
reduction of intraocular pressure, when applied topically, without the dose
limiting side effects of these traditional anti-glaucoma therapies.

"ACADIA's lead compounds provide the potential for an important new
breakthrough in glaucoma therapy," said David Pyott, Allergan's President and
Chief Executive Officer. "This latest collaboration between Allergan and
ACADIA is consistent with Allergan's objective to continue to expand our
growing glaucoma franchise through the discovery and development of new and
complimentary therapeutic approaches to the disorder that have the potential
to significantly improve patient care."

In addition to this new license and collaboration agreement concerning
ACADIA's muscarinic compounds, ACADIA and Allergan have another pre-existing
collaboration directed at the discovery of other therapeutics for ocular
disease. In November 1998, just one year into that collaboration, Allergan
nominated a subtype-selective alpha-adrenergic agonist as a clinical
candidate for glaucoma. Alpha-adrenergic agents lower introcular pressure,
in part, by decreasing inflow of ocular fluid, while ACADIA's new
receptor-selective muscarinic lead compounds are designed to increase the
outflow of fluid from the eye. Both inflow and outflow agents are used as
initial therapy and in combination to lower intraocular pressure associated
with glaucoma.

<PAGE>

"Given the outstanding success of our existing discovery collaboration with
Allergan, they were the obvious preferred partner for our internal glaucoma
program," added Leonard R. Borrmann, Pharm.D., ACADIA's Chief Executive
Officer. "The successful discovery of our second clinical lead compound in
less than one year further validates ACADIA's unique ability to rapidly
identify novel receptor-selective compounds with the potential for improved
clinical utility over existing therapies."

Forward Looking Statements
Any of the above statements that refer to Allergan's estimated or anticipated
future results are forward-looking and reflect Allergan's current analysis of
existing trends and information. Actual results may differ based on a number
of factors including timing and uncertainty of the results of both research
and regulatory processes and including the research, development, regulatory
approval, introduction and consumer acceptance of new products. The reader is
cautioned not to rely on these forward-looking statements. Allergan
disclaims any intent or obligation to update these statements. Additional
information concerning these factors can be found in press releases as well
as in Allergan's public periodic filings with the Securities and Exchange
Commission, including the discussion under the heading "Certain Factors and
Trends Affecting Business" in Allergan's 1998 Form 10-K. Copies of Allergan
press releases and additional information about Allergan are available on the
World Wide Web at WWW.ALLERGAN.COM, or you can contact the Allergan Investor
Relations Department by calling 714-246-4636.

ACADIA is a privately held drug discovery company focused on the
identification of novel lead compounds for the treatment of Central Nervous
System disorders. ACADIA uses its integrated discovery platform to identify
and validate the molecular targets relevant to a disease and to discover
highly selective compounds that specifically regulate these targets. ACADIA
has a portfolio of internal drug discovery programs and is commercializing
this pipeline through licensing and discovery collaborations with
pharmaceutical partners. The Company's corporate headquarters and biological
research are located in San Diego, California; chemistry research facilities
are located in Copenhagen, Denmark. Additional information can be found on the
Company's website at WWW.ACADIA-PHARM.COM.

<PAGE>

Allergan, headquartered in Irvine, California, is a technology-driven, global
healthcare company, providing eye care and specialty pharmaceutical products
worldwide. Allergan develops and commercializes products in the eye care
pharmaceutical, ophthalmic surgical device, over-the-counter contact lens
care, movement disorder and dermatological markets that deliver value to our
customers, satisfy unmet medical needs and improve patients' lives.<PAGE>

                                             Confidential Treatment Requested
                                          Under 17 C.F.R. Sections 200.80(b)(4),
                                                     200.83 and 230.406

                   COMPOUND DISCOVERY COLLABORATION AGREEMENT

         This Research Collaboration and License Agreement (this "AGREEMENT") is
entered into as of December 18, 2000 (the "EFFECTIVE DATE") by and between
ArQule, Inc. ("ArQule"), a Delaware corporation, and ACADIA Pharmaceuticals,
Inc. ("ACADIA"), a Delaware corporation.

                                    RECITALS

         WHEREAS, ArQule and ACADIA previously entered into a Material Transfer
and Screening Agreement dated April 7, 1998 (the "MTA") pursuant to which ArQule
delivered certain of its Mapping Array-TM- compounds to ACADIA, and ACADIA
screened those compounds against certain of its targets;

         WHEREAS, ACADIA detected activity of certain ArQule compounds against
certain ACADIA targets; and

         WHEREAS, pursuant to the terms of the MTA, ArQule and ACADIA have
negotiated this Agreement to expand their joint research activities and to
pursue further development of the active compounds discovered by ACADIA.

         NOW, THEREFORE, ArQule and ACADIA hereby agree as follows:

1.       DEFINITIONS.

         1.1 "ACADIA TARGET" means each biological target nominated by ACADIA,
accepted by ArQule, and selected by the Research Committee for use in the
Collaboration, as further described in Subsection 3.3.1. below.

         1.2 "ACTIVE COMPOUND" means any ArQule Compound, Targeted Compound, or
Analog Compound which exhibits confirmed significant functional activity against
an ACADIA Target in a primary screen, as determined by the Research Committee.

         1.3 "AFFILIATE" means any legal entity (such as a corporation,
partnership, or limited liability company) that is controlled by a party. For
the purposes of this definition, the term "control" means (i) beneficial
ownership of at least fifty percent (50%) of the voting securities of a
corporation or other business organization with voting securities or (ii) a
fifty percent (50%) or greater interest in the net assets or profits of a
partnership or other business organization without voting securities.

         1.4 "ANALOG COMPOUND" means a chemical compound that (i) exhibits
[***] to an identified Active Compound or Targeted Compound, (ii) was
discovered or developed using information obtained by screening one or more
Active Compounds or Targeted Compounds, or (iii) was [***] from a parent
ArQule Compound or Targeted Compound by [***]

                                             * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[***].

         1.5 "ARQULE COMPOUND" means a small organic chemical molecule in a
Mapping Array Set, Compass Array Set, or Biased Array Set (as described in the
Collaboration Plan) and provided by ArQule to ACADIA as directed by the Research
Committee under this Agreement or previously provided to ACADIA under the MTA.

         1.6 "AVAILABLE COMPOUND" means an ArQule Compound or Analog Compound
that is neither: (i) licensed or otherwise committed by ArQule or ACADIA to a
third party in the Field nor (ii) committed to an internal ArQule or ACADIA
program in the Field. In addition, all Targeted Compounds are Available
Compounds. "AVAILABLE ACTIVE COMPOUND" means an Active Compound that is also an
Available Compound.

         1.7 "AVAILABLE TARGET" means an ACADIA Target that is neither: (i)
licensed or otherwise committed by ACADIA or ArQule to a third party in the
Field nor (ii) committed to an internal ACADIA or ArQule program in the Field.

         1.8 "COLLABORATION" means the activities of ACADIA and ArQule carried
out in performance of, and the relationship, rights and obligations of the
parties established by, Articles 2 and 3 of this Agreement.

         1.9 "COLLABORATION PLAN" means the overall plan for research and
development activities for typical projects in the Collaboration, as set forth
on EXHIBIT A. The Steering Committee may modify the Collaboration Plan as needed
to advance the goals of the Collaboration.

         1.10 "COLLABORATION PRODUCT" means any product containing as one of its
constituents any Committed Compound or any Analog Compound based on a Committed
Compound.

         1.11 "COLLABORATION WORK PRODUCT" means, individually or collectively,
(i) any Committed Target or Committed Target Set and its corresponding Committed
Compounds or Committed Compound Set(s), GLP Toxicology Candidate, or IND
Candidate, as well as all Technology pertaining to any of the foregoing or the
manufacture, use or sale thereof, and (ii) all libraries of Targeted Compounds.

         1.12 "COMMERCIALIZATION PLAN" means a plan developed and approved by
the Steering Committee for the sale, license, or other transfer of commercial
rights in Collaboration Work Product to a third party, as described in Section
3.7.

         1.13 "COMMITTED COMPOUND" means (i) any Available Active Compound
designated by the Research Committee as a Committed Compound pursuant to
Subsection 3.4.2. and (ii) any Analog Compound developed by the parties in the
course of an optimization program as described in Section 3.5., provided that
such Analog Compound is an Available Compound as required under Section 3.5.

                                       2.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         1.14 "COMMITTED COMPOUND SET" means a set of Committed Compounds
that [***] as determined by the Research Committee.

         1.15 "COMMITTED TARGET" means any Available Target designated by the
Research Committee as a Committed Target pursuant to Subsection 3.4.2.

         1.16 "COMMITTED TARGET SET" means a set of Committed Targets that are
so closely related that the Research Committee has decided to group those
Committed Targets into one optimization program under Section 3.5. or allocation
under Subsection 9.6.2.

         1.17 "CONFIDENTIAL INFORMATION" means any technical or business
information furnished by one party (the "DISCLOSING PARTY") to the other party
(the "RECEIVING PARTY") in connection with this Agreement. Such Confidential
Information may include, without limitation, the identity or use of a chemical
compound, the identity or use of a biological target, trade secrets, know-how,
inventions, technical data or specifications, testing methods, business or
financial information, research and development activities, Steering Committee
reports, Research Committee reports, royalty reports, product and marketing
plans, clinical development plans, and customer and supplier information.

         1.18 "FIELD" means applications in [***].

         1.19 "GLP TOXICOLOGY CANDIDATE" means a Committed Compound that meets
or exceeds the criteria established by the Research Committee for a compound
that is ready for submission to IND enabling toxicology studies, as documented
in the Research Plan.

         1.20 "GROSS REVENUES" means the aggregate amount of consideration
received from a third party by either party in connection with an agreement to
commercialize any Collaboration Work Product, including without limitation
license fees, milestone payments, royalties, and the premium portion of equity
payments at a premium to fair market value, but excluding funds specifically
allocated to and actually used for the research and development of Collaboration
Work Product. Gross Revenues shall be calculated without deduction of any costs,
fees, or expenses (e.g., legal fees or finders fees) paid by a party in
connection with the transaction. To the extent that any Gross Revenues are
transferred to a party in a form other than cash, the amount of such Gross
Revenues payable to the other party shall be based on the fair market value of
such non-monetary consideration on the date of transfer, as determined in good
faith by the parties.

         1.21 "IND" means an investigational new drug application filed with the
FDA prior to beginning clinical trials in humans or any comparable application
filed with the regulatory authorities of a country other than the United States,
prior to beginning clinical trials in humans in that country.

         1.22 "IND CANDIDATE" means a Committed Compound that meets or exceeds
the criteria established by the Research Committee for a compound that is ready
for human clinical trials, including data sufficient to support the filing of an
IND, as documented in the Research Plan.

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         1.23 "PATENT RIGHTS" means any United States patent application and any
divisional, substitution, continuation, or continuation-in-part of such patent
application (to the extent the claims are directed to subject matter
specifically described therein) or inventor's certificate relating to such
patent application, as well as any patent issued thereon and any reissue,
reexamination, renewal, extension or term restoration of such patent, and any
foreign counterparts to such patents and patent applications. "ARQULE PATENT
RIGHTS" means Patent Rights that are either (i) assigned solely to ArQule, (ii)
assigned jointly to ArQule and a party other than ACADIA, or (iii) licensed to
ArQule, in each case to the extent that ArQule has the ability to license or
sublicense the rights required under this Agreement without payment to a third
party. "ACADIA PATENT RIGHTS" means Patent Rights that are either (i) assigned
solely to ACADIA, (ii) assigned jointly to ACADIA and a party other than ArQule,
or (iii) licensed to ACADIA, in each case to the extent that ACADIA has the
ability to license or sublicense the rights required under this Agreement
without payment to a third party. "JOINT PATENT RIGHTS" means Patent Rights (i)
in Committed Compounds and their use against Committed Targets; (ii) in Targeted
Compounds and their uses; or (iii) that are assigned to both ArQule and ACADIA
as joint owners or are otherwise jointly invented by one or more employees or
consultants of ACADIA and one or more employees or consultants of ArQule in
connection with the Collaboration.

         1.24 "RESEARCH COMMITTEE" means the Research Committee described in
Section 2.1. The Research Committee manages and directs the research and
development activities in the Collaboration.

         1.25 "RESEARCH MATERIALS" means any tangible research materials,
whether biological, chemical, physical, or otherwise. "PROPRIETARY RESEARCH
MATERIALS" means any Research Materials that a party designates as proprietary
or confidential, including without limitation (a) all ArQule Compounds, and (b)
all expressed proteins for ACADIA Targets provided by ACADIA in the
Collaboration.

         1.26 "RESEARCH PLAN" means the specific, detailed plan for research and
development activities in the Collaboration that is developed by the Research
Committee and approved by the Steering Committee. The parties anticipate that
they will update the Research Plan on at least a quarterly basis.

         1.27 "RESERVED COMPOUND" means an Available Compound that has been
reserved by the parties for the Collaboration as described in Subsection 3.4.1.

         1.28 "RESERVED COMPOUND SET" means a set of Reserved Compounds that
share substantial chemical or structure homology, and which exhibit significant
functional activity for the same Reserved Target, or which share other common
characteristics such that the Research Committee has decided, in its discretion,
to group those Reserved Compounds for evaluation under Section 3.4. or for
allocation under Subsection 9.6.2.

         1.29 "RESERVED TARGET" means an Available Target that has been reserved
by the parties for the Collaboration as described in Subsection 3.4.1.

                                       4.
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         1.30 "RESERVED TARGET SET" means a set of Reserved Targets that are so
closely related that the Research Committee has decided, in its discretion, to
group those Reserved Targets for evaluation under Section 3.4. or allocation
under Subsection 9.6.2.

         1.31 "STEERING COMMITTEE" means the Steering Committee described in
Section 2.2. of this Agreement. The Steering Committee has overall authority
within the Collaboration, and specifically has approval authority over financial
decisions.

         1.32 "TARGETED COMPOUND" means a compound in a library focused on a
target class, which library is developed jointly by the parties within the
Collaboration, as more particularly described in the Collaboration Plan and
Research Plan.

         1.33 "TECHNOLOGY" means any proprietary development, idea, design,
concept, technique, process, invention, Research Material, discovery, or
improvement, whether or not patentable or copyrightable. "ARQULE TECHNOLOGY"
means Technology that is either (i) assigned solely to ArQule, (ii) assigned
jointly to ArQule and a party other than ACADIA, or (iii) licensed to ArQule, in
each case to the extent that ArQule has the ability to license or sublicense the
rights required under this Agreement without payment to a third party. "ACADIA
TECHNOLOGY" means Technology that is either (i) assigned solely to ACADIA, (ii)
assigned jointly to ACADIA and a party other than ArQule, or (iii) licensed to
ACADIA, in each case to the extent that ACADIA has the ability to license or
sublicense the rights required under this Agreement without payment to a third
party. "COLLABORATION TECHNOLOGY" means (i) all Committed Compounds and their
use against Committed Targets, (ii) all Targeted Compounds and their uses, and
(iii) any Technology that is developed, invented, or discovered jointly by one
or more employees or consultants of ACADIA and one or more employees or
consultants of ArQule in connection with the Collaboration.

2.       MANAGEMENT OF COLLABORATION.

         2.1 RESEARCH COMMITTEE.

             2.1.1 CREATION OF RESEARCH COMMITTEE. The parties hereby create
a Research Committee with at least four (4) members, with equal
representation from each party. The members initially designated by ACADIA
are [***] and [***], and the members initially designated by ArQule are [***]
and [***]. Either party may change its representatives on the Research
Committee at any time upon written notice to the other party. The chairperson
of the Research Committee shall be designated annually on an alternating
basis between the parties. The chairperson shall initially be [***]. The
party not designating the chairperson shall designate one of its
representatives as secretary to the Research Committee for such [***].

             2.1.2 MEETINGS OF THE RESEARCH COMMITTEE. Regular meetings of
the Research Committee shall be held within [***] of the end of each calendar
quarter, or at such other times as the parties may deem appropriate, at such
times and places as the members of the Research Committee shall from time to
time agree. Special meetings of the Research Committee may be called by
either party on [***] written notice to the other party unless notice is
waived by the parties. All meetings shall alternate between the offices of
the parties

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unless the parties otherwise agree. The chairperson shall be responsible for
sending notice of meetings to all members. In the event a Research Committee
member is unable to attend a meeting of the Research Committee, such Research
Committee member may designate an alternate member who will serve solely for
that Research Committee meeting.

             2.1.3 DECISIONS OF RESEARCH COMMITTEE. A quorum of the Research
Committee shall be present at any meeting of the Research Committee if at least
one representative of each party is present at such meeting in person or by
telephone. If a quorum exists at any meeting, the unanimous consent of all
members of the Research Committee present at such meeting is required to take
any action on behalf of the Research Committee.

             2.1.4 RESPONSIBILITIES OF RESEARCH COMMITTEE. The Research
Committee shall be responsible for the day-to-day conduct and progress of the
Collaboration, including without limitation:

                   (i) preparing, approving, and updating the Research Plan and
the annual budget;

                   (ii) managing all technical aspects of the Collaboration,
including all research and development activities;

                   (iii) providing a forum for the exchange of scientific
information among the scientists participating in the Collaboration;

                   (iv) resolving matters involving scientific questions;

                   (v) determining the criteria of significant functional
activity necessary for an ArQule Compound, Targeted Compound, or Analog Compound
to qualify as an Active Compound and confirming that an ArQule Compound,
Targeted Compound, or Analog Compound qualifies as an Active Compound;

                   (vi) maintaining records of Reserved Compounds and Reserved
Targets and establishing Reserved Compound Sets and Reserved Target Sets;

                   (vii) designating Available Active Compounds as Committed
Compounds, establishing Committed Compound Sets, and adding and removing
compounds from Committed Compound Sets; and

                   (viii) designating Available Targets as Committed Targets,
establishing Committed Target Sets, and adding and removing targets from
Committed Target Sets.

             2.1.5 RESEARCH COMMITTEE REPORTS. Within [***] following each
meeting of the Research Committee held pursuant to Subsection 2.1.2., the
secretary of the Research Committee shall prepare and send to each party a
written report of actions taken at the meeting in such form and containing
such detail as shall be determined by the Research Committee.

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             2.1.6 DEADLOCK. In the event that the Research Committee cannot
reach agreement with respect to any matter that is subject to its
decision-making authority, then the matter shall be referred to the Steering
Committee for resolution.

         2.2 STEERING COMMITTEE.

             2.2.1 CREATION OF STEERING COMMITTEE. The parties hereby also
create a Steering Committee with at least six (6) members, with equal
representation from each party. The members initially designated by ACADIA
are [***]. The members initially designated by ArQule are [***]. Either party
may change its representatives on the Steering Committee at any time upon
written notice to the other party. The chairperson of the Steering Committee
shall be designated annually on an alternating basis between the parties. The
initial chairperson of the Steering Committee shall be [***]. The party not
designating the chairperson shall designate one of its representatives as
secretary of the Steering Committee for such [***].

             2.2.2 MEETINGS OF THE STEERING COMMITTEE. Regular meetings of
the Steering Committee shall be held within [***] of the end of each calendar
year, or at such other times as the parties may deem appropriate, at such
times and places as the members of the Steering Committee shall from time to
time agree. Special meetings of the Steering Committee may be called by
either party on [***] written notice to the other party unless notice is
waived by the parties. All meetings shall alternate between the offices of
the parties unless the parties otherwise agree. In the event a Steering
Committee member is unable to attend a meeting of the Steering Committee,
such Steering Committee member may designate an alternate member who will
serve solely for that Steering Committee meeting.

             2.2.3 DECISIONS OF THE STEERING COMMITTEE. Unless otherwise
specifically designated as a responsibility of the Research Committee pursuant
to Subsection 2.1.4., all decisions regarding the contractual and financial
relationship created by this Agreement shall be made by the Steering Committee
acting in accordance with this Agreement or by agents duly authorized in writing
by the Steering Committee. A quorum of the Steering Committee shall be present
at any meeting of the Steering Committee if at least one representative of each
party is present at such meeting in person or by telephone. If a quorum exists
at any meeting, the unanimous consent of all members of the Steering Committee
present at such meeting is required to take any action on behalf of the Steering
Committee.

             2.2.4 RESPONSIBILITY OF STEERING COMMITTEE. The Steering Committee
shall be responsible for approving long-term objectives for, and evaluating the
progress of, the Collaboration, including without limitation:

                   (i) approving all updates to the Research Plan and any
changes to the Collaboration Plan;

                   (ii) approving the annual budget for the Collaboration;

                   (iii) reviewing and approving involvement of third parties in
the Collaboration;

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                   (iv) developing Commercialization Plans and managing
commercialization of Collaboration Work Product;

                   (v) resolving deadlocks of the Research Committee; and

                   (vi) determining the number of members for both the Research
Committee and Steering Committee, beyond the minimum of four members.

             2.2.5 STEERING COMMITTEE REPORTS. Within ten (10) days following
each meeting of the Steering Committee held pursuant to Subsection 2.2.2., the
secretary of the Steering Committee shall prepare and send to the members of the
Steering Committee a detailed written report of actions taken at the meeting in
such form and containing such detail as shall be determined by the Steering
Committee.

             2.2.6 DEADLOCK. In the event that the Steering Committee declares a
deadlock with respect to, or fails to reach agreement within sixty (60) days as
to, any matter relating only to specific activities under the Collaboration
(such as designation of Active Available Compounds as Committed Compounds;
designation of ACADIA Targets as Committed Targets; the initiation or conduct of
lead optimization or preclinical development activities; approval of the annual
budget or changes to the Research Plan; or approval of a Commercialization Plan)
the matter shall not be subject to dispute resolution under Article 10, but
shall be referred to the Chief Executive Officers of each party for resolution
within sixty (60) days after the date the deadlock is reached, subject to
extension by mutual agreement. If the Chief Executive Officers fail to resolve
the matter within the sixty-day period, or such other period that the parties
mutually establish, the Agreement will terminate pursuant to Section 9.3. Any
other unresolved disagreements within the Steering Committee and relating to
this Agreement shall be referred to dispute resolution in accordance with the
procedures set forth in Article 10.

3.       CONDUCT OF COLLABORATION

         3.1 SCOPE OF COLLABORATION. During the Collaboration, the parties will
(i) perform lead generation activities using ArQule Compounds and multiple
ACADIA Targets to identify Active Compounds, (ii) perform lead qualification
activities on Reserved Compounds and Reserved Targets to select Committed
Compounds and Committed Targets for lead optimization efforts, (iii) perform
lead optimization activities on Committed Compound Sets to develop one or more
GLP Toxicology Candidates, and (iv) if appropriate, conduct work on one or more
GLP Toxicology Candidates to develop IND Candidates, in each case as further
described below. The parties may also develop libraries of Targeted Compounds
that are focused on a particular target class, and then use the Targeted
Compounds for lead generation, as described below. The overall objective of the
Collaboration is to discover and develop compounds that demonstrate potential as
human therapeutic products, and to sell, license, or otherwise transfer
commercial rights to those compounds to third parties.

         3.2 GENERAL RESPONSIBILITIES OF EACH PARTY. In general, the parties
intend that ACADIA will be responsible for biology-related tasks relating to the
ACADIA Targets and ArQule will be responsible for chemistry-related tasks
relating to the ArQule Compounds, but only until identification of a GLP
Toxicology Candidate. If the parties decide to develop a GLP

                                       8.
<PAGE>

Toxicology Candidate into an IND Candidate, they will share responsibility for
the necessary preclinical activities through the Research Committee and Steering
Committee. This allocation of responsibilities reflects the expected
contributions from each party. However, the Research Committee has discretion to
allocate specific research and development tasks on a case-by-case basis to the
party that has the best current capability and capacity to complete the task and
advance the project. The actual responsibilities of each party will be
determined by the Research Committee and Steering Committee and described in the
Collaboration Plan or Research Plan.

         3.3 LEAD GENERATION.

             3.3.1 TARGET SELECTION. The Research Committee will select which
ACADIA Targets to screen in the Collaboration from among those nominated by
ACADIA and accepted by ArQule. ACADIA will only nominate Available Targets for
ACADIA. ArQule will decline to accept any ACADIA Targets that are not Available
Targets for ArQule. The initial ACADIA Targets selected by the Research
Committee are set forth in the initial Research Plan. After the Research
Committee selects an ACADIA Target, ACADIA and ArQule agree to notify the
Research Committee as soon as possible before taking any actions which could
remove the status of that ACADIA Target as an Available Target. In such event,
the Research Committee will immediately remove that ACADIA Target from the
Collaboration.

             3.3.2 COMPOUND SELECTION. The Research Committee will decide which
libraries of ArQule Compounds to screen in the Collaboration (e.g., Compass
Array Sets, Biased Array Sets, or Mapping Array Sets, as described in the
Collaboration Plan). The Research Committee may also decide to screen Targeted
Compounds in focused libraries developed by the parties for a target class, if
any, as described in the Collaboration Plan. The Research Committee may also
decide to screen Analog Compounds developed by the parties for a different
ACADIA Target.

             3.3.3 PROCEDURES FOR ARQULE COMPOUNDS. The parties will screen
ArQule Compounds against ACADIA Targets as directed by the Research Committee
and described in the Collaboration Plan and Research Plan. Initially, ArQule
will not disclose structures of individual ArQule Compounds. ArQule will
disclose to ACADIA the structures of Active Compounds that are Available
Compounds for ArQule. ACADIA will then determine whether those Active Compounds
are Available Compounds for ACADIA. If an Active Compound is an Available
Compound for both parties, each party will preserve the availability of the
Active Compound and the corresponding ACADIA Target and proceed to confirm
activity as described in Section 3.4. and in the Collaboration Plan. In
contrast, if a party determines that an Active Compound is not an Available
Compound for such party, the parties shall immediately cease all information
disclosure and activities under this Agreement with respect to that Active
Compound; however, the parties shall use reasonable efforts to monitor whether
that Active Compound later becomes an Available Compound and, in such event,
shall notify the other party and then proceed in accordance with Section 3.4.
Any information regarding the activity of these Active Compounds that are not
Available Compounds for the ACADIA Targets shall remain subject to the
restrictions on Confidential Information set forth in Article 7.

             3.3.4 PROCEDURES FOR TARGETED COMPOUNDS. If the parties develop or
one or more focused compound libraries of Targeted Compounds for a target class,
as described in the

                                       9.
<PAGE>

Collaboration Plan, the parties will screen those Targeted Compounds against
ACADIA Targets as directed by the Research Committee and described in the
Collaboration Plan and Research Plan. Both parties shall have access to the
structures of all Targeted Compounds and shall maintain Targeted Compounds as
Available Compounds during the Collaboration. Therefore, unlike the procedures
for ArQule Compounds, a determination of availability is unnecessary.

         3.4 LEAD QUALIFICATION.

             3.4.1 SELECTION OF RESERVED COMPOUNDS AND RESERVED TARGETS. The
parties expect to discover multiple series of Available Active Compounds with
activity for multiple ACADIA Targets in the course of screening under the
Research Plan. The Research Committee will group the various ACADIA Targets
in multiple batches for screening. After each batch of ACADIA Targets is
screened, the Research Committee will review the various combinations of
Available Active Compounds and ACADIA Targets for which activity was detected
and decide which Available Active Compounds and ACADIA Targets from that
batch of screening, if any, should progress to further qualification in
secondary screens and ADMET assays as described in the Collaboration Plan and
Research Plan. For those Available Active Compounds and ACADIA Targets that
the Research Committee decides to pursue, the parties will designate the
Available Active Compounds as Reserved Compounds and the ACADIA Targets as
Reserved Targets under this Agreement and reserve those compounds and targets
exclusively for the Collaboration for a period of [***], subject to extension
by the Research Committee, while secondary screens and ADMET assays are
conducted. The Research Committee may also group Reserved Compounds as a
Reserved Compound Set and Reserved Targets as a Reserved Target Set. All
remaining Available Active Compounds and ACADIA Targets that the Research
Committee has declined to advance to secondary screening shall automatically
be released from their reserved status; however, any information regarding
the activity of these Available Compounds for the ACADIA Targets shall remain
subject to the restrictions on Confidential Information set forth in Article
7.

             3.4.2 SELECTION OF COMMITTED COMPOUNDS AND COMMITTED TARGETS.
The parties expect that the Research Committee will further qualify and
prioritize the various opportunities presented by the combinations of
Reserved Compounds and Reserved Targets as described in the Collaboration
Plan and Research Plan. In order to facilitate this process, ArQule shall
disclose to ACADIA the structures, but not the locations, of inactive ArQule
Compounds from each Mapping Array Set from which Reserved Compounds are
selected. ArQule shall also produce and deliver to ACADIA resynthesized
samples of selected Reserved Compounds, as directed by the Research
Committee. ACADIA shall test the resynthesis samples of Reserved Compounds in
various assays as directed by the Research Committee and in accordance with
the Research Plan. The Research Committee shall then review the data and,
after consideration, designate [***] Reserved Targets and their corresponding
Reserved Compounds as Committed Targets and Committed Compounds under this
Agreement. The Research Committee has discretion to replace [***]Committed
Targets and their corresponding Committed Compounds at any time as new
batches of ACADIA Targets and ArQule Compounds and Targeted Compounds are
screened and new Reserved Targets and Reserved Compounds are identified. The
Research Committee may increase the number of Committed Targets and their
Committed Compounds at any time, with approval of the Steering Committee. Any
Reserved Targets and their corresponding Reserved Compounds, if any, that

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have met the predefined criteria for consideration as Committed Targets and
Committed Compounds but which were not selected by the Research Committee shall
be allocated between the parties as provided in Section 9.6. All other Reserved
Targets and Reserved Compounds, if any, shall automatically be released from
their reserved status; however, any information regarding the activity of these
Reserved Compounds for the Reserved Targets shall remain subject to the
restrictions on Confidential Information set forth in Article 7.

         3.5 LEAD OPTIMIZATION. The Research Committee will update the Research
Plan to provide for the accelerated lead optimization of the selected Committed
Compound Sets with Committed Targets in the Collaboration, subject to Steering
Committee approval. The Research Plan will set project priorities and define
success criteria for a GLP Toxicology Candidate. As described in the
Collaboration Plan, in a typical project the parties will iteratively develop
and test Analog Compounds based on Committed Compounds. The parties will
determine whether a proposed Analog Compound is an Available Compound before
synthesis, and only Available Compounds will proceed to synthesis and testing in
the Collaboration. The Analog Compounds developed by the parties shall
automatically become Committed Compounds under this Agreement and, therefore,
the Committed Compound Set for the Committed Target will likely expand as a
result of the lead optimization efforts. At the discretion of the Research
Committee, the parties may also use such Analog Compounds in primary screens
against other ACADIA Targets. The parties anticipate that lead optimization of
Committed Compounds will occur in two stages:

         (i) In the first stage, the parties will develop Analog Compounds as
             combinatorial libraries to explore the promise of the Committed
             Compound Set for the Committed Target. The parties will test these
             Analog Compounds for various properties determined by the Research
             Committee to predict whether the Committed Compound Set may
             eventually meet the defined success criteria for a GLP Toxicology
             Candidate. The parties will decide whether to proceed to stage two
             for a given Committed Compound Set within [***].

        (ii) In the second stage, the parties intend to concentrate their
             efforts on developing [***] and [***] corresponding Committed
             Compound Set(s) to identify a GLP Toxicology Candidate, with
             [***] from the first stage. The parties shall maintain a level
             of effort determined by the Research Committee for the [***].
             The Research Committee may release Committed Targets and the
             corresponding Committed Compound Set(s) that are no longer of
             interest to the Collaboration or which are no longer the subject
             of the active efforts by the parties, as determined by the
             Research Committee and subject to Steering Committee approval,
             in which case the allocation provisions of Section 9.6. shall
             apply. Lead optimization activities will continue with respect
             to a Committed Target until the Research Committee and Steering
             Committee decide to stop further efforts. The parties anticipate
             that lead optimization activities will continue with respect to
             a Committed Target until the parties (i) develop an acceptable
             GLP Toxicology Candidate, (ii) determine that they are unlikely
             to develop an acceptable GLP Toxicology Candidate, or (iii)

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             decide to seek commercialization of the Committed Compound Set(s)
             and Committed Target as described below.

         3.6 PRECLINICAL DEVELOPMENT. At the discretion of the Steering
Committee, the parties may decide to conduct the necessary preclinical
development activities to advance one or more GLP Toxicology Candidates to
become IND Candidates, as described in the Collaboration Plan. In such event,
the Research Committee will update the Research Plan to provide for such
activities, subject to approval of the Steering Committee. These preclinical
development activities will continue with respect to a GLP Toxicology Candidate
until the Research Committee and Steering Committee decide to stop further
efforts. The parties anticipate that these preclinical development activities
will continue with respect to a GLP Toxicology Candidate until the parties (i)
develop an acceptable IND Candidate, (ii) determine that they are unlikely to
develop an acceptable IND Candidate, or (iii) decide to seek commercialization
of the GLP Toxicology Candidate and the corresponding Committed Target as
described below.

         3.7 COMMERCIALIZATION. At any time during the Collaboration, the
Steering Committee may decide to sell, license, or otherwise transfer commercial
rights in Collaboration Work Product to a third party. In such event, the
Steering Committee will develop and approve a Commercialization Plan for such
Collaboration Work Product. Unless otherwise determined by the Steering
Committee, the Commercialization Plan will (i) describe the expectations of the
parties regarding the commercial value of the Collaboration Work Product and
potential Collaboration Products, (ii) set forth a marketing plan for the
Collaboration Work Product (e.g., best potential customers), and (iii) state the
respective responsibilities of each party for commercialization of the
Collaboration Work Product (e.g., lead negotiator). The Steering Committee will
manage the commercialization process. Alternatively, one party may purchase the
interest of the other party in particular Collaboration Work Product on
negotiated terms in a voluntary transaction. In such event, the separately
negotiated agreement shall supersede the terms of this Agreement with respect to
that Collaboration Work Product. The Steering Committee may also decide to sell,
license, or otherwise transfer commercial rights in one or more focused
libraries of Targeted Compounds developed by the parties during the
Collaboration. In such event, the Steering Committee will develop and approve a
Commercialization Plan for this Collaboration Work Product.

         3.8 REPORTS AND RECORDS. Each party agrees to promptly and regularly
communicate to the other party all research results from the Collaboration,
including quarterly reports to the Research Committee detailing all tests
conducted and results obtained by such party in connection with the
Collaboration. Each party shall prepare and maintain adequate records, including
bound laboratory notebooks maintained in accordance with standard scientific
procedures, containing all appropriate data reflecting all research results from
the Collaboration. In addition, each party shall retain under appropriate
conditions any necessary or desirable samples of research materials that are
developed or used in the Collaboration.

4.       ALLOCATION OF EXPENSES AND REVENUES.

         4.1 EXPENSES. The Research Committee shall establish an annual budget
for all activities in the Collaboration, subject to Steering Committee approval.
Each party shall bear the expenses of its respective activities under the
Research Plan in accordance with the annual

                                      12.
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budget, except that the parties will share equally any expenses payable (i) to
third party service providers or (ii) incurred in connection with preclinical
development activities under Section 3.6. above, provided such expenses are
approved in advance by the Steering Committee and included in the annual budget.
The Research Committee and Steering Committee shall use their best efforts to
ensure that the resource and value contributions of each party are approximately
equal on an annual basis. Any significant deviations from the annual budget must
receive Steering Committee approval. Each party shall also pay fifty percent
(50%) of all direct expenses (e.g., legal fees, travel) incurred by either party
in connection with commercialization activities approved by the Steering
Committee pursuant to Section 3.7. The Steering Committee has the right to
refuse payment of expenses that are not properly documented or are unreasonably
excessive. Each party shall promptly make payments to third parties, or
reimburse the other party, for expenses owed by such party as set forth in this
Section.

         4.2 REVENUES. Each party shall receive fifty percent (50%) of all Gross
Revenues received in connection with Collaboration Work Product sold, licensed
or transferred to a third party under Section 3.7, provided that each party has
contributed approximately equal resources and value to the Collaboration in
accordance with the Research Plan and the annual budget. In the event that one
party expends greater resources or contributes greater value than the other
party in the Collaboration, as formally recognized by the Steering Committee and
documented in the Research Plan or annual budget, the Steering Committee will
compensate the party with the greater resource expenditure or value contribution
in a manner reasonably acceptable to both parties.

         4.3 RECORDS. Each party shall establish separate and distinct
accounting records (but not necessarily separate general ledgers) such that
the expenditures for the Collaboration are direct and transparent. As a
guideline, each party should have separate project records supported by time
records and records of direct expenses attributable to the Collaboration.
Each party shall maintain these records for a period of at least [***] after
the conclusion of the applicable calendar year. Each party shall have the
right, at its own expense, to cause an independent certified public
accountant reasonably acceptable to the other party to inspect such records
during normal business hours for the sole purpose of verifying the
expenditures reported under this Agreement. The accountant shall conduct the
audit at a date and time reasonably acceptable to the audited party but not
later than [***] after the audited party is notified of the audit. Such
accountant shall not disclose to the requesting party any information other
than information relating to the accuracy of expenditures reported under this
Agreement and shall provide the audited party with a copy of any report given
to the requesting party. In the event of any discrepancy, the parties shall
promptly reconcile the discrepancy to achieve the results set forth in
Sections 4.1. and 4.2. Each party may exercise its audit right not more than
[***].

                                      13.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

5.       INTELLECTUAL PROPERTY RIGHTS.

         5.1 LICENSE GRANTS.

             5.1.1 CROSS-LICENSES AND CROSS-ASSIGNMENT.

                   (i) ArQule hereby grants ACADIA a worldwide, royalty-free,
non-exclusive license under the ArQule Patent Rights, Joint Patent Rights,
and other rights in ArQule Technology and Collaboration Technology to [***].

                   (ii) ACADIA hereby grants ArQule a worldwide,
royalty-free, non-exclusive license under the ACADIA Patent Rights, Joint
Patent Rights, and other rights in ACADIA Technology and Collaboration
Technology to [***].

                   (iii) To the extent that any Patent Rights in any
Committed Compound or its use against any Committed Target or in any Targeted
Compound or its use are not assigned to, or controlled by, both ArQule and
ACADIA as joint owners or are not otherwise jointly invented by one or more
employees or consultants of ACADIA and one or more employees or consultants
of ArQule in connection with the Collaboration [***].

             5.1.2 COMMERCIALIZATION LICENSES. In the event that the parties
sell, license, or otherwise transfer commercialization rights in Collaboration
Work Product to a third party pursuant to Section 3.7. above, each party hereby
covenants and agrees to grant to such third party any rights and licenses under
such party's Patent Rights and Technology as are reasonably necessary for such
third party to exploit such Collaboration Work Product in accordance with the
terms of a written agreement between the parties and such third party that is
consistent with the Commercialization Plan applicable to such Collaboration Work
Product, and to provide reasonable warranties of title, further assurances, and
similar customary provisions in connection with such grant of rights or
licenses.

         5.2 INTELLECTUAL PROPERTY DEVELOPED OUTSIDE OF THE COLLABORATION.
Except as expressly set forth in this Agreement, neither party shall have any
rights in Patent Rights and Technology that are developed or discovered by the
other party prior to the Effective Date or outside of the Collaboration.
Therefore, ArQule shall have no rights in ACADIA Targets other than as provided
in the Agreement, and ACADIA shall have no rights in ArQule Compounds other than
as provided in the Agreement. Each party shall have sole responsibility for and
control over Patent Rights claiming any of its Technology that was developed or
discovered prior to the Effective Date or outside of the Collaboration. Neither
party shall have any right to review or comment on such Patent Rights of the
other party.

                                      14.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         5.3 INTELLECTUAL PROPERTY ARISING FROM THE COLLABORATION.

             5.3.1 COMMITTED COMPOUNDS AND COMMITTED TARGETS. Committed
Compounds and Committed Targets are exclusive to the Collaboration, which means
that except as otherwise expressly provided in this Agreement:

                   (i) ArQule shall not engage in any research and development
activities on Committed Compounds outside of the Collaboration;

                   (ii) ArQule shall not knowingly engage in any research and
development activities on Committed Targets outside of the Collaboration except
to the extent that a third party requires ArQule to perform such activities
under a binding contract (which ArQule will disclose in advance to ACADIA);

                   (iii) ACADIA shall not engage in any research and development
activities on Committed Targets outside of the Collaboration; and

                   (iv) ACADIA shall not knowingly engage in any research and
development activities on Committed Compounds outside of the Collaboration
except to the extent that a third party requires Acadia to perform such
activities under a binding contract (which ACADIA will disclose in advance to
ArQule).

In the event that a party engages in research and development activities with a
third party with respect to Committed Compounds or Committed Targets under the
limited circumstances permitted under this Subsection, such party shall
establish and observe strict procedures to ensure that no information crosses
from one project to the other project. The other party shall have the right to
audit such procedures upon reasonable prior written notice. All Committed
Compounds and Committed Targets shall remain exclusive to the Collaboration
until the Collaboration terminates or the Steering Committee releases a
particular Committed Compound, Committed Compound Set, Committed Target, or
Committed Target Set.

             5.3.2 RIGHT TO USE. Except as provided in Section 5.1. above or
otherwise expressly provided in this Agreement, each party shall have the
following rights and restrictions for the use of Patent Rights and Technology
arising from the Collaboration:

                   (i) ArQule shall not have any right or license under ACADIA
Patent Rights or other rights in ACADIA Technology arising from the
Collaboration.

                   (ii) ACADIA shall not have any right or license under ArQule
Patent Rights or other rights in ArQule Technology arising from the
Collaboration.

                   (iii) During the Collaboration, neither party may use
Targeted Compounds outside of the Collaboration without the prior written
consent of the other party. After the expiration or termination of this
Agreement, the parties shall have co-exclusive rights to Targeted Compounds
(other than Targeted Compounds that are subject to the provisions of Section
9.6.2) as follows. [***]

                                      15.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[***].

                   (iv) Except as otherwise provided in this Agreement, each
party shall have the right to use Joint Patent Rights and Collaboration
Technology consistent with the provisions of Article 7 without accounting to the
other party.

             5.3.3 OWNERSHIP. Ownership of Patent Rights and Technology arising
from the Collaboration shall be allocated in the following manner:

                   (i) ArQule shall have sole ownership of all right, title, and
interest in ArQule Patent Rights and ArQule Technology;

                   (ii) ACADIA shall have sole ownership of all right, title,
and interest in ACADIA Patent Rights and ACADIA Technology; and

                   (iii) ArQule and ACADIA shall have joint ownership of all
right, title, and interest in Joint Patent Rights and Collaboration Technology.

Each party shall ensure that its employees, consultants, agents, and
representatives are contractually required to disclose and to assign to such
party all Patent Rights and other rights in Technology arising from the
Collaboration.

             5.3.4 NOTICE. Each party shall provide prompt written notice to the
Research Committee of the internal disclosure of any significant Technology
developed by its personnel in connection with the Collaboration.

             5.3.5 RESPONSIBILITY FOR PATENT RIGHTS. ArQule shall be responsible
for and shall control, at its expense, the preparation, filing, prosecution,
grant, and maintenance of any Patent Rights claiming only ArQule Technology
arising from the Collaboration and shall consult with ACADIA on, and give ACADIA
a reasonable opportunity to review, all such filings to the extent they directly
relate to the Collaboration. ACADIA shall be responsible for and shall control,
at its expense, the preparation, filing, prosecution, grant, and maintenance of
all Patent

                                      16.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

Rights claiming only ACADIA Technology arising from the Collaboration and shall
consult with ArQule on, and give ArQule a reasonable opportunity to review, all
such filings to the extent they relate directly to the Collaboration. In the
case of Collaboration Technology, the Research Committee will decide whether to
seek Joint Patent Rights claiming that Technology or to maintain that Technology
as a trade secret, subject to approval of the Steering Committee. The Research
Committee will also decide whether to seek Patent Rights claiming both ArQule
Technology and ACADIA Technology in one filing (which also constitutes a Joint
Patent Right), subject to approval of the Steering Committee. If the parties
decide to seek any Joint Patent Rights, the parties shall jointly prepare, file,
prosecute, and maintain such Patent Rights, and all related expenses shall be
borne equally by the parties. Notwithstanding the foregoing, neither party shall
file any Joint Patent Rights claiming the composition or use of any Active
Compound until the Research Committee has properly designated that Active
Compound as a Committed Compound in accordance with Subsection 3.4.2.

             5.3.6 ASSUMPTION OF RIGHTS BY OTHER PARTY. In the event that a
party desires to decline responsibility for obtaining or maintaining Patent
Rights in a country for any of its Technology that arises from the
Collaboration, such party will notify the other party before taking such action
and, upon request, will allow the other party to assume responsibility for, and
all expenses relating to, the relevant Patent Rights in those countries;
provided, however, that neither party shall have the right to seek patent
protection for any Technology that a party has decided, in its discretion, to
maintain as a trade secret. In the event that a party desires to cease further
payment of patent-related expenses for a Joint Patent Right in any country, such
party may assign to the other party all rights in that Joint Patent Right in
such country and thereafter have no further obligation to pay such expenses.

             5.3.7 COOPERATION. Each party agrees to cooperate fully in the
preparation, filing, prosecution, and maintenance of all Patent Rights claiming
Technology arising from the Collaboration. Such cooperation includes, without
limitation, (i) promptly executing all papers and instruments, or requiring its
employees, consultants, and agents to execute such papers and instruments, as
reasonable and appropriate so as to enable one or both parties to file,
prosecute, and maintain such Patent Rights in any country; (ii) promptly
informing the other party of matters that may affect the preparation, filing,
prosecution, or maintenance of any such Patent Rights; and (iii) undertaking no
actions that are potentially deleterious to the preparation, filing, or
prosecution of any such Patent Rights.

6.       RESEARCH MATERIALS.

         6.1 OWNERSHIP OF RESEARCH MATERIALS. In the course of this
Collaboration, one party (the "PROVIDER") may transfer to the other party (the
"RECIPIENT") certain of its Research Materials. The Recipient acknowledges and
agrees that such Research Materials are and shall be owned by the Provider. The
Recipient agrees to execute and deliver any documents of assignment or
conveyance to effectuate the ownership rights of the Provider in such Research
Materials. Specifically, ACADIA acknowledges and agrees that all ArQule
Compounds provided to ACADIA in the Collaboration and, previously, under the MTA
are proprietary to and owned by ArQule and are or may be covered by claims of
ArQule Patent Rights, and ArQule acknowledges and agrees that all expressed
proteins for ACADIA Targets provided by ACADIA

                                      17.
<PAGE>

in the Collaboration are proprietary to and owned by ACADIA and are or may be
covered by claims of ACADIA Patent Rights.

         6.2 USE AND TRANSFER OF RESEARCH MATERIALS. Except as otherwise agreed
by the Research Committee, the Recipient agrees to use Research Materials
provided by the Provider solely for purposes set forth in this Agreement and
shall not distribute such Research Materials to any third party other than its
employees and consultants who are working on the Collaboration; provided that
the parties may provide Research Materials specific to Collaboration Work
Product to a third party for the purposes described in Section 3.7 and may
provide Research Materials specific to Targeted Compounds to a sublicensee of
such party's rights to such Targeted Compounds under Section 5.3.2(iii).

         6.3 ADDITIONAL RESTRICTIONS FOR PROPRIETARY RESEARCH MATERIALS. In the
case of Proprietary Research Materials furnished by a Provider, Recipient agrees
(i) not to transfer such Proprietary Research Materials to any third party
without the prior written consent of the Provider, (ii) to permit access to the
Proprietary Research Materials only to its employees and consultants requiring
such access, (iii) to inform such employees and consultants of the proprietary
nature of the Proprietary Research Materials, and (iv) to take reasonable
precautions, at least as stringent as those observed by Recipient to protect its
own proprietary materials, to ensure that such employees and consultants observe
the obligations of Recipient under this Section.

         6.4 DISPOSITION OF UNUSED RESEARCH MATERIALS. At the request of
Provider, Recipient will return or destroy any unused Research Materials
furnished by Provider.

         6.5 COMPLIANCE WITH LAW. Recipient agrees to comply with all federal,
state, and local laws and regulations applicable to the use, storage, disposal,
and transfer of Research Materials furnished by Provider, including without
limitation the Toxic Substances Control Act (15 USC 2601 ET SEQ.) and
implementing regulations (in particular, 40 CFR 720.36 [Research and Development
Exemption]), the Food, Drug, and Cosmetic Act (21 USC 301 ET SEQ.) and
implementing regulations, and all Export Administration Regulations of the
Department of Commerce. Recipient assumes sole responsibility for any violation
of such laws or regulations by Recipient or any of its Affiliates or
sublicensees.

         6.6 LIMITATION OF LIABILITY. Any Research Materials delivered pursuant
to this Agreement are understood to be experimental in nature and may have
hazardous properties. Recipient should assume that the compounds are dangerous
and should use appropriate precautions. PROVIDER MAKES NO REPRESENTATIONS, AND
EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO
THE RESEARCH MATERIALS FURNISHED TO RECIPIENT. THERE ARE NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE
USE OF THE RESEARCH MATERIALS WILL NOT INFRINGE ANY PATENT OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF A THIRD PARTY.

                                      18.
<PAGE>

7.       CONFIDENTIAL INFORMATION.

         7.1 DESIGNATION OF CONFIDENTIAL INFORMATION. Confidential
Information that is disclosed in writing or electronically shall be marked
with a legend indicating its confidential status. Confidential Information
that is disclosed orally or visually shall be documented in a written notice
prepared by the Disclosing Party and delivered to the Receiving Party within
[***] of the date of disclosure; such notice shall summarize the Confidential
Information disclosed to the Receiving Party and reference the time and place
of disclosure.

         7.2 OBLIGATIONS OF RECEIVING PARTY. The Receiving Party agrees that it
shall:

             (i) maintain all Confidential Information in strict confidence,
                 except that the Receiving Party may disclose or permit the
                 disclosure of any Confidential Information to (A) its
                 Affiliates, directors, officers, employees, consultants, and
                 advisors, (B) solely with respect to Confidential Information
                 specific to Collaboration Work Product, a third party for the
                 purposes described in Section 3.7 and (C) solely with respect
                 to Confidential Information specific to Targeted Compounds, a
                 sublicensee of such party's rights to such Targeted Compounds
                 under Section 5.3.2(iii), in each case which recipients are
                 obligated to maintain the confidential nature of such
                 Confidential Information and need to know such Confidential
                 Information for the purposes set forth in this Agreement;

            (ii) use all Confidential Information solely for the purposes of
                 this Agreement and the permitted uses set forth in Section
                 7.6.; and

           (iii) allow permitted recipients under Section 7.2(i) to reproduce
                 the Confidential Information only to the extent necessary to
                 effect the purposes set forth in this Agreement, with all such
                 reproductions being considered Confidential Information.

         7.3 EXCEPTIONS. The obligations of the Receiving Party under Section
7.2. above shall not apply to the extent that the Receiving Party can
demonstrate that certain Confidential Information:

             (i) was in the public domain prior to the time of its disclosure
                 under this Agreement;

            (ii) entered the public domain after the time of its disclosure
                 under this Agreement through means other than an unauthorized
                 disclosure resulting from an act or omission by the Receiving
                 Party;

           (iii) was independently developed or discovered by the Receiving
                 Party without use of any Confidential Information of the
                 Disclosing Party; or

            (iv) is or was disclosed to the Receiving Party at any time,
                 whether prior to or after the time of its disclosure under this
                 Agreement, by a third party having no fiduciary relationship
                 with the Disclosing Party and having no obligation of

                                      19.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                 confidentiality or non-use to the Disclosing Party with respect
                 to such Confidential Information.

         7.4 PERMITTED DISCLOSURE. Notwithstanding any other provision of this
Agreement, disclosure of Confidential Information shall not be precluded if such
disclosure is required to comply with applicable laws or regulations (such as
disclosure to the FDA or the United States Patent and Trademark Office or to
their foreign equivalents), or to comply with a court or administrative order,
provided that the Disclosing Party receives prior written notice of such
disclosure and that the Receiving Party takes all reasonable and lawful actions
to obtain confidential treatment for such disclosure and, if possible, to
minimize the extent of such disclosure.

         7.5 RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement, or earlier at the request of the Disclosing Party, the Receiving
Party shall return to the Disclosing Party all originals, copies, and summaries
of documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential Information in the
possession of its legal counsel solely for the purpose of monitoring its
obligations under this Agreement.

         7.6 PERMITTED USE OF INFORMATION. ACADIA and ArQule [***]. Under no
circumstances may either party use any information from lead optimization
activities or preclinical development activities for any purpose other than
the Collaboration.

         7.7 SURVIVAL OF OBLIGATIONS. The obligations set forth in this
Article shall remain in effect for an item of Confidential Information for a
period of [***] after the date upon which a Receiving Party first received
that Confidential Information, except that the obligation of the Receiving
Party to return Confidential Information to the Disclosing Party shall
survive until fulfilled.

8.       INDEMNIFICATION AND INSURANCE.

         8.1 GENERAL INDEMNIFICATION. Each party (the "INDEMNIFYING PARTY")
shall indemnify and hold harmless the other party, its Affiliates, and their
respective directors, officers, employees and agents (collectively, the
"INDEMNITEES") from and against all claims, expenses or liability of whatever
nature arising from any default, act, omission, or negligence of the
Indemnifying Party, its agents or employees, or others exercising rights by,
through, or under the Indemnifying Party, or the failure of the Indemnifying
Party or such persons to comply with any applicable laws, rules, regulations,
codes, ordinances or directives of governmental authorities, in each case to the
extent the same are related, directly or indirectly, to the Collaboration
described herein; PROVIDED, HOWEVER, that in no event shall the Indemnifying
Party

                                      20.

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<PAGE>

be obligated under this section to indemnify the Indemnitees to the extent that
such claim, expense or liability results from any omission, fault, negligence,
or other misconduct of any of the Indemnitees.

         8.2 PRODUCT LIABILITY INDEMNIFICATION. Each Indemnifying Party further
agrees to defend, indemnify, and hold the Indemnitees harmless from all costs,
judgments, liabilities, and damages assessed by a court of competent
jurisdiction arising from claims asserted by a third party against the
Indemnitees as a result of (i) actual or asserted violations of any applicable
law or regulation by the Indemnifying Party, its Affiliates, sublicensees, or
third party manufacturers by virtue of which the Collaboration Products, or any
product containing as one of its constituents any Targeted Compound,
manufactured, distributed, or sold shall be alleged or determined to be
adulterated, misbranded, mislabeled, or otherwise not in compliance with such
applicable law or regulation; (ii) claims for bodily injury, death, or property
damage attributable to the manufacture, distribution, sale, or use of the
Collaboration Products, or any product containing as one of its constituents any
Targeted Compound, by the Indemnifying Party, or by its Affiliates,
sublicensees, or third party manufacturers; or (iii) a recall ordered by a
governmental agency, or required by a confirmed failure, as reasonably
determined by the parties, of Collaboration Products, or any product containing
as one of its constituents any Targeted Compound, manufactured, distributed, or
sold by the Indemnifying Party, or by its Affiliates, sublicensees or third
party manufacturers; PROVIDED, HOWEVER, that in no event shall the Indemnifying
Party be obligated under this section to indemnify the Indemnitees to the extent
that such claim, expense or liability results from any omission, fault,
negligence, or other misconduct of any of the Indemnitees.

         8.3 PROCEDURE. The Indemnitees agree to provide the Indemnifying Party
with prompt written notice of any claim, suit, action, demand, or judgment for
which indemnification is sought under this Agreement. If an Indemnitee fails to
provide such notice within a reasonable time, and if such failure prejudicially
affects the ability of the Indemnifying Party to defend such action, the
Indemnifying Party shall be relieved of its liability to such Indemnitee under
this Article 8. The Indemnifying Party agrees, at its own expense, to provide
attorneys reasonably acceptable to the Indemnitees to defend against any such
claim. The Indemnitees shall cooperate fully with the Indemnifying Party in such
defense and will permit the Indemnifying Party to conduct and control such
defense and the disposition of such claim, suit, or action (including all
decisions relative to litigation, appeal, and settlement); provided, however,
that any Indemnitee shall have the right to retain its own counsel, at the
expense of the Indemnifying Party, if representation of such Indemnitee by the
counsel retained by the Indemnifying Party would be inappropriate because of
actual or potential differences in the interests of such Indemnitee and any
other party represented by such counsel. The Indemnifying Party agrees to keep
the other party informed of the progress in the defense and disposition of such
claim and to consult with such party with regard to any proposed settlement.
Neither party may settle a claim or action for which indemnification is sought
under this Agreement without the consent of the other party if such settlement
would impose any monetary obligation on the other party or require the other
party to submit to an injunction or otherwise limit the other party, its
Affiliates or their respective directors, officers, employees or agents.

         8.4 INSURANCE. Each party shall maintain, and shall require its
Affiliates and sublicensees to maintain, adequate product liability insurance or
self insurance with respect to

                                      21.
<PAGE>

development, manufacture, and sale of Collaboration Products, or any product
containing as one of its constituents any Targeted Compound, by such party in
such amount as that party customarily maintains with respect to sales of its
other products, and in no event less than a reasonable amount. Each party shall
maintain, and shall require its Affiliates and sublicensees to maintain, such
insurance for so long as that party continues to manufacture or sell the
Collaboration Products, and thereafter for so long as that party maintains
insurance for itself covering such manufacture or sale.

9.       TERM AND TERMINATION.

         9.1 TERM. This Agreement shall commence on the Effective Date and shall
continue for a period of five (5) years unless earlier terminated pursuant to
this Article 9.

         9.2 TERMINATION BY PARTY. Either party may terminate this Agreement for
any reason upon ninety (90) days written notice to the other party. In addition,
the Steering Committee may terminate this Agreement at any time by mutual
agreement of the parties.

         9.3 DEADLOCK. As described in Subsection 2.2.6., this Agreement shall
automatically terminate sixty (60) days (or such longer period as the parties
mutually agree) after the Steering Committee deadlocks on any matter relating
only to specific activities under the Collaboration, unless the matter is
resolved by the Chief Executive Officers of each party during such time period.

         9.4 TERMINATION FOR DEFAULT. In the event that either party commits
a material breach of its obligations under this Agreement and fails to cure
that breach within [***] after receiving written notice thereof, the other
party may terminate this Agreement immediately upon written notice to the
party in breach.

         9.5 FORCE MAJEURE. Neither party will be responsible for delays
resulting from acts beyond the control of such party, provided that the
nonperforming party uses commercially reasonable efforts to avoid or remove such
causes of nonperformance and continues performance hereunder with reasonable
dispatch whenever such causes are removed.

         9.6 DISPOSITION OF COLLABORATION WORK PRODUCT. Except as otherwise
agreed by the parties, the following provisions shall apply under the
circumstances specified in this Agreement or upon the expiration or termination
of this Agreement.

             9.6.1 COMMERCIAL PRODUCTS. If any Collaboration Work Product has
been successfully commercialized pursuant to Section 3.7., the parties shall
share Gross Revenues attributable to that Collaboration Work Product as set
forth in Section 4.2.

             9.6.2 RESIDUAL VALUE IN TARGETS AND COMPOUNDS. Except for
Collaboration Work Product that has been commercialized pursuant to Section
3.7., the parties will apportion rights in Reserved Targets, Reserved Compounds,
Committed Targets, and Committed Compounds as follows.

                   (i) The Research Committee will establish Reserved Target
Sets, Committed Target Sets, Reserved Compound Sets, and Committed Compound Sets
as necessary

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<PAGE>

or desirable to prevent significant overlap between the rights granted to each
party under this Subsection. For example, if two ACADIA Targets are receptor
subtypes and if the Available Active Compounds for those two ACADIA Targets are
similar enough to form a single Reserved Compound Set or Committed Compound Set,
the Research Committee may group the ACADIA Targets into a single Reserved
Target Set or Committed Target Set to minimize the risk of conflicting Patent
Rights filed by each party. As another example, if two dissimilar ACADIA Targets
are found to have activity with respect to Available Active Compounds that are
within a single chemotype and have substantial homology, the Research Committee
has discretion to establish two Reserved Compound Sets or Committed Compound
Sets (i.e., one for each ACADIA Target) based on different structure-activity
profiles that are identified for each ACADIA Target.

                   (ii) For Reserved Targets and the corresponding Reserved
Compounds that have met the requisite criteria for consideration as Committed
Targets and Committed Compounds but which the Research Committee has declined
to designate as Committed Targets and Committed Compounds, as described in
Subsection 3.4.2. [***].

                   (iii) For Committed Targets and the corresponding
Committed Compound Set(s) that the Research Committee has removed from the
Collaboration as described in Subsection 3.4.2. or Section 3.5. or which have
not been commercialized pursuant to Section 3.7. when the Agreement expires
or terminates [***].

                   (iv) Each party hereby agrees to assign, transfer, and
convey to the other party, or to grant such other party [***]

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<PAGE>

[***]. Finally, each party agrees to provide reasonable warranties of title,
further assurances, and similar customary provisions in connection with the
grant of rights or licenses under this Subsection.

                   (v) The parties shall enter into a Compound License
Agreement in substantially the form of the Compound License Agreement dated
May 10, 2000 between ACADIA and ArQule for each (a) Reserved Target or
Reserved Target Set and its corresponding Reserved Compounds or Reserved
Compound Set and (b) Committed Target or Committed Target Set and its
corresponding Committed Compounds or Committed Compound Set, for which such
party obtains rights under this Subsection. Each party acknowledges and
agrees that the Compound License Agreement provides for, among other things,
an annual license maintenance fee in the amount of [***] and a royalty of
[***].

             9.6.3 RIGHTS IN TARGETED COMPOUNDS. Except for Collaboration Work
Product that has been commercialized pursuant to Section 3.7., the rights of
each party to use Targeted Compounds continues after the Collaboration ends as
provided in Subsection 5.3.2., clause (iii), subject to the other provisions of
this Section 9.6.

         9.7 SURVIVAL. The following provisions shall survive the expiration or
termination of this Agreement: Articles 4, 6, 7, 8, and 10; Sections 5.1.2.,
5.3. (except 5.3.1), 9.6., 9.7., 11.7., and 11.9.

10.      DISPUTE RESOLUTION.

         10.1 PROCEDURES MANDATORY. Except as otherwise provided in Subsection
2.2.6., the parties agree that any dispute arising out of or relating to this
Agreement shall be resolved solely by means of the procedures set forth in this
Article, and that such procedures constitute legally binding obligations that
are an essential provision of this Agreement; provided, however, that all
procedures and deadlines specified in this Article may be modified by written
agreement of the parties. If either party fails to observe the procedures of
this Article, as modified by their written agreement, the other party may bring
an action for specific performance in any court of competent jurisdiction.

                                      24.

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<PAGE>

         10.2 DISPUTE RESOLUTION PROCEDURES.

              10.2.1 NEGOTIATION. Except as otherwise provided in Subsection
2.2.6., in the event of any dispute arising out of or relating to this
Agreement, the affected party shall notify the other party, and the Steering
Committee shall attempt in good faith to resolve the matter within [***]after
the date such notice is received by the other party (the "NOTICE DATE"). Any
disputes not resolved by good faith discussions within the Steering Committee
shall be referred to senior executives of each party, who shall meet at a
mutually acceptable time and location within [***] after the Notice Date and
attempt to negotiate a settlement.

              10.2.2 MEDIATION. If the matter remains unresolved within [***]
after the Notice Date, or if the senior executives fail to meet within [***]
after the Notice Date, either party may initiate mediation upon written
notice to the other party, whereupon both parties shall be obligated to
engage in a mediation proceeding under the then current Center for Public
Resources ("CPR") Model Procedure for Mediation of Business Disputes, except
that specific provisions of this Section shall override inconsistent
provisions of the CPR Model Procedure. The mediator will be selected from the
CPR Panels of Neutrals. If the parties cannot agree upon the selection of a
mediator within [***] after the Notice Date, then upon the request of either
party, the CPR shall appoint the mediator. The parties shall attempt to
resolve the dispute through mediation until one of the following occurs: (i)
the parties reach a written settlement; (ii) the mediator notifies the
parties in writing that they have reached an impasse; (iii) the parties agree
in writing that they have reached an impasse; or (iv) the parties have not
reached a settlement within [***] after the Notice Date.

              10.2.3 TRIAL WITHOUT JURY. If the parties fail to resolve the
dispute through mediation, or if neither party elects to initiate mediation,
each party shall have the right to pursue any other remedies legally available
to resolve the dispute; provided, however, that the parties expressly waive any
right to a jury trial in any legal proceeding under this Section.

         10.3 PRESERVATION OF RIGHTS PENDING RESOLUTION.

              10.3.1 PERFORMANCE TO CONTINUE. Each party shall continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement; provided, however, that a
party may suspend performance of its obligations during any period in which the
other party fails or refuses to perform its obligations.

              10.3.2 PROVISIONAL REMEDIES. Although the procedures specified in
this Article are the sole and exclusive procedures for the resolution of
disputes arising out of or relating to this Agreement, either party may seek a
preliminary injunction or other provisional equitable relief if, in its
reasonable judgment, such action is necessary to avoid irreparable harm to
itself or to preserve its rights under this Agreement.

              10.3.3 STATUTE OF LIMITATIONS. The parties agree that all
applicable statutes of limitation and time-based defenses (such as estoppel and
laches) shall be tolled while the procedures set forth in Subsections 10.2.1.
and 10.2.2. are pending. The parties shall take any actions necessary to
effectuate this result.

                                      25.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

11.      MISCELLANEOUS.

         11.1 PUBLICITY. No press release, advertising, promotional sales
literature, or other promotional oral or written statements to the public in
connection with or alluding to work performed under this Agreement or the
relationship between the parties created by it, having or containing any
reference to ArQule or ACADIA, shall be made by either party without the prior
written approval of the other party, except for restatements of
previously-approved statements and disclosures required by applicable law or
regulation.

         11.2 RELATIONSHIP OF PARTIES. For the purposes of this Agreement, each
party is an independent contractor and not an agent or employee of the other
party. Neither party shall have authority to make any statements,
representations, or commitments of any kind, or to take any action which shall
be binding on the other party, except as may be explicitly provided for herein
or authorized in writing. In particular, (i) neither party shall represent to
creditors or vendors that such party has any authority to obligate or bind the
other party, and shall affirmatively correct any misconception to that effect
and (ii) neither party shall use the name of the other party in connection with
such transactions without the prior written consent of the other party, which
consent may be withheld in its sole discretion.

         11.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

         11.4 HEADINGS. All headings in this Agreement are for convenience only
and shall not affect the meaning of any provision hereof.

         11.5 BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective lawful successors and assigns.

         11.6 ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either of the
parties may assign this Agreement to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets or that portion
of its business pertaining to the subject matter of this Agreement; provided,
however, that in the event of such a transaction, no intellectual property
rights of any Affiliate or third party that is an acquiring party shall be
included in the technology subject to this Agreement.

         11.7 NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized national overnight courier, confirmed facsimile
transmission, or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses or facsimile numbers:

                                      26.
<PAGE>

If to ACADIA:

                  ACADIA Pharmaceuticals
                  3911 Sorrento Valley Blvd.
                  San Diego, CA 92121-1402
                  Attn: Chief Executive Officer
                  Tel: (858) 320-8614
                  Fax: (858) 455-1751

         with a copy (which shall not constitute notice) to:

                  Pillsbury Madison & Sutro LLP
                  101 West Broadway, Suite 1800
                  San Diego, CA  92101-8219
                  Attn:  John M. Dunn
                  Tel: (858) 509-4015
                  Fax: (858) 236-1995

         If to ArQule:

                  ArQule, Inc.
                  19 Presidential Way
                  Woburn, MA  01801
                  Attn:  President
                  Tel: (781) 994-0300
                  Fax: (781) 503-0009

         with a copy (which shall not constitute notice) to:

                  ArQule, Inc.
                  19 Presidential Way
                  Woburn, MA  01801
                  Attn:  Legal Department
                  Tel: (781) 994-0300
                  Fax: (781) 994-0676

Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.

         11.8 AMENDMENT AND WAIVER. This Agreement may be amended, supplemented,
or otherwise modified at any time, but only by means of a written instrument
signed by both parties. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.

         11.9 GOVERNING LAW. This Agreement and the legal relations among the
parties shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts irrespective of any conflict of laws principles.

                                      27.
<PAGE>

         11.10 SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein.

         11.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous oral and prior written agreements and
understandings including, without limitation, the MTA.

                                      28.
<PAGE>

         IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.

                                     ACADIA PHARMACEUTICALS, INC.

                                     By:/s/ ULI HACKSELL
                                        ----------------------------------------
                                        Uli Hacksell, Ph.D.
                                        Chief Executive Officer

                                     ARQULE, INC.

                                     By:/s/ STEPHAN A. HILL
                                        ----------------------------------------
                                        Stephen A. Hill, M.D.
                                        President and Chief Executive Officer

<PAGE>

                                    EXHIBIT A

                               COLLABORATION PLAN

[***]

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[***]

                                       2.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[***]

                                       3.

                                              * CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[***]

                                       4.

                                              * CONFIDENTIAL TREATMENT REQUESTED

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