Document:

Exhibit 10.219

                        SUPPLY AND DEVELOPMENT AGREEMENT

     This Supply and Development Agreement (this "Agreement") is made and
entered into as of the 7th day of January, 2000 (the "Effective Date"), by and
among

               LIGAND PHARMACEUTICALS INCORPORATED, a corporation organized
               and existing under the laws of Delaware and having its principal
               place of business at 10275 Science Center Drive, San Diego,
               California 92121 (hereinafter called "LIGAND"),

               SERAGEN, INC., a corporation organized and existing under
               the laws of Delaware and having its principal place of business
               at 99 South Street, Hopkinton, Massachusetts 01748 (hereinafter
               called "SERAGEN"), and

               COPHARMA, INC., a corporation organized and existing under
               the laws of Delaware and having a principal place of business at
               45 Moulton Street, Cambridge, MA 02138 (hereinafter called
               "COPHARMA").

WHEREAS, SERAGEN has developed a new biological entity designated as DAB389IL-2,
denileukin difitox, the active ingredient in ONTAK(R), prepared as a purified
drug substance (hereinafter "PDS"), and intends to further refine the process
for the manufacture of first generation PDS and to develop a process for the
manufacture of a second generation final formulated bulk product (hereinafter
"FFBP"); and

WHEREAS, SERAGEN desires to have COPHARMA perform certain process development
support, manufacturing, validation and analytical services and services related
to the refinement of the PDS manufacturing process and development of the FFBP
manufacturing process, as described in Article III and Exhibit D of this
Agreement (the "Technology Services"); and

WHEREAS, SERAGEN will be responsible for the commercial development and sale of
PRODUCT on a worldwide basis; and

WHEREAS, SERAGEN desires to have COPHARMA manufacture (including therein,
without limitation, fermentation of ONTAK pellets if required), store, test and
supply commercial PRODUCT on a worldwide basis, test the final drug product
(FDP), perform stability testing, and perform reference standard qualification
as described in Article II of this Agreement, all in accordance with United
States current Good Manufacturing Practices (cGMPs;Title 21 C.F.R., Parts 210
211, and 600 as applicable) and their functional foreign equivalents thereof;
and all other regulatory requirements and filings as applicable; and

WHEREAS, SERAGEN may, from time to time, desire to purchase from COPHARMA
additional services such as, but not limited to, clinical product storage, cell
line stock, storage,

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and reference standard storage and regulatory/CMC consulting all in accordance
with United States current Good Manufacturing Practices (cGMPs;Title 21 C.F.R.,
Parts 210, 211, and 600 as applicable) and their functional foreign equivalents
thereof; and all other regulatory requirements and filings as applicable; and

WHEREAS, COPHARMA is willing to undertake the manufacture, storage, testing and
commercial supply of PRODUCT to SERAGEN and the provision of the Technology
Services to SERAGEN and may chose to provide other services requested by SERAGEN
as described above according to the terms, conditions and covenants hereinafter
set FORTH.

NOW, THEREFORE, the parties hereto, in consideration of the promises and the
mutual covenants and agreements contained herein, the sufficiency of which are
hereby acknowledged, agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

1.01 DEFINED TERMS. In addition to terms otherwise defined in this Agreement,
the following terms have the specified meanings for purposes of this Agreement:

"Affiliate" shall mean any corporation, firm, partnership, individual or other
form of business organization which is now or hereafter owned or controlled by a
Party or, any corporation in which a Party owns at least fifty percent (50%) of
the stock entitled to vote for directors or otherwise controls the election of
directors, and any corporation, firm, partnership, individual or other form of
business organization in which a Party has the maximum ownership interest it is
permitted to have in the country where such business organization exists.

"Batch" shall mean an amount of PRODUCT sufficient to fill *** ( *** ) vials,
each vial containing *** of PRODUCT.

"Lot" shall mean *** vials of Final Drug Product packaged into its final dosage
form.

"cGMPs" shall mean:

               (i) as of the Effective Date of this Agreement, the current
               Good Manufacturing Practices standards required by the FDA as set
               forth in Title 21 C.F.R., Parts 210, 211 and 600 as applicable,
               in the United States Food, Drug & Cosmetic Act, as amended, or
               the applicable FDA regulations, policies or guidelines in effect,
               at the time of manufacture, for the manufacture and testing of
               pharmaceutical materials as applied to bulk pharmaceuticals,
               biologics, and

               (ii) in the future, may also include the corresponding
               equivalent requirements of the Canadian, European, Japanese and
               South American jurisdictions in which

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               FDP is to be marketed and sold, and such other jurisdictions
               of which SERAGEN informs COPHARMA from time to time that FDP is
               to be marketed and sold, provided that the requirements of
               additional jurisdictions will become part of cGMPs only in
               accordance with the terms of this Agreement.

"DAB389IL-2" shall mean a fusion protein developed by SERAGEN and sold in the
United States under the trademark ONTAK(R) comprising the first 389 amino acids
of the A and B fragments of the diphtheria toxin combined with interleukin-2.

"Facility" means the manufacturing, testing and production facility at 97 South
Street, Hopkinton, Massachusetts.

"Food and Drug Act" means the Food, Drug and Cosmetic Act, 21 U.S.C. ' 301-391.

"FDA" shall mean the United States Food and Drug Administration (U.S.A).

"Final Formulated Bulk Product" or "FFBP" shall mean the second generation
formulated DAB389IL-2 protein complete and ready for lyophilization, as
developed in accordance with the Technology Services described in Exhibit D.

"Final Drug Product" or "FDP" shall mean PRODUCT packaged into its final dosage
form (liquid or lyophilized product in vials).

"Intellectual Property" shall mean all know-how, copyrights, designs, databases,
mask works, patents, trademarks, trade names and other proprietary data and
rights, and all registrations and applications therefor.

"Manufacturing and Release Requirements" shall mean any and all specifications
and release requirements mutually agreed on between the Parties for PRODUCT and
its manufacture, including, without limitation, all product, raw materials,
solvents, reagents, processing, storage, shipping and packaging specifications
and necessary test protocols, product release specifications for PRODUCT,
certificates of analysis and other documentation required to describe, control
and assure the quality manufacture and testing of PRODUCT, which Manufacturing
and Release Requirements for PDS are as specifed in Biologics License
Application #97-1325 and its supplements and for FFBP will be attached upon the
completion of the Technology Services, and such Manufacturing and Release
Requirements may be changed only upon the written agreement of the parties. The
current Manufacturing and Release Requirements for PDS are described on Exhibit
A.

"MRR Documentation" means all production and release documentation specified in
the Manufacturing and Release Requirements, as described in Exhibit A.

"Party" or "party" shall mean either SERAGEN, COPHARMA or, subject to the terms
set forth below, LIGAND, and the term "Parties" or "parties" shall, as
appropriate, mean SERAGEN, COPHARMA and LIGAND. LIGAND shall be considered a
Party to this Agreement only for

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the purpose of being subject to the provisions of Section 2.05 and Sections
7.01, 7.06, 7.07 and 7.08 of this Agreement and for being liable to COPHARMA for
a breach of such provisions, including liability pursuant to Article VIII to the
same extent SERAGEN would be liable for such a breach.

"Process Improvements" shall mean any improvement made to the method of
manufacture of PRODUCT.

"PRODUCT" shall mean purified drug substance (PDS, i.e. first generation) or
final formulated bulk product (FFBP, i.e. second generation, provided that
PRODUCT shall only include FFBP once all Technology Services are complete and
all necessary approvals and validations for the manufacture and shipment of FFBP
have been received by the Parties), collectively, manufactured by COPHARMA
pursuant to the terms of this Agreement.

"PRODUCT Intellectual Property" shall mean all Intellectual Property which is
specifically related to PRODUCT and its method of manufacture, including Process
Improvements which are specifically related to PRODUCT. PRODUCT Intellectual
Property shall not include Intellectual Property (including Process
Improvements) which represent general know-how relating to the development and
manufacture of biopharmaceuticals and that have applications to and or value for
developing and manufacturing biopharmaceuticals other than the PRODUCT.

"Purified Drug Substance" or "PDS" shall mean the first generation formulated
DAB389IL-2 protein complete and ready for fill/finish, as described in Exhibit
"A".

"Regulatory Agency " shall mean:

     (i) as of the Effective date of this Agreement, the FDA and all other U.S.
regulatory agencies with authority over the manufacture and/or shipment of
PRODUCT, and

     (ii) in the future may also include equivalent foreign regulatory agencies
including, but not limited to, those of Europe, Canada, Japan, and South America
in which FDP is to be marketed and sold, and such other jurisdictions of which
SERAGEN informs COPHARMA from time to time that FDP is to be marketed and sold,
provided that regulatory agencies in additional jurisdictions will be included
in the definition of Regulatory Agency only in accordance with the terms of this
Agreement.

"Regulatory Requirements" means the Guidelines for Bulk Pharmaceuticals and the
cGMPs in effect at the particular time, issued or required by the Regulatory
Agency for the methods to be used in, and the facilities and controls to be used
for, the manufacture, processing, packaging and storage of the manufactured
PRODUCT.

"Specifications" shall mean any and all specifications mutually agreed on
between the Parties for the manufacture of PRODUCT, including, without
limitation, all product, raw materials, solvents, reagents and processing
specifications contained within the Manufacturing and Release Requirements.

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"Agreement" means this Supply and Development Agreement entered into by and
between COPHARMA, SERAGEN and LIGAND, as amended or modified from time to time.

"Technology Services" means those services set forth in Exhibits "D" and "E" to
this Agreement.

                                   ARTICLE II
                COMMERCIAL SUPPLY OF PRODUCT AND RELATED SERVICES

2.01 VALIDATION REQUIREMENTS.

     (a) CURRENT VALIDATIONS. SERAGEN represents and warrants to COPHARMA that
as of the Effective Date all equipment, manufacturing processes and procedures,
cleaning processes and procedures and analytical test methodologies (together
"Equipment and Procedures") which are used in the manufacture and testing of
PRODUCT have been properly validated under all applicable Regulatory
Requirements and that all such validations are in accordance with cGMPs and are
in full force and effect and will remain so immediately following the Effective
Date. SERAGEN further represents and warrants to COPHARMA that as of the
Effective Date all validations of the Equipment and Procedures which SERAGEN
deems necessary have been received and are in full force and effect and will
remain so immediately following the Effective Date.

     (b) MAINTENANCE OF VALIDATIONS. COPHARMA shall use commercially reasonable
efforts to maintain the validations in effect immediately following the
Effective Date for all Equipment and Procedures. COPHARMA shall use commercially
reasonable efforts to maintain such validations in accordance with cGMPs.

     (c) ADDITIONAL VALIDATIONS Validations in connection with the manufacture
and testing of FFBP for the United States will be executed under the terms and
conditions of this agreement as described in Article III and Exhibits D and E.
The parties agree to negotiate in good faith the cost implications of any
additional validations in connection with PRODUCT. The parties agree that with
respect to additional validations required in connection with PRODUCT,
additional regulatory agencies will not be deemed "Regulatory Agencies" for
purposes of the remainder of this Agreement, and the requirements of any
additional jurisdictions will not be deemed part of "cGMPs" for purposes of the
remainder of this Agreement, until COPHARMA and SERAGEN have successfully
received all required validations and approvals necessary in connection with the
marketing and sale of PRODUCT in the associated jurisdictions.

2.02 REGULATORY INSPECTIONS. COPHARMA shall prepare for, submit to and endeavor
to pass all inspections deemed necessary by the Regulatory Agencies. The parties
agree to negotiate in good faith the cost implications of such preparations,
inspections and corrective actions specific to PRODUCT.

2.03 COMMERCIAL SUPPLY. COPHARMA shall, from time to time, as requested by

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SERAGEN, supply SERAGEN with PRODUCT produced, tested, packaged and shipped
according to the Manufacturing and Release Requirements under the terms and
conditions of this Agreement, and in accordance with all Regulatory
Requirements. SERAGEN shall be notified in writing of all significant process
deviations, manufacturing failures, errors/accidents and out of specification
results within one (1) working day. SERAGEN and COPHARMA agree that for purposes
of this Article 2.03, email messages shall be deemed notification in writing.
SERAGEN and COPHARMA shall agree to investigations of significant process
deviations, manufacturing failures, errors/accidents and out of specification
results if indicated prior to manufacture of subsequent Batches.

2.04 FDP RELEASE AND STABILITY TESTING. COPHARMA shall, from time to time as
requested by SERAGEN, perform validated analytical release and stability testing
for FDP according to SERAGEN approved standard operating procedures (SOP's ) or
protocols. COPHARMA shall perform the work detailed in all protocols under cGMP
conditions, and shall perform the work as detailed in the protocols within the
time agreed, including laboratory testing, QA review of data and final report.
In the event that SERAGEN requests a repeat of a test/protocol, COPHARMA shall
begin the work within *** (***) *** of the request, and complete the work within
the time specified in the original protocols. In the event that analytical
release or stability test results fail to meet Specifications or acceptance
criteria as defined in the protocols, COPHARMA will undertake any resulting
investigations and other actions required as per cGMPs.

2.05 EXCLUSIVITY. COPHARMA shall not manufacture PRODUCT for itself, or for any
other entity other than SERAGEN, except with the prior written consent of
SERAGEN. SERAGEN and LIGAND, and each of their Affiliates, agree to purchase
and/or sell PRODUCT produced exclusively by COPHARMA during the term of this
Agreement, but retain the right to qualify a second source of supply of PRODUCT.
In the event that SERAGEN identifies a second source, COPHARMA agrees to support
at SERAGEN's expense the transfer to the second source of manufacturing methods
and processes which constitute PRODUCT Intellectual Property, including but not
limited to the manufacturing Batch records, solution preparation documents,
pertinent QC assay and manufacturing SOPs, equipment specifications, QC assay
validation protocols, process validation protocols, and technical transfer
assistance at the discretion of COPHARMA.

2.06 FORECASTS. Upon the Effective Date, SERAGEN shall provide COPHARMA with a
binding take or pay *** (***) *** forecast for PRODUCT, consisting of a minimum
of *** (***) Batches (excluding any development batches called for as part of
the Technology Services) for the ***. *** prior to expiration of ***, and ***
thereafter for the duration of this Agreement, SERAGEN will supply COPHARMA with
a binding *** forecast for PRODUCT for the ***. By *** of *** SERAGEN will issue
a PO for the PRODUCT requirements for the *** of the following *** and by *** of
*** SERAGEN will issue a PO for the PRODUCT requirements for the *** of the ***.
Delivery of the first *** Batches of PRODUCT against the PO for the *** of the
*** will be no sooner than ***, and delivery of the first *** Batches of PRODUCT
against the PO for the *** of the *** will be no sooner than ***. PRODUCT will
be delivered at a

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maximum rate of *** Batches *** thereafter.

For the ***, only, the PO for the *** will be issued by *** of *** and the PO
for the *** will be issued by ***. Delivery of the first *** Batches of PRODUCT
against the PO for the *** will be no sooner than ***, and delivery of the first
*** Batches of PRODUCT against the PO for the *** will be delivered no sooner
than ***. PRODUCT will be delivered at a maximum rate of *** Batches ***
thereafter.

Notwithstanding the maximum Batch delivery rate set forth above, additional
PRODUCT Batches may be delivered to SERAGEN at any time on mutual agreement of
the parties if adequate PRODUCT inventory is available.

COPHARMA shall notify SERAGEN within 10 business days of receipt of each
forecast if it anticipates that it will be unable to meet any or all of the
forecasted requirements, provided, however, that failure to make such
notification will not obligate COPHARMA to supply amounts of PRODUCT beyond the
limitations set forth below in this Section 2.06.

COPHARMA may reject, and is under no obligation to fulfill, any purchase order
for PRODUCT which, when aggregated with previously received purchase orders and
any development batches called for under the Technology Services, (i) exceeds by
more than ***% the current *** forecast or the current *** forecast previously
delivered by SERAGEN in accordance with this Section 2.06, (ii) exceeds ***
Batches in any given calendar year or *** Batches in any six-month period, (iii)
exceeds the production capacity of *** Batches every two weeks or *** Batches
per month of COPHARMA'S facility at 97 South Street, Hopkinton, Massachusetts,
or (iv) cannot be filled due to circumstances arising under Section 11.10.
COPHARMA shall notify SERAGEN in writing of any rejection within ten (10) days
of receipt of the purchase order being rejected. Any purchase order which is not
rejected within this ten (10) days of receipt shall be deemed accepted by
COPHARMA.

2.07 MANUFACTURING MATERIALS. COPHARMA shall be responsible for planning and
ordering an adequate supply of other components meeting the Specifications that
are necessary to manufacture PRODUCT. Further, COPHARMA shall provide facilities
to adequately store and maintain all raw materials, starting materials,
reagents, intermediates and PRODUCT within Specifications. COPHARMA shall ensure
that, to the extent COPHARMA and SERAGEN have agreed upon a price for such
services, appropriate diligence, caution and management are taken in COPHARMA'S
storage and control of key cell lines and other reagents owned by SERAGEN which
are directly related to the manufacture and testing of ONTAK, such as, but not
limited to, ***.

2.08 CREDIT FOR CURRENT STOCKS OF MATERIALS AND REAGENTS. As of the Effective
Date SERAGEN has the raw materials, starting materials, reagents and other
components (the "Components") to manufacture *** (***) Batches of PRODUCT. As of
the Effective Date the Components are being stored at the Facility. SERAGEN
agrees that following the Effective Date

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it will make these materials available to COPHARMA for use by COPHARMA in
the manufacture and supply of PRODUCT. COPHARMA will credit against SERAGEN'S
payment due for PRODUCT or other services provided pursuant to this Agreement a
total of *** representing the value of such Components. The *** will be credited
to SERAGEN in ***.

2.09 MANUFACTURING PROCESS. All PRODUCT provided to SERAGEN by COPHARMA shall
meet the Specifications, which cannot be changed unless agreed to in a dated,
written document signed by the Parties. In addition, if any Regulatory Agency
having jurisdiction in any country where SERAGEN is selling FDP requires any
changes to the Specifications, COPHARMA shall make reasonable efforts to make
the required changes, at SERAGEN's expense. In the event amendments or
supplements are required to the Specifications for the purpose of complying with
current Regulatory Requirements, the parties shall mutually agree on appropriate
amendments or supplements.

2.10 PROCESS IMPROVEMENTS. Each of COPHARMA and SERAGEN shall have the right to
request changes to implement Process Improvements or to reduce the cost of
manufacturing, by written notice delivered to the other party. COPHARMA and
SERAGEN shall meet as soon as possible after such notification to discuss such
changes and the continued provision of PRODUCT under this Agreement. No change
shall be implemented by COPHARMA, whether requested by either of the parties or
requested or required by any governmental agency, until SERAGEN has agreed in
writing to such change. Under no circumstances shall this section be construed
to require either party to agree to changes that do not comply with cGMP
Requirements.

2.11 QUALITY CONTROL AND QUALITY ASSURANCE. COPHARMA shall conduct quality
control testing and release the PRODUCT (hereafter referred to as "COPHARMA QA
release") in accordance with (a) the methods and procedures described in the
Manufacturing and Release Requirements, and (b) current Regulatory Requirements.
Unless otherwise authorized by SERAGEN, shipment of PRODUCT shall not occur
prior to SERAGEN's release of the PRODUCT, which release will be based solely
upon SERAGEN'S review of the MRR Documentation supplied by COPHARMA. COPHARMA
shall retain all records pertaining to testing as required by cGMP.

2.12 NON-CONFORMING MANUFACTURED PRODUCT. COPHARMA shall provide SERAGEN'S
quality assurance and compliance department with copies of completed MRR
Documentation listed in Exhibit A, and shall endeavor to do so within 10
business days of COPHARMA QA release of PRODUCT. Within thirty (30) days after
COPHARMA QA release of each batch of PRODUCT and receipt of all MRR
Documentation, SERAGEN shall determine by review of the MRR Documentation
whether or not the given Batch of PRODUCT conforms to the Manufacturing and
Release Requirements, and was manufactured in accordance with cGMPs; provided
that COPHARMA provides timely answers to information requests and resolution of
issues arising from SERAGEN's review of MRR Documentation. If within the thirty
(30) days SERAGEN QA makes a determination that SERAGEN believes the Batch to be
nonconforming,

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SERAGEN shall have the right to reject the Batch in its entirety and shall
notify COPHARMA promptly of this decision. If SERAGEN does not reject the Batch
within such thirty (30) day period the Batch will be deemed accepted by SERAGEN.
Acceptance of the Batch by SERAGEN triggers payment as described in Article VI.
Any dispute between COPHARMA and SERAGEN as to whether or not a Batch that has
been rejected by SERAGEN is nonconforming will be resolved in accordance with
the procedures set forth in Section 2.15 below.

2.13 REPLACEMENT BATCH. COPHARMA shall notify SERAGEN promptly of a rejection of
a Batch by COPHARMA QA, or any delay or irregularity encountered during
manufacture which could lead to a rejection. SERAGEN and COPHARMA shall promptly
and mutually agree upon new dates for the initiation and completion by COPHARMA
of the manufacture of a replacement Batch of PRODUCT if required to meet any
outstanding purchase order.

In the event that a replacement Batch is commenced prior to a rejection and the
Parties subsequently determine that the replacement Batch is not required,
SERAGEN will bear the costs associated with the manufacture of the replacement
Batch, up to the time of such determination. SERAGEN and COPHARMA will negotiate
in good faith terms for the continuance or discontinuation of the manufacture of
any such replacement Batch.

Subject to prior resolution of the dispute in accordance with the procedures set
forth in Section 2.15, below in the event there is a dispute between COPHARMA
and SERAGEN over whether a Batch is nonconforming, COPHARMA shall replace all
non-conforming shipments at its expense, refund any payments made for the
nonconforming shipment, and shall reimburse SERAGEN for any reasonable charges
incurred by SERAGEN for shipping or storage, if applicable, of the
non-conforming shipment. Any replacement Batch of PRODUCT to be manufactured by
COPHARMA shall be invoiced by COPHARMA in accordance with the purchase order
placed by SERAGEN for the nonconforming shipment of PRODUCT.

2.14 DESTRUCTION OF NONCONFORMING PRODUCT. COPHARMA shall destroy, after
thorough investigation and upon determination that no further action can be
taken, at COPHARMA's sole cost and expense, in accordance with all applicable
laws and regulations (including, without limitation, environmental laws and
regulations) and in a manner to which SERAGEN has given its prior written
approval, PRODUCT deemed to be nonconforming in its possession that has been
replaced or is to be replaced, and such PRODUCT shall not be sold, reprocessed,
salvaged, reclaimed or otherwise reused in any manner by COPHARMA. SERAGEN, or
its designees, shall return all rejected Batches to COPHARMA, at COPHARMA's
expense, for destruction. Representatives of SERAGEN shall be permitted to
witness the destruction of nonconforming PRODUCT under this section, and shall
receive from COPHARMA proof of such destruction, upon written request.

2.15 RESOLUTION OF DISPUTES. In the event of dispute between the Parties over
the validity of a Batch rejection for failure to meet PRODUCT Specifications,
the Parties agree to submit a representative sample of the rejected Batch to a
qualified independent cGMP test facility to be agreed upon by the Parties, and
to accept the results of the testing performed by that facility as binding with
regard to that Batch. The testing procedures utilized must be formerly
transferred

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and qualified at the independent test facility prior to performing the testing.
The expense of such testing shall be borne by the losing Party.

In the event that the Parties cannot resolve a dispute regarding conformance
with cGMPs and/or required MRR Documentation, the Parties shall submit the issue
to a mutually agreed upon expert cGMP organization. The findings of the expert
cGMP organization shall be binding on the Parties, absent manifest error.
COPHARMA shall bear such expenses of the cGMP organization if the findings
confirm the non-conformity, and SERAGEN shall bear such expenses if the findings
confirm that the PRODUCT was manufactured in accordance with cGMPs and/or
required MRR Documentation. The Parties agree to make all efforts in good faith
to resolve disputes within 60 days.

2.16 ADDITIONAL SERVICES. Clinical product storage, cell line stock, storage,
and reference standard storage and regulatory/CMC consulting requested by
SERAGEN will be provided by COPHARMA all in accordance with cGMPs; and all other
regulatory requirements and filings as applicable. A list of these additional
services is shown in Exhibit F. The work scope and pricing of these additional
services will be agreed to by the parties by the end of January 2000. The
parties understand and agree that if the fermentation of additional ONTAK
pellets is required in connection with the manufacture of PRODUCT, such
additional fermentation will constitute an additional service requested by
SERAGEN pursuant to this Section 2.16 and that if the parties are unable to
agree upon the terms, including price, for the provision of such service,
COPHARMA will be released from any obligation to supply PRODUCT until and unless
such agreement is reached.

2.17 COMPLETION OF PRODUCT BATCHES WHICH ARE INCOMPLETE AS OF THE EFFECTIVE
DATE. SERAGEN represents and warrants to COPHARMA that as of the Effective Date
(upon which date COPHARMA is taking over operation of the Facility from Marathon
Biopharmaceuticals, Inc., a wholly-owned subsidiary of SERAGEN) the PRODUCT
Batches set forth on Exhibit G have not been completed. SERAGEN represents and
warrants to COPHARMA that Exhibit G sets forth a list of each unfinished Batch.
COPHARMA agrees that following the Effective Date it will complete the
manufacture of the unfinished Batches listed on Exhibit G. As such Batches are
finished COPHARMA will invoice SERAGEN for such Batches in the amounts set forth
on Exhibit G and SERAGEN shall make payment for such Batches in the amounts
specified on Exhibit G following the payment procedures set forth in this
Agreement for Batches wholly manufactured by COPHARMA. For Batches which are in
process as of the Effective Date and are completed by COPHARMA following the
Effective Date, the Parties agree that COPHARMA bears no responsibility or
liability for any work on such Batches through the Effective Date and the
Parties agree that the representations, warranties, covenants and obligations of
COPHARMA contained in this Agreement are applicable to such Batches only to the
extent of the work on the Batches which COPHARMA completes.

2.18 REMOVAL OF REJECTED MATERIALS Within 30 days of execution of this
agreement, SERAGEN and COPHARMA will convene a Material Review Board ("MRB") to
determine disposition of rejected PRODUCT Batches and rejected fermentation
pellets. Materials that are deemed rejected by this MRB will be disposed of
according to approved procedures.

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                                   ARTICLE III

                          DEVELOPMENT SERVICES AND FEES

3.01 TECHNOLOGY SERVICES. COPHARMA agrees to provide and deliver to SERAGEN, on
the terms set forth in this Agreement, the services described in Exhibit "D"
(the "Technology Services"). All Batches of PDS or FFBP provided under the
Technology Services shall be manufactured in accordance with appropriate
application of GMP principles (i.e. using specified raw materials, preapproved
development batch records available at the time of manufacture and subject to QA
review of both parties.)

3.02 TECHNOLOGY SERVICES FEES. In consideration of COPHARMA's providing the
Technology Services, SERAGEN agrees to pay COPHARMA for the Technology Services
according to the payment schedule attached to this Agreement as Exhibit "E."

3.03 PAYMENT TERMS. COPHARMA will invoice SERAGEN on a monthly basis for
Technology Services performed by COPHARMA for SERAGEN during the prior month,
except for payment for GMP Comparability Batches or other GMP Batches produced
under Technology Services, which shall be invoiced in the same manner as other
PRODUCT Batches. Payment shall be due from SERAGEN to COPHARMA within thirty
(30) days of receipt of each invoice

3.04 MODIFICATION OF SERVICES. In the event the Parties agree to amend the scope
of the Technology Services to be provided to account for changes in the
specifications for FFBP, the Parties shall negotiate in good faith appropriate
adjustments to the fees payable under Exhibit E. Any adjustments to Exhibits D
or E shall be effective only if in writing.

3.05 PAYMENT LIMITS. The aggregate payment for Technology Services in year 2000
shall not exceed *** (***). The aggregate payment for Technology Services in
year 2001 shall not exceed *** (***). If the maximum expenditures for the
Technology Services set forth in this Section 3.05 are met in a given year and
SERAGEN does not agree to waive such limit and continue to pay for additional
Technology Services in accordance with the provisions of Section 3.03, then
COPHARMA may immediately cease any further work on the Technology Services and
all of COPHARMA'S obligations to provide the Technology Services will
immediately terminate for that year. Further work on the Technology Services
during the following year will continue from the stage where it was halted
during the previous year.

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                                   ARTICLE IV

           MATTERS RELATED TO MANUFACTURE OF PRODUCT AND PROVISION OF
                              TECHNOLOGY SERVICES

4.01 FACILITIES; STAFFING; MATERIALS; EQUIPMENT. COPHARMA shall perform all
manufacturing, storage, handling, packaging and testing of PRODUCT, testing of
FDP and the Technology Services at its facility located at 97 South Street,
Hopkinton, Massachusetts or other testing facility as agreed to by the parties.
COPHARMA shall use commercially reasonable efforts to maintain at all times such
staffing, supplies and equipment as are sufficient to ensure that it has the
ability to supply PRODUCT and to perform the Technology Services in accordance
with the terms of this Agreement. COPHARMA shall provide SERAGEN with sixty (60)
days prior written notice, and receive SERAGEN'S prior written consent, before
making any changes in the raw materials, process, procedures, suppliers,
facilities, equipment, testing, packaging, labeling specifications or other
significant changes and can not implement that change until necessary approvals
are obtained from Regulatory Agencies by SERAGEN. A list of raw materials and
other components to be used in the manufacture of PRODUCT is attached hereto as
EXHIBIT C. COPHARMA shall formally qualify and approve suppliers of raw
materials, reagents, solvents, and packaging components used in the manufacture
of PRODUCT according to COPHARMA's written procedures consistent with cGMPs.
Pursuant to cGMPs, only suppliers approved by COPHARMA's supplier qualification
program shall be used in the manufacture of PRODUCT.

4.02 SUBCONTRACTING. Without SERAGEN's prior written consent, COPHARMA shall not
enter into any subcontract with any third party for the provision of services
under this Agreement, including the manufacture, storage, handling, packaging
and testing of PRODUCT and FDP and the provision of the Technology Services. Any
third party or contract laboratory used for the testing of PRODUCT or
intermediates must, (i) be approved by SERAGEN in advance, (ii) have signed a
confidentiality agreement with SERAGEN and (iii) have completed a successful
qualification/validation between COPHARMA, or SERAGEN, or a SERAGEN designated
contractor. A copy of the qualification/validation and procedures and results
must be submitted by COPHARMA to SERAGEN for their approval prior to COPHARMA'S
use of the contractor for the designated purposes.

4.03 AUDITS; ACCESS. SERAGEN'S authorized representative(s), after arranging at
least five (5) business days in advance with COPHARMA, shall be allowed during
regular business hours to examine and inspect that portion of the COPHARMA
facilities required for the performance of this Agreement, including periodic
inspections relating to the manufacture, testing, handling, storage, packaging
and labeling of PRODUCT and to inspect and request copies of all MRR
Documentation related to this Agreement, including, but not limited to, the
following: Batch records, validation documentation, analytical results on raw
materials, components, intermediates and final products, deviation reports, in
process testing and PRODUCT reports, trend analysis reports, inspection reports
generated by regulatory authorities and responses to reports and

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inspections by regulatory authorities (both edited to maintain client
confidentiality). SERAGEN shall also be allowed to conduct routine annual cGMP
audits of COPHARMA facilities. SERAGEN shall send a request to schedule an audit
with COPHARMA within sixty (60) days of the proposed audit.

4.04 COOPERATION. COPHARMA shall provide reasonable cooperation in order that
SERAGEN, among other things, may from time to time confirm COPHARMA's compliance
with the provisions of Article IV, including COPHARMA's due and reasonable care
in the storage of biological materials and COPHARMA's full compliance with all
applicable Regulatory Requirements.

4.05 INFORMATION. COPHARMA shall provide SERAGEN copies of all MRR Documentation
relating to the services provided and PRODUCT supplied under this Agreement. All
such MRR Documentation shall be provided in a timely manner at the request of
SERAGEN.

4.06 TAXES. Subject to the provisions of this Section 4.06, SERAGEN shall
reimburse COPHARMA for all tariffs, duties and excise, sales or use, value added
or other taxes or levies (collectively, "TAXES") that may be paid by COPHARMA
with respect to the manufacture and sale to SERAGEN of the PRODUCT or the
provision of the Technology Services or any other services by COPHARMA to
SERAGEN pursuant to this Agreement. Notwithstanding the foregoing, SERAGEN shall
have no reimbursement obligations under this Section 4.06 to the extent that (i)
such Taxes are based on COPHARMA'S net income or (ii) such Taxes are recoverable
or offset by COPHARMA, in whole or in part, as a credit, rebate, deduction or
otherwise.

                                    ARTICLE V
                    STANDARDS OF CARE AND COMPLIANCE WITH LAW

5.01 GENERAL. COPHARMA shall supply PRODUCT and Technology Services in
accordance with current regulatory standards prevailing in the biopharmaceutical
industry. Without limiting the foregoing, COPHARMA shall exercise all due and
reasonable care with regard to any biological raw materials, work-in-process,
clinical products or finished products in its custody relating to the PRODUCT
and its manufacture or the Technology Services.

5.02 COMPLIANCE WITH APPLICABLE LAW. COPHARMA shall comply with all applicable
laws, requirements, rules, regulations and standards prescribed by public
authorities (including the Food and Drug Act), in supplying PRODUCT and the
Technology Services and shall maintain all necessary records to comply with
these applicable laws, requirements, rules, regulations and standards. Without
limiting the foregoing, COPHARMA shall comply with current Regulatory
Requirements.

5.03 DOCUMENTS AND REPORTS. COPHARMA shall use commercially reasonable efforts
to ensure that documents required to be retained according to cGMPs are stored
in a confidential manner to maintain their integrity and protection from fire
and other hazards, for the required length of storage. COPHARMA shall
participate and provide information and data, excluding confidential business
and proprietary information of COPHARMA, as are reasonably requested

                                       13

<PAGE>

by SERAGEN to support drug product complaint investigations, annual product
reviews, and error/accident reporting. COPHARMA shall cooperate fully with
SERAGEN in promptly filing all documents and reports required or reasonably
requested by any Regulatory Agency in a form reasonably acceptable to SERAGEN,
and shall provide SERAGEN with such information and assistance as SERAGEN may
require with regard to those filings, including all reports, authorizations,
certificates, methodologies, specifications and other documentation in the
possession of or under the control of COPHARMA, and shall ensure that the
content of all submissions is suitable for regulatory filings.

5.04 DEBARMENT. COPHARMA represents and warrants to SERAGEN that it has neither
been debarred nor is subject to debarment and that it will take commercially
reasonable precautions to not use in any capacity, in connection with PRODUCT or
the Technology Services to be supplied under this Agreement, any person who has
been debarred pursuant to subsections 306(a) or 306(b) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 335a(a)) or who is the subject of a conviction
described in such section. COPHARMA agrees to inform SERAGEN immediately in
writing if it is, or it becomes aware that any person who is performing services
hereunder on behalf of COPHARMA is, debarred or is the subject of a conviction
described in subsections 306(a) or 306(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 335a(a)) or if any action, suit, claim, investigation,
or proceeding is pending or, to the knowledge of COPHARMA, threatened relating
to the debarment of COPHARMA or any person performing services on behalf of
COPHARMA hereunder.

5.05 COMPLAINTS; ANNUAL PRODUCT REVIEWS; ACCIDENT REPORTING; ADVERSE EVENTS;
ERROR/ACCIDENT REPORTING. COPHARMA shall participate and provide information and
data, excluding confidential business and proprietary information of COPHARMA,
as are reasonably requested by SERAGEN to support drug product complaint
investigations, annual product reviews, and error/accident reporting. In the
event that COPHARMA receives any complaint or report of adverse drug event(s) as
defined by 21 C.F.R. 600.80 (an "Adverse Event") regarding the PRODUCT,
regardless of its association with the PRODUCT, then COPHARMA shall notify
SERAGEN in writing, by facsimile [858-550-1860] on or before the fifth calendar
day following the receipt thereof; provided that COPHARMA shall notify SERAGEN
in writing, by facsimile [858-550-1860] and by telephone [858-550-7750] within
twenty four (24) hours of any fatal or life-threatening adverse event. SERAGEN
shall have primary responsibility for fielding, investigating and responding to
all PRODUCT complaints and Adverse Events. COPHARMA shall cause its
manufacturing, quality assurance and quality control personnel to cooperate
fully with SERAGEN, as appropriate and needed, to investigate any PRODUCT
complaints or Adverse Events and to provide such information or assistance as is
reasonably requested by SERAGEN in order to support SERAGEN's compliance with
Adverse Event, field alert and other reporting requirements imposed by any
Regulatory Agency. SERAGEN, as the product licensee for Regulatory Agency
purposes, shall have the right to exercise full functional control over the
resolution of complaints and Adverse Events as required by all applicable
regulations. The Parties shall each report to the other on the resolution of
complaints and Adverse Events.

5.06 NOTIFICATION OF POTENTIAL LIABILITY. Each Party shall notify the other in
writing as soon as is reasonably possible following any event, including the
receipt of any notice, warning,

                                       14

<PAGE>

citation, finding, report or service of process or the occurrence of any
release, spill, upset or discharge of hazardous wastes or substances, related to
the PRODUCT or the Technology Services that could reasonably be expected to give
rise to liability on the part of the other Party under any law, rule or
regulation prescribed by a public authority or otherwise.

5.07 GOVERNMENTAL COMMUNICATIONS AND INSPECTIONS. COPHARMA will notify SERAGEN
within twenty-four (24) hours of COPHARMA'S receipt of notice of any inspections
of COPHARMA'S facilities relating to PRODUCT or the Technology Services, whether
pre-scheduled or unannounced, by a Regulatory Agency and if possible shall give
SERAGEN the opportunity to be present and observe such an inspection. The
findings of these inspections shall be provided by COPHARMA to SERAGEN in a
manner which protects the confidential information of third parties, to the
extent they relate to or impact the manufacture, testing, packaging, storage or
handling of PRODUCT for SERAGEN or the provision of Technology Services to
SERAGEN. COPHARMA will notify SERAGEN within twenty-four (24) hours of receipt
of any communications from a Regulatory Agency relating to the PRODUCT or the
Technology Services, including any communication or directive from a Regulatory
Agency commencing or threatening seizure of any PRODUCT or other removal from
the market of any PRODUCT. If a written communication, the notifying Party shall
attach a copy. Otherwise, the notifying Party shall provide a reasonable
description to the other Party of the communication. SERAGEN shall have the
right to review in advance and approve any response to the communication or
investigation submitted by COPHARMA related to PRODUCT. The Parties shall
cooperate fully with each other in providing the information needed for any such
communication.

5.08 NOTIFICATION AND INVESTIGATION OF ALLEGED DEFECTS. In the event that any
PRODUCT is alleged or proven not to meet the Specifications, the Party receiving
notice of the failure shall notify the other Party immediately, and both Parties
shall cooperate fully regarding the investigation and disposition of the matter.

5.09 ALLOCATION OF BURDEN OF PRODUCT RECALL. In the event (a) any government
authority issues a request, directive or order that FDP prepared from PRODUCT
supplied by COPHARMA to SERAGEN be recalled, or (b) a court of competent
jurisdiction orders such a recall, or (c) SERAGEN or COPHARMA shall reasonably
determine that the PRODUCT should be recalled, the parties shall take all
appropriate corrective actions, and shall cooperate in the investigations
surrounding the recall. In the event that such recall results from any cause or
event arising from the manufacture, storage or handling of the PRODUCT by
COPHARMA in a manner which does not comply with the Manufacturing and Release
Requirements (excluding defects relating to packaging or labeling supplied by or
prepared at the direction of SERAGEN), COPHARMA shall be responsible for all
expenses of the recall (except that COPHARMA and SERAGEN shall share such
expenses equally if such recall is due to a failure by SERAGEN to meet the
Manufacturing and Release Requirements during a Process Improvement requested by
or approved by SERAGEN) and COPHARMA shall promptly replace such PRODUCT at no
additional cost to SERAGEN consistent with directions received from the
appropriate governmental authority. In all other cases, SERAGEN shall be
responsible for the expenses of recall, including the cost of replacement
material for the PRODUCT. For the purposes of this

                                       15

<PAGE>

Agreement, the expenses of recall shall include, without limitation, the
expenses of notification and destruction or return of the recalled PRODUCT and
all other costs incurred in connection with such recall, but shall not include
lost profits of either party.

5.10 MATERIAL SAFETY. During the term of this Agreement and for one year
thereafter, COPHARMA shall promptly provide SERAGEN with all new information,
excluding confidential business and proprietary information of COPHARMA, within
its possession or control or otherwise available to COPHARMA from time to time
regarding handling precautions, toxicity and hazards associated with the
manufactured PRODUCT.

5.11 WASTE DISPOSAL. COPHARMA will conduct the manufacture, packaging, storage
and testing of PRODUCT for SERAGEN and the provision of the Technology Services,
including the disposal of all wastes generated thereby, in conformance with
COPHARMA'S waste handling procedures and appropriate local, provincial or
national environmental laws or regulations. SERAGEN shall provide COPHARMA with
any information required for the environmental assessment, such as disposal
requirements, etc. In this regard, COPHARMA will provide SERAGEN, upon SERAGEN's
written request, with information, documents, and permits reasonable requested
by SERAGEN for SERAGEN to perform an environmental assessment to be made
available to the Regulatory Agency through SERAGEN'S Biologics License
Application (BLA), BLA supplements and/or U.S. license, and as required by other
appropriate regulatory authorities, prior to supply of PRODUCT to SERAGEN.

                                   ARTICLE VI
                      PRODUCT PRICING, PAYMENT AND DELIVERY

6.01 PRICING. Pricing of PRODUCT and of FDP release testing during the period
ending *** of this Agreement shall be as specified in Exhibit B attached hereto.
Pricing of additional services provided according to Section 2.16 during the
period ending *** shall be agreed to by the parties by the end of January 2000.
Pricing of PRODUCT stability testing and FDP stability testing during the period
ending December 31, 2000 shall be as specified on Exhibit B.

     For periods after ***, the parties will negotiate the pricing of PRODUCT,
of FDP release testing, and of additional services in good faith. For periods
after ***, the parties will negotiate the pricing of PRODUCT and FDP stability
testing in good faith. Pricing for fermentation of additional ONTAK pellets, if
required in connection with the manufacture of PRODUCT, will be in addition to
the fees set forth in Exhibit "B" and shall be negotiated by the parties in
accordance with Section 2.16 of this Agreement.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

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<PAGE>

6.02 PAYMENT TERM.

     (a) Except as otherwise set forth below, terms of payment for PRODUCT,
shall be net thirty (30) days from COPHARMA QA release of PRODUCT and receipt
from COPHARMA of a corresponding invoice by SERAGEN, provided there is then a
valid purchase order from SERAGEN in effect for such released PRODUCT, unless a
Batch is deemed nonconforming within said thirty (30) day period. Payment shall
be net thirty (30) days following resolution of a dispute over nonconforming
PRODUCT. Payment for PRODUCT, however, does not in any way impact SERAGEN's
rights pursuant to Articles 2.11-2.15. The invoice from COPHARMA shall credit
advance payments made by SERAGEN under subpart (b) to cover estimated material
costs for PRODUCT.

     (b) As applies to production of PRODUCT: On *** of each year COPHARMA shall
invoice SERAGEN for *** the raw materials costs for the Batches ordered by PO
the preceding *** at the rate of ***/Batch. The remainder of the raw materials
costs for the *** PO will be invoiced by COPHARMA to SERAGEN the following ***.
On *** of each year, COPHARMA shall invoice SERAGEN for *** the raw materials
costs for the Batches ordered by PO the preceding *** at the rate of ***/Batch.
The remainder of the raw materials and preparation costs for the *** PO will be
invoiced by COPHARMA to SERAGEN the following *** .

     For the year 2000 only COPHARMA shall invoice SERAGEN ***, 2000 for *** the
raw materials costs for the Batches ordered by PO by *** of 2000 at the rate of
***/Batch. The remainder of the raw materials costs for the *** PO will be
invoiced by COPHARMA to SERAGEN the following ***. On *** of 2000, COPHARMA
shall invoice SERAGEN for *** the raw materials costs for the Batches ordered by
PO on *** of 2000 at the rate of ***/Batch. The remainder of the raw materials
and preparation costs for the *** PO will be invoiced by COPHARMA to SERAGEN the
following *** .

     Payment by SERAGEN to COPHARMA shall be net thirty (30) days from the
receipt of an invoice from COPHARMA for such estimated costs.

     (c) Terms of payment for FDP release testing shall be net thirty (30) days
from COPHARMA QA approval of the Certificate of Analysis and receipt by SERAGEN
of an invoice for the testing services.

     (d) Terms of payment for stability testing shall be net thirty (30) days
from receipt by SERAGEN of an invoice submitted by COPHARMA on the last day of
every month for scheduled work performed during that month.

     (e) Terms of payment for additional services provided under Section 2.16
shall be net thirty (30) days from receipt by SERAGEN of an invoice submitted by
COPHARMA on the last

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       17

<PAGE>

day of every month for scheduled work performed during that month.

6.03 ***

6.04 MATTERS AFFECTING PRICE OF PRODUCT AND FDP TESTING. The pricing of PRODUCT
and FDP release and stability testing set forth on Exhibit B is based upon the
current Manufacturing and Release Requirements for first generation PRODUCT, the
anticipated Manufacturing and Release Requirements for second generation
PRODUCT, and the current release and stability testing procedures for FDP, as
well as current regulatory requirements. In the event that any regulatory
requirements change or the manner of producing the PRODUCT or performing release
and stability testing for FDP, as set forth on Exhibit A or as anticipated for
second generation PRODUCT, changes, in such a way to increase or decrease the
cost or burden on COPHARMA to manufacture the PRODUCT or perform such release
and stability testing, the parties agree to negotiate an appropriate price
adjustment.

     Similarly, the pricing of PRODUCT and FDP release and stability testing set
forth on Exhibit B is based upon the number of inquiries, requests for
information and explanation, and similar forms of correspondence which COPHARMA
would expect to have from a customer of its contract manufacturing services. In
the event that the burden of answering and dealing with such inquiries, requests
for information and explanation, and other similar forms of correspondence from
SERAGEN is greater than the burden associated with the provision of similar
services to other customers the parties agree to negotiate appropriate pricing
increases.

6.05 DELIVERY OF PRODUCT. Delivery shall be FOB the COPHARMA Plant located at 97
South Street, Hopkinton, Massachusetts or such other location as agreed to by
the parties. SERAGEN shall, at its cost, ensure that adequate insurance
coverage, for full replacement cost, exists on PRODUCT in transit to SERAGEN or
its designee in the event that such PRODUCT is damaged, destroyed or lost, and
shall bear all costs of such insurance. Title to and risk of loss of PRODUCT
shall pass to SERAGEN or its designee at the time of SERAGEN QA release of
PRODUCT.

                                   ARTICLE VII
                    CONFIDENTIALITY AND INTELLECTUAL PROPERTY

7.01 CONFIDENTIALITY The Parties recognize that all non-public information
including, where appropriate and without limitation, any information, know-how,
patent disclosures, patent applications, structures, models, techniques,
processes, compositions, compounds, apparatus and other confidential or
proprietary data and information relating to the same of one Party disclosed to
the other Party pursuant to this Agreement is of proprietary value and is to be
considered highly confidential ("Proprietary Information"). The Parties agree
not to use (except in accordance with this Agreement), and not to disclose to
any third party, any Proprietary Information except with the prior written
consent of the other Party. The foregoing obligations

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       18

<PAGE>

shall survive the expiration or termination of this Agreement for a period
of ten (10) years. For purposes of this Article VII, all confidential
information specifically relating to the PRODUCT and its manufacture acquired or
generated by COPHARMA on behalf of SERAGEN as a result of this Agreement shall
be considered to be Proprietary Information disclosed by SERAGEN to COPHARMA,
provided, however, that this shall not impact COPHARMA'S rights to file patent
applications and prosecute, maintain, enforce and defend such applications and
subsequently issued patents pursuant to the terms of Section 7.05 of this
Agreement covering such Proprietary Information. The obligations of non-use and
nondisclosure shall not apply to Proprietary Information that:

     (a) is known by the receiving Party at the time of its receipt, and not
through a prior disclosure by the disclosing Party, as documented by written
records;

     (b) is at the time of disclosure or thereafter becomes published or
otherwise part of the public domain without breach hereof by the receiving
Party;

     (c) is subsequently disclosed to the receiving Party by a third party who
has no confidentiality obligation to the disclosing Party with respect to the
information disclosed;

     (d) is developed by the receiving Party independently of Proprietary
Information or other information received from the disclosing Party and such
independent development can be properly demonstrated by the receiving Party;

     (e) is disclosed to governmental or other regulatory authorities in order
to obtain patents or to gain approval to conduct clinical trials or to market
the PRODUCT, but such disclosure may be only to the extent reasonably necessary
to obtain such patents or authorizations;

     (f) is necessary to be disclosed to sublicensees, agents, consultants,
affiliates, or other third parties for the research and development,
manufacturing, or marketing of the PRODUCT (or for such parties to determine
their interest in performing such activities) in accordance with this Agreement
on the condition that such third parties agree to be bound by the
confidentiality obligations and use restrictions contained in this Agreement and
that the term of such obligations and restrictions for such third parties shall
be no less than the term of such obligations and restrictions hereunder, but
such disclosure may be only to the extent reasonably necessary for such
purposes; or

     (g) is required to be disclosed by law or court order, PROVIDED that notice
is promptly delivered to the other Party in order to provide it with an
opportunity to seek a protective order or other similar order with respect to
such Proprietary Information, but such disclosure may be only to the extent
reasonably necessary to comply with the required disclosure, whether or not a
protective order or other similar order is obtained by the other Party.

7.02 LICENSE. SERAGEN represents and warrants to COPHARMA that SERAGEN owns all
rights necessary to manufacture, market, sell and distribute the PRODUCT and to
perform the Technology Services. During the term of this Agreement, SERAGEN
hereby grants to

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<PAGE>

COPHARMA a paid-up, royalty-free, non-exclusive license, without the right to
sublicense or transfer, to all rights held by SERAGEN necessary to manufacture
PRODUCT and to perform the Technology Services for SERAGEN under this Agreement,
but only for such purposes and only to the extent necessary for COPHARMA to
perform its obligations under this Agreement. The parties agree that the grant
contained in this section is personal to COPHARMA only and COPHARMA agrees to
make use of SERAGEN's confidential information only in accordance with this
license and only by COPHARMA.

7.03 INTELLECTUAL PROPERTY.

     (a) All Intellectual Property worldwide to ideas, innovations or inventions
(whether or not patentable) developed solely by COPHARMA and its employees
during the course of fulfilling its obligations under this Agreement, including
any Process Improvements for manufacture of PRODUCT, shall be solely owned by
COPHARMA.

     (b) Intellectual Property worldwide to ideas, innovations or inventions
(whether or not patentable) developed solely by SERAGEN and its employees while
this Agreement is in force, including any Process Improvements, shall be solely
owned by SERAGEN.

     (c) Intellectual Property worldwide to ideas, innovations or inventions
(whether or not patentable ) developed jointly by COPHARMA and SERAGEN and their
respective employees while this Agreement is in force, including any Process
Improvements, shall be jointly owned by the Parties.

     (d) COPHARMA agrees to promptly disclose to SERAGEN as they occur any
PRODUCT Intellectual Property developed by COPHARMA during the course of
fulfilling its obligations under this Agreement. COPHARMA represents and
warrants that all of its employees are obligated by written agreement to assign
to COPHARMA any of their inventions that arise as a result of the provision of
services under this Agreement.

7.04 EXCLUSIVE LICENSE. COPHARMA hereby grants to SERAGEN an irrevocable,
worldwide, royalty free, fully paid-up exclusive license, with right to
sublicense, under PRODUCT Intellectual Property or other Intellectual Property
necessary or desirable to manufacture PRODUCT owned in whole or in part by
COPHARMA, only for SERAGEN to make, have made, use and sell PRODUCT, and to
offer PRODUCT for sale. The parties agree that this license does not apply to
the use of Intellectual Property for purposes other than to make, have made, use
and sell PRODUCT and COPHARMA retains all other rights to Intellectual Property,
including the right to license such other rights. Upon request by SERAGEN,
COPHARMA agrees to execute any documents necessary for SERAGEN to exercise its
rights under the exclusive license granted under this provision.

7.05 PATENTS. With respect to Intellectual Property owned solely by SERAGEN or
jointly by SERAGEN and COPHARMA under this Agreement, SERAGEN shall decide, at
its sole discretion, whether, when and where to file a patent application and if
SERAGEN decides to file a patent application, it shall be solely responsible for
filing, prosecuting, maintaining, enforcing

                                       20

<PAGE>

and defending such application or subsequently issued patent. Upon request by
SERAGEN, COPHARMA shall provide SERAGEN with reasonable assistance in obtaining
any copyright, patent or other Intellectual Property protection covering any
Intellectual Property created or developed under this Agreement and owned solely
or jointly by SERAGEN, provided that COPHARMA's costs are paid for by SERAGEN.

With respect to Intellectual Property owned solely by COPHARMA, COPHARMA shall
first decide whether, when and where to file a patent application. If COPHARMA
decides to file a patent application to protect Intellectual Property, it shall
be solely responsible for filing, prosecuting, maintaining, enforcing and
defending such application or subsequently issued patent. If COPHARMA decides
not to file a patent application to protect PRODUCT Intellectual Property, or
decides to abandon an existing patent or patent application covering PRODUCT
Intellectual Property, it shall promptly notify SERAGEN of its decision and
SERAGEN shall have the right to file a patent application to protect the PRODUCT
Intellectual Property, or to maintain the existing patent or patent application.
If SERAGEN exercises its rights to assume responsibility for PRODUCT
Intellectual Property abandoned by COPHARMA under this provision, COPHARMA shall
assign its rights to the PRODUCT Intellectual Property to SERAGEN and shall
provide SERAGEN with reasonable assistance in obtaining patent protection,
provided that COPHARMA's costs are paid for by SERAGEN.

7.06 NO PUBLICITY. No Party shall disclose the terms related to this Agreement
without the prior written consent of the other Party. Nothing in the foregoing,
however, shall prohibit a Party from making such disclosures to the extent
deemed necessary under applicable federal or state securities laws or any rule
or regulation of any nationally recognized securities exchange; in such event,
however, the disclosing Party shall use good faith efforts to consult with the
other Party prior to such disclosure and, where applicable, shall request
confidential treatment to the extent available. In addition, COPHARMA may
disclose the identity of SERAGEN as a customer of COPHARMA to other customers
and potential customers.

7.07 TRADEMARKS AND TRADE NAMES. The Parties hereby acknowledge and agree that
neither Party has acquired, nor shall it acquire by virtue of this Agreement or
the activities contemplated hereby, any interest in any of the other Party's
trademarks or trade names.

7.08 INJUNCTIVE RELIEF. The Parties hereto understand and agree that remedies at
law may be inadequate to protect against any breach of any of the provisions of
this Article 7 by any Party or their employees, agents, officers or directors or
any other person acting in concert with it or on its behalf. Accordingly, each
Party shall be entitled to the granting of injunctive relief by a court of
competent jurisdiction against any action that constitutes any such breach of
this Article 7.

7.09 NO OTHER RIGHTS. Except as otherwise expressly set forth in this Agreement,
it is understood and agreed by the Parties that this Agreement does not grant
any license or other right under any Intellectual Property of the Parties.

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                                  ARTICLE VIII
                                 INDEMNIFICATION

8.01 INDEMNIFICATION BY SERAGEN. SERAGEN shall indemnify and hold harmless
COPHARMA and its Affiliates, and their respective directors, officers,
shareholders, employees, consultants and agents from and against all suits,
claims, losses, demands, liabilities, damages, costs and expenses (including
court costs, reasonable attorney's fees and reasonable investigative costs)
(together "Liabilities") in connection with any suit, demand or action by any
third party (a "Third Party Action") arising out of, resulting from or relating
to: (a) the further processing, formulation, storage, labeling, promotion,
marketing, use or sale of PRODUCT by SERAGEN, as long as the PRODUCT met or
exceeded the Manufacturing and Release Requirements provided herein at the time
of its release to SERAGEN and was manufactured in accordance with cGMPs, (b)
breach of any representation, warranty, covenant or agreement contained in this
Agreement by SERAGEN, (c) SERAGEN's negligence, recklessness or willful
misconduct or the negligence, recklessness or willful misconduct of any employee
or agent of SERAGEN, (d) any representation or warranty made by SERAGEN to its
customers or users with respect to the PRODUCT, other than a representation that
the PRODUCT conformed to the Manufacturing and Release Requirements at the time
of its release to SERAGEN, or (e) any Third Party Action alleging that the
PRODUCT or the production of the PRODUCT or provision of the Technology Services
pursuant to the Agreement infringes any patent or other proprietary rights
except to the extent such Third Party Action relates to the use of COPHARMA's
patents or other proprietary rights which are not deemed Proprietary Information
of SERAGEN; except in each case to the extent that any of the foregoing arises
out of or results from the breach by COPHARMA of the terms of this Agreement or
failure of COPHARMA to provide PRODUCT that meets or exceeds the Manufacturing
and Release Requirements at the time of release to SERAGEN and was manufactured
in accordance with cGMPs.

8.02 INDEMNIFICATION BY COPHARMA. COPHARMA shall indemnify and hold harmless
SERAGEN and its Affiliates, and their respective directors, officers,
shareholders, employees, consultants and agents from any and all Liabilities to
third parties to the extent that such Liability arises from: (a) COPHARMA'S
failure to meet the Manufacturing and Release Requirements, (b) COPHARMA'S
negligence, recklessness, or willful misconduct in the manufacture, handling,
storage, testing or packaging of PRODUCT, (c) COPHARMA'S failure to manufacture
PRODUCT in accordance with cGMPs, (d) COPHARMA'S failure to reasonably comply
with all laws, regulatory filings, rules or regulations applicable to its
performance under this Agreement, or (e) breach of any representation, warranty,
covenant or agreement contained in this Agreement by COPHARMA.

8.03 INDEMNIFICATION PROCEDURES. As a condition of the indemnification rights
provided in this Article 8, the indemnified Party shall promptly notify the
indemnifying party in writing of any claim, action or suit (the "Asserted
Liability") potentially giving rise to the indemnification obligation hereunder.
The indemnifying party may elect to compromise or defend, and control the
defense of, at its own expense and by counsel reasonably satisfactory to the
indemnified party, any such Asserted Liability, provided that the indemnified
party shall have no liability under any compromise or settlement agreed to by
the indemnifying party which it has not

                                       22

<PAGE>

approved in writing. The indemnified party shall cooperate upon the request
and at the expense of the indemnifying party, in the compromise of, or defense
against, such Asserted Liability. If the indemnifying party elects not to
compromise or defend the Asserted Liability, or fails to notify the indemnified
party of its election as herein provided, the indemnified party may pay,
compromise or defend such Asserted Liability and receive full indemnification
for its losses as provided in Sections 8.01 or 8.02 hereof, including all costs
of defending such suit. In any event, the indemnified party and the indemnifying
party may participate, at their own expense, in the defense of such Asserted
Liability. If the indemnifying party chooses to defend any claim, the
indemnified party shall make available to the indemnifying party any books,
records or other documents within its control that are reasonably requested for
such defense and shall otherwise cooperate with the indemnifying party, in which
event the indemnified party shall be reimbursed for its out-of-pocket expense.

8.04 SURVIVAL OF REMEDIES. All limitations on either Party's remedies and
liabilities under this Article VIII shall survive the expiration, termination or
cancellation of this Agreement.

8.05 LIMITATION OF LIABILITY.

     (a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTIAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF THE
PERFORMANCE OF THIS AGREEMENT.

     (b) THE MAXIMUM AGGREGATE LIABILITY OF COPHARMA FOR ALL CAUSES OF ACTION
ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
LIABILITY ARISING UNDER ARTICLE 8.02 (INDEMNIFICATION), LIABILITY ARISING FROM A
BREACH OF THIS AGREEMENT OR NONPERFORMANCE UNDER THIS AGREEMENT, AND LIABILITY
ARISING OUT OF OR RELATED TO THE MANUFACTURE OF PRODUCT, THE PROVISION OF THE
TECHNOLOGY SERVICES, AND THE PROVISION OF OTHER SERVICES PROVIDED BY COPHARMA
PURSUANT TO THIS AGREEMENT, SHALL BE THE DIFFERENCE BETWEEN (A) THE SUM OF (I)
THE AMOUNT WHICH COPHARMA WOULD BE ABLE TO RECOVER IN CONNECTION WITH ANY SUCH
CAUSES OF ACTION UNDER THE INSURANCE POLICY DESCRIBED IN SECTION 8.06(B) BELOW
IF COPHARMA TOOK COMMERCIALLY REASONABLE STEPS TO MAINTAIN AND COLLECT UNDER
SUCH INSURANCE AND (II) THE AMOUNT PAID BY SERAGEN TO COPHARMA PURSUANT TO THIS
AGREEMENT FOR THE MANUFACTURE OF PRODUCT, THE PROVISION OF THE TECHNOLOGY
SERVICES AND THE PROVISION OF SUCH OTHER SERVICES DURING THE TWELVE (12) MONTHS
PRIOR TO ANY EVENT GIVING RISE TO LIABILITY AND (B) THE AMOUNT OF ALL PREVIOUS
AGGREGATE LIABILITY OF COPHARMA FOR CAUSES OF ACTION ARISING OUT OF OR RELATED
TO THIS AGREEMENT. THE LIMITATION ON COPHARMA'S AGGREGATE LIABILITY CONTAINED IN
THE PRECEDING SENTENCE SHALL NOT APPLY TO LIABILITY ARISING FROM COPHARMA'S
WILLFUL MISCONDUCT IN THE MANUFACTURE, HANDLING, STORAGE, TESTING OR PACKAGING
OF PRODUCT; PROVIDED THAT

                                       23

<PAGE>

THIS SENTENCE SHALL NOT APPLY TO COPHARMA'S FAILURE TO MANUFACTURE AND SUPPLY
PRODUCT PURSUANT TO THIS AGREEMENT, EVEN IF WILLFUL.

8.06 INSURANCE.

     (a) Throughout the Term, SERAGEN shall obtain and maintain comprehensive
general liability insurance (including broad form general liability, completed
operations and products liability, personal injury liability, blanket
contractual liability and broad form property damage liability) with limits of
not less than $3,000,000 combined single limit for bodily injury and property
damage liability per occurrence and annual aggregate, containing a
cross-liability or severability of interests clause. Without limiting the
foregoing, SERAGEN shall obtain and maintain, at its sole expense, product
liability insurance relating to the PRODUCT that is comparable in type and
amount to the insurance it maintains with respect to its most similar other
products. With respect to all insurance coverage required under this clause (a):
(i) SERAGEN shall, promptly upon COPHARMA's request, furnish COPHARMA with
certificates of insurance evidencing such insurance; and (ii) all policies shall
include provisions for at least 30 days' prior written notice of any material
change or cancellation (whether for non-payment or otherwise).

     (b) Throughout the Term, COPHARMA shall obtain and maintain comprehensive
general liability insurance (including broad form general liability, completed
operations and products liability, blanket contractual liability and broad form
property damage liability) with limits of not less than $3,000,000 combined
single limit for bodily injury and property damage liability per occurrence and
annual aggregate, containing a cross-liability or severability of interests
clause. During the Term, COPHARMA shall obtain and maintain worker's
compensation insurance as required under Massachusetts law and employer's
liability insurance with a limit of not less than $1,000,000. With respect to
all insurance coverage required under this clause (b): (i) COPHARMA shall,
promptly upon SERAGEN's request, furnish SERAGEN with certificate of insurance
evidencing such insurance; and (ii) all policies shall include provisions for at
least 30 days' prior written notice of any material change or cancellation
(whether for non-payment or otherwise). COPHARMA shall use its best efforts to
obtain and maintain five-year tail coverage for the above-mentioned insurance.

                                       24

<PAGE>

                                   ARTICLE IX
                         WARRANTIES AND REPRESENTATIONS

9.01 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each Party represents and
warrants to the other that (a) it is a corporation, duly organized and validly
existing under the laws of the State of Delaware; (b) it has all requisite
corporate power and authority to own its properties, conduct its business as
presently conducted, and enter into and perform its obligations under this
Agreement; (c) it has taken all necessary corporate action to authorize this
Agreement; (d) it has duly executed and delivered this Agreement and this
Agreement constitutes its legal and valid obligation, enforceable against it in
accordance with its terms; (e) the execution and delivery of this Agreement and
the performance of its obligations hereunder do not and will not (i) violate any
other agreement or instrument of any nature to which it is a party or by which
it is bound, (ii) violate any law, rule or regulation to which it is subject or
by which it is bound, or (iii) require any filing, approval, authorization,
permit or license from or with any governmental authority which has not been
made or obtained, PROVIDED, HOWEVER, that COPHARMA makes no representation or
warranty concerning any approvals or consents which may be required for, or in
connection with, the transfer of any Permits (as defined in the Asset Purchase
Agreement, dated the date hereof, between COPHARMA, SERAGEN, LIGAND and Marathon
Biopharmaceuticals, Inc. (the "Asset Purchase Agreement")) required for
COPHARMA'S operation of the Business (as defined in the Asset Purchase
Agreement) or COPHARMA'S use of the Facility or the Purchased Assets (as defined
in the Asset Purchase Agreement) following the Closing (as defined in the Asset
Purchase Agreement) or the performance of any of the COPHARMA'S obligations
under this Agreement.

9.02 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SERAGEN. SERAGEN represents
that it is not aware of any asserted or threatened claim or demand that it
believes may be enforced against its patents and other proprietary rights
relating to the PRODUCT or the Technology Services, and in entering into this
Agreement, to its knowledge it will not infringe on any patent or other
proprietary rights of any third party. SERAGEN further represents that
operations which are critical to its performance under this Agreement,
particularly with regard to computer systems and applications, will be "Year
2000 ready". "Year 2000 ready" means that operations will not be adversely
affected by the occurrence of the year 2000 and that computer systems and
applications will operate and (1) will correctly store, represent and process
(including sort) all dates (including single and multi-century formulas and leap
year calculations), such that errors will not occur when the date being used is
in the year 2000, or in a year preceding or following the year 2000; and (2)
will not cause or result in an abnormal termination or ending.

9.03 REPRESENTATIONS AND WARRANTIES OF COPHARMA. COPHARMA represents and
warrants that, at the time of delivery of the PRODUCT to SERAGEN, the PRODUCT
will (a) have been manufactured, stored and shipped in accordance with current
Regulatory Requirements and cGMPs, (b) will meet or exceed the Manufacturing and
Release Requirements, and (c) not be adulterated or misbranded under the Food
and Drug Act or any other applicable law, rule or regulation.

                                       25

<PAGE>

9.04 REMEDIES. In the event that any PRODUCT provided by COPHARMA was not
manufactured in accordance with cGMPs, and/or fails to meet the Manufacturing
and Release Requirements or the warranties provided herein, SERAGEN'S sole
remedy with respect to a rejected Batch shall be the re-supply, at COPHARMA'S
cost, of (1) lost fermentation pellets; and (2) said non-conforming PRODUCT in a
non-defective form meeting the Manufacturing and Release Requirements.

9.05 DISCLAIMER OF WARRANTIES. THE PARTIES ACKNOWLEDGE AND AGREE THAT ALL
SERVICES PROVIDED UNDER THIS AGREEMENT WILL BE PERFORMED BY COPHARMA AT THE
DIRECTION OF SERAGEN. COPHARMA DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTIBILITY OR
FITNESS FOR A PARTICULAR PURPOSE, ANY WARRANTIES ARISING FROM COURSE OF DEALING
OR USAGE OF TRADE OR ANY WARRANTIES OF PATENT VALIDITY OR FREEDOM OF OR FROM
PATENT INFRINGMENT, WITH RESPECT TO ANY PRODUCT OR SERVICES DELIVERED UNDER THIS
AGREEMENT (OTHER THAN THOSE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT).

                                    ARTICLE X
                              TERM AND TERMINATION

10.01 TERM. This Agreement shall commence on the later of (i) January 7, 2000
and (ii) the Closing Date (as defined in Section 1.8 of the Asset Purchase
Agreement) (the later of (i) or (ii) being the "Effective Date") and shall
continue in full force and effect until ***, unless earlier terminated, in whole
or in part, in accordance with the provisions of Section 10.02, 10.03, 10.04,
10.05, 10.06 or 10.07 below (the "Term"). Beginning ***, the parties will enter
into negotiations for a period not to exceed *** (***) *** concerning whether
they desire to extend this Agreement beyond ***, and if so, the terms and
conditions for any such extension.

10.02 TERMINATION FOR BREACH OR DEFAULT. On any material breach of or default
under this Agreement by either Party (the "Breaching Party"), the other Party
(the "Non-Breaching Party") shall have the right to serve notice (a "Preliminary
Termination Notice") on the Breaching Party of the Non-Breaching Party's
intention to terminate this Agreement if the breach is not cured within ***
following the Breaching Party's receipt of the Preliminary Termination Notice.
The Preliminary Termination Notice shall state the cause for the Non-Breaching
Party's intention to terminate this Agreement. If the Breaching Party does not
remedy the breach or default within the *** period, the Non-Breaching Party
shall have the right to terminate this Agreement effective immediately upon
provision of further notice (the "Final Termination Notice") to the Breaching
Party, and following the provision of the Final Termination Notice, this
Agreement and all rights, privileges and licenses granted under this Agreement
shall automatically terminate and neither Party shall have any further rights,
duties or obligations under this Agreement except

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       26

<PAGE>

as may have then accrued under this Agreement before termination or except
as otherwise provided in this Agreement. If, at any time before receipt of the
Final Termination Notice, the Breaching Party has remedied the default, this
Agreement shall continue in full force and effect as if the Final Termination
Notice had not been given.

COPHARMA may terminate the Agreement for a material breach of or default under
the Agreement by LIGAND in the same manner as COPHARMA would terminate above for
such a breach or default by SERAGEN.

10.03 TERMINATION FOR FORCE MAJEURE. If an event under Section 11.10 causes the
failure of performance of a party for a period of ninety (90) days or more, any
Party to this Agreement, including the Party whose performance has failed
pursuant to Section 11.10, shall have the right to terminate this Agreement upon
written notice to the other Parties.

10.04 TERMINATION FOR REGULATORY ISSUES RELATED TO FACILITY TRANSFER. If any
Regulatory Agency or other governmental agency or instrumentality objects to the
transfer of the Facility to COPHARMA or COPHARMA'S manufacture of PRODUCT at the
Facility following the Effective Date, or suspends or terminates any validation
or approval in connection with such Facility transfer then both parties resolve
to work together diligently to resolve the problems and implement remedies
sufficient to regain approval. All obligations to supply and order PRODUCT shall
be suspended until necessary approvals are reinstated.

10.05 BANKRUPTCY. SERAGEN shall have the right to terminate this Agreement
effective immediately in the event COPHARMA files a voluntary petition in
bankruptcy, is adjudicated as bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within fifteen (15) days an involuntary petition in bankruptcy filed
against it COPHARMA shall have the right to terminate this Agreement effective
immediately in the event SERAGEN or LIGAND files a voluntary petition in
bankruptcy, is adjudicated as bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within fifteen (15) days an involuntary petition in bankruptcy filed
against it.

10.06 TERMINATION OF TECHNOLOGY SERVICES. With respect only to Technology
Services provided under Article III, either Party may terminate this Agreement
upon ***written notice to the other Party. Termination under this Section 10.06
shall not affect the commercial supply and related services provided under
Article II, except that if the Technology Services are not completed PRODUCT
shall not be deemed to include FFBP.

10.07 TERMINATION OF ADDITIONAL SERVICES. With respect only to additional
services provided under Section 2.16, either Party may terminate this Agreement
upon *** written notice to the other Party. Termination under this Section 10.07
shall not affect the commercial supply and related services provided under
Article II or development services provided under Article III.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       27

<PAGE>

10.08 CONSEQUENCES OF TERMINATION.

     (a) Nothing in this Agreement shall be construed to release either Party
from any obligation that matured (including, without limitation, the obligation
to make payment for PRODUCT manufactured or Technology Services or other
services rendered prior to such termination, or thereafter, if rendered in
accordance in this Section 10.08) or any breach of this Agreement that occurred
before the effective date of termination; provided, however, that upon any
termination of this Agreement COPHARMA shall cease any further provision of
Technology Services and, except as set forth below, shall cease all other
services under this Agreement as well. Upon a termination of this Agreement, in
addition to payment for the PRODUCT, Technology Services and other services
rendered prior to such termination, SERAGEN shall be responsible for paying to
COPHARMA the amounts of any outstanding commitments to which COPHARMA has
obligated itself in connection with COPHARMA'S performance under this Agreement
and which COPHARMA is unable, using reasonable commercial efforts, to terminate.

     (b) In the event of termination of this Agreement for a material breach or
default by COPHARMA (except for matters covered by Section 11.10 of this
Agreement), COPHARMA shall, if COPHARMA is able and SERAGEN elects for COPHARMA
to do so, *** Upon purchase by SERAGEN in accordance with this Agreement, the
materials and components specified in (i) of the preceding sentence shall become
the exclusive property of SERAGEN.

     In the event that this Agreement is terminated for a breach or default of
SERAGEN or LIGAND then, in addition to the provisions set forth above, SERAGEN
shall pay to COPHARMA, as liquidated damages and not as a penalty, (i) the
amount SERAGEN would have had to pay if COPHARMA had manufactured all remaining
PRODUCT called for by the forecasts for PRODUCT in effect at the time of such
termination, less the estimated costs COPHARMA would have incurred in providing
such PRODUCT according to article 6.02(b) and (ii) the amount SERAGEN would have
had to pay if COPHARMA had performed the remaining Technology Services called
for through December 31, 2001, less the estimated costs COPHARMA would have
incurred in providing such Technology Services. Such payments shall be made in a
lump sum amount on the date of the termination of this Agreement.

The obligations under Sections 4.06, Taxes, this Article X, Section 5.09,
Allocation of Burden of Product Recall, Article IX, Warranties and
Representations, Article VII, Confidentiality and Intellectual Property and
Article VIII, Indemnification, shall survive expiration or termination of this
Agreement or any extensions thereof. With respect to confidential information
exchanged under Article VII, upon termination of this Agreement the receiving
Party shall return all confidential information to the disclosing Party.

10.09 LIMITATION OF LIABILITY.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       28

<PAGE>

     (a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTIAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF THE
PERFORMANCE OF THIS AGREEMENT.

     (b) THE MAXIMUM AGGREGATE LIABILITY OF COPHARMA FOR ALL CAUSES OF ACTION
ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
LIABILITY ARISING UNDER ARTICLE 8.02 (INDEMNIFICATION), LIABILITY ARISING FROM A
BREACH OF THIS AGREEMENT OR NONPERFORMANCE UNDER THIS AGREEMENT (INCLUDING
LIABILITY ASSOCIATED WITH OR ARISING OUT OF SERAGEN'S ATTEMPT TO FIND ALTERNATE
SOURCES OF SUPPLY IN THE EVENT OF COPHARMA'S NONPERFORMANCE OR BREACH), AND
LIABILITY ARISING OUT OF OR RELATED TO THE MANUFACTURE OF PRODUCT, THE PROVISION
OF THE TECHNOLOGY SERVICS, AND THE PROVISION OF OTHER SERVICES PROVIDED BY
COPHARMA PURSUANT TO THIS AGREEMENT, SHALL BE THE DIFFERENCE BETWEEN (A) THE SUM
OF (I) THE AMOUNT WHICH COPHARMA WOULD BE ABLE TO RECOVER IN CONNECTION WITH ANY
SUCH CAUSES OF ACTION UNDER THE INSURANCE POLICY DESCRIBED IN SECTION 8.06(B)
ABOVE IF COPHARMA TOOK COMMERCIALLY REASONABLE STEPS TO MAINTAIN AND COLLECT
UNDER SUCH INSURANCE AND (II) THE AMOUNT PAID BY SERAGEN TO COPHARMA PURSUANT TO
THIS AGREEMENT FOR THE MANUFACTURE OF PRODUCT, THE PROVISION OF THE TECHNOLOGY
SERVICES AND THE PROVISION OF SUCH OTHER SERVICES DURING THE TWELVE (12) MONTHS
PRIOR TO ANY EVENT GIVING RISE TO LIABILITY AND (B) THE AMOUNT OF ALL PREVIOUS
AGGREGATE LIABILITY OF COPHARMA FOR CAUSES OF ACTION ARISING OUT OF OR RELATED
TO THIS AGREEMENT. THE LIMITATION ON COPHARMA'S AGGREGATE LIABILITY CONTAINED IN
THE PRECEDING SENTENCE SHALL NOT APPLY TO LIABILITY ARISING FROM COPHARMA'S
WILLFUL MISCONDUCT IN THE MANUFACTURE, HANDLING, STORAGE, TESTING OR PACKAGING
OF PRODUCT; PROVIDED THAT THIS SENTENCE SHALL NOT APPLY TO COPHARMA'S FAILURE TO
MANUFACTURE AND SUPPLY PRODUCT PURSUANT TO THIS AGREEMENT, EVEN IF WILLFUL.

     (c) IN ADDITION TO BEING SUBJECT TO THE LIMITATION ON AGGREGATE LIABILITY
SET FORTH ABOVE, IN THE EVENT THAT SERAGEN MUST COVER FOR ANY BREACH OR
NONPERFORMANCE OF COPHARMA, THE MAXIMUM LIABILITY OF COPHARMA TO SERAGEN FOR THE
COSTS ASSOCIATED WITH ANY SUCH COVER SHALL BE *** PER BATCH OF PRODUCT FOR WHICH
SUCH COVER IS REQUIRED.

10.10 LIMITATION OF REMEDIES FOLLOWING DECEMBER 31, 2002. Notwithstanding any
other provisions of this Agreement to the contrary, SERAGEN'S sole remedy for
any breach or nonperformance under this Agreement by COPHARMA which occurs on or
after December 31, 2002, shall be to (i) terminate this Agreement, (ii) require
COPHARMA to transfer all raw

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       29

<PAGE>

materials used in the manufacture of PRODUCT which have been paid for by
SERAGEN and are in COPHARMA'S possession to an alternate supplier of PRODUCT
designated by SERAGEN and (iii) have COPHARMA technical personnel available for
reasonable assistance in effecting such transfer of the manufacture of PRODUCT
for a period of six (6) months from the effective date of termination. SERAGEN
shall not be entitled to any damages in connection with a termination covered by
this Section 10.10.

                                   ARTICLE XI
                                  MISCELLANEOUS

11.01 NOTICES. All notices or other communications that are required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when delivered by registered or certified mail, return receipt
requested, postage prepaid, by facsimile transmission, by reputable overnight
courier service of national reputation, or by hand, addressed as follows:

                  If to COPHARMA:

                         COPHARMA, INC.
                         97 South Street
                         Hopkinton, Massachusetts 01748
                         Facsimile:  (508) 497-0777
                         Attention:       President

                  If to SERAGEN:

                          Seragen,  Inc., c/o Ligand Pharmaceuticals Inc.
                          10275 Science Center Drive
                          San Diego, CA  92121
                          Attention: Phillip Duffy, Vice President
                             Manufacturing & Technical Operations
                          Facsimile:  (858) 550-1826

                                       30

<PAGE>

                  If to LIGAND:

                          10275 Science Center Drive
                          San Diego, CA  92121
                          Attention: Phillip Duffy, Vice President
                             Manufacturing & Technical Operations
                          Facsimile: (858) 550-1826

or to such other address as either Party may be notice to the other Party have
directed.

11.02. FURTHER ASSURANCES. Each Party to this Agreement covenants and agrees
that it will promptly, during the term and on the request of the other Party,
execute, acknowledge and deliver or otherwise properly authenticate, as may be
required by law, all documents, instruments, applications, assignments,
registrations, or other legal papers necessary to effectuate the provisions of
this Agreement.

11.03 ASSIGNMENT. SERAGEN may assign this Agreement and the rights and
obligations hereunder granted to SERAGEN without prior written approval of
COPHARMA, provided that the party to whom the Agreement is assigned agrees in
writing with COPHARMA to be bound by all of the terms of this Agreement.
COPHARMA shall not assign this Agreement without the prior written consent of
SERAGEN, which consent shall not be unreasonably withheld, however, COPHARMA
may, without such written consent, assign this Agreement, and its rights and
objections hereunder, in connection with the transfer or sale of all or
substantially all of its business, or in the event of its merger or
consolidation or change in control or similar transaction. In the event of any
assignment, performance shall be guaranteed by the assignor in form satisfactory
to the other Party.

11.04 EFFECTS. This Agreement is binding on, and shall redound to the benefit
of, the Parties to this Agreement and their respective successors and permitted
assigns. Except as otherwise expressly provided in this Agreement, this
Agreement does not create or confer, and is not to be construed as creating or
conferring, any right, remedy, claim or benefit on any third party, other than
the respective successors and permitted assigns of the Parties to this
Agreement.

11.05 WAIVERS AND AMENDMENTS. Any amendment or supplementation of this Agreement
or any waiver of any term or condition of this Agreement shall be effective only
if in writing. A waiver of any breach of any of the terms or conditions of this
Agreement is not in any way to be construed as a waiver of any subsequent
breach.

11.06 SEVERABILITY. In the event that any one or more of the provisions of this
Agreement is determined to be invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in any other respect and the remaining

                                       31

<PAGE>

provisions of this Agreement shall not, at the election of the Party for whom
the benefit of the provision exists, be in any way impaired.

11.07 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which together constitute one and the same instrument.

11.08 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard to
the conflict-of-laws rules of Massachusetts law.

11.09 ENTIRE AGREEMENT. This Agreement (including the Exhibits), the Asset
Purchase Agreement of even date herewith and of its all attachments, and all
other documents executed in connection with the consummation of the transactions
contemplated by these agreements contain the entire agreement among the parties
with respect to the supply of PRODUCT and related transactions, and supersedes
all prior agreements, written or oral, with respect thereto.

11.10 FORCE MAJEURE. Any delays in or failure by either Party in performance of
any obligations hereunder shall be excused if and to the extent caused by such
occurrences beyond such Party's reasonable control, including, but not limited
to, acts of God, strikes, or other labor disturbances, war, whether declared or
not, sabotage, product shortages, acts or omissions of governmental authorities,
including, without limitation, failure to receive required regulatory approvals
or revocation or suspension of required regulatory approvals, and other causes,
whether similar or dissimilar to those specified which cannot reasonably be
controlled by the Party who failed to perform. Upon request from SERAGEN,
COPHARMA shall use commercially reasonable efforts to provide contingency plans
for occurrences as described in this Section at such time as they may be
required, provided that COPHARMA shall not be required, as part of such
contingency plans, to take steps which are commercially unreasonable.

11.11 INDEPENDENT CONTRACTORS. The status of the Parties under this Agreement is
that of independent contractors. Neither Party shall have the right to enter
into any agreements on behalf of the other Party, nor may either Party represent
to any person that it has any such right or authority. Nothing in this Agreement
is to be construed as establishing a partnership or joint venture relationship
between the Parties.

11.12 HEADINGS. Headings are used in this Agreement for convenience only and
shall not affect any construction or interpretation of this Agreement.

             [The remainder of this page intentionally left blank.]

                                       32

<PAGE>

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

SERAGEN, INC.                            COPHARMA, INC.

By: /S/PAUL V. MAIER                     By: /S/SAMUEL ACKERMAN
    ------------------                       --------------------

Title: CEO                               Title:
       --------------                          --------------

Date: --------------                     Date: --------------

LIGAND PHARMACEUTICALS
INCORPORATED

By:      /S/WILLIAM L. RESPESS
         ----------------------

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

Date:
       ------------------------

              [Signature page to Supply and Development Agreement]

                                       33

<PAGE>

                                   EXHIBIT "A"
                     MANUFACTURING AND RELEASE REQUIREMENTS

Manufacturing and Release Requirements for PDS are as specified in Biologics
License Application #97-1325 and its supplements.

MRR Documentation is defined as copies of the following:

a)   All production batch records

b)   All QC Test/Request Forms (result worksheets) and associated data

c)   Dynamic monitoring performed during processing

d)   Any alert/action notifications generated during processing

e)   Any planned or unplanned deviations associated with the PRODUCT

f)   Any out of specification result investigations associated with the PRODUCT

g)   The Certificate of Analysis for the batch lot comparing testing to
     specifications

h)   The appropriate disposition notification for the Batch

i)   The Client Authorization/Notification form

                                       34

<PAGE>

                                   EXHIBIT "B"
                                     PRICING

COPHARMA will provide SERAGEN's PRODUCT requirements during the term of the
Agreement at a price of *** per Batch for PDS and *** per Batch for FFBP.

COPHARMA will provide FDP release testing at a price of *** per Lot for the year
2000 and at a price of *** per Lot for each succeeding year through ***.

COPHARMA will provide stability testing (PRODUCT and FDP) at a price of
***/timepoint for clinical Lots and a price of ***/timepoint for commercial
Batches and Lots.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       35

<PAGE>

                                   EXHIBIT "C"
                    KEY RAW MATERIALS AND APPROVED SUPPLIERS

                                       36

<PAGE>

RAW MATERIALS - CLIENT USE

                                      ***

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<PAGE>

RAW MATERIALS - CLIENT USE

                                      ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

RAW MATERIALS - CLIENT USE

                                      ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

QA APPROVED VENDOR LIST

                                      ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

QA APPROVED VENDOR LIST

                                       ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

                                   EXHIBIT "D"
                               TECHNOLOGY SERVICES

I.  ONTAK 1ST GENERATION POLYSORBATE MODIFICATION

                                      ***

II.      ONTAK SECOND GENERATION DEVELOPMENT

                                       ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

                                   EXHIBIT "E"
                          FEES FOR TECHNOLOGY SERVICES

                        TECHNOLOGY SERVICES FEES FOR PDS
                                    YEAR 2000

<TABLE>
<CAPTION>

PART I ITEMS:
   SERVICE ITEMS                       PRICING           EST. COMPLETE
      <S>                                <C>                   <C>

       ***                               ***                   ***
</TABLE>

* Dates are estimated starting dates, not completion dates, for real time
stability studies

<TABLE>
<CAPTION>
PART II ITEMS:
   SERVICE ITEMS                       PRICING           EST. COMPLETE
      <S>                                <C>                   <C>

       ***                               ***                   ***
</TABLE>

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Confidential Treatment and filed separately with the Commission.

<PAGE>

                    TECHNOLOGY SERVICES FEES FOR FFBP AND PDS
                                    YEAR 2001

<TABLE>
<CAPTION>

PART I ITEMS:
   SERVICE ITEMS                       PRICING           EST. COMPLETE
      <S>                                <C>                   <C>

       ***                               ***                   ***
</TABLE>

<TABLE>
<CAPTION>

PART II ITEMS:
   SERVICE ITEMS                       PRICING           EST. COMPLETE
      <S>                                <C>                   <C>

       ***                               ***                   ***
</TABLE>

* Dates are estimated starting dates, not completion dates, for real time
stability studies

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Confidential Treatment and filed separately with the Commission.

<PAGE>

                                   EXHIBIT "F"
                               ADDITIONAL SERVICES

                                       ***

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Confidential Treatment and filed separately with the Commission.

<PAGE>

                                   EXHIBIT "G"
                           INCOMPLETE PRODUCT BATCHES

THE COSTS FOR COMPLETION OF INCOMPLETE PRODUCT BATCHES ARE AS FOLLOWS:

         BATCH #                                  COST TO COMPLETE

                                      ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.Exhibit 10.220

                   RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

                                 by and between

                                 ORGANON COMPANY

                                       and

                       LIGAND PHARMACEUTICALS INCORPORATED

                                      dated

                                FEBRUARY 11, 2000

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<S>                      <C>                                                                                     <C>
ARTICLE 1           -    DEFINITIONS............................................................................  4

ARTICLE 2           -    RESEARCH PROGRAM ......................................................................  9

ARTICLE 3           -    MANAGEMENT OF THE RESEARCH PROGRAM ...................................................  12

ARTICLE 4           -    DEVELOPMENT PROGRAM ..................................................................  14

ARTICLE 5           -    LICENSES -- RESEARCH, DEVELOPMENT,
                         MARKETING AND MANUFACTURING ..........................................................  15

ARTICLE 6           -    ROYALTIES, MILESTONES AND OTHER PAYMENTS..............................................  16

ARTICLE 7           -    INFRINGEMENT ACTIONS BY THIRD PARTIES................................................   21

ARTICLE 8           -    CONFIDENTIALITY.......................................................................  21

ARTICLE 9           -    PUBLICATION ..........................................................................  23

ARTICLE 10          -    PATENTS AND INVENTIONS................................................................. 24

ARTICLE 11          -    REPRESENTATIONS AND WARRANTIES........................................................  26

ARTICLE 12          -    TERM AND TERMINATION .................................................................  28

ARTICLE 13          -    FORCE MAJEURE.........................................................................  31

ARTICLE 14          -    ASSIGNMENT............................................................................  31

ARTICLE 15          -    REGULATORY MATTERS..................................................................... 32

ARTICLE 16          -    SEVERABILITY..........................................................................  32

ARTICLE 17          -    INDEMNIFICATION ......................................................................  33

ARTICLE 18          -    MISCELLANEOUS ........................................................................  33
</TABLE>

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                   RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

          THIS RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT, (this "Agreement"),
effective the 11th day of February, 2000 (the "Agreement Date"), is by and
between N.V. ORGANON COMPANY (herein "Organon"), having its principal place of
business at Molenstraat 110, 5340BH, Oss, Netherlands, and LIGAND
PHARMACEUTICALS INCORPORATED (herein "Ligand"), a Delaware corporation, having
its principal place of business at 10275 Science Center Drive, San Diego,
California 92121. Organon and Ligand may be referred to herein individually as a
"Party" or collectively as the "Parties".

                                 R E C I T A L S

          WHEREAS, Ligand has developed certain expertise and acquired certain
proprietary rights relating to the discovery and development of pharmaceutical
products for the treatment and prevention of diseases, which products act
through the progesterone receptor;

          WHEREAS, Organon has certain expertise in the discovery, development,
marketing and sales of pharmaceutical products which act through the
progesterone receptor;

          WHEREAS, Organon and Ligand desire to engage in a joint research and
development effort to discover and/or design Nonsteroidal Compounds which act
through the progesterone receptor and to develop pharmaceutical products from
such compounds (the "Collaboration"); and

          WHEREAS, in conjunction with such joint research and development,
Organon desires to sponsor certain research activities to be carried out by
Ligand, and Ligand and Organon desire that Organon commercialize products
resulting from the joint research;

          NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Organon and Ligand agree as follows:

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                                    ARTICLE 1

                                   DEFINITIONS

     For the purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:

     "ACT" shall have the meaning set forth in Section 10.5.

     "AFFILIATE" shall mean, with respect to a Party, any other business entity
which directly or indirectly controls, is controlled by, or is under common
control with, such Party. As used in this definition of "Affiliate", the term
"control" shall mean direct or indirect beneficial ownership of more than ***%
of the voting or income interest in such business entity or if it directly or
indirectly possesses the power to direct or cause the direction of the
management and policies of the other business entity by any means whatsoever.

     "AFFILIATED CUSTOMER" shall mean, with respect to a Party, any Affiliate or
Sublicensee.

     "ANDA" shall have the meaning set forth in Section 10.5.

     "BACKGROUND TECHNOLOGY" shall mean all technology, inventions, information,
data, know-how, compounds and materials (whether or not patented or patentable)
that (a) relate to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of Collaboration Compounds, Collaboration Lead
Compounds or Products for use in the Field, (b) exist as of the Commencement
Date, (c) are owned or Controlled by a Party hereto, and (d) are considered
necessary for the conduct of the Collaboration by both Parties. Background
Technology owned or Controlled by Ligand shall be referred to herein as "Ligand
Background Technology. Background Technology owned or Controlled by Organon
shall be referred to herein as "Organon Background Technology".

     "BACKUP COMPOUND" shall have the meaning set forth in Section 6.10.2.

     "CLAIM" shall have the meaning set forth in Article 17.

     "CLINICAL CANDIDATE" shall mean a Collaboration Compound in Clinical
Development.

     "CLINICAL DEVELOPMENT" shall mean the development of any Collaboration
Compound in the Field from and after the initiation of a Phase I clinical trial,
through and including product registration.

     "COLLABORATION" shall have the meaning set forth in the third paragraph in
the Recitals.

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     "COLLABORATION COMPOUND" shall mean a Nonsteroidal Compound which is first
identified, first confirmed, first discovered, or first synthesized and
identified by either Ligand or Organon as mediating the activity of the
Designated Target during the Research Term and those Nonsteroidal Compounds
under development by Organon as of the Commencement Date that mediate the
activity of the Designated Target.

     "COLLABORATION LEAD COMPOUND" shall mean a Collaboration Compound or
Background Technology compound, other than Ligand Background Technology
compounds that are "Existing Compounds," and whose commercial use is restricted,
*** that has met criteria established by the JRC of safety and efficacy for
advancement into Pre-Clinical Development during the Research Term or any
extension thereof and which is selected by Organon as a Collaboration Lead
Compound according to Section 4.1. Attached hereto as Exhibit D is a complete
list of the Ligand Background Technology compounds whose commercial use is
restricted ***.

     "COLLABORATION TECHNOLOGY" shall mean (a) all Collaboration Compounds and
information related thereto; (b) such technology, inventions, information, data,
know-how and materials (whether or not patented or patentable) that (i) a Party
hereto owns or Controls, (ii) related to the Field and (iii) are conceived,
generated or reduced to practice during the Research Term pursuant to the
Research Program, including, without limitation, improvements on either Party's
Background Technology; and (c) all patents, trade secrets and other intellectual
property rights covering any of (a) or (b).

     "COMMENCEMENT DATE" shall mean February 11, 2000.

     "COMPETING PRODUCT" shall mean, with respect to each specified
Collaboration Compound or Product, any other Collaboration Compound or Product
which (a) exhibits therapeutic or prophylactic activity which is similar to that
exhibited by such specified Collaboration Compound or Product, or (b) which is
being developed for *** for which the specified Collaboration Compound or
Product is also being developed.

     "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 8.2

     "CONTROL" OR "CONTROLLED" shall mean possession of the ability to grant the
licenses or sublicenses as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party.

     "DESIGNATED TARGET" shall mean the progesterone receptor, including all
isoforms and variants thereof.

     "DEVELOPMENT CANDIDATE" shall mean a Collaboration Lead Compound which
meets Organon's standard SOPP criteria and enters Pre-Clinical Development and
for which Organon has developed a synthesis which it believes can be used for
making quantities adequate for Clinical

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<PAGE>

Development and which has been used to generate sufficient quantities of the
material for Pre-Clinical Development and Phase I.

     "EUROPE" shall mean The Netherlands, France, Germany, Great Britain, Italy
and Spain.

     "EXTENSION TERM" shall have the meaning set forth in Article 2.11.

     "FDA" shall mean the United States Food and Drug Administration or any
successor entity thereto.

     "FIELD" shall mean the discovery, characterization, design and development
of Nonsteroidal Compounds for the treatment or prevention of diseases whose
beneficial effects are mediated through the Designated Target.

     "FINAL DEVELOPMENT PLAN" shall mean a detailed plan prepared by Organon for
completing the preclinical development of a Collaboration Compound based on a
Ligand chemical template which is adequate for submission of an IND and which is
to be carried out in the time period described in Section 12.9 (a).

     "FTES" shall mean one or more researchers with appropriate qualifications
employed by Ligand or Organon and assigned to work on the Collaboration with
such time and effort to constitute one such researcher working on the
Collaboration on a full time basis for no less than ***(***) hours per year.

     "IND" shall mean an Investigational New Drug Application as defined in the
United States Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or any corresponding foreign equivalent.

     "INDEMNIFIED GROUP" shall have the meaning set forth in Article 17.

     "INVENTION" shall have the meaning set forth in Section 10.2.

     "INVENTOR" shall have meaning set forth in Section 10.2.

     "JOINT RESEARCH COMMITTEE" or "JRC" shall mean the joint research committee
composed of representatives of Ligand and Organon described in Section 3.1
hereof.

     "NDA" shall mean a New Drug Application as defined in the United States
Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any
corresponding foreign equivalent.

     "NET SALES" shall mean with respect to a Product, or product subject to
royalty under this Agreement , the gross amount invoiced to Non-Affiliated
Customers for all units of such Product,

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<PAGE>

or product subject to royalty under this Agreement , sold by Organon and its
Affiliated Customers, after deduction for the following items ***.

     "NON-AFFILIATED CUSTOMER" shall mean any purchaser of Product who is not an
Affiliated Customer.

     "NONSTEROIDAL COMPOUND" shall mean a compound which is not a Steroid.

     "PATENT RIGHTS" shall mean, with respect to Organon or Ligand (a) all
patent applications heretofore or hereafter filed in any country within the
Territory owned or Controlled by or licensed to Ligand or Organon during the
Term of this Agreement, together with any and all United States and foreign
patents that have issued or in the future issue therefrom, and (b) all
divisionals, continuations, continuations-in-part, reexaminations, reissues,
renewals, substitutions, confirmation, registrations, revalidations, extensions
or additions to any such patents and patent applications and patents issuing
thereon; all to the extent and only to the extent that Ligand or Organon now has
or hereafter will have the right to grant licenses or other rights thereunder.
Patent Rights owned or Controlled by Ligand shall be referred to herein as
"Ligand Patent Rights. Patent Rights owned or Controlled by Organon shall be
referred to herein as "Organon Patent Rights".

     "PHASE I", "PHASE II", and "PHASE III" shall mean Phase I (or Phase I/II),
Phase II and Phase III clinical trials, respectively, in each case as prescribed
by the applicable Regulatory Agency's regulations.

     "PRE-CLINICAL DEVELOPMENT" shall mean, after selection of a Collaboration
Lead Compound under Section 4.1, all activities undertaken by Organon to develop
the Collaboration Lead Compound in the Field up to and including the initiation
of Phase I clinical trials or, in the U.S., filing of an IND on such
Collaboration Lead Compound, which are determined by the JRC or Organon to be
necessary or desirable to file an IND on such Collaboration Lead Compound,
including the preparation and filing of an IND.

     "PRIMARY SCREENING" shall mean conducting any assay, screen or other test
on a compound under the Research Program to determine initially whether such
compound mediates the activity of the Designated Target, including without
limitation such assays, screens and other tests set forth in the Technical
Operating Plan and which Ligand currently has in its possession.

     "PRODUCT" shall mean a pharmaceutical product which has as one of its
active ingredients a Collaboration Lead Compound that has been approved by the
applicable Regulatory Agency for marketing in a country for treatment,
palliation or prevention of disease in the Field.

     "PRODUCT-LIGAND" shall mean a Product resulting from a Collaboration Lead
Compound that is based on a chemical template originated by Ligand.

     "PRODUCT-ORGANON" shall mean a Product resulting from a Collaboration Lead
Compound that is based on a chemical template originated by Organon from an
Organon Background Technology compound.

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<PAGE>

     "PROJECT LEADER" shall have the meaning set forth in Section 3.3.

     "REGULATORY AGENCY" shall mean the FDA and agencies of other governments of
other countries having similar jurisdiction over the development, manufacturing,
registration and marketing of pharmaceutical products.

     "RESEARCH PROGRAM" shall mean the program of research in which Ligand and
Organon will participate and which is described generally in the Technical
Operating Plan.

     "RESEARCH TERM" shall have the meaning set forth in Section 2.2.

     "SECONDARY SCREENING" shall mean conducting any assay, screen or other test
using intracellular receptors on a Collaboration Compound for the purpose of
confirming the results of the Primary Screening or to test such Collaboration
Compound for cross-reactivity with other than the Designated Target.

     "STEROID" shall mean a compound possessing ***.

     "SUBLICENSEE" shall mean any Third Party who is granted the right to sell a
Product.

     "TECHNICAL OPERATING PLAN" shall mean the research plan for the conduct of
the collaboration set forth in present form in Exhibit B hereto. The Technical
Operating Plan may be modified from time to time by the JRC in accordance with
Section 3.1.2.

     "TERM OF THIS AGREEMENT" shall mean the period from the Agreement Date
until, with respect to each Product, the expiration of the last royalty
obligation owed by one Party to the other with respect to such Product, or until
this Agreement is otherwise terminated pursuant to its terms.

     "TERRITORY" shall mean the entire world.

     "THIRD PARTY" shall mean any party other than Organon or Ligand or an
Affiliate of either of them.

     "TRIGGER EVENT" shall have the meaning set forth in Section 6.10.1.

     "VALID CLAIM" shall mean a claim of an issued, unexpired and unabandoned
patent included within the Patent Rights owned or Controlled by a Party, which
has not been held unenforceable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been disclaimed or admitted
to be invalid or unenforceable through reissue or otherwise.

     "WITHHELD PARTY" shall have the meaning set forth in Section 6.6.

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<PAGE>

     "WITHHOLDING PARTY" shall have the meaning set forth in Section 6.6.

                                    ARTICLE 2

                                RESEARCH PROGRAM

     2.1. CONDUCT OF RESEARCH. Each Party shall diligently conduct the work
assigned to it in the Technical Operating Plan in a professional manner and in
compliance with all requirements of applicable laws and regulations. Promptly
after the Agreement Date, each Party shall disclose to the other all Background
Technology then possessed by it which it deems to be relevant to the Field and
which it deems to be necessary or helpful for the other Party to perform the
work set out in the Technical Operating Plan. Each Party agrees to commit the
qualified and experienced personnel, facilities, equipment, expertise and other
resources necessary to perform its obligations under the Research Program.

     2.2. RESEARCH TERM. The term of the Research Program ("Research Term")
shall begin on the Commencement Date and shall terminate on the second
anniversary of the Commencement Date, unless Organon elects to extend the
Research program in accordance with article 2.11 or terminate the Research
Program early in accordance with article 12.7.

     2.3. ALLOCATION OF PERSONNEL. During the Research Term Ligand shall
allocate ***(***) FTEs for the areas of activity agreed to by the JRC and set
forth in the Technical Operating Plan. Organon shall allocate *** (***) FTEs for
the areas of activity agreed to by the JRC and set forth in the Technical
Operating Plan.

     2.4. SCREENING RESPONSIBILITY. Ligand shall have primary responsibility for
conducting *** and *** as set forth in the Technical Operating Plan and as
designated by the JRC.

     2.5. TRANSFER OF BACKGROUND TECHNOLOGY. Commencing after the Commencement
Data, and from time to time thereafter, each Party shall disclose to the other
Party such of its Background Technology as is reasonably necessary to enable the
other Party to perform Collaboration activities hereunder in accordance with the
Technical Operating Plan. During the Research Term, each Party will provide the
other Party with reasonable technical assistance relating to the use and
practice of such Party's Background Technology, solely to the extent permitted
under the licenses granted to the other Party herein. Absent an express decision
by the JRC, Ligand Background Technology will not be applied to the development
of Collaboration Compounds which are based on an Organon originated chemical
template.

     2.6. SUBCONTRACTS. Neither Ligand nor Organon shall subcontract to Third
Parties portions

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<PAGE>

of the Technical Operating Plan to be performed by it or contract with
consultants to provide services specifically relating to the Technical Operating
Plan to any Third Party without the prior consent of the JRC, which consent
shall not be unreasonably withheld. Any such subcontractor shall enter into a
confidentiality agreement with the contracting Party which shall require such
subcontractor to maintain Confidential Information in confidence, and any such
subcontractor shall be required to comply in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory practices and good manufacturing practices. The contracting
Party shall negotiate and execute the applicable agreement with such Third
Party, at its expense, and shall supervise and be responsible under this
Agreement for such subcontracted work. All such subcontracts shall contain terms
consistent with the terms of this Agreement.

     2.7. INFORMATION AND REPORTS CONCERNING COLLABORATION TECHNOLOGY. All
Collaboration Technology made by either Party will be promptly disclosed to the
other Party, with significant discoveries or advances being communicated as soon
as practical after such information is obtained or its significance is
appreciated. The Parties will exchange at least monthly verbal or written
reports presenting a meaningful summary of their activities performed under this
Agreement. In addition to the foregoing, each Party shall promptly provide to
the other, as necessary, biological materials and the structures of all
Collaboration Compounds prepared or developed by such Party pursuant to the
Research Program.

     2.8. FUNDING OF THE RESEARCH PROGRAM. In consideration for Ligand's
performance of its obligations under the Research Program, Organon shall pay
Ligand an amount for the FTEs employed by Ligand in the Research Program
according to the following schedule:

         During year 2000:    $*** per FTE per year.

         From January 1st 2001 to December 31, 2001: $*** per FTE per year

***

During the Research Term, Organon shall pay Ligand quarterly in advance for
services to be performed by Ligand's FTEs under the Research Program upon
receipt of an invoice from Ligand. The first payment shall be due and payable on
the Commencement Date and shall include payment for any services to be rendered
between the Commencement and the next calendar quarter. Subsequent payments
shall be due and payable on the first day of each calendar quarter starting with
the calendar quarter starting on April 1, 2000. Ligand shall apply the research
funding it receives from Organon under this Agreement solely toward the conduct
of research with the goal of achieving the objectives of the Research Program.

         2.9. ***. During the Research Term Ligand and Organon shall conduct
research with respect to identifying Collaboration Lead Compounds based on both
Ligand and Organon chemical

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<PAGE>

templates. Except as permited in Article 12, during the Research Term, ***.

     2.10 RECORDS.

          2.10.1 RECORDS. Ligand and Organon each shall maintain records, in
sufficient detail and in accordance with recognized scientific practices
appropriate for patent purposes, which shall be complete and accurate and shall
fully and properly reflect all work done and results achieved in the performance
of the Research Program (including all data in the form required under all
applicable laws and regulations). Such records shall include books, records, raw
data, reports, research notes, charts, graphs, comments, computations, analyses,
recordings, photographs, computer programs and documentation thereof, computer
information storage means, samples of materials and other graphic or written
data generated in connection with the Research Program including any data
required to be maintained pursuant to all requirements of applicable laws, rules
and regulations.

          2.10.2 INSPECTION OF RECORDS. During the Research Term and ***, Ligand
and Organon each shall have the right, during normal business hours and upon
reasonable notice, to inspect all such records of the other Party to the extent
reasonably required for the performance of its obligations under this Agreement
(with the Party owning the records determining what is reasonably required).
Each Party shall maintain such records and the information of the other Party
contained therein in confidence in accordance with Article 8 and shall not use
such records or information except to the extent otherwise permitted by this
Agreement. Ligand shall maintain sufficient records to verify the calculation of
Ligand's allocation of Ligand FTEs to the Research Program as required under
Section 2.3. Ligand shall supply Organon with quarterly reports of the FTE
allocation to the Research Program. Not more than once each year during the
Research Term and *** Organon shall have the right, during normal business hours
and upon reasonable notice, to audit such records to verify such allocation.
Organon shall treat all financial information subject to review under this
Section 2.10 as confidential in accordance with the terms of Article 8. Ligand
shall promptly reimburse Organon for any overcharge for services provided under
the Research Program.

     2.11. EXTENSION OF RESEARCH TERM. Organon shall have the right to further
extend the Research Term for additional ***(***) *** periods (the "Extension
Term") by giving Ligand written notice at least *** (***) *** before the second
anniversary of the Commencement Date with respect to the first such Extension
Term and *** (***) *** before the expiration of any subsequent Extension Term;
provided, however, that the cummulative Extension Term shall not exceed ***
(***) *** unless agreed to by Ligand. The amount paid to Ligand per FTE during
any extension shall be in accordance with Section 2.8.

     2.12 ***

     2.13 *** In accordance with ARTICLE 312.160, Title 21, Code of US Federal
Regulations, the Parties certify that the Background Technology compounds and
Collaboration Compounds

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<PAGE>

transferred from one Party to the other under this Agreement will be used
only for laboratory research or clinical research in accordance with applicable
law. ***

                                    ARTICLE 3

                       MANAGEMENT OF THE RESEARCH PROGRAM

     3.1 JOINT RESEARCH COMMITTEE.

          3.1.1 COMPOSITION OF THE JRC. The Research Program and all
pre-clinical testing of Collaboration Compounds before commencing Pre-Clinical
Development shall be conducted under the direction of the JRC. The JRC shall be
composed of three (3) named representatives of Organon and three (3) named
representatives of Ligand. The named representatives shall designate one member
to serve as chairperson of the JRC for the first year of the Research Term.
Thereafter, the JRC will appoint a successor chairman. Each Party will identify
its representatives to the JRC within thirty (30) days after the Commencement
Date and each Party shall have the right to replace its representatives at any
time in its sole discretion after giving notice to the other Party.

          3.1.2 RESPONSIBILITIES OF THE JRC. The purposes of the JRC shall be to
review, direct, supervise and coordinate all operational and scientific aspects
of the Research Program and all pre-clinical testing of Collaboration Compounds
before commencement of Pre-Clinical Development. As part of its
responsibilities, the JRC shall (a) promptly after the Commencement Date affirm
criteria of safety and efficacy set forth in the Technical Operating Plan for
advancement of Collaboration Compounds into Pre-Clinical Development as
Collaboration Lead Compounds and establish joint research teams to carry out the
Research Program, (b) review the research by Ligand and Organon under the
Research Program and the pre-clinical testing of Collaboration Compounds before
commencement of Pre-Clinical Development and amend the Technical Operating Plan
accordingly, (c) monitor the progress of the Research Program and evaluate the
work performed and the results obtained in relation to the goals of the Research
Program, (d) plan future activities under, and make any necessary or desirable
modifications to, the Research Program and the Technical Operating Plan, (e)
recommend Collaboration Compounds for further evaluation by the Parties under
the Research Program and for Pre-Clinical Development and Clinical Development
by Organon, and (f) perform such other functions to which the Parties agree. The
Party hosting each meeting of the JRC promptly shall prepare and deliver to the
other Party within fifteen (15) business days after the date of such meeting,
minutes of such meeting setting forth all decisions of the JRC relating to the
Research Program in form and content reasonably acceptable to the other Party.

          3.1.3 MEETINGS OF THE JRC. The JRC shall meet at least once each
quarter during the Research Term, at such times and places as agreed to by
Ligand and Organon, alternating between San Diego, California and Oss, The
Netherlands, or such other locations as the Parties shall agree. The JRC and any
of its members may meet or attend meetings by telephone or video conference. The
JRC will communicate regularly by telephone, facsimile and video conference.
Meetings and telephone and video conferences of the JRC may be attended by such
other directors,

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officers, employees, consultants and other agents of Ligand and Organon as the
Parties from time to time reasonably agree. Ligand and Organon will bear their
own costs in attending such meetings.

          3.1.4 ACTIONS BY THE JRC. All decisions of the JRC shall be made by
unanimous vote of all of the members.

     3.2 DISAGREEMENTS. All disagreements within the JRC shall be resolved by
presenting the disagreement to David E. Robinson or his successor as Chief
Executive Officer on behalf of Ligand, and the Managing Director R&D on behalf
of Organon, or their designees, for good faith resolution, for a period of
***(***) ***. If such disagreement is not resolved by the end of such *** (***)
*** period, the Parties shall be free to pursue any legal or equitable remedy
available to them.

     3.3 PROJECT LEADERS. Ligand and Organon each shall appoint a person (a
"Project Leader") to coordinate its part of the Research Program. The Project
Leaders shall be the primary contacts between the Parties with respect to the
Research Program. Each Party shall notify the other within thirty (30) days of
the date of the Commencement Date of the appointment of its Project Leader and
shall promptly notify the other Party upon changing this appointment.

                                    ARTICLE 4

                               DEVELOPMENT PROGRAM

     4.1. PRE-CLINICAL DEVELOPMENT. The JRC will review the characteristics of
the Collaboration Compounds identified under the Research Program, and the JRC
will attempt to select certain Collaboration Compounds to be recommended to
Organon for further work in the Field as a "Collaboration Lead Compound".
Further, Organon shall have the right in its sole discretion, but without the
obligation, during the Term of the Agreement to select (either on its own or in
response to a recommendation from the JRC) Collaboration Compounds or Background
Technology compounds for such further work in the Field. Upon a written
recommendation by the JRC, Organon will use diligent efforts to conduct all
needed studies on such Collaboration Compound or Background Technology compound
to determine if such Collaboration Compound or Background Technology compound
shall be selected by Organon as a "Collaboration Lead Compound" and shall make
such selection within *** (***) *** of such recommendation by the JRC. If so
selected, Organon shall conduct Pre-Clinical Development of each such selected
Collaboration Compound in such manner as Organon shall determine in its sole
discretion, upon availability of an adequate supply of the Collaboration
Compound for Pre-Clinical Development and Phase I, and shall inform Ligand and
the JRC of the progress and results thereof. If not selected, then Ligand shall
have the right ***(***) *** following the date of recommendation by the JRC to
develop and commercialize the compound as if it were an abandoned Collaboration
Compound in accordance with Section 5.3.1

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if the abandoned Collaboration Compound is based on a chemical template
originated by Ligand.

     4.2. CLINICAL DEVELOPMENT. Organon shall use diligent efforts to pursue the
Clinical Development and commercialization of each Collaboration Lead Compound
at its own expense and under its sole discretion. Notwithstanding anything else
in this Agreement, but subject to Ligand's rights under Section 5.3, Organon
shall have the sole discretion to determine (a) which Products to develop or
market or to continue to develop or market, (b) which Products to seek
regulatory approval for, and (c) when and where and how and on what terms and
conditions, to market such Products in the Territory.

     4.3 DEVELOPMENT INFORMATION. Organon shall be the owner of any data,
information, inventions and discoveries generated as a result of the
Pre-Clinical Development, Clinical Development and commercialization of
Collaboration Lead Compounds and Products. Within thirty (30) days after the end
of each twelve (12) month period following the commencement of Preclinical
Development by Organon of the first Collaboration Lead Compound, Organon shall
provide to Ligand a reasonably detailed written development report which shall
describe the progress of the Preclinical Development and/or Clinical Development
of the Collaboration Lead Compound or Product and the filing and obtaining of
the approvals necessary for marketing. The report shall contain not less than
the information identified in Exhibit A hereto.

                                    ARTICLE 5

                       LICENSES -- RESEARCH, DEVELOPMENT,
                           MARKETING AND MANUFACTURING

     5.1 CROSS-LICENSES TO BACKGROUND TECHNOLOGY. Each Party hereby grants and
agrees to grant to the other a worldwide, non-exclusive, royalty-free license to
use and practice such Party's Background Technology solely to the extent
necessary for the other Party to perform its obligations under the Research
Program, until the termination of the Research Term. Notwithstanding the
foregoing, the granting Party may terminate such license granted by it hereunder
immediately upon its termination of this Agreement for breach by the other Party
under Section 12.3.

     5.2 LICENSE GRANT TO ORGANON. Ligand hereby grants to Organon an exclusive,
worldwide license, with the right to sublicense, which license shall be
exclusive even as to Ligand, under Ligand's Patent Rights and Collaboration
Technology owned or Controlled by or licensed to Ligand, including Ligand's
rights in any jointly owned Patent Rights to the extent necessary, to develop,
make, have made, use, manufacture, have manufactured, import, promote, offer for
sale, sell, distribute, market and commercialize (with the right to sublicense)
any Products in the Field.

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The rights granted Organon by Ligand under this Section 5.2 do not include the
right to commercialize compounds which ***.

     5.3 LIGAND RIGHTS.

          5.3.1 At any time ***, Ligand shall have the right in its sole
discretion at its sole expense, for its own benefit or together with an
Affiliate or Third Party, to develop and commercialize in the Territory those
Collaboration Lead Compounds which Organon notifies Ligand that it has abandoned
or elected not to develop in the Field if the abandoned Collaboration Lead
Compound is based on a chemical template originated by Ligand, provided that
Organon, or any of its Affiliates or Sublicensees is not developing or
commercializing the Collaboration Lead Compound for any other pharmaceutical
purpose and not conducting Pre-Clinical Development or Clinical Development with
respect to, or selling or commercializing, a Competing Product.

          5.3.2 Except in the case of termination by Organon under Section 12.3
below, if Organon notifies Ligand that ***, Ligand shall have the right in its
sole discretion at its sole expense, for its own benefit or together with an
Affiliate or Third Party, to commercialize such Product in such abandoned
country, provided that Organon, its Affiliates or Sublicensees is ***.

          5.3.3 In the event that Organon decides, in its sole discretion, to
license a Product to Third Parties, it shall first notify Ligand in writing and
offer to negotiate such arrangement with Ligand. If Ligand notifies Organon that
it desires to negotiate for such rights within ***(***) *** of receipt of
notification from Organon, the Parties shall in good faith and for a period of
*** (***) ***, negotiate the terms of any such commercial arrangement. If no
definitive written agreement on such terms is reached within such *** (***) ***
period, Organon may at any time thereafter transfer such rights to a Third
Party.

          5.3.4 If Ligand exercises its rights under Sections 5.3.1 or 5.3.2
with respect to any Collaboration Lead Compound or Product owned by or licensed
to Organon, Organon (a) shall grant to Ligand an exclusive license (with the
exclusive right to sublicense) to make, have made, use and sell (i) such
abandoned Collaboration Lead Compounds in the Field in the Territory or (ii)
such Products in the Field in the country(ies) for which Organon has abandoned
the Product, (b) shall provide Ligand, at Ligand's expense, with all such
information and data which Organon, its Affiliates or Sublicensees reasonably
has available in such country or the Territory as the case may be, for example
access to drug master file, clinical and QA data and the like, and shall execute
such instruments as reasonably necessary , to effectuate such license , and (c)
thereafter shall have no further rights under this Agreement in the Territory
with respect to such Collaboration Lead Compound or in the abandoned
country(ies) with respect to such Product except as expressly provided in this
Agreement. If Ligand exercises the right to develop and commercialize a
Collaboration Lead Compound or Product under Sections 5.3.1 or 5.3.2, upon
exercise that right shall be exclusive and with the right to grant sublicenses.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

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                                    ARTICLE 6

                    ROYALTIES, MILESTONES AND OTHER PAYMENTS

     6.1. REIMBURSEMENT FOR RESEARCH AND DEVELOPMENT. As consideration for
research and development expense incurred by Ligand in the Field, upon receipt
of an invoice from Ligand, Organon shall pay Ligand a fee of ***(***) due and
payable upon ***.

     6.2. ROYALTIES PAYABLE BY ORGANON. In consideration for the technology and
know-how provided by Ligand to the Research Program and for the licenses granted
to Organon herein, Organon shall pay to Ligand a royalty on worldwide sales of
Products by Organon and Affiliated Customers to Non-Affiliated Customers of
Organon equal to a percentage of the annual Net Sales of such Products, where
the percentage rate applicable to a particular sale shall be determined based on
the total annual Net Sales of Products and whether the Product is a
Product-Ligand or a Product-Organon according to the following rate schedule:

<TABLE>
<CAPTION>
                                                      Annual Net Sales (in millions)
         ROYALTY PERCENTAGE                          OF EACH PRODUCT IN THE TERRITORY

PRODUCT-LIGAND           PRODUCT-ORGANON
     <S>                        <C>                           <C>
         ***%                   ***%                          up to ***
         ***%                   ***%                          in excess of *** and up to ***
         ***%                   ***%                          in excess of *** and up to ***
         ***%                   ***%                          in excess of ***
</TABLE>

By way of clarification, the royalty on a Product-Ligand with annual Net Sales
of *** million would be ***% for the first *** million, ***% for the second ***
million, ***% for the next *** million and ***% for the remaining *** million.
The royalties shall be payable with respect to a particular Product, on a
country-by-country basis, until the later of (a) expiration in the particular
country of the last to expire Valid Claim owned or Controlled by Ligand or
jointly owned by Ligand and Organon that is necessary to make, use, import for
sale or sell such Product in such country, or (b) *** (***) *** from the date of
the first sale of such Product to a Third Party in such country; provided that
such royalty obligation shall terminate upon ***.

     6.3 ADJUSTMENTS TO ROYALTY.

     (a) No ROYALTY CREDIT. All royalties Organon is already obligated as of the
Agreement Date, or becomes obligated after the Agreement Date, to pay to any
Third Party in connection with the manufacture, use or sale of a Collaboration
Lead Compound or Product shall be the sole obligation of Organon and shall not
affect royalties payable to Ligand under this Agreement.

*** Portions of this page have been omitted pursuant to a request for
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     6.4 CURRENCY OF PAYMENT. All payments to be made under this Agreement shall
be made in United States dollars in the United States by wire transfer to a bank
account designated by the Party to be paid. Royalties earned shall first be
determined in the currency of the country in which they are earned and then
converted to its equivalent in United States currency. The buying rates of
exchange for the currencies involved into the currency of the United States
quoted by Citibank (or its successor in interest) in New York, New York at the
close of business on the last business day of the quarterly period in which the
royalties were earned shall be used to determine any such conversion.

     6.5 PAYMENT AND REPORTING. The royalties due under Section 6.2 shall be
paid quarterly, within three (3) months after the close of each calendar
quarter, or earlier if practical (i.e., on or before the last day of each of the
months of June, September, December and March), immediately following each
quarterly period in which such royalties are earned. With each such quarterly
payment, the payer shall furnish the payee a royalty statement setting forth on
a country-by-country basis the total number of units, gross amount invoiced,
deductions taken according to each category listed in the Net Sales definition,
and Net Sales of each royalty-bearing Product sold hereunder for the quarterly
period for which the royalties are due.

     6.6 TAXES WITHHELD. Any income or other tax that one Party hereunder, its
Affiliates or Sublicensees is required to withhold (the "Withholding Party") and
pay on behalf of the other Party hereunder (the "Withheld Party") with respect
to the royalties payable under this Agreement shall be deducted from and offset
against said royalties prior to remittance to the Withheld Party; provided,
however, that in regard to any tax so deducted, the Withholding Party shall give
or cause to be given to the Withheld Party such assistance as may reasonably be
necessary to enable the Withheld Party to claim exemption therefrom or credit
therefor, and in each case shall furnish the Withheld Party proper evidence of
the taxes paid on its behalf.

     6.7 COMPUTATION OF ROYALTIES. All sales of Products between the selling
Party and any of its Affiliated Customers shall be disregarded for purposes of
computing Net Sales and royalties under this Section 6, but in such instances
royalties shall be payable only upon sales of the selling Party and its
Affiliated Customers to Non-Affiliated Customers. Nothing herein contained shall
obligate either Party to pay the other Party more than one royalty on any unit
of a Product.

     6.8 LICENSES TO AFFILIATES AND SUBLICENSEES. Each Party shall, at the other
Party's reasonable request, enter into license and/or royalty agreements
directly with the other Party's Affiliates and permitted Sublicensees, in lieu
of the license grant to or royalty obligation of the requesting Party; provided
such agreements would not decrease the amount of royalties which would be owed
hereunder. Such agreements shall contain the same language as contained herein
with appropriate changes in parties and territory, and this Agreement shall be
amended as appropriate. No such license and/or royalty agreement will relieve
Organon or Ligand, as the case may be, of its obligations hereunder, and such
Party will guarantee the obligations of its Affiliate or sublicense in any such
agreement. Royalties received directly from one Party's Affiliates and
Sublicensees shall be credited towards such Party's royalty obligations under
this Agreement, as applicable.

     6.9 RESTRICTIONS ON PAYMENTS. Payment of royalties under this Agreement
shall be adjusted

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or excused to the extent necessary to comply with statutes, laws, codes or
government regulations in a particular country which restrict or prevent such
royalty payments by the seller of Products.

     6.10 Milestone Payments.

          6.10.1 TRIGGER EVENTS: As additional consideration for Ligand's
participation in the Research Program, Organon shall pay Ligand, at the times
set forth below, milestone payments set forth below with respect to each
Collaboration Lead Compound based on a chemical template originated by Ligand to
achieve such milestone, except as permitted in Section 6.10.2. Organon shall pay
Ligand, at the times set forth below, ***% of the milestone payments set forth
below with respect to each Collaboration Lead Compound based on a chemical
template originated by Organon,

     a. ***

     b. ***

     c. ***

     d. ***

     e. ***

For convenience of reference, each of the events described in clauses (a)
through (e) above is referred to herein as a "Trigger Event".

          6.10.2 BACKUP COMPOUNDS. Except as provided in this Section 6.10.2,
***. If development of the more advanced Collaboration Lead Compound is
abandoned prior to occurrence of the Trigger Event described in Section
6.10.1(e), Organon will have to make *** per cent (***%) of the milestone
payments for Trigger Events achieved by the Backup Compound that were not
achieved by the abandoned Collaboration Lead Compound. If the Backup Compound
reaches a Trigger Event before the Collaboration Lead Compound for which it is a
backup compound, Organon will make *** per cent (***%) of the milestone payment
for that and each subsequent Trigger Event reached by the Backup Compound but
shall not be required to make the milestone payment for that and each subsequent
Trigger Event realized by the Collaboration Lead Compound for which a milestone
payment is made for the Backup Compound. If a Backup Compound reaches Trigger
Event 6.10.1(b) for a different therapeutic indication than that for which the
Collaboration Lead Compound is being developed, Ligand shall be paid the
6.10.1(a) milestone and the 6.10.1(b) milestone and thereafter the Backup
Compound shall be treated under 6.10.1 as a Collaboration Lead Compound. If a
Collaboration Lead Compound reaches Trigger Event 6.10.1(e) and Organon
continues to develop a Backup Compound for it, upon reaching the next Trigger
Event for that Backup Compound Organon shall pay Ligand the milestone payment
for that and all prior Trigger

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Events reached by the Backup Compound and thereafter the Backup Compound shall
be treated under 6.10.1 as a Collaboration Lead Compound.

     6.11 AUDITS.

          6.11.1 AUDITS. Upon the written request of Ligand and not more than
once in each calendar year, Organon shall permit an independent certified public
accounting firm of nationally recognized standing, selected by Ligand and
reasonably acceptable to Organon, at Ligand's expense, to have access during
normal business hours to such of the records of Organon as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder for eight (8)
quarters prior to the date of such request. The accounting firm shall be bound
by confidentiality obligations and shall disclose to Ligand only whether the
records are correct or not and, if applicable, the amount of any discrepancies.

          6.11.2 If such accounting firm concludes that additional royalties
were owed during such period, Organon shall pay the additional royalties within
*** (***) *** of the date Ligand delivers to Organon such accounting firm's
written report so concluding. The fees charged by such accounting firm shall be
paid by Ligand; provided, however, if the audit discloses that the royalties
payable by Organon for the audited period are more than *** percent (***%) of
the royalties actually paid for such period, then Organon shall pay the
reasonable fees and expenses charged by such accounting firm.

          6.11.3 Organon shall include in each permitted sublicense granted by
it pursuant to the Agreement a provision requiring the Sublicensee to make
reports to Organon, to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by Ligand's accounting firm to
the same extent required of Organon under the Agreement. Upon the expiration of
twenty-four (24) months following the end of any year, the calculation of
royalties payable with respect to such year shall be binding and conclusive upon
Ligand, Organon and its Sublicensees, and such Sublicensees shall be released
from any liability or accountability with respect to royalties for such year.

                                    ARTICLE 7

                      INFRINGEMENT ACTIONS BY THIRD PARTIES

     If a Party, or to its knowledge, any of its Affiliates or Sublicensees
shall be sued or threatened to be sued for infringement of a patent or other
intellectual property rights of a Third Party because of the reasonable
development, manufacture, use or sale of Collaboration Compounds, Collaboration
Lead Compounds or Products or any other action undertaken by such Party under
this Agreement, such Party shall promptly notify the other in writing of the

*** Portions of this page have been omitted pursuant to a request for
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institution or threat of such action. The Party sued or threatened to be sued
shall have the right, in its sole discretion, to control the defense and
settlement of such claim at its own expense, in which event the other Party
shall cooperate fully in the defense of such suit and furnish to the Party sued
all evidence and assistance in its control. Any judgments, settlements or
damages payable with respect to legal proceedings covered by this Article 7
shall be paid by the Party which controls the litigation, subject to any claims
against the other Party for breach of this Agreement or otherwise available at
law or in equity. Any Third Party royalty payments required to be paid as the
result of a judgment or settlement under this Article 7 shall be paid by the
Party controlling the suit subject to any claims against the other Party for
breach of this Agreement or otherwise available at law or in equity; provided,
however, (a) in the case of a Product sold by Organon, if such Third Party
royalty payments or damages arise from the infringement of a patent published or
granted before the date of this Agreement having a claim or claims which cover
the screening activities of Ligand or use of Ligand Background Technology under
the Research Program, the Third Party royalty payments or damages shall be
creditable against the royalty due Ligand under Article 6; or (b) in the case of
a Product sold by Organon, if such Third Party royalty payments arise from the
infringement of a granted patent published after the date of this Agreement
having a claim or claims which cover the screening activities of Ligand or use
of Ligand Background Technology under the Research Program, *** per cent (***% )
of the Third Party royalty payments shall be creditable against the royalty due
Ligand under Article 6, but in no event shall the royalty due Ligand be reduced
by more than ***per cent (***%) under this subsection (b).

                                    ARTICLE 8

                                 CONFIDENTIALITY

     8.1 NONDISCLOSURE OBLIGATIONS. Except as otherwise provided in this Article
8 and subject to Article 9 hereof, during the Term of this Agreement and for a
period of *** (***) *** thereafter, (a) both Parties shall maintain in
confidence all Collaboration Technology and information and data developed
pursuant to the Collaboration and solely owned by the disclosing Party or
jointly owned by the Parties; and (b) both Parties shall also maintain in
confidence and use only for purposes of this Agreement all Background Technology
and all other information and data supplied by the other Party under this
Agreement.

     8.2 PERMITTED DISCLOSURES. For purposes of this Article 8, information and
data described in clauses (a) or (b) of Section 8.1 above shall be referred to
as "Confidential Information". To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, (a) a Party may disclose Confidential Information it is otherwise
obligated under this Article 8 not to disclose to its Affiliates, Sublicensees,
consultants, outside contractors, clinical investigators, agent, suppliers and
other Third Parties on a need-to-know basis on condition that such persons or
entities agree to keep the Confidential Information confidential for the same
time periods

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and to the same extent as such Party is required to keep the Confidential
Information confidential; (b) a Party or its Affiliates or Sublicensees may
disclose such Confidential Information to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to
conduct Pre-Clinical Development, Clinical Development or commercialization of
Collaboration Lead Compounds or Products or to obtain patents on Collaboration
Compounds, Collaboration Lead Compounds or Products ; (c) a Party may disclose
Confidential Information as required by applicable law, regulation or judicial
process, provided that, where practicable, such Party shall give the other Party
prior written notice thereof and adequate opportunity to object to any such
disclosure or to request confidential treatment thereof; and (d) a Party may
disclose Confidential Information as permitted under Article 9.

     The obligation not to disclose or use the Confidential Information shall
not apply to any part of the Confidential Information that (i) is or becomes
patented, published or otherwise part of the public domain other than by acts of
the Party obligated not to disclose such Confidential Information or its
Affiliates or Sublicensees in contravention of this Agreement; or (ii) is
disclosed to the receiving Party or its Affiliates or Sublicensees by a Third
Party, provided such Confidential Information was not obtained by such Third
Party directly or indirectly from the other Party on a confidential basis; or
(iii) prior to disclosure under this Agreement, was already in the possession of
the receiving Party or any of its Affiliates or Sublicensees, provided such
Confidential Information was not obtained directly or indirectly from the other
Party on a confidential basis; (iv) is independently developed by the receiving
Party or any of its Affiliates of sublicenses without aid or use of the
Confidential Information; or (v) is disclosed in a press release agreed to by
both Parties under Section 8.3 below.

     8.3. PUBLICITY. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby (other than
publications by Organon of results of Pre-Clinical Development, Clinical
Development or post-marketing research) shall be reviewed in advance by, and
shall be subject to the approval of, both Parties; provided, however, that
either Party may (a) disclose the terms of this Agreement to the extent required
to comply with applicable securities laws and in that case , the non-disclosing
Party shall have the right to review and comment on such disclosure prior to its
submission and the disclosing Party shall cooperate to minimize the scope and
content of such disclosure, and (b) disclose the terms of this Agreement to
prospective lenders, investment bankers and other financial institutions of its
choice solely for purposes of financing the business operations of such Party,
but only if the disclosing Party obtains a signed confidentiality agreement with
such entity upon terms similar to those contained in this Article 8. The Parties
have agreed to issue a press release in the form attached hereto as Exhibit C
following execution of this Agreement.

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                                    ARTICLE 9

                                   PUBLICATION

     The Parties shall cooperate in appropriate publication of the results of
the Research Program, but subject to the predominating interest to obtain patent
protection for any patentable subject matter. To this end, it is agreed that
prior to any public disclosure of such results, the Party proposing disclosure
shall send the other Party a copy of the information to be disclosed, and shall
allow the other Party *** from the date of receipt in which to determine whether
the information to be disclosed contains subject matter for which patent
protection should be sought prior to disclosure, or otherwise contains
Confidential Information of the reviewing Party which such Party desires to
maintain as a trade secret. If notification is not received during the ***, the
Party proposing disclosure shall be free to proceed with the disclosure. If due
to a valid business reason or a belief by the non-disclosing Party that the
disclosure contains subject matter for which a patentable invention should be
sought, then prior to the expiration of the ***, the non-disclosing Party shall
so notify the disclosing Party, who shall then delay public disclosure of the
information for an additional period of up to *** to permit the preparation and
filing of a patent application on the subject matter to be disclosed or other
action to be taken. The Party proposing disclosure shall thereafter be free to
publish or disclose the information. The determination of authorship for any
paper shall be in accordance with accepted scientific practice. In no event may
any publication or other disclosure contain a Party's Confidential Information
without such Party's prior written consent. Ligand shall not publish the results
of the Pre-Clinical Development or the Clinical Development of any Collaboration
Lead Compound or any other information or data relating to a Collaboration
Compound, Collaboration Lead Compound or Product without Organon's prior written
consent. Organon may publish the results of the Pre-Clinical Development and
Clinical Development without Ligand's prior written consent provided that no
such publication shall contain Confidential Information solely owned by Ligand.

                                   ARTICLE 10

                             PATENTS AND INVENTIONS

     10.1 OWNERSHIP OF BACKGROUND TECHNOLOGY. Except as otherwise set forth
herein, each Party shall retain ownership or Control, as the case may be, over
its Background Technology. The owner of any patentable Background Technology
shall have the right, at its option and expense, to prepare, file and prosecute
(including without limitation in administrative proceedings such as oppositions
and interferences) in its own name any patent applications with respect to such
Background Technology and to maintain any patents issued.

     10.2 OWNERSHIP OF COLLABORATION TECHNOLOGY. Except as otherwise set forth
herein, ownership of Collaboration Technology (whether or not patentable) shall
be owned by the Party(ies)

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whose employee(s) are determined to be inventors in accordance with United
States laws of inventorship. Subject to Section 10.3, the owner (the "Inventor")
of any patentable Collaboration Technology (an "Invention") shall have the
right, at its option and expense and through attorneys and agents of its choice,
to prepare, file and prosecute (including any proceedings relating to reissues,
reexaminations, protests, interferences and requests for patent extensions or
supplementary protection certificates) in its own name any patent applications
with respect to any Invention owned by it and to maintain any patents issued. In
connection therewith, the non-Inventor Party agrees to cooperate with the
Inventor at the Inventor's expense in the preparation and prosecution of all
such patent applications and in the maintenance of any patents issued. The
obligations set forth in this Section 10.2 shall survive the expiration or
termination of this Agreement.

     10.3 JOINT INVENTIONS. ***; however, subject to Section 10.2, Organon will
have the rights and responsibilities of the Inventor as described in this
Section 10 with respect to the preparation, filing, prosecution and maintenance
of patent applications in the name of both owners for any such patentable, ***
and Ligand shall have the rights and responsibilities of *** therein. Organon
shall have the right but not the obligation to pay all expenses in connection
with the preparation, filing and prosecution of patent applications that claim
patentable, ***. Organon shall from time to time notify Ligand of the amount of
such expenses, and Ligand shall promptly thereafter pay Organon ***percent
(***%) of its out-of-pocket expenses. As used in the preceding sentence
"out-of-pocket expenses" means direct costs, excluding internal labor costs.
Ligand may elect in writing to disclaim all interest in any jointly invented
Invention, in which case (a) such Invention will be solely owned by Organon, and
Ligand will cooperate to assure Organon's sole ownership, (b) Ligand will have
no further interest in such Invention, by ownership, license or otherwise, and
(c) Ligand will not be responsible for reimbursing Organon for any expenses
incurred by Organon from and after the date that Organon receives Ligand's
written disclaimer. Organon may elect in writing to disclaim all interest in any
jointly invented Inventions, in which case (i) such Invention will be solely
owned by Ligand and Ligand shall be solely liable for any expenses incurred with
respect to such Invention after Organon's disclaimer, and Organon will cooperate
to assure Ligand's sole ownership, (ii) Organon will have no further interest in
such Invention, by ownership, license or otherwise, and (iii) Organon will, at
Ligand's cost and request, continue the preparation, filing and prosecution of
the relevant patent application(s) for up to four weeks following Organon's
delivery of written disclaimer, if failure to so continue would have a material
adverse impact on such patent application(s).

     10.4 PROTECTION OF PATENT RIGHTS.

     (a) The Inventor shall prepare, prosecute and maintain (and shall use
reasonable efforts to keep the other Party currently informed of all steps to be
taken in such preparation, prosecution and maintenance) all of its Patent Rights
which claim an Invention and upon request shall furnish the other Party with
copies of such Patent Rights and other related correspondence relating to such
Invention to and from patent offices and permit the other Party to offer its
comments thereon before the Inventor makes a submission to a patent office which
could materially affect the scope or validity

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of the patent coverage that may result. The Inventor will inform the
Non-Inventor of the countries in which it intends to file for Patent Rights. The
non-Inventor Party shall offer its comments promptly, including any request that
the Patent Rights be filed in additional countries. Ligand and Organon shall
each promptly notify the other of any infringement or unauthorized use of an
Invention which comes to its attention.

     (b) If the Inventor fails to (i) fulfill its obligations under this Section
10, (ii) protect against abandonment of a Patent Right which claims an
Invention, or (iii) file for Patent Rights in a country requested by the
Non-Inventor, the Inventor shall permit the non-Inventor Party, at its option
and expense, to undertake such obligations, and thereafter such Patent Rights
shall be deemed to be assigned to such non-Inventor Party in the affected
countries. The Party not undertaking such actions shall fully cooperate with the
other Party and shall provide to the other Party whatever assignments and other
documents that may be needed in connection therewith. The Party finally
conducting legal actions or proceedings against an alleged infringer or other
Party shall be entitled to any damages or costs awarded against such infringer
or other Party.

     (c) In the event Ligand or Organon becomes aware of any actual or
threatened infringement of any Patent Right of either Party which claims an
Invention, that Party shall promptly notify the other, and the Parties'
representatives shall promptly discuss how to proceed in connection with such
actual or threatened infringement. If both Parties participate in the conduct of
a legal action pursuant to this Section 10.4(c), (i) if one Party files, the
actual costs and expenses of such action shall be reimbursed first to the filing
Party and then to the participating Party out of any damages or other monetary
awards recovered therein in favor of Organon or Ligand, or (ii) if both Parties
file, the actual costs and expenses of such action shall be reimbursed
proportionally between the Parties out of any damages or other monetary awards
recovered therein in favor of Organon or Ligand, based on the actual costs and
expenses incurred by each Party in connection with such action. Any remaining
damages received by Organon shall then be treated as Net Sales of Product by
Organon. If one Party alone conducts such legal action, ***percent (***%) of the
actual costs and expenses of such action shall be reimbursed to such Party out
of any damages or other monetary awards; any remaining damages shall then be
treated as Net Sales of Product. If either Party commences any actions or
proceedings (legal or otherwise) pursuant to this Section 10.4(c), it shall
prosecute the same vigorously at its expense and shall not abandon or compromise
them or fail to exercise any rights of appeal without giving the other Party the
right to take over the prosecuting Party's conduct at such other Party's own
expense.

     10.5 NOTIFICATION OF PATENT TERM RESTORATION AND THIRD PARTY ABBREVIATED
NEW DRUG APPLICATIONS. Ligand or Organon, as the case may be, shall notify the
other Party of (a) the issuance of each U.S. patent, or foreign patent where
extension is possible, included within the Patent Rights which claim an
Invention, giving the date of issue and patent number for each such patent, and
(b) each notice pertaining to any patent included within the Patent Rights which
claim an Invention which it receives as patent owner pursuant to the Drug Price
Competition and Patent Term Restoration Act of 1984 (hereinafter called the
"Act") or equivalent foreign laws, including notices

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pursuant to 21 U.S.C. ss.355(b)(3) and ss.355(j)(2)(B)from persons who have
filed an abbreviated NDA ("ANDA"). Such notices shall be given promptly, but in
any event within ten (10) calendar days of each such patent's date of issue or
receipt of each such notice pursuant to the Act, whichever is applicable. The
Parties will assist with each other's efforts to seek patent extensions within
the meaning of this Section 10.5.

     10.6 Any dispute between the Parties regarding the inventorship of an
Invention or Joint Invention made under the Research Program shall be resolved
through appointment of an independent patent counsel, mutually acceptable to the
Parties, after consideration of all evidence submitted by the Parties. The
expense of the independent patent counsel shall be borne equally by Ligand and
Organon.

     10.7 TRADE SECRETS. If a Party owns an Invention which can be usefully
practiced as a trade secret, it shall have the right to not seek Patent Rights
on that Invention and all rights to use that trade secret shall revert to it
upon expiration or termination of the Research Program. In the case of a jointly
owned Invention, if the Parties do not agree to keep it a trade secret, at the
request of either Party, the procedures of Articles 10.3 and 10.4 shall apply to
said Invention.

                                   ARTICLE 11

                         REPRESENTATIONS AND WARRANTIES

     Each Party hereby represents and warrants to the other Party as follows:

     11.1 CORPORATE EXISTENCE AND POWER. Such Party (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, (b) has the corporate power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it is now
being conducted, and (c) is in compliance with all requirements of applicable
law, except to the extent that any noncompliance would not have a material
adverse effect on such Party's ability to perform its obligations under this
Agreement.

     11.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such Party (a) has the
corporate power and authority and the legal right to enter into this Agreement
and to perform its obligations hereunder, and (b) has taken all necessary
corporate action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such Party, and constitutes a
legal, valid, binding obligation, enforceable against such Party in accordance
with its terms and does not conflict with Ligand's obligations under the
agreement made between Ligand and American Home Products Incorporated prior to
the Agreement Date .

     11.3 CONSENTS. All necessary consents, approvals and authorizations of all
governmental authorities and other persons required to be obtained by such Party
in connection with the execution, delivery and performance of this Agreement
have been and shall be obtained.

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     11.4 NO CONFLICT. Notwithstanding anything to the contrary in this
Agreement, the execution and delivery of this Agreement and the performance of
such Party's obligations hereunder do not conflict with or violate any
requirement of applicable laws or regulations or any of the terms of its
certificate of incorporation or by-laws.

     11.5 INTELLECTUAL PROPERTY. Such Party (a) owns or is the licensee in good
standing of all Patent Rights presently contemplated to be used by it in
connection with the Research Program, except to the extent that such use is to
be based upon patents, trademarks and other intellectual property furnished by
the other Party; (b) is not in default with respect to any license agreement
related to the Research Program; (c) has received no notice of infringement or
misappropriation of any alleged rights asserted by any Third Party in relation
to any Background Technology to be used by it in connection with the Research
Program and (d) is not aware of any patent, trade secret or other right of any
Third Party which could materially adversely affect its ability to carry out its
responsibilities under this Agreement or the other Party's ability to exercise
or exploit any license granted to it under this Agreement. Such Party agrees to
immediately notify the other Party in writing in the event such Party hereafter
becomes in default under any license agreement referred to in (b) above, or
receives a notice of the type referred to in (c) above or becomes aware of any
patent trade secret or other right of the nature referred to in subpart (d) of
the preceding sentence.

     11.6 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY LIGAND OR ORGANON (A) THAT ANY
PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE PATENT
RIGHTS, (B) THAT ANY PATENT WITHIN THE PATENT RIGHTS WHICH ISSUES WILL BE VALID,
OR (C) THAT, EXCEPT FOR THE PROVISIONS OF SECTION 11.5 HEREIN WHICH SHALL NOT BE
AFFECTED BY THIS SECTION 11.6, THE USE OF ANY LICENSE GRANTED HEREUNDER OR THE
USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF
ANY THIRD PARTY. FURTHERMORE, NEITHER LIGAND NOR ORGANON MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PATENT
RIGHTS EXCEPT AS PROVIDED IN SECTION 11.5. LIGAND AND ORGANON EACH SPECIFICALLY
DISCLAIM THAT THE RESEARCH PROGRAM OR THE PRE-CLINICAL DEVELOPMENT OR CLINICAL
DEVELOPMENT WILL BE SUCCESSFUL, IN WHOLE OR IN PART, OR THAT ANY CLINICAL OR
OTHER STUDIES UNDERTAKEN BY IT WILL BE SUCCESSFUL. ORGANON DOES NOT WARRANT THAT
ITS EFFORTS TO RESEARCH, DEVELOP OR COMMERCIALIZE ANY COLLABORATION COMPOUND,
COLLABORATION LEAD COMPOUND OR PRODUCT WILL RESULT IN REGULATORY APPROVAL OF ANY
PRODUCT, NOR DOES ORGANON WARRANT THAT ANY SUCH PRODUCT WILL ACHIEVE ANY LEVEL
OF NET SALES OR BE CONTINUED IF IT OBTAINS REGULATORY APPROVAL. EXCEPT AS
OTHERWISE EXPRESSLY STATED HEREIN, EACH PARTY HEREBY DISCLAIMS ANY WARRANTY,
EXPRESSED OR IMPLIED, AS TO ANY PRODUCT SOLD OR PLACED IN COMMERCE BY OR ON
BEHALF OF ORGANON OR ITS AFFILIATES OR SUBLICENSEES.

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                                   ARTICLE 12

                              TERM AND TERMINATION

     12.1 EXPIRATION. Unless terminated earlier by agreement of the Parties or
pursuant to this Article 12, this Agreement shall expire on the expiration of
the last to expire of all obligations to pay royalties under this Agreement.

     12.2 TERMINATION OF AGREEMENT AT END OF RESEARCH TERM. Organon shall have
the right to terminate this Agreement at the end of the Research Term, or any
extension thereof, by giving Ligand ***(***) *** written notice if no
Collaboration Lead Compound has been selected. Each Party shall then return to
the other Party the Background Technology of such other Party that is in its
possession. After such termination Ligand shall have the right to develop and
market Collaboration Compounds based on a Ligand chemical template without the
obligation to pay milestones or royalties to Organon and Organon shall have the
right to develop and market Collaboration Compounds based on an Organon chemical
template without the obligation to pay milestones or royalties to Ligand.

     12.3 TERMINATION FOR BREACH. A Party shall have the right to terminate the
Term of this Agreement for a material breach of this Agreement; provided,
however, that termination cannot occur until ***(***) *** after the giving of
notice of intention to terminate to the breaching Party and only if the breach
is not cured during such *** (***) *** period.

     In the event of an uncured breach of a material obligation under this
Agreement, the non-breaching Party may terminate the Term of this Agreement and
each Party shall retain such ownership interest in the Collaboration Technology
as it shall hold on the date of the termination, provided, however, that (i) the
licenses granted to the non-breaching Party under Article 5 shall remain in full
force and effect (and the breaching Party shall transfer to the non-breaching
Party such Background Technology and Collaboration Technology as shall be
necessary to permit the non-breaching Party to continue conduct of the Research
Program) but the breaching Party shall forfeit all rights to develop and promote
all Collaboration Compounds, Collaboration Lead Compounds and Products, (ii) the
breaching Party shall not conduct any further research in the Field for a period
of *** from the effective date of such early termination, (iii) all licenses
granted to such breaching Party under this Agreement may be immediately
terminated by the non-breaching Party, (iv) any royalties due the breaching
Party under this Agreement shall be reduced by *** percent (***%), and (v) if
the breach relates specifically to a Collaboration Lead Compound or Product,
this Agreement may only be terminated as it relates to such Collaboration Lead
Compound or Product and shall remain in full force and effect as it relates to
all other Collaboration Lead Compounds and Products.

     12.4 TERMINATION OF AGREEMENT BY ORGANON. Organon shall have the right to
terminate

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this Agreement by giving written notice to Ligand of its intention to do so in
the event that neither Ligand nor Organon is able to obtain a license for
technology that is necessary for the conduct of the Research Program and that is
claimed in Third Party patents, or other intellectual property. Notice of
termination cannot be effective less than *** (***) *** from the date upon which
Organon advises Ligand in writing that such technology is necessary for the
conduct of the Research Program. The termination shall be effective *** (***)
*** after the giving of the notice. Upon termination each Party shall return to
the other Party the Background Technology of such other Party that is in its
possession. If Organon has selected a Collaboration Lead Compound prior to
termination under this section it shall be required to pay Ligand milestones and
royalties for its development and commercialization of the Collaboration Lead
Compound as a Product as if this agreement remains in full force and effect.

     12.5 EFFECT OF EXPIRATION OR TERMINATION. Expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior to such
expiration or termination. The representations and warranties contained in this
Agreement as well as those rights and obligations contained in the terms of this
Agreement which by their intent or meaning have validity beyond the Term of this
Agreement shall survive the termination or expiration of this Agreement. The
provisions of Sections 2.10.2 and 4.3, and Articles 5, 8, 9, 11, and 17 shall
survive the expiration or termination of this Agreement. Any rights and
obligations which have accrued prior to termination or expiration of this
Agreement in any respect shall survive such termination or expiration.

     12.6 BANKRUPTCY. Either Party shall have the right to terminate this
Agreement effective immediately in the event the other Party files a voluntary
petition in bankruptcy, is adjudicated as bankrupt, makes a general assignment
for the benefit of creditors, admits in writing that it is insolvent or fails to
discharge within fifteen (15) days an involuntary petition in bankruptcy filed
against it.

     12.7 EARLY TERMINATION OF THE RESEARCH PROGRAM. Organon shall have the
right to terminate the Research Program, without termination of this Agreement,
by giving Ligand written notice of its intention to do so not later than
***(***) *** from the Commencement Date. The termination of the Research Program
will be effective *** (***) *** after the Commencement Date. After termination
of the Research Program Ligand shall have the right to use only Ligand
Background Technology in the Field, without restriction, including the right to
collaborate with a Third Party to develop Products based on a chemical template
originated by Ligand.

     12.8 RIGHTS UPON ARTICLE 14 ASSIGNMENT. If Ligand makes a permitted
assignment of this Agreement under Article 14 other than to its Affiliate whose
performance it guarantees, Organon may terminate the Research Program with
Ligand and undertake the development of Products from Collaboration Compounds
and Collaboration Lead Compounds under the same terms and conditions of this
Agreement applicable when the Research Program runs its full course.

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     12.9 OTHER TERMINATION RIGHTS.

          a) Ligand shall have the right to terminate this Agreement in the
following circumstances: (i) if no Collaboration Compound based on a chemical
template originated by Ligand is declared a Development Candidate during the
Research Term (including any extension thereof as permitted by this Agreement or
by mutual agreement of Organon and Ligand), (ii) if no Development Compound
based on a chemical template originated by Ligand has become a Clinical
Candidate by the end of a period commencing on the end of the Research term and
ending *** later unless, prior to the expiration of the *** period, Organon has
presented Ligand with a Final Development Plan for a Development Compound based
on a chemical template originated by Ligand; (iii) *** after presentation of the
Final Development Plan if the Development Compound to which it is directed has
not become a Clinical Candidate; or (iv) if, after the end of the Research Term
(including any extensions thereof), Clinical Development of a Clinical Candidate
which is a Collaboration Compound based on a chemical template originated by
Ligand is abandoned except in the circumstance where another Development
Candidate or Clinical Candidate based on a clinical template originated by
Ligand has progressed in development such that, if it were the only such
compound in development, Ligand could not terminate under this Section 12.9.

          b) In consideration of Ligand entering this Agreement, Organon agrees
not to declare a Collaboration Compound based on a chemical template originated
by Organon to be a Development Candidate during the period beginning on the
Commencement Date and ending on the second anniversary of the Commencement Date.

          c) In the case of termination of this Agreement by Ligand pursuant to
subsection (a), all rights to Ligand Background Technology and Collaboration
Compounds based on a chemical template originated by Ligand shall resort to
Ligand. If Ligand develops and commercializes a Collaboration Compound based on
a Ligand chemical template after termination under subsection (a) above, it
shall owe no milestone or royalty payment to Organon based on the development
and commercialization of that Collaboration Compound. If Organon develops and
commercializes a Collaboration Compound based on an Organon chemical template
after termination under subsection (a) above, it shall owe no milestone or
royalties to Ligand based on development and commercialization of that
Collaboration Compound.

                                   ARTICLE 13

                                  FORCE MAJEURE

     Neither Party shall be held liable or responsible to the other Party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement when such failure or
delay is caused by or results from causes beyond the

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reasonable control of the affected Party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party, provided that the Party so affected
shall use its best efforts to avoid or remove such causes of non-performance and
shall continue performance hereunder with the utmost dispatch whenever such
causes are removed.

                                   ARTICLE 14

                                   ASSIGNMENT

     This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations hereunder be assigned
or transferred ***; provided, however, that *** may, without such consent,
assign this Agreement and its rights and obligations hereunder in connection
with the transfer or sale of all or substantially all of its business pertaining
to this Agreement, or in the event of its merger or consolidation or change in
control or similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. This Agreement shall be
binding upon, subject to the terms of the foregoing sentence, inure to the
benefit of the Parties' successors, legal representatives and assigns. A
permitted assignment under this Article 14 by Ligand shall not preclude the
exercise of Organon's right to terminate the Research Program under Section
12.8.

                                   ARTICLE 15

                               REGULATORY MATTERS

     15.1 SIDE EFFECTS AND ADVERSE EVENTS. Ligand shall advise Organon within
the time limits required by applicable FDA laws and regulations (or similar
foreign laws and regulations) by telefax or overnight delivery service addressed
to the attention of its Vice President, Medical Affairs of any unexpected side
effect, adverse reaction or injury which has been brought to Ligand's attention
at any place and which is alleged to have been caused by a Product. Organon
shall have all rights and responsibilities to report such side effect, adverse
reaction or injury to the appropriate regulatory authorities as required by
applicable law.

     15.2 PRODUCT RECALL. In the event that Organon determines that an event,
incident or circumstance has occurred which may result in the need for a recall
or other removal of any Product, or any lot or lots thereof, from the market, it
shall notify Ligand with respect thereto. Organon shall, in its sole discretion,
have the right to order any such recall or other removal and Ligand shall
cooperate with such recall.

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     15.3 REGULATORY MATTERS. From and after the Commencement Date, the
preparation, filing and prosecution of INDs, NDAs and other regulatory filings
required to be filed with any Regulatory Agency in respect of a Product will be
in the name of, under sole control of, and at the responsibility of Organon and
its Affiliates. Further, Organon and/or its Affiliates shall own all regulatory

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documentation relating to such filings. The costs of preparation, filing and
prosecution of regulatory filings with regard to Products incurred on or after
the Commencement Date shall be borne entirely by Organon as long as Organon
retains rights to commercialize such Product hereunder. Organon shall be solely
responsible for all contacts and communications with governmental and regulatory
authorities with respect to all matters relating to any Product (including
reporting adverse drug reactions). Unless required by law, Ligand shall have no
contacts or communications with any governmental or regulatory authority
regarding any Product without the prior written consent of Organon. Ligand shall
provide Organon with copies of all communications received from any governmental
or regulatory authority relating to any Product and shall allow Organon at its
discretion to control and/or participate in any further contacts or
communications in connection therewith.

                                   ARTICLE 16

                                  SEVERABILITY

     If any term or provision of this Agreement is held to be invalid, illegal
or unenforceable by a court or other governmental authority of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement, which shall remain in full force
and effect. The holding of a term or provision to be invalid, illegal or
unenforceable in a jurisdiction shall not have any effect on the application of
the term or provision in any other jurisdiction.

                                   ARTICLE 17

                                 INDEMNIFICATION

     Each of Organon and Ligand agrees to indemnify, hold harmless, and defend
the other Party and its Affiliates and their respective employees, agents,
officers, directors and permitted assigns (such Party's "Indemnified Groups")
from and against any claims by a Third Party resulting in the award or payment
of any judgments, expenses (including reasonable attorney's fees), damages and
awards (collectively a "Claim") arising out of or resulting from (a) its
negligence or willful misconduct, (b) a breach of any of its representations,
warranties or obligations hereunder, or (c) such Party's research and
development, manufacture, use, promotion, marketing or sale of any Collaboration
Compounds, Collaboration Lead Compounds or Products, except to the extent that
such Claim arises out of or results from the negligence or misconduct of a Party
seeking to be indemnified and held harmless or the negligence or misconduct of a
member of such Party's Indemnified Group. A condition of this obligation is
that, whenever a member of the Indemnified Group has information from which it
may reasonably conclude an incident has occurred which could give rise to a
Claim, such indemnified Party shall immediately give notice to the indemnifying
Party of all pertinent data surrounding such incident and, in the event a Claim
is made, all members of the Indemnified Group shall assist the indemnifying
Party and cooperate in the gathering of information with respect to the time,
place and circumstances and in obtaining the names and addresses of any

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<PAGE>

injured Parties and available witnesses. No member of the Indemnified Group
shall make any payment or incur any expense in connection with any such Claim
without prior written consent of the indemnifying party, provided, however, that
an indemnitee may take any reasonably appropriate action that is necessary to
preserve or avoid prejudice to its interests after the indemnifying party has
been notified of the Claim if the indemnitor states that it does not believe
that the indemnification obligations described herein apply to such Claim or if
the indemnitor does not or cannot perform its indemnity obligations hereunder.
The indemnifying Party shall have the right, but not the obligation, to control
any such action. The obligations set forth in this Article 17 shall survive the
expiration or termination of this Agreement.

                                   ARTICLE 18

                                  MISCELLANEOUS

     18.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, or U.S. overnight courier), U.S. overnight
courier, postage prepaid (where applicable), or delivered by certified mail,
postage prepaid, return receipt requested to the address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.

  If to Ligand:      Ligand Pharmaceuticals Incorporated
                     10275 Science Center Drive
                     San Diego, California 92121
                     Attention:  General Counsel

  With a copy to:    Ligand Pharmaceuticals Incorporated
                     10275 Science Center Drive
                     San Diego, California 92121
                     Attention:  Chief Scientific Officer

  If to Organon:     Organon
                     Molenstraat 110
                     5340 BH Oss
                     The Netherlands
                     Attention: Director Research

  With a copy to:    AKZONOBEL Nederland B.V.
                     Wethouder van Eschstraat 1
                     5342 AV Oss
                     The Netherlands
                     Attention:  Legal Affairs Department

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     18.2 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to its
conflicts of law provisions, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.

     18.3 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the Parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both Parties hereto.

     18.4 HEADINGS. The captions to the several Articles and Sections hereof are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.

     18.5 INDEPENDENT CONTRACTORS. Each of Organon and Ligand acknowledges and
agrees that neither it nor any of its employees are employees of the other Party
and that neither it nor any of its employees are eligible to participate in any
employee benefit plans of such other Party. Each of Organon and Ligand further
acknowledges that neither it nor any of its employees are eligible to
participate in any such benefit plans even if it is later determined that its or
any of its employees' status during the period of this Agreement was that of an
employee of the other Party. In addition, each of Organon and Ligand waives any
claim that it may have under the terms of any such benefit plans or under any
law for participation in or benefits under any of the other Party's benefit
plans.

     18.6 WAIVER. The waiver by either Party hereto of any right hereunder or
the failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.

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

     18.8 GOVERNING LANGUAGE: This Agreement has been prepared and executed in
the English language. No authorized translation has been prepared or executed.
In the event that any translation is prepared, the English language version of
this Agreement shall govern. All written correspondence between the parties
shall be in the English language, including all reports due under this
Agreement.

     18.9 DISPUTE RESOLUTION.

     a) The Parties shall attempt in good faith to resolve promptly any dispute
arising out of or relating to this Agreement by negotiation. If the matter can
not be resolved in the normal course of business any interested party shall give
the other party written notice of any such dispute not resolved, after which the
dispute shall be referred to the senior executives of the Parties as described
in Section 3.2 for resolution of JRC disputes , who shall likewise attempt to
resolve the

                                       34

                                                         Ligand Initial  [/s/WR]
                                                         Organon Initial [/s/JV]

<PAGE>

dispute.

     If a dispute has not been resolved by negotiation within ***(***) *** of
the disputing party's written notice, or if the parties fail to meet within ***
(***) *** from such notice, the parties shall endeavour to settle the dispute by
mediation under the supervision of and in accordance with the guidelines of the
Centre for Dispute Resolution (CEDR) in London, UK. Unless otherwise agreed,
both parties or each individual party may request the CEDR to appoint an
independent mediator. The language of mediation shall be English and the seat of
the mediation shall be New York, New York.

     b) If the dispute has not been resolved by non-binding means as provided in
subsection (a) above within ninety (90) days of the initiation of such
procedure, the dispute shall be finally and exclusively settled in New York, New
York, or any other mutually agreed upon venue under the Uncitral Arbitration
Rules by three (3) independent arbitrators appointed in accordance with said
Rules. The appointing authority shall be the American Arbitration Association.
The language of the arbitration shall be English. The arbitration, except as
provided in the paragraph below, shall be in lieu of any other remedy and the
award shall be final, binding and enforceable by any court having jurisdiction
for that purpose.

     This Article shall, however, not be construed to limit or to preclude
either party from bringing any action in any court of competent jurisdiction for
injunctive or other provisional relief as necessary or appropriate.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                       35

                                                         Ligand Initial  [/s/WR]
                                                         Organon Initial [/s/JV]

<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this Research, Development
and License Agreement as of the date first set forth above.

ORGANON COMPANY                               LIGAND PHARMACEUTICALS
                                              INCORPORATED

By:   /S/ C.NICHOLSON                       By:      /S/ WILLIAM L. RESPESS
     ---------------------                       --------------------------
                                                       William L. Respess

Title:  Director Research                     Title:  Senior Vice President,
                                                      General Counsel and
                                                      Secretary
By:    /S/ M J VERGOUWEN
      ---------------------

Title:  Managing Director R&D

                                       36

                                                         Ligand Initial  [/s/WR]
                                                         Organon Initial [/s/JV]

<PAGE>

                                    EXHIBIT A

                             REPORTING REQUIREMENTS

Each report required under Section 4.3 will include the following:

1.   The declaration of a Collaboration Compound to be a Collaboration Lead
     Compound.

2.   The Projected and actual dates of filing of each IND for a Collaboration
     Lead Compound.

3.   Projected and actual initiation dates for clinical trials for each
     Collaboration Lead Compound for all indications.

4.   Projected and actual dates of completion of clinical phases.

5.   A summary of the purpose of each clinical trial of a Collaboration Lead
     Compound.

6.   The projected and actual completion dates of each trial of a Collaboration
     Lead Compound.

7.   Any projected and actual dates of NDA submissions for each Collaboration
     Lead Compound and any FDA response thereto.

8.   Copies of any publications (preclinical and clinical) by Organon or its
     investigators or Organon's third party collaborators/investigators
     concerning Collaboration Lead Compounds upon request by Ligand.

9.   Copies of materials presented to financial analysts concerning a
     Collaboration Lead Compound upon request by Ligand.

<PAGE>

                                    EXHIBIT B
                            TECHNICAL OPERATING PLAN

                  DEVELOPMENT OF PR AGONIST CLINICAL CANDIDATES
                                     FOR ***

I.   RESEARCH PROGRAM GOAL

         To use Ligand's existing non-steroidal progestin templates to
         develop clinical candidates which:

         ***

II.  PR PROGRAM RATIONALE

         ***

III. PROFILE FOR A NOVEL NON-STEROIDAL PROGESTIN AGONIST

         ***

IV.  INDICATIONS

     A. PRIMARY

         ***

     B. SECONDARY

         ***

V.   MOLECULAR AND CELL-BASED PROFILING ASSAYS (PHASE I)

     A.  REPRESENTATIVE LIGAND ASSAYS

         ***

VI.  EFFICACY AND SELECTIVITY ASSAYS

     A.  IN VITRO MODELS (PHASE I/II)

         ***

     B.  IN VIVO MODELS (PHASE I/II)

         ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

                                    EXHIBIT B
                            TECHNICAL OPERATING PLAN

VII. MEDICINAL CHEMISTRY

     A.  ASSUMPTIONS

          ***

     B.  DRUG DISCOVERY ACTIVITIES

          ***

VIII. ACTIVITIES IN SUPPORT OF PRE-CLINICAL CANDIDATE OPTIMIZATION

      A.       BIOLOGY

          ***

      B.       CHEMISTRY

          ***

IX.  APPENDICES

     THE FOLLOWING (DRAFT) LISTS OF CRITERIA AND CONSIDERATIONS FOR THE
     ORGANON-LIGAND CO-OPERATION ON NON-STEROIDAL, TISSUE SELECTIVE
     PR-MODULATORS, IS PROVISIONAL AND INTENDED AS A POINT OF REFERENCE FOR THE
     CRITERIA, STANDARDS AND CONSIDERATIONS TO BE INCORPORATED IN A FUTURE
     PHARMACOCHEMICAL PLAN (PCP).

         Abbreviations:

              S&T:Synthesis & Testing
              SOPP:        Collaboration Lead Compound
              PCP:PharmacoChemical Plan

         A.       S & T - AND SOPP-CRITERIA

                  ***

         B.       QUALITATIVE SOPP-CRITERIA
                  (to be elaborated in PCP)

                  ***

         C.       ORGANON STANDARD SOPP-CHECKLIST
                  (to be discussed and finalized in the PCP)

                  ***

         D.       POTENCY-CRITERIA

                  ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

                                    EXHIBIT B
                            TECHNICAL OPERATING PLAN

E.   FLOW-CHART FOR S & T PHASE

  ----------------------------------------------------------
    Flow Chart of S&T PHASE
  ----------------------------------------------------------

         ***

F.   DRAFT "CO"-STANDARDS

         ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

                                                            EXHIBIT C

 ------------------------------------------------------------------------------
                        PROPOSED PRESS RELEASE TIMETABLE
 ------------------------------------------------------------------------------
    IF RECEIPT OF FUNDS IS CONFIRMED BY LIGAND ON MONDAY, FEBRUARY 14, 2000,
      THEN ISSUE RELEASE MONDAY, FEBRUARY 14, 2000, AFTER MARKET CLOSES AT
                                 5:15 P.M. EST
     IF CONFIRMATION OF RECEIPT OF FUNDS IS NOT RECEIVED BY MID-DAY MONDAY,
      THEN ISSUE RELEASE TUESDAY, FEBRUARY 15, 2000 BEFORE MARKET OPENS AT
                                8:15 A.M. EST OR
         TUESDAY, FEBRUARY 15, 2000 AFTER MARKET CLOSES AT 5:15 P.M. EST

 ------------------------------------------------------------------------------

                                                  Ligand Contact:  Paul V. Maier
                                                                  (858) 550-7573

                                             Organon Contact:  Dr. E.C. Havenaar
                                                                  +31.412.662132

              LIGAND AND ORGANON ENTER INTO RESEARCH COLLABORATION

   -- COLLABORATION WILL FOCUS ON RESEARCH OF COMPOUNDS FOR THE TREATMENT AND
                    PREVENTION OF GYNECOLOGICAL DISORDERS --

     SAN DIEGO, CALIFORNIA AND OSS, THE NETHERLANDS - February __, 2000 - Ligand
Pharmaceuticals Incorporated (Nasdaq: LGND) and Organon announced today that
they have signed a Collaboration Agreement to focus on the discovery,
characterization, design and development of small molecule compounds with
potential effects for the treatment and prevention of gynecological diseases
mediated through the progesterone receptor.

     The objective of the collaboration is the discovery of new non-steroidal
compounds which are tissue-selective in nature and may have fewer side effects.
Such compounds may provide utility in hormone replacement therapy, oral
contraception, reproductive diseases, and other hormone-related disorders.

     "The research collaboration with Organon marks Ligand's tenth research
collaboration to date and Ligand's fourth collaboration focusing on sex hormone
modulators," said Ligand Chairman, President and CEO David E. Robinson. "The
Organon collaboration should aid Ligand in its strategy of building a
diversified royalty-based business focusing on the development of Ligand's broad
technology platform, which includes the estrogen and progesterone receptor
modulators. Four products from existing collaborations focusing on these hormone
modulators are currently in clinical development."

     Under the terms of the agreement, Ligand has received undisclosed up front
payments for research reimbursements and may receive milestone and royalty
payments on a product-by-product basis. Organon has been granted exclusive
worldwide rights to manufacture and sell any products resulting from the
collaboration.

     Driek Vergouwen, Managing Director R&D of Organon commented on the new
collaboration: "The

<PAGE>

     collaboration with Ligand complements our internal research and development
programs in the areas of gynecology. Promising compounds resulting from this
collaboration could significantly augment Organon's existing portfolio of
marketed medicines in this field."

     Andres Negro-Vilar, M.D., Ph.D., Ligand Senior Vice President of Research
and Development and Chief Scientific Officer, said, "Organon's strength in the
research, development and marketing of gynecological products in areas such as
contraception, hormone replacement therapy, osteoporosis and infertility
complements Ligand's leadership and technology in female hormone research. The
significant experience and pharmaceutical expertise of Organon will allow the
pursuit of development of our technology in large health care markets." N.V.
ORGANON

     NV Organon develops and produces pharmaceutical products in fields such as
gynaecology, psychiatry, athero-thrombosis, and auto-immune diseases. The
company employs more than 11,500 employees worldwide. The company invests over
17 percent of its sales income in its drug discovery and development programmes.
NV Organon is one of the pharmaceutical business units of Akzo Nobel. Akzo
Nobel, based in the Netherlands, serves customers throughout the world with
healthcare products, coatings, and chemicals. The company currently employs
approximately 68,000 people in almost 75 countries. Consolidated sales for 1999
will total about EUR 12 billion (NLG 26 billion). LIGAND PHARMACEUTICALS
INCORPORATED

     Ligand Pharmaceuticals Incorporated discovers, develops and markets new
drugs that address critical unmet medical needs of patients in the areas of
cancer, skin diseases, and men's and women's hormone-related diseases, as well
as osteoporosis, metabolic disorders and cardiovascular and inflammatory
diseases. In addition to the recently approved Targretin(R) capsules, Ligand had
two drugs approved during 1999 for marketing in the U.S. -- ONTAK(R) and
Panretin(R) gel -- that are being marketed through its specialty cancer and
HIV-center sales force in the U.S. Targretin(R) gel is currently under review by
the FDA for marketing approval in the U.S., and two additional oncology-related
products -- Morphelan(TM) (licensed from Elan) and Panretin(R) capsules -- are
in late-stage development. Ligand's proprietary drug discovery and development
programs are based on its leadership position in gene transcription technology,
primarily related to Intracellular Receptors (IR) and Signal Transducers and
Activators of Transcription (STATs).

     This news release may contain certain forward-looking statements by Ligand
and actual results could differ materially from those described as a result of
factors outside of the control of Ligand. There can be no assurance that (a) the
collaborative arrangement will be successful or continued, (b) Ligand will
receive any further reimbursement amounts for the prior development of its
technology or any milestone payments for the discovery and/or development of any
compounds, (c) any compounds will be discovered and/or be deemed

<PAGE>

     appropriate for further testing, pre-clinical development or clinical
development, (d) any products under development by Ligand or any of its
collaborative partners, including Organon, will receive approval from the FDA or
other authorities to market any of these products; (e) if successfully developed
and thereafter approved, there will be a market for the drugs. Additional
information concerning these and other factors affecting Ligand's business can
be found in press releases as well as in Ligand's public periodic filings with
the Securities and Exchange Commission, available via our web site at
HTTP://WWW.LIGAND.COM. Ligand undertakes no obligations to update the matters
discussed herein to reflect events after the date of this press release.

                                      # # #

     NOTE: Panretin(R)and Targretin(R)are registered trademarks of Ligand
Pharmaceuticals Incorporated, and ONTAK(R)is a registered trademark of Seragen,
Inc., a wholly owned subsidiary of Ligand.

                                      # # #

<PAGE>

                                    EXHIBIT D

                         (23 pages including cover page)

 LIST OF THE LIGAND BACKGROUND TECHNOLOGY COMPOUNDS SUBJECT TO RESTRICTIONS ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

                                    EXHIBIT D

                                       ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

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