Document:

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                                                                   EXHIBIT 10.73

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                         KINETEK PHARMACEUTICALS, INC.

                                      AND

                                    QLT INC.

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                         RESEARCH AND EARLY DEVELOPMENT

                                   AGREEMENT

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                    RESEARCH AND EARLY DEVELOPMENT AGREEMENT

                               TABLE OF CONTENTS

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<S>                                                                                                     <C>
ARTICLE 1 - INTERPRETATION.     ......................................................................   1
         1.1    Definitions...........................................................................   1
         1.2    Other Definitions.....................................................................   7
         1.3    Best of Knowledge.....................................................................   7
         1.4    Headings..............................................................................   7
         1.5    Exhibits..............................................................................   7

ARTICLE 2 - RESEARCH PROGRAM..........................................................................   8
         2.1    Scope.................................................................................   8
         2.2    Responsibility and Costs..............................................................   8
         2.3    [*]...................................................................................   8
         2.4    Selection of Third Eligible Target....................................................   8
         2.5    [*]...................................................................................   8
         2.6    [*]...................................................................................   8
         2.7    Research Plan.........................................................................   8

ARTICLE 3 - DEVELOPMENT RIGHTS........................................................................   9
         3.1    Delivery of Prospective Lead Compounds................................................   9
         3.2    Development Election..................................................................   9
         3.3    Expiry of Development Election........................................................  11
         3.4    Acceleration of Development Election..................................................  11

ARTICLE 4 - EARLY DEVELOPMENT.........................................................................  11
         4.1    Research Program Timetable............................................................  11
         4.2    Selection of Additional Target........................................................  11
         4.3    Additional Compound Request...........................................................  11
         4.4    [*]...................................................................................  11
         4.5    Delivery of Additional Prospective Lead Compounds.....................................  12
         4.6    Failure to Deliver (Additional) Prospective Lead Compounds............................  12

ARTICLE 5 - EXCLUSIVITY...............................................................................  14
         5.1    QLT Exclusivity  .....................................................................  14
         5.2    Kinetek's Rights......................................................................  14
         5.3    Exceptions to Kinetek's Rights........................................................  14
         5.4    Cross-Over Use/Cross-Pricing Risk.....................................................  15
         5.5    Grant of License......................................................................  15

ARTICLE 6 - COMMITTEES................................................................................  15
         6.1    Joint Technical Committee.............................................................  15
         6.2    Joint Management Committee............................................................  16
         6.3    Budget................................................................................  17

ARTICLE 7 - COMMITMENTS OF KINETEK AND QLT............................................................  18
         7.1    Commitments of Kinetek................................................................  18
         7.2    Sub-contracting and Outsourcing.......................................................  18
         7.3    Commitments of QLT....................................................................  18

ARTICLE 8 - FINANCIAL MATTERS.........................................................................  19
         8.1    Initial Investment by QLT.............................................................  19
         8.2    Use of Proceeds.......................................................................  19
         8.3    Investment for Additional Compounds...................................................  19
         8.4    Convertible Loan Facility.............................................................  19
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ARTICLE 9 - CONFIDENTIALITY; PUBLICITY AND PUBLICATION................................................  20
         9.1    Obligation of Confidentiality.........................................................  20
         9.2    Permitted Disclosures.................................................................  21
         9.3    Return of Confidential Information....................................................  21
         9.4    Ownership of Confidential Information.................................................  21
         9.5    Press Release.........................................................................  22
         9.6    Publication...........................................................................  22
         9.7    Survival..............................................................................  23

ARTICLE 10 - INTELLECTUAL PROPERTY....................................................................  23
         10.1   Ownership of Background Intellectual Property.........................................  23
         10.2   Disclosure of Inventions..............................................................  23
         10.3   Ownership of Inventions...............................................................  23

ARTICLE 11 - PATENTS; PROSECUTION AND LITIGATION......................................................  24
         11.1   Prosecution of Patents................................................................  24
         11.2   Patent Review.........................................................................  24
         11.3   Patent Costs..........................................................................  25
         11.4   Right to Assume Prosecution...........................................................  25
         11.5   Defense of Infringement Suits.........................................................  25
         11.6   Infringement by Third Parties.........................................................  26
         11.7   Interference Proceedings..............................................................  27
         11.8   Status of Proceedings.................................................................  28

ARTICLE 12 - SAFETY AND REGULATORY....................................................................  28
         12.1   Compliance with Laws..................................................................  28
         12.2   Safety................................................................................  28
         12.3   Regulatory Filings....................................................................  28

ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS................................................  28
         13.1   Representations and Warranties of Kinetek.............................................  28
         13.2   Covenants of Kinetek..................................................................  29
         13.3   Representations and Warranties of QLT.................................................  30
         13.4   Covenants of QLT......................................................................  30
         13.5   Kinetek Change of Control.............................................................  30

ARTICLE 14 - TERM AND TERMINATION.....................................................................  30
         14.1   Termination...........................................................................  30
         14.2   Term..................................................................................  30
         14.3   Termination by QLT....................................................................  31
         14.4   Termination for Breach................................................................  31
         14.5   Termination on Bankruptcy.............................................................  32
         14.6   Termination on Scientific Grounds.....................................................  32
         14.7   Survival..............................................................................  33

ARTICLE 15 - INDEMNIFICATION..........................................................................  33
         15.1   Mutual Indemnification................................................................  33
         15.2   Intellectual Property Indemnity.......................................................  34
         15.3   Indemnification Procedure.............................................................  34

ARTICLE 16 - MISCELLANEOUS............................................................................  34
         16.1   Assignment; Enurement.................................................................  34
         16.2   Dispute Resolution....................................................................  35
         16.3   Entire Agreement......................................................................  35
         16.4   Force Majeure.........................................................................  36
         16.5   Further Assurances....................................................................  36
         16.6   Governing Law and Attornment..........................................................  36
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         16.7   Insurance.............................................................................  36
         16.8   Notices...............................................................................  36
         16.9   Change of Address.....................................................................  37
         16.10  Rights and Remedies...................................................................  37
         16.11  Severability..........................................................................  37
         16.12  Counterparts; Facsimile...............................................................  37
         16.13  Waiver................................................................................  37

EXHIBIT A       KINETEK PATENTS..........................................................................  1
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EXHIBIT B       QLT PATENTS..............................................................................  1
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EXHIBIT C       GENERAL GUIDELINES FOR RESEARCH PLAN.....................................................  1
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EXHIBIT D       LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT.....................................  1
                ----------------------------------------------------

EXHIBIT E       THIRD PARTY LICENSES.....................................................................  1
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EXHIBIT F       KINETEK INSURANCE COVERAGE...............................................................  1
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                    RESEARCH AND EARLY DEVELOPMENT AGREEMENT

THIS RESEARCH AND EARLY DEVELOPMENT AGREEMENT (this "AGREEMENT") is entered into
as June 7, 2001 (the "EFFECTIVE DATE") by and among KINETEK PHARMACEUTICALS,
INC. ("KINETEK"), a corporation organized and existing under the laws of Canada
and having an office at 850 - 1200 West 73rd Avenue, Vancouver, British
Columbia, V6P 6G5 and QLT INC. ("QLT"), a corporation organized and existing
under the laws of Canada and having an office at 887 Great Northern Way,
Vancouver, British Columbia, V5T 4T5

                                    RECITALS

WHEREAS Kinetek has scientific expertise and proprietary technology in the field
of signal transduction and has undertaken a broad drug discovery program with
the objective of designing small-molecule inhibitors targeting protein kinases
and protein phosphatases;

WHEREAS QLT is interested in developing and commercializing drugs targeting
protein kinases and protein phosphatases for the diagnosis, prevention and/or
treatment of conditions and diseases in humans and has particular expertise in
developing, registering, manufacturing, marketing and selling pharmaceuticals
world-wide;

WHEREAS both parties desire to enter into a collaboration the objective of which
will be for Kinetek to research and develop lead compounds targeting selected
protein kinases and protein phosphatases which QLT shall exclusively license for
development and commercialization by QLT in potential co-development with
Kinetek;

NOW THEREFORE, for and in consideration of the mutual observance of the
covenants set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
agree as follows:

                            ARTICLE 1- INTERPRETATION

1.1      DEFINITIONS

         (a)      "ADDITIONAL COMPOUND REQUEST" shall have the meaning set forth
                  in Section 4.3;

         (b)      "ADDITIONAL PROSPECTIVE LEAD COMPOUND" shall have the meaning
                  set forth in Section 4.3;

         (c)      "ADDITIONAL TARGET" shall mean a Target selected by QLT
                  pursuant to Section 4.2 from among the Kinetek Available
                  Targets;

         (d)      "AFFILIATE" shall mean, with respect to any Person, any Person
                  directly or indirectly controlled by, controlling or under
                  common control with such Person. For the purposes of this
                  definition, "control" shall mean:

                  (i)      the possession, directly or indirectly, of the power
                           to direct the management or policies of any such
                           Person or to veto any material decision relating to
                           the management or policies of such Person, in each
                           case whether through ownership of voting securities,
                           by contract or otherwise; or

                  (ii)     direct or indirect beneficial ownership of 40% or
                           more of the voting securities of, or a 40% or greater
                           interest in the income of, such Person, or such other
                           relationship as, in fact, constitutes actual control;

         (e)      "ANNUAL BUDGET" shall have the meaning set forth in
                  Section 6.3;

         (f)      "COMMON SHARES" shall mean the common shares in the capital
                  of Kinetek;
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         (g)      "COMMENCEMENT DATE" shall mean the date on which the draft
                  Research Program budget prepared by JTC pursuant to Section
                  2.7 has been approved by the JMC pursuant to Section 6.2(b);

         (h)      "COMPOUND" shall mean any chemical compound, including salts
                  thereof, owned, controlled or licensed by Kinetek as at the
                  Effective Date and/or becomes owned, controlled or licensed by
                  Kinetek during the Term that is directed against a Kinase, a
                  Phosphatase or any other Target;

         (i)      "CONFIDENTIAL INFORMATION" shall mean all information, data
                  and records, whether written or oral, which is obtained by a
                  receiving party (Kinetek or QLT, as the case may be) from a
                  disclosing party (Kinetek or QLT, as the case may be).
                  Information shall not be considered "CONFIDENTIAL INFORMATION"
                  to the extent that when considered as a whole and in the
                  context disclosed, the information:

                  (i)      is in the public domain at the time of disclosure,

                  (ii)     after disclosure, subsequently becomes part of the
                           public domain other than as a consequence of a breach
                           of an obligation of confidentiality owed to the
                           disclosing party by the receiving party,

                  (iii)    can be demonstrated by the receiving party by written
                           record to have been known or otherwise available to
                           the receiving party prior to the disclosure by the
                           disclosing party,

                  (iv)     after disclosure, can be demonstrated by the
                           receiving party by written record to have been
                           subsequently provided to the receiving party by a
                           third party if the receiving party reasonably
                           believes such disclosure does not violate any
                           obligations of the third party to the disclosing
                           party,

                  (v)      is subsequently and independently developed by
                           employees of the receiving party or Affiliates of the
                           receiving party who had no knowledge of the
                           Confidential Information disclosed, as demonstrated
                           by the receiving party by written record, or

                  (vi)     is required to be disclosed by law or government
                           regulation(s), provided that the receiving party
                           gives the disclosing party prompt notice of the
                           required disclosure in order to allow the disclosing
                           party to seek protective treatment.

                  A combination of features will not be deemed within the
                  foregoing exceptions merely because individual features are in
                  the public domain or in the possession of the receiving party
                  unless the combination itself is in the public domain or in
                  the possession of the receiving party;

         (j)      "CONVERTIBLE LOAN FACILITY" shall mean the convertible
                  loan facility as provided for in Section 8.4 of this
                  Agreement;

         (k)      "CROSS-OVER USE" shall mean the use or sale of a Compound, or
                  any Related Compound, that is directed against the same
                  Target(s) as any Lead Compound and/or Licensed Product, by a
                  party or an Affiliate of such party or by a Third Party
                  appointed by a party or an Affiliate of such party that can
                  reasonably be seen as competing with the use or sale of any
                  Lead Compound and/or Licensed Product in the Territory;

         (l)      "CROSS-PRICING RISK" shall mean the existence of a Compound,
                  or any Related Compound, that has substantially the same
                  chemical structure, or similar performance characteristics to
                  any Lead Compound and/or Licensed Product, so that such
                  Compound could reasonably be considered to be substituted in
                  medical practice and subject to competitive pricing in
                  relation to such Lead Compound and/or Licensed Product;

         (m)      "CURRENT MARKET PRICE" of Common Shares on any date shall
                  mean the weighted average of the "daily trading prices" for
                  the 15 consecutive "Trading Days" immediately preceding
                  such date. The "daily trading price" for each Trading Day
                  shall be the weighted average trading price for sales of
                  common shares on The Toronto Stock Exchange (or, if the
                  Common Shares are not then listed and posted for
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                                       -3-

                  trading on The Toronto Stock Exchange, on such stock
                  exchange or similar quotation system on which such shares
                  are listed and posted for trading as may be selected for
                  such purpose by the directors of QLT acting in good faith)
                  provided that if the Common Shares are not listed on any
                  stock exchange, the "Current Market Price" shall be the
                  price at which Common Shares are issued to investors that
                  are not industry-related strategic investors or
                  collaborative research partners in the then most recent
                  bona fide private placement financing by Kinetek completed
                  within the 12 month period immediately preceding the date
                  of the applicable Additional Compound Request and having
                  gross proceeds of at least [*] (the "PRIVATE PLACEMENT").
                  Provided further that in the event Kinetek has not
                  completed such Private Placement, the parties agree to
                  negotiate the price per Common Share, and failing such
                  agreement within 30 days of the applicable Additional
                  Compound Request, either party may refer the matter for
                  resolution pursuant to Section 16.2 in accordance with
                  generally accepted valuation practices.  A "TRADING DAY"
                  shall be any day on which The Toronto Stock Exchange (or
                  such other stock exchange or similar quotation system as
                  may be selected by the directors of QLT) is open for
                  business and on which Common Shares have been traded;

         (n)      "DESIGNATED TARGETS" shall mean:

                  (i)      up to 2 Eligible Targets selected or designated by
                           QLT pursuant to Sections 3.2(b) and 3.2(f); and

                  (ii)     an Additional Target, if selected by QLT pursuant to
                           Section 4.2 following the exercise by QLT of its
                           Development Election pursuant to Section 3.2 in
                           respect of the second Prospective Lead Compound;

         (o)      "DEVELOPMENT ELECTION" shall have the meaning set forth in
                  Section 3.2(a);

         (p)      "DEVELOPMENT INFORMATION" shall have the meaning set forth
                  in Section 3.1;

         (q)      "EFFECTIVE DATE" shall mean the effective date of this
                  Agreement as set forth on the first page hereof;

         (r)      "ELIGIBLE TARGETS" shall mean ILK, [*] and one of  [*]
                  selected pursuant to Section 2.4;

         (s)      "FDA" shall mean the United States Food and Drug
                  Administration or any successor entity thereto;

         (t)      "FIELD" shall mean the diagnosis, prevention and/or treatment
                  of ocular, renal (excluding renal disease caused by
                  hypertension) and/or immune system conditions or diseases
                  (excluding asthma) in humans;

         (u)      "FTE COST" shall have the meaning set forth in Section 8.2;

         (v)      "GLP" shall mean the current Good Laboratory Practices
                  regulations promulgated by the FDA, published at 21 CFR
                  Section 58, as such regulations may be from time to time
                  amended, and such equivalent regulations or standards of
                  countries outside the United States as may be applicable
                  to activities conducted hereunder;

         (w)      "GMP" shall mean the current Good Manufacturing Practice
                  regulations promulgated by the FDA, published at 21 CFR
                  Section 210 et seq., as such regulations may from time to
                  time be amended, and such equivalent regulations or
                  standards of countries outside the United States as may
                  be applicable to activities conducted hereunder;

         [*]

         (y)      "ILK" shall mean integrin linked kinase, an enzyme;

* Material has been omitted and filed separately with the commission.
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                                       -4-

         (z)      "IND" shall mean an Investigational New Drug Application
                  under 21 CFR Section.312.23 pursuant to the rules and
                  policies of the FDA;

         (aa)     "IND READY" shall mean that stage in the pre-clinical
                  development of a Research Candidate when Kinetek has performed
                  all pre-clinical work and prepared all documentation and
                  materials (including drug product and data) necessary to
                  support the filing of an IND as documented in 21 CFR Section
                  312.23 with the exception of the clinical trial protocol;

         (bb)     "INITIAL INVESTMENT" shall have the meaning set forth in
                  Section 8.1;

         (cc)     "INITIAL TARGETS" shall mean ILK, [*] ;

         (dd)     "INTELLECTUAL PROPERTY" shall mean any discoveries,
                  developments, improvements, Know-How, Patents, copyrights,
                  copyright applications, industrial designs, industrial design
                  applications, mask works, trademarks, trademark applications
                  and trade secrets;

         (ee)     "INTERIM BUDGET" shall have the meaning set forth in
                  Section 6.3;

         (ff)     "JOINT INVENTIONS" shall have the meaning set forth in
                  Section 10.3;

         (gg)     "JOINT MANAGEMENT COMMITTEE" or "JMC" shall mean the committee
                  appointed by the parties pursuant to in Section 6.2;

         (hh)     "JOINT TECHNICAL COMMITTEE" or "JTC" shall mean the committee
                  appointed by the parties pursuant to Section 6.1;

         (ii)     "KINASE" shall mean a human enzyme that catalyzes the addition
                  of a phosphate group to a protein and includes, without
                  limitation, ILK, [*] ;

         (jj)     "KINASE TECHNOLOGY" shall mean all Patents and Know-How that
                  are owned, controlled or licensed by either party or its
                  Affiliates as at the Effective Date and/or become owned,
                  controlled or licensed during the Term in connection with
                  performance by either party under the Research Program and
                  that relate to the research, development, utilization,
                  manufacture or use of:

                  (i)      Compounds (including Research Candidates, Prospective
                           Lead Compounds, Additional Prospective Lead Compounds
                           and Lead Compounds) and Licensed Products that are
                           directed against the Targets ILK, [*] or any other
                           Kinase; and

                  (ii)     the Targets against which the Compounds or Licensed
                           Products listed in clause (i) are directed;

         (kk)     "KINETEK AVAILABLE TARGETS" means any Targets that Kinetek has
                  identified or that are the subject of a research or
                  development program conducted by Kinetek provided that such
                  research and development program is not being undertaken in
                  conjunction with a Third Party pursuant to a license or other
                  agreement;

         (ll)     "KINETEK KNOW-HOW" shall mean all Know-How that is owned,
                  controlled or licensed by Kinetek as at the Effective Date
                  and/or becomes owned, controlled or licensed by Kinetek during
                  the Term, and that:

                  (i)      arises in connection with the performance of the
                           Research Program, or

                  (ii)     relates to:

                           (A)      all or any part of the Technology,

* Material has been omitted and filed separately with the commission.
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                                       -5-

                           (B)      any improvements to the Technology,

         (mm)     "KINETEK PATENT" shall mean any Patent that is owned,
                  controlled or licensed by Kinetek as at the Effective Date
                  and/or becomes owned, controlled or licensed by Kinetek during
                  the Term and that is included in the Technology, and those
                  Patents set out in EXHIBIT A, as updated from time to time
                  during the Term;

         (nn)     "KINETEK TECHNOLOGY" shall mean all Technology that is owned,
                  controlled or licensed by Kinetek as at the Effective Date
                  and/or becomes owned, controlled or licensed by Kinetek during
                  the Term;

         (oo)     "KNOW-HOW" shall mean any and all data, technical information,
                  instructions, processes, experience, inventions (not yet
                  patented), discoveries, formulae, trade secrets, compositions
                  of matter and methods, expert opinions and other information
                  (in written or other tangible form) including, without
                  limitation, any chemical, pharmacological, toxicological,
                  clinical, assay, control and manufacturing data, biological
                  materials, manufacturing or related technology, analytical
                  methodology, chemical and quality control procedures,
                  protocols, techniques, improvements and results of
                  experimentation and testing;

         (pp)     "[*] " shall mean the Compounds listed in documents
                  delivered to QLT concurrent with the execution of this
                  Agreement;

         (qq)     "LEAD COMPOUND" shall mean a Prospective Lead Compound or an
                  Additional Prospective Lead Compound that has been accepted by
                  QLT pursuant to Section 3.2 for development and
                  commercialization under the License Agreement;

         (rr)     "LICENSE AGREEMENT" shall mean the License, Development and
                  Commercialization Agreement in substantially the form set out
                  in EXHIBIT D to this Agreement, to be executed by Kinetek and
                  QLT with respect to all Lead Compounds;

         (ss)     "LICENSED PRODUCT" shall mean any finished product that
                  incorporates any Technology that is covered by Kinetek
                  Patents, Kinetek Know-How or Patents arising out of Joint
                  Inventions, and that is developed and commercialized pursuant
                  to the License Agreement;

         (tt)     "[*]" shall mean the Compounds selected by Kinetek under [*]
                  to be developed in the [*] Field;

         (uu)     "[*]" shall mean the treatment, diagnosis or prevention of
                  oncological conditions or diseases in humans;

         (vv)     "OTHER TARGET TECHNOLOGY" shall mean all Patents and Know-How
                  that are owned, controlled or licensed by either party or its
                  Affiliates as at the Effective Date and/or become owned,
                  controlled or licensed during the Term in connection with
                  performance by either party under the Research Program and
                  that relate to the research, development, utilization,
                  manufacture or use of:

                  (i)      Compounds (including Research Candidates, Prospective
                           Lead Compounds, Additional Prospective Lead Compounds
                           and Lead Compounds) and Licensed Products that are
                           directed against Targets other than Kinases or
                           Phosphatases; and

                  (ii)     the Targets against which the Compounds or Licensed
                           Products listed in clause (i) are directed;

         (ww)     "PATENT" shall mean:

                  (i)      an issued patent or a patent application,

* Material has been omitted and filed separately with the commission.
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                                       -6-

                  (ii)     all continuations and continuation(s)-in-part to the
                           issued patent or patent application set out in clause
                           (i) (solely to the extent such continuation(s)-in-
                           part contain(s) subject matter on which claims
                           issuing obtain the benefit of a priority date of any
                           patent or patent application set out in clause (i),

                  (iii)    all divisions, patents of addition, reissues,
                           renewals and extensions of any of the patent, patent
                           application, continuations and continuation(s)-in-
                           part set out in clauses (i) and (ii), and

                  (iv)     all foreign counterparts of any of the foregoing;

         (xx)     "PERSON" shall mean and include any individual, corporation,
                  partnership, firm, joint venture, syndicate, association,
                  trust, government body and any other form of entity or
                  organization;

         (yy)     "PHASE I" shall mean that portion of the FDA submission and
                  approval process which provides for the first introduction
                  into humans of a Lead Compound and/or Licensed Product for the
                  purpose of determining human toxicity, metabolism, absorption,
                  elimination and other pharmacological action as more fully
                  defined in 21 C.F.R. Section 312.21(a), and such equivalent
                  regulations or standards of countries outside the United
                  States as may be applicable to activities conducted hereunder;

         (zz)     "PHOSPHATASE" shall mean a human enzyme that catalyzes the
                  removal of a phosphate group from a protein and includes,
                  without limitation, [*] ;

         (aaa)    "PHOSPHATASE TECHNOLOGY" shall mean all Patents and Know-How
                  that are owned, controlled or licensed by either party or its
                  Affiliates as at the Effective Date and/or become owned,
                  controlled or licensed during the Term in connection with
                  performance by either party under the Research Program and
                  that relate to the research, development, utilization,
                  manufacture or use of:

                  (i)      Compounds (including Research Candidates, Prospective
                           Lead Compounds, Additional Prospective Lead Compounds
                           and Lead Compounds) and Licensed Products that are
                           directed against the Targets [*], or any other
                           Phosphatase; and

                  (ii)     the Targets against which the Compounds or Licensed
                           Products listed in clause (i) are directed;

         [*]

         (ccc)    "PRIME RATE" shall mean the rate per year from time to time
                  announced by the Royal Bank of Canada as the reference rate to
                  determine interest payable on commercial loans to its most
                  creditworthy customers;

         (ddd)    "PROSPECTIVE LEAD COMPOUND" shall mean a Research Candidate
                  proposed by Kinetek to QLT for consideration as a Lead
                  Compound that has satisfied the general guidelines set out in
                  the Research Plan to make the Research Candidate IND Ready;

         [*]

         (fff)    "QLT KNOW-HOW" shall mean all Know-How that becomes owned,
                  controlled or licensed by QLT during the Term, and that:

                  (i)      arises in connection with the performance of the
                           Research Program, or

                  (ii)     relates to:

                           (A)      all or any part of the Technology, or

                           (B)      any improvements to the Technology;

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -7-

         (ggg)    "QLT PATENT" shall mean any Patent that becomes owned,
                  controlled or licensed by QLT during the Term and that is
                  included in the Technology, including those Patents set out in
                  EXHIBIT B as updated from time to time during the Term;

         (hhh)    "QLT TECHNOLOGY" shall mean all Technology that becomes owned,
                  controlled or licensed by QLT during the Term;

         (iii)    "RESEARCH CANDIDATE" shall mean a Compound selected by the JTC
                  for which a Research Plan is prepared pursuant to Section
                  2.7(c);

         (jjj)    "RESEARCH PLAN" shall have the meaning set forth in Section
                  2.7(c);

         (kkk)    "RESEARCH PROGRAM" shall have the meaning set forth in
                  Section 2.1;

         (lll)    "SUBSCRIPTION AGREEMENT" shall mean the subscription agreement
                  entered into prior to the Effective Date between Kinetek and
                  QLT governing the Initial Investment by QLT in Kinetek's
                  Common Shares;

         (mmm)    "TARGET" shall mean any Kinase or Phosphatase or any other
                  human enzymes forming part of cellular communication pathways
                  that regulate various biological functions of cells;

         [*]

         (ooo)    "TECHNOLOGY" shall mean the Kinase Technology, Phosphatase
                  Technology and Other Target Technology;

         (ppp)    "TERM" shall have the meaning set forth in Section 14.2;

         (qqq)    "TERRITORY" shall mean world-wide;

         (rrr)    "THIRD PARTY" shall mean any party other than a party to this
                  Agreement or an Affiliate of a party to this Agreement; and

         (sss)    "THIRD PARTY LICENSE" shall mean an agreement between Kinetek
                  and a Third Party for the licensing of Intellectual Property
                  required for the use, research and development of a Research
                  Candidate into a Prospective Lead Compound or Additional
                  Prospective Lead Compound that is IND Ready.

1.2      OTHER DEFINITIONS

Any words defined elsewhere in this Agreement shall have the particular meaning
assigned to the words thereto.

1.3      BEST OF KNOWLEDGE

Any reference in this Agreement to the "best of the knowledge" of a party shall
be deemed to mean the knowledge of the senior management of QLT or Kinetek, as
the case may be, as organized bodies corporate and the knowledge that senior
management knew or should have known in respect of the relevant subject matter.

1.4      HEADINGS

The headings in this Agreement are solely for convenience of reference and shall
not be used for purposes of interpreting or construing the provisions hereof.

1.5      EXHIBITS

The following Exhibits shall form an integral part of this Agreement:

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -8-

<TABLE>
<CAPTION>
EXHIBIT                          DESCRIPTION
-------        -----------------------------------------------------
<S>            <C>
   A           Kinetek Patents

   B           QLT Patents

   C           General Guidelines for Research Plan

   D           License, Development and Commercialization Agreement

   E           Third Party Licenses

   F           Kinetek Insurance Coverage
</TABLE>

                          ARTICLE 2 - RESEARCH PROGRAM

2.1      SCOPE

Promptly following the Effective Date of this Agreement, the parties shall
initiate a research program for the purpose of identifying Research Candidates
that will be developed for use in the Field through pre-clinical development
into Prospective Lead Compounds that are IND Ready ("RESEARCH PROGRAM"). During
the Term, up to 5 Prospective Lead Compounds against up to 3 Designated Targets
may be selected and licensed by QLT as Lead Compounds which shall be developed
by QLT or co-developed by QLT and Kinetek for commercialization as Licensed
Products under the terms of the License Agreement.

2.2      RESPONSIBILITY AND COSTS

Kinetek shall have primary responsibility for the conduct of the Research
Program, including the costs thereof, under the direction of the JTC and the
JMC. QLT shall provide consultation and advice as may be deemed appropriate by
the JTC, and shall be responsible for the preparation and cost of filing an IND
in respect of any Lead Compound and the design, preparation and the cost of any
resulting clinical trial protocols.

2.3      [*]

2.4      SELECTION OF THIRD ELIGIBLE TARGET

On or before the date that is 4 months after the Effective Date, QLT shall
select, with notice to Kinetek, 1 of [*] from the Initial Targets as the third
Target to be included as an Eligible Target.

2.5      [*]

Kinetek shall have a period of 5 months after the Effective Date within which to
select, with notice to QLT, [*] that Kinetek may develop outside of the Research
Program within the Oncology Field. The [*] identified hereunder may not be
selected as a Research Candidate in the Research Program and shall not be
available to QLT for selection or development as a Lead Compound.

2.6      [*]

The [*] shall not be selected as a Research Candidate in the Research Program
and shall not be available for selection or development by QLT as a Lead
Compound, except that QLT may select any Compounds derived from the [*] which
have a distinct chemical structure from the [*] in the event [*] is selected by
QLT as an Eligible Target. Notwithstanding the exclusion of the right of QLT to
receive information concerning, or samples of, the [*] under Section 2.3,
Kinetek shall deliver to QLT, upon request by QLT, information concerning, and
samples of, the [*] for research purposes if [*] is being considered, or is
selected by QLT as an Eligible Target.

2.7      RESEARCH PLAN

         (a)      Promptly following the Effective Date, the JTC shall be
                  established in accordance with Article 6, and shall:

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -9-

                  (i)      meet and prepare a draft budget for the Research
                           Program and submit such budget to the JMC for
                           approval; and

                  (ii)     define a process for the selection of Research
                           Candidates.

         (b)      On an ongoing basis until Kinetek has delivered to QLT
                  Development Information in respect of the second Prospective
                  Lead Compound pursuant to Section 3.1, the JTC will select,
                  from among the Compounds directed against the Eligible
                  Targets, Research Candidates for the Research Program, with
                  the exception of the Oncology Compound selected by Kinetek
                  under Section 2.5 and the [*].

         (c)      As soon as practicable after the JTC has selected each
                  Research Candidate, it shall prepare a work plan that shall
                  outline the activities, documentation and materials required
                  for the development of the Research Candidate, for evaluating
                  the feasibility of selecting the Research Candidate as a Lead
                  Compound and for developing the Research Candidate into a
                  Prospective Lead Compound that is IND Ready (the "RESEARCH
                  PLAN"). The Research Plan shall take into account the general
                  guidelines attached as EXHIBIT C.

         (d)      Upon the request of either party, the JTC may modify a
                  Research Plan as appropriate to reflect material scientific or
                  commercial developments.

         (e)      If, during the course of the Research Program the JTC, acting
                  reasonably, determines that a Research Candidate directed
                  against an Eligible Target cannot be developed as a
                  Prospective Lead Compound due to unforeseen scientific
                  reasons, and the JTC recommends an alternative Research
                  Candidate from among the Compounds directed against the
                  Eligible Targets, and if the JTC's recommendation is
                  unanimously supported by the JMC, then the Research Plan in
                  respect of the Research Candidate that cannot be developed
                  as a Prospective Lead Compound shall be cancelled and a
                  Research Plan in respect of the alternate Research
                  Candidate shall be initiated.

                         ARTICLE 3 - DEVELOPMENT RIGHTS

3.1      DELIVERY OF PROSPECTIVE LEAD COMPOUNDS

When Kinetek has determined that a Research Candidate has satisfied the criteria
of the applicable Research Plan and is an IND Ready Prospective Lead Compound or
Additional Prospective Lead Compound, Kinetek shall promptly notify QLT thereof
and, to the extent the following has not previously been provided to QLT,
promptly forward to QLT, at no cost to QLT:

         (a)      all material information known to Kinetek about the
                  Prospective Lead Compound or Additional Prospective
                  Lead Compound;

         (b)      a sample of the Prospective Lead Compound or Additional
                  Prospective Lead Compound;

         (c)      all reagents (including antibodies directed against Targets)
                  that may reasonably be required by QLT in evaluating the
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound, provided that QLT will reimburse Kinetek its actual
                  cost for producing or purchasing genetically engineered animal
                  models; and

         (d)      such other information as QLT may reasonably require in order
                  to make a Development Election in respect of Prospective Lead
                  Compound or Additional Prospective Lead Compound as a Lead
                  Compound pursuant to Section 3.2.

(collectively, the "DEVELOPMENT INFORMATION")

3.2      DEVELOPMENT ELECTION

         (a)      During the Term, QLT shall have the exclusive right, but not
                  the obligation, to select from among the Prospective Lead
                  Compounds and Additional Prospective Lead Compounds proposed
                  by Kinetek

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -10-

                  pursuant to Section 3.1 up to 5 Lead Compounds that
                  may be directed against up to 3 Designated Targets and to
                  license, develop and commercialize such Lead Compounds on an
                  exclusive basis under the terms and conditions set forth in
                  the License Agreement (the "DEVELOPMENT ELECTION").

         (b)      If QLT determines that a Research Candidate has met the
                  criteria set out in the Research Plan and is an IND Ready
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound, QLT shall, within [*] after receipt of the
                  Development Information, deliver notice to Kinetek of the
                  exercise of its Development Election, specifying the
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound and the Eligible Target(s) against which the
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound is being directed as the Designated Target(s).
                  Upon delivery of such notice, the parties will be deemed to
                  have entered into a License Agreement in respect of that
                  Lead Compound and the parties shall execute the form of
                  License Agreement attached hereto as EXHIBIT D promptly
                  thereafter. As QLT delivers additional notices with
                  respect to subsequent Development Elections, the License
                  Agreement shall be deemed to be amended to include the Lead
                  Compounds specified in such Development Elections, and the
                  parties shall promptly execute an amended schedule to the
                  License Agreement to reflect those additions.

         (c)      Notwithstanding the delivery of a Research Candidate as a
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound under Section 3.1, if QLT determines that a Research
                  Candidate has not met the criteria to become a Prospective
                  Lead Compound or Additional Prospective Lead Compound, then
                  QLT shall promptly notify Kinetek of QLT's determination and:

                  (i)      Kinetek shall perform the necessary work to render
                           the Research Candidate IND Ready; or

                  (ii)     the parties shall resolve the dispute pursuant to
                           Section 16.2.

         (d)      Notwithstanding the [*] period set out in Section 3.2(b), QLT
                  may propose to Kinetek by written notice delivered at least
                  [*] prior to the end of that period that the time within
                  which it must make the Development Election be extended for
                  good reason for a specified reasonable time to permit QLT,
                  at its expense, to conduct such additional studies of that
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound as may be specified in the notice.  Kinetek shall
                  discuss this request with QLT and the parties shall attempt
                  in good faith to reach mutual agreement with respect to the
                  requested extension and the conduct of additional studies.

         (e)      If:

                  (i)      QLT has not exercised its Development Election within
                           [*] after receipt of the Development Information in
                           respect of a Prospective Lead Compound or Additional
                           Prospective Lead Compound and has not requested an
                           extension under Section 3.2(d) to make its
                           Development Election; or

                  (ii)     there has been a dispute pursuant to Section 3.2(c)
                           and the Prospective Lead Compound or Additional
                           Prospective Lead Compound is rendered IND Ready by
                           Kinetek or has been determined to be IND Ready
                           pursuant to Section 16.2, and QLT does not exercise
                           its Development Election within [*] following notice
                           from Kinetek that the Prospective Lead Compound or
                           Additional Prospective Lead Compound is IND Ready or
                           within [*] of such determination pursuant to Section
                           16.2; then

                  Kinetek may, on written notice to QLT, elect to develop and
                  commercialize such Prospective Lead Compound or Additional
                  Prospective Lead Compound for its own use outside the Field.

         (f)      In the event that the [*] Prospective Lead Compounds selected
                  by QLT pursuant to its Development Election under Section
                  3.2(b) are directed against a single Eligible Target, QLT may
                  elect to designate a [*] Eligible Target as a Designated
                  Target at any time within [*] following selection by QLT of
                  the [*] Prospective Lead Compound.

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -11-

3.3      EXPIRY OF DEVELOPMENT ELECTION

QLT shall no longer have the right to select Lead Compounds under this Agreement
upon the first to occur of:

         (a)      delivery by Kinetek to QLT of the last Prospective Lead
                  Compound required to be delivered under this Agreement and
                  the expiry of the applicable [*] period in Section 3.2(b);

         (b)      early termination of the Research Program by QLT under
                  Section 14.3; or

         (c)      early termination of the Research Program by either party
                  under Sections 14.4 or 14.5.

3.4      ACCELERATION OF DEVELOPMENT ELECTION

Notwithstanding that a particular Research Candidate has not yet been determined
to be a Prospective Lead Compound by Kinetek pursuant to Section 3.1, QLT may,
by written notice to Kinetek and the JTC, exercise a Development Election with
respect to that Research Candidate as if the Research Plan in respect of it had
been successfully completed and as if the Research Candidate were a Prospective
Lead Compound. In such an event, the Development Election shall have the same
effect hereunder as if it had been exercised in respect of a Prospective Lead
Compound.

                         ARTICLE 4 - EARLY DEVELOPMENT

4.1      RESEARCH PROGRAM TIMETABLE

Within [*] after the Commencement Date, Kinetek shall identify, develop and
deliver to QLT from among the Research Candidates [*] Prospective Lead Compounds
directed against up to [*] Eligible Targets.

4.2      SELECTION OF ADDITIONAL TARGET

Within [*] following the exercise by QLT of its Development Election pursuant to
Section 3.2 in respect of the [*] Prospective Lead Compound, QLT shall have the
right, but not the obligation, to select one Additional Target to be included as
a Designated Target and against which Additional Prospective Lead Compounds may
be directed.

4.3      ADDITIONAL COMPOUND REQUEST

Subject to Section 4.4, on the earlier of the expiration of [*] following the
date that QLT and Kinetek are deemed to have entered into a License Agreement
pursuant to Section 3.2(b) in respect of the [*] Prospective Lead Compound
selected by QLT under this Agreement and the date that is [*] following the
Commencement Date, QLT may elect to receive up to 3 additional Prospective Lead
Compounds (each an "ADDITIONAL PROSPECTIVE LEAD COMPOUND") directed against the
Designated Targets by delivering to Kinetek one or more written notices of its
election (an "ADDITIONAL COMPOUND REQUEST"), together with an investment in
Kinetek of CDN $5,000,000 for each Additional Prospective Lead Compound elected
in such notice, as required pursuant to Section 8.3. Promptly following delivery
by QLT to Kinetek of an Additional Compound Request, the JTC shall meet and
prepare a draft Research Program budget for the Additional Prospective Lead
Compound for approval by the JMC under Section 6.2.

4.4      [*]

If QLT wishes to make an Additional Compound Request before QLT exercises its
Development Election pursuant to Section 3.2 in respect of the second
Prospective Lead Compound:

         (a)      QLT shall give Kinetek [*] notice prior to making its [*]
                  Additional Compound Request pursuant to Section 4.3, within
                  which period Kinetek may select, by notice to QLT, [*] that
                  Kinetek may develop outside the Research Program within the
                  Oncology Field. QLT may make its [*] Additional Compound
                  Request at any time following such [*] notice period.

         (b)      In the event Kinetek has not selected [*] within the [*]
                  notice period set out in Section 4.4(a), QLT shall give
                  Kinetek [*] notice prior to making its [*] Additional Compound
                  Request, within which period

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -12-

                  Kinetek may select, by notice to QLT, such [*]. QLT may make
                  its [*] Additional Compound Request at any time following such
                  [*] notice period.

         (c)      In the event Kinetek has not selected [*] within the [*]
                  notice period set out in Sections 4.4(a) or (b), QLT shall
                  give Kinetek [*] notice prior to making its [*] Additional
                  Compound Request, within which period Kinetek may select, by
                  notice to QLT, such additional Oncology Compound. QLT may make
                  its [*] Additional Compound Request at any time following such
                  [*] notice period, and Kinetek may select, by notice to QLT,
                  such [*] any time thereafter.

         (d)      Following exercise by QLT of its Development Election pursuant
                  to Section 3.2 in respect of the second Prospective Lead
                  Compound, Kinetek shall be free to select, by notice to QLT,
                  any number of additional Oncology Compounds that Kinetek may
                  develop outside the Research Program within the Oncology
                  Field, subject only to Sections 5.1, 5.3(c) and 5.4.

4.5      DELIVERY OF ADDITIONAL PROSPECTIVE LEAD COMPOUNDS

Within the later of [*] after the date Kinetek receives an Additional Compound
Request and [*] following the Commencement Date, Kinetek shall deliver to QLT
Development Information pursuant to Section 3.1 in respect of all Additional
Prospective Lead Compounds for which QLT may make a Development Election.

4.6      FAILURE TO DELIVER (ADDITIONAL) PROSPECTIVE LEAD COMPOUNDS

         (a)      [*] FROM COMMENCEMENT DATE In the event that:

                  (i)      Kinetek fails to deliver to QLT the Development
                           Information in respect of[*] Prospective Lead
                           Compounds within [*] following the [*] of the
                           Commencement Date; or

                  (ii)     Kinetek fails to deliver to QLT the Development
                           Information in respect of the number of Additional
                           Prospective Lead Compounds elected by QLT under
                           Section 4.3 within [*] following the later of [*]
                           following the Commencement Date and the [*] of the
                           date of the Additional Compound Request for such
                           Additional Prospective Lead Compounds;

                  and the parties subsequently enter into a License Agreement in
                  respect of any such Prospective Lead Compounds or Additional
                  Prospective Lead Compounds that Kinetek has failed to deliver
                  to QLT within the time periods set forth in clauses (i) and
                  (ii), [*]

         (b)      [*] FROM COMMENCEMENT DATE (PROSPECTIVE LEAD COMPOUNDS) In the
                  event that Kinetek fails to deliver to QLT the Development
                  Information in respect of [*] Prospective Lead Compounds
                  within [*] following the Commencement Date, QLT shall, on
                  written notice delivered to Kinetek:

                  (i)      immediately terminate this Agreement in its entirety
                           pursuant to Section 14.4, provided that for the
                           purpose of termination pursuant to this Section
                           4.6(b), such termination shall be effective
                           immediately upon receipt of such notice by Kinetek;
                           or

                  (ii)     either:

                           [*]

                           and in either case, Kinetek shall have no further
                           obligation to continue the Research Programs in
                           respect of the Prospective Lead Compounds that it has
                           not delivered provided, however, that Kinetek shall
                           remain obligated to deliver any Additional
                           Prospective Lead Compounds that have been requested
                           or may subsequently be requested by QLT pursuant to
                           Sections 4.3 or 4.6(e). Except for Kinetek no longer
                           having an obligation to deliver the Development
                           Information in respect of the [*] Prospective Lead
                           Compounds, this Agreement shall continue in full
                           force and effect, unless terminated by QLT in its
                           entirety in accordance with clause (i).

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -13-

         (c)      [*] FROM ADDITIONAL COMPOUND REQUEST (ADDITIONAL PROSPECTIVE
                  LEAD COMPOUNDS) In the event that Kinetek fails to deliver to
                  QLT the Development Information in respect of those Additional
                  Prospective Lead Compounds elected by QLT under Sections 4.3
                  or 4.6(e) within [*] following the date of the Additional
                  Compound Request for each such Additional Prospective Lead
                  Compound, QLT shall, on written notice delivered to Kinetek:

                  (i)      terminate this Agreement in its entirety pursuant to
                           Section 14.4, provided that for the purpose of
                           termination pursuant to this Section 4.6(c), such
                           termination shall be effective immediately upon
                           receipt of such notice by Kinetek; or

                  (ii)     either:

                           [*]

                           and in either case, Kinetek shall have no further
                           obligation to continue the Research Program in
                           respect of such Additional Prospective Lead Compound
                           provided, however, that Kinetek shall remain
                           obligated to deliver any other Additional Prospective
                           Lead Compounds requested by QLT pursuant to Sections
                           4.3 or 4.6(e). Except for Kinetek no longer having an
                           obligation to deliver the Development Information in
                           respect of the Additional Prospective Lead Compounds
                           that Kinetek has failed to deliver to QLT under this
                           Section 4.6(c), this Agreement shall continue in full
                           force and effect, unless terminated by QLT in its
                           entirety in accordance with clause (i).

         (d)      [*]

                  (i)      [*]

                  (ii)     [*].

         (e)      ADDITIONAL PROSPECTIVE LEAD COMPOUNDS Notwithstanding the
                  provisions set out in Section 4.3, the following shall apply
                  to Additional Compound Requests made by QLT after [*] under
                  Section 4.6(b)(ii):

                  (i)      QLT may make an Additional Compound Request before
                           the earlier of:

                           (A)      the expiration of [*] following the date
                                    that QLT and Kinetek enter into a License
                                    Agreement in respect of the [*] Prospective
                                    Lead Compound developed by QLT under this
                                    Agreement, or

                           (B)      the expiration of [*] following the date
                                    that [*],

                  (ii)     QLT shall pay to Kinetek the sum of [*], payable in
                           accordance with Section 8.3, for the first Additional
                           Prospective Lead Compound QLT selects pursuant to
                           this Section 4.6(e),

                  (iii)    QLT shall pay to Kinetek the sum of [*], payable in
                           accordance with Section 8.3, for each subsequent
                           Additional Prospective Lead Compound QLT selects
                           pursuant to this Section 4.6(e), and

                  (iv)     in the event that the parties enter into a License
                           Agreement in respect of any Additional Prospective
                           Lead Compound selected by QLT under clause (i), [*].

                  Pursuant to Section 4.3, in no event shall QLT select more
                  than an aggregate total of 3 Additional Prospective Lead
                  Compounds.

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -14-

                            ARTICLE 5 - EXCLUSIVITY

5.1      QLT EXCLUSIVITY

During the Term:

         (a)      QLT shall have an exclusive right to exploit Compounds
                  directed against the Eligible Targets or Designated Targets,
                  as the case may be, in the Field; and

         (b)      Kinetek shall exploit the Eligible Targets or Designated
                  Targets, as the case may be, in the Field exclusively for the
                  benefit of QLT,

         on the terms set forth in this Agreement. Upon execution of a License
         Agreement in respect of a Lead Compound, the provisions regarding
         exclusivity shall be as set forth therein and, in respect of that Lead
         Compound, shall supersede the terms of this Article 5.

5.2      KINETEK'S RIGHTS

Subject to Section 5.4, Kinetek shall have the right:

         (a)      at any time during the Term, to pursue and commercially
                  exploit, alone or with others, all Targets, the Oncology
                  Compounds and the [*] directed against all Targets, solely for
                  the use in the Oncology Field; and

         (b)      at any time during the Term, and further subject to Section
                  5.3(a), to perform screening and/or profiling on behalf of
                  Third Parties of those Third Parties' Compounds directed
                  against Eligible Targets or Designated Targets outside the
                  Field and against all other Targets within or outside the
                  Field.

5.3      EXCEPTIONS TO KINETEK'S RIGHTS

Other than as permitted by Section 5.2, Kinetek shall not, without the prior
written consent of QLT, grant to any Third Party any rights (whether by license,
sale or assignment) in, or waive any rights which Kinetek may have under any
Third Party Licenses to:

         (a)      any of the Eligible Targets or Compounds directed against
                  those Eligible Targets, whether within or outside the Field,
                  from the Commencement Date until the earlier of the date on
                  which QLT has exercised its Development Election pursuant to
                  Section 3.2 in respect of the [*] Lead Compound and [*]
                  following the Commencement Date;

         (b)      any of the Designated Targets or Compounds directed against
                  those Designated Targets, within the Field, from:

                  (i)      the earlier of the date on which QLT has exercised
                           its Development Election pursuant to Section 3.2 in
                           respect of the [*] Lead Compound and [*] following
                           the Commencement Date, until,

                  (ii)     the expiry of the Term, and

         (c)      any Research Candidates, Prospective Lead Compounds and
                  Additional Prospective Lead Compounds that are part of the
                  Research Program, including any Research Candidates,
                  Prospective Lead Compounds and Additional Prospective Lead
                  Compounds for which [*] pursuant to Section 4.6, during the
                  Term.

5.4      CROSS-OVER USE/CROSS-PRICING RISK

Kinetek may grant to Third Parties any rights in or to any Compounds or Kinetek
Technology for use outside the Field provided that:

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -15-

         (a)      Kinetek shall use all commercially reasonable efforts to
                  protect QLT against Cross-Over Use or Cross-Pricing Risk in
                  relation to all Research Candidates, Prospective Lead
                  Compounds, Additional Prospective Lead Compounds, Lead
                  Compounds, or Eligible Targets or Designated Targets, as the
                  case may be; and

         (b)      Kinetek shall use all commercially reasonable efforts to
                  ensure that any future licenses granted by Kinetek for the
                  marketing, distribution or sale of any Compounds or
                  finished products incorporating any Compounds shall require
                  the licensee to use all commercially reasonable efforts to
                  protect QLT from Cross-Over Use and Cross-Pricing Risk in
                  relation to all Research Candidates, Prospective Lead
                  Compounds, Additional Prospective Lead Compounds, Lead
                  Compounds, or Eligible Targets or Designated Targets, as
                  the case may be, including, without limitation, requiring
                  the licensee to prohibit any off-label use thereof by its
                  distributors and advise its distributors that any off-label
                  use is not permitted under the licenses granted by Kinetek
                  to the licensee.

5.5      GRANT OF LICENSE

For the purposes of carrying out its obligations under this Agreement, Kinetek
hereby grants to QLT a non-exclusive royalty-free license to use the Kinetek
Technology for the purposes of pursuing, assisting with, or evaluating the
Research Program or any Compounds, Research Candidates, Prospective Lead
Compounds or and Additional Prospective Lead Compounds delivered to QLT under
this Agreement during the Term.

                             ARTICLE 6 - COMMITTEES

6.1      JOINT TECHNICAL COMMITTEE

         (a)      COMPOSITION Promptly following the Effective Date, Kinetek and
                  QLT shall establish a Joint Technical Committee to review and
                  co-ordinate the parties' efforts under the Research Program.
                  The JTC shall consist of an equal number of representatives
                  from each party (which number may be increased or decreased
                  upon recommendation of the JMC from time to time). Each of
                  Kinetek and QLT may change its representatives from time to
                  time by written notice to the other.

         (b)      FUNCTIONS The JTC shall have the following functions:

                  (i)      to prepare the draft Research Program budget;

                  (ii)     to prepare and recommend to the JMC the draft
                           Research Plan including project progression
                           criteria, and any proposed revisions thereto;

                  (iii)    to select Research Candidates and the Fields or
                           indications in which they may be pursued;

                  (iv)     to receive and review reports by Kinetek;

                  (v)      to review Compounds and Targets identified by
                           Kinetek;

                  (vi)     to regularly review the progress of the Research
                           Program in respect of each Research Candidate;

                  (vii)    to maintain the quality of data and reports;

                  (viii)   to supervise Patent prosecution and maintenance
                           by the parties;

                  (ix)     to discuss matters relating to Patents as may be
                           presented to the JTC by Kinetek or QLT;

                  (x)      to ensure proper transition of the research in
                           respect of a Lead Compound from Kinetek to QLT
                           following the exercise by QLT of the Development
                           Election in respect of that Lead Compound;

                  (xi)     to make recommendations to the JMC on all aspects
                           of the Research Program; and
<PAGE>
                                       -16-

                  (xii)    to undertake such other responsibilities and
                           functions as may be assigned to it by the JMC;

         (c)      CHAIR Unless the parties otherwise agree, Kinetek shall
                  appoint the first chair of the JTC from among the members of
                  the JTC. The Chair shall alternate at each meeting between the
                  appointee of Kinetek and QLT.

         (d)      MEETINGS The JTC shall meet a minimum of 8 times per year and
                  at least once per calendar quarter, or as otherwise determined
                  by the JTC, and shall establish its own rules for the conduct
                  of its meetings. All meetings shall be in person and in
                  Vancouver, the precise location to be mutually agreed by the
                  parties, or by teleconference. Quorum for meetings shall be an
                  equal number of each party's representatives.

         (e)      DECISION-MAKING

                  (i)      All decisions of the JTC shall be carried by a simple
                           majority of the votes of representatives, provided
                           that at least 1 representative from each party shall
                           vote in favor of a particular decision. The objective
                           of the JTC shall be to reach agreement by consensus
                           on all matters within the scope of the Research
                           Program.

                  (ii)     In the event of a deadlock on any matter (which shall
                           be deemed to have occurred if either party shall
                           request a vote of the JTC on a matter and that vote
                           shall either not be taken within 10 days of the
                           request or, if taken, results in a tie vote) such
                           matter shall be referred to the JMC for resolution.

                  (iii)    Each party shall retain the rights, powers, and
                           discretion granted to it under this Agreement, and
                           the JTC shall not be delegated or vested with any
                           such rights, powers or discretion except as expressly
                           provided in this Agreement. Although the JTC shall
                           not have the power to amend or modify this Agreement,
                           which may only be amended or modified as provided in
                           Section 16.3, the JTC may recommend amendments to
                           this Agreement to reflect unforeseen scientific or
                           technical issues.

         (f)      MINUTES QLT shall be responsible for the recording of minutes
                  of the initial meeting of the JTC. Thereafter, responsibility
                  for recording minutes shall alternate between the parties. The
                  responsible party for each meeting shall deliver such minutes
                  to the other party within 14 days after the date of the
                  applicable meeting setting forth, inter alia, all decisions of
                  the JTC and, on a quarterly basis, including a report on the
                  progress of work performed by Kinetek.

6.2      JOINT MANAGEMENT COMMITTEE

(a)               COMPOSITION Promptly following the Effective Date, Kinetek
         and QLT shall establish a Joint Management Committee which shall
         consist of 6 senior executives of the parties, 3 to be designated by
         each party from time to time.

         (b)      FUNCTIONS The JMC shall have the following functions:

                  (i)      general oversight of the entire collaboration between
                           Kinetek and QLT, including the Research Programs;

                  (ii)     periodic review of the overall goals and strategy of
                           the Research Programs;

                  (iii)    approval of the draft Research Plan and draft
                           Research Program budget prepared by the JTC;

                  (iv)     to review progress against milestones and variance
                           from the Research Program budget; and

                  (v)      resolution of any deadlocked issues submitted to
                           it by the JTC.
<PAGE>
                                       -17-

         (c)      CHAIR Unless the parties otherwise agree, QLT shall appoint
                  the first chair of the JMC from among the members of the JMC.
                  The Chair shall alternate at each meeting between the
                  appointee of Kinetek and QLT.

         (d)      MEETINGS The JMC shall meet at least once per calendar
                  quarter, or with such other frequency as may be established by
                  the Committee. All meetings shall be in person and in
                  Vancouver, the precise location to be mutually agreed by the
                  parties, or by teleconference. Quorum for meetings shall be an
                  equal number of each party's representatives.

         (e)      DECISION-MAKING

                  (i)      All decisions of the JMC shall be carried by a simple
                           majority of the votes of representatives, provided
                           that at least 1 representative from each party shall
                           vote in favor of a particular decision. The objective
                           of the JMC shall be to reach agreement by consensus
                           on all matters within the scope of the Research
                           Program.

                  [*]      In the event of a deadlock (which shall be deemed to
                           have occurred if either party shall request a vote of
                           the JMC on a matter and that vote shall either not be
                           taken within 10 days of the request or if taken,
                           results in a tie vote) only with respect to [*].

         (f)      MINUTES Kinetek shall be responsible for the recording of
                  minutes of the initial meeting of the JMC. Thereafter,
                  responsibility for recording minutes shall alternate between
                  the parties. The responsible party for each meeting shall
                  deliver such minutes to the other party within 14 days after
                  the date of the applicable meeting setting forth, inter alia,
                  all decisions of the JMC.

6.3      BUDGET

         (a)      The JTC shall prepare and provide to the JMC an annual budget
                  and operating plan ("ANNUAL BUDGET") and such other budget and
                  operating plan covering shorter periods or discrete projects
                  ("INTERIM BUDGET") as the JMC may direct. The Annual Budget
                  shall be provided to the JMC not later than 60 days prior to
                  the beginning of the fiscal year of Kinetek to which it
                  relates and shall include the following:

                  (i)      an estimate of proposed capital expenditures,
                           indicating the item or type of expenditure, the
                           necessity therefor and the time of such expenditure;

                  (ii)     an estimate of the operating and other costs to be
                           incurred, and the basis on which such estimates
                           were prepared; and

                  (iii)    an estimate of the amount and timing of all
                           dispositions of funds.

                  The JMC shall consider any Annual Budget or Interim Budget
                  received by it from the JTC and approve it or not approve it.
                  If the JMC does not approve the Annual Budget or Interim
                  Budget, it shall be re-submitted to the JTC for its
                  reconsideration, with recommendations from the JMC as it sees
                  fit.

         (b)      Kinetek shall furnish to the JTC as soon as practicable, but
                  not later than [*] after the end of each quarter, a summary of
                  the status of the Research Programs conducted during such
                  month, together with a statement of application of funds
                  showing actual expenditures to date against the applicable
                  Annual Budget or Interim Budget, and, if applicable, latest
                  estimates to the date of completion of a Prospective Lead
                  Compound or Additional Prospective Lead Compound, as well as
                  such other pertinent financial or other information as may
                  reasonably be requested from time to time by the JTC.

         (c)      Kinetek shall make a prompt report to the JTC of:

                  (i)      any unexpected occurrence that will, or is likely to,
                           materially affect the delivery of a Prospective Lead
                           Compound or Additional Prospective Lead Compound;

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -18-

                  (ii)     any actual aggregate expenditures during a period
                           that exceed the aggregate budgeted expenditures for
                           such period by [*] or more; and

                  (iii)    any anticipated deviations from the estimates set
                           forth in the Annual Budget of the amounts and timing
                           of funds that will be required.

                    ARTICLE 7- COMMITMENTS OF KINETEK AND QLT

7.1      COMMITMENTS OF KINETEK

Kinetek shall:

         (a)      work diligently and utilize sound and reasonable business and
                  scientific practice and judgement to identify and develop
                  Prospective Lead Compounds that will be suitable Lead
                  Compounds for development and commercialization by QLT;

         (b)      deliver to QLT promptly following the exercise by QLT of its
                  Development Election in respect of a Prospective Lead Compound
                  sufficient quantities of that Prospective Lead Compound, as
                  specified by QLT acting reasonably, to support the conduct by
                  QLT of a Phase I study;

         (c)      prepare and submit reports to the JTC on a quarterly basis [*]
                  after the end of each calendar quarter (commencing with the
                  first full quarter following the Effective Date) summarizing
                  Kinetek's progress under the Research Plan during the
                  preceding quarter;

         (d)      periodically update EXHIBIT A in respect of all Kinetek
                  Patents; and

         (e)      subject to Kinetek's internal requirements and the
                  availability of its personnel, provide to QLT reasonable
                  technical and clinical assistance with respect to the exercise
                  of its Development Election, including advising QLT in
                  carrying out its evaluation of the Prospective Lead Compounds
                  and Additional Prospective Lead Compounds.

7.2      SUB-CONTRACTING AND OUTSOURCING

If Kinetek elects to sub-contract or otherwise outsource certain activities
under the Research Programs, and [*] has the necessary resources and expertise
at commercially reasonable rates, Kinetek agrees to utilize [*] as contractor of
first choice.

7.3      COMMITMENTS OF QLT

QLT will:

         (a)      work diligently and utilize sound and reasonable business and
                  scientific practice and judgement in evaluating Prospective
                  Lead Compounds and Additional Prospective Lead Compounds for
                  development and commercialization by QLT;

         (b)      use commercially reasonable efforts to complete concurrently
                  with the Research Program for a Prospective Lead Compound or
                  Additional Prospective Lead Compound any necessary work that
                  may facilitate the prompt filing of an IND in the event the
                  Prospective Lead Compound or Additional Prospective Lead
                  Compound is selected as a Lead Compound, to the extent the
                  work can be completed concurrently; and

         (c)      promptly provide to Kinetek copies of the results of any
                  internal evaluation and testing (excluding confidential
                  reports to QLT's management) conducted by QLT on any Compound,
                  Research Candidate, Prospective Lead Compound or Additional
                  Prospective Lead Compound.

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -19-

                          ARTICLE 8 - FINANCIAL MATTERS

8.1      INITIAL INVESTMENT BY QLT

QLT shall make an initial investment of CDN$11,000,000 ("INITIAL INVESTMENT") in
the Common Shares of Kinetek subject to, and in accordance with, the terms and
conditions of the Subscription Agreement in respect of the Initial Investment.

8.2      USE OF PROCEEDS

Subject to the acceleration by QLT of its Development Election pursuant to
Section 3.4, Kinetek shall use [*] of the Initial Investment of CDN $11,000,000
referred to in Section 8.1 for the performance of the Research Program in
respect of the [*] Prospective Lead Compounds. The parties agree that Kinetek's
expenditures in respect of such Research Program shall be calculated with
reference to a full-time equivalent employee with a deemed cost per year of [*]
(the "FTE Cost"), plus the actual amount paid to a Third Party in connection
with the performance of portions of the Research Program. The FTE Cost includes
all costs attributable to the FTE except additional expenses approved by the
JMC.

8.3      INVESTMENT FOR ADDITIONAL COMPOUNDS

For each Additional Compound Request made pursuant to Sections 4.3, 4.6(e)(ii)
or 4.6(e)(iii), QLT shall pay to or invest in Kinetek the required sum, at QLT's
option, either by way of:

         (a)      a purchase of Kinetek's Common Shares at the then Current
                  Market Price of such shares,

         (b)      a cash payment; or

         (c)      a combination of both (a) and (b).

The subscription for Kinetek's Common Shares shall be made in accordance with a
subscription agreement in substantially the same form as the Subscription
Agreement, except as to the number of Common Shares, the subscription price [*],
and except that the provisions of [*] of the Subscription Agreement shall only
apply until [*].

8.4      CONVERTIBLE LOAN FACILITY

During the Term, QLT shall create, reserve and maintain an internal convertible
loan facility of up to [*] ("CONVERTIBLE LOAN FACILITY") from which it shall
advance funds to Kinetek required by Kinetek to fulfill its obligations under
the Research Program, and from which Kinetek may draw funds from time to time in
accordance with the terms set out below:

         (a)      DRAWS In order to draw on the Convertible Loan Facility,
                  Kinetek shall submit a notice of funding to QLT, signed by its
                  Chief Financial Officer, specifying the amount requested
                  (which shall not be less than [*] per request), the Research
                  Candidate to which the advance relates, [*]. Advances shall be
                  made by QLT by cheque or wire transfer at Kinetek's direction
                  within 10 days after receipt of the notice of funding.

         (b)      AVAILABILITY AND REPAYMENT The Convertible Loan Facility
                  shall:

                  (i)      be made available by QLT from [*] to a date that is
                           [*] following the Commencement Date;

                  (ii)     bear an interest rate equal to [*] in effect on the
                           date such amounts not paid were due under the
                           Convertible Loan Facility, compounding quarterly; and

                  (iii)    be repaid by Kinetek at any time without notice
                           within [*] of the date the principal was drawn down,
                           at Kinetek's option, either:

                           (A)      in Kinetek's freely traceable Common
                                    Shares [*]; or

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -20-

                           (B)      in cash.

                           If Kinetek exercises the option to repay the loan in
                           cash under clause (B), Kinetek shall first notify QLT
                           to this effect, and QLT may require Kinetek to repay
                           the loan in freely traceable Common Shares under
                           clause (A).

         (c)      CONDITIONS The Convertible Loan Facility referred to in this
                  Section 8.4 shall be available to Kinetek if the following
                  conditions are met:

                  (i)      there has been no expiration or early termination of
                           the Research Program in respect of which a notice of
                           funding has been delivered by Kinetek to QLT pursuant
                           to Section 8.4(a);

                  (ii)     the costs of the Research Programs have exceeded[*];

                  (iii)    Kinetek shall utilize 100% of the Convertible Loan
                           Facility proceeds on the Research Program identified
                           in the notice of funding delivered by Kinetek to QLT
                           pursuant to Section 8.4(a);

                  (iv)     Kinetek has not experienced a material adverse event
                           in the reasonable opinion of QLT;

                  (v)      Kinetek shall grant to QLT a security interest in the
                           Research Candidate or Research Candidates to which
                           the advance relates as security for the Convertible
                           Loan Facility pursuant to a specific security
                           agreement, the form of which shall be negotiated in
                           good faith by the parties and entered into prior to
                           any funding advance being made by QLT to Kinetek
                           under the Convertible Loan Facility.

                  (vi)     Kinetek shall abide by all of the terms and
                           conditions of the Convertible Loan Facility.

                  Promptly following the execution of this Agreement, the
                  parties shall negotiate in good faith the form of the
                  agreement incorporating the terms set out above. In the event
                  the parties are unable to agree on the form of that agreement
                  or the specific security agreement, either party may refer the
                  dispute for resolution in accordance with Section 16.2.

             ARTICLE 9 - CONFIDENTIALITY; PUBLICITY AND PUBLICATION

9.1      OBLIGATION OF CONFIDENTIALITY

It is understood by both QLT and Kinetek that misuse or improper disclosure of
Confidential Information may irreparably harm the business of the disclosing
party or that party's Affiliates. Accordingly, for good and valuable
consideration, receipt of which is hereby acknowledged, the parties agree that
at all times during the Term and for a period of 5 years thereafter, they shall:

         (a)      not use the Confidential Information of the other party for
                  any purpose other than to carry out its obligations under this
                  Agreement, without the prior written consent of the disclosing
                  party;

         (b)      maintain the Confidential Information in confidence and not
                  disclose any portion of the Confidential Information to any
                  Third Party, without the prior written consent of the
                  disclosing party, other than to its counsel, accountants,
                  employees and consultants who are bound by obligations of
                  confidentiality and non-use in connection therewith at least
                  as stringent as those set forth in this Agreement, provided
                  that each party shall remain responsible for the actions, uses
                  and disclosures of its counsel, accountants, employees and
                  consultants; and

         (c)      take reasonable measures to assure that no unauthorized use or
                  disclosure is made by others to whom access to Confidential
                  Information is granted.

Notwithstanding the foregoing, the parties acknowledge that if they enter into a
License Agreement, the confidentiality provisions of the License Agreement shall
supersede the provisions of this Section 9.1 with respect to the use of the
Confidential Information.

* Material has been omitted and filed separately with the commission.
<PAGE>
                                       -21-

9.2      PERMITTED DISCLOSURES

         (a)      Nothing herein shall be construed as preventing QLT from
                  disclosing any Confidential Information received from Kinetek
                  to any of QLT's Affiliates, sublicenses or distributors or
                  potential sublicensees or distributors, provided each
                  Affiliate, sublicensee and distributor has undertaken in
                  writing a similar obligation of confidentiality and non-use
                  with respect to the Confidential Information, with Kinetek
                  stated as a third-party beneficiary thereof.

         (b)      Nothing herein shall be construed as preventing Kinetek from
                  disclosing any Confidential Information received from QLT to
                  any of Kinetek's Affiliates, provided each Affiliate has
                  undertaken in writing a similar obligation of confidentiality
                  and non-use with respect to the Confidential Information, with
                  QLT stated as a third-party beneficiary thereof.

9.3      RETURN OF CONFIDENTIAL INFORMATION

Upon termination of this Agreement, except as set out below, each party shall
promptly return to the disclosing party or destroy, at the disclosing party's
request, all copies of the disclosing party's Confidential Information, and
return or destroy all summaries, abstracts, extracts or other documents which
contain any of the disclosing party's Confidential Information in any form. If
the disclosing party requests destruction of its Confidential Information, the
other party shall document the destruction of the Confidential Information and
shall provide a copy of this documentation to the disclosing party.
Notwithstanding the foregoing, the receiving party may retain 1 copy of any
documents in its possession containing the disclosing party's Confidential
Information for archival purposes only. For the purposes of this section, the
term "document" includes any information fixed in any tangible medium of
expression, in whatever form or format.

9.4      OWNERSHIP OF CONFIDENTIAL INFORMATION

         (a)      All Confidential Information disclosed by one party to the
                  other shall remain the property of the disclosing party.

         (b)      The parties agree that, except as otherwise specifically set
                  out in this Agreement, as between QLT and Kinetek, all right,
                  title and interest in and to all data and results created by a
                  party during performance of any Research Program, shall be the
                  exclusive property of the creating party and all data and
                  results arising from the Research Program shall be treated as
                  the creating party's Confidential Information under this
                  Agreement.

         (c)      In the event that a court or other legal or administrative
                  tribunal, directly or through an appointed master, trustee or
                  receiver, assumes partial or complete control over the assets
                  of a party to this Agreement based on the insolvency or
                  bankruptcy of the party, the bankrupt or insolvent party shall
                  promptly notify the court, other tribunal or appointee:

                  (i)      that Confidential Information received from the other
                           party under this Agreement remains the property of
                           the other party; and

                  (ii)     of the confidentiality obligations under this
                           Agreement.

                  In addition, the bankrupt or insolvent party shall, to the
                  extent permitted by law, take all steps necessary or desirable
                  to maintain the confidentiality of the other party's
                  Confidential Information and to ensure that the court, other
                  tribunal or appointee maintains the information in confidence
                  in accordance with the terms of this Agreement.

9.5      PRESS RELEASE

         (a)      The parties shall agree upon the timing and content of any
                  initial press release or any other public communications
                  relating to this Agreement and the transactions contemplated
                  herein.

         (b)      Except to the extent already disclosed in the initial press
                  release or other public communication made pursuant to clause
                  (a), no public announcement concerning the existence or the
                  terms of this Agreement
<PAGE>
                                       -22-

                  or concerning the transactions described herein shall be
                  made, either directly or indirectly, by Kinetek or QLT,
                  without first obtaining the approval of the other party and
                  agreement upon the nature, text, and timing of such
                  announcement, which approval and agreement shall not be
                  unreasonably withheld.

         (c)      Notwithstanding clauses (a) and (b), each party shall have the
                  right to issue, immediately and without prior consent of
                  the other, press releases that disclose any information
                  required by the rules and regulations of provincial
                  securities regulatory authorities in Canada, the Securities
                  and Exchange Commission in the United States or similar
                  foreign authorities, as determined in good faith by the
                  disclosing party, provided that, where reasonably possible,
                  each party shall use reasonable efforts to give prior
                  notice of the press release to the other party and an
                  opportunity for the other party to review and comment on
                  that press release.

         (d)      Notwithstanding the provisions of clauses (a) and (b), each
                  party agrees to use reasonable good faith efforts to notify
                  the other party when it releases any information relating to
                  this Agreement, including any previously approved information
                  and any information required to be disclosed by the rules and
                  regulations of provincial securities regulatory authorities in
                  Canada, the Securities and Exchange Commission in the United
                  States or similar foreign authorities, and will promptly
                  provide a copy of any such disclosure to the other party for
                  its review and comment.

         (e)      Each of Kinetek and QLT acknowledge that Kinetek may file a
                  preliminary and final prospectus with provincial securities
                  regulatory authorities in Canada in respect of its IPO and
                  QLT may file prospectuses in connection with future
                  securities offerings, and that the said prospectuses will
                  be required to include full, true and plain disclosure
                  regarding each party and its business, including this
                  Agreement and the form of License Agreement.  Each of
                  Kinetek and QLT agree to promptly provide a copy of
                  portions of such prospectuses relating to this Agreement
                  and the License Agreement to the other party for its
                  approval and agreement, which approval and agreement shall
                  not be unreasonably withheld.  The parties will consult
                  with one another regarding the provisions of this Agreement
                  to be redacted in any filing made by the parties with
                  securities regulatory authorities, or as otherwise required
                  by law.

9.6      PUBLICATION

Subject to the terms and conditions of any agreement between Kinetek and any
Third Party relating to the Technology, each of QLT and Kinetek reserves the
right to publish or publicly present the results (the "RESULTS") of any Research
Program, subject to compliance with the terms and conditions set out in this
Section 9.6. The party proposing to publish or publicly present the Results (the
"PUBLISHING PARTY") will submit a draft of any proposed manuscript or speech to
the other party (the "NON-PUBLISHING PARTY") for comments at least 60 days prior
to submission for publication or presentation. The Non-Publishing Party shall
notify the Publishing Party in writing within 30 days of receipt of such draft
whether such draft contains:

         (a)      information of the Non-Publishing Party which it considers to
                  be confidential under the provisions of Article 9;

         (b)      information that if published would have an adverse effect on
                  a patent application covering the subject matter of this
                  Agreement which the Non-Publishing Party intends to file; or

         (c)      information that the Non-Publishing Party reasonably believes
                  would be likely to have a material adverse impact on the
                  development or commercialization of a Lead Compound and/or
                  Licensed Product (as defined in the License Agreement). In any
                  such notification, the Non-Publishing Party shall provide
                  detailed suggestions regarding the manner and degree to which
                  the Publishing Party may disclose such information, if at all
                  permitted.

In the case of Section 9.6(a) above, no party may publish Confidential
Information of the other party without its consent in violation of Article 9 of
this Agreement. In the case of Section 9.6(b) above, the Non-Publishing Party
may request a delay and the Publishing Party shall delay such publication, for a
period not exceeding 90 days, to permit the timely preparation and filing of a
patent application or an application for a certificate of invention on the
information involved. In the case of Section 9.6(c) above, if the Publishing
Party disagrees with the Non-Publishing Party as to the impact of the
publication, then the issue shall be referred to the JMC for resolution. If the
JMC is unable to reach agreement on the
<PAGE>
                                       -23-

matter within 30 days after such referral, the matter shall be referred by the
JMC to the Chief Executive Officer QLT and the Chief Executive Officer of
Kinetek who shall attempt in good faith to reach a fair and equitable resolution
of this disagreement. If the disagreement is not resolved in this manner within
2 weeks of referral by the JMC as aforesaid, then the decision of the Publishing
Party as to publication of any information generated by it, subject always to
the confidentiality provisions of Article 9 shall be final, provided that such
decision shall be exercised with reasonable regard for the interests of the
Non-Publishing Party.  The parties agree that authorship of any publication will
be determined based on the customary standards then being applied in the
relevant scientific journal.  The parties will use their best efforts to gain
the right to review proposed publications relating to the subject matter of the
Research Program by consultants or contractors.

9.7      SURVIVAL

The provisions of this Article 9 shall survive the termination of this Agreement
and shall survive for a period of 5 years thereafter.

                       ARTICLE 10 - INTELLECTUAL PROPERTY

10.1     OWNERSHIP OF BACKGROUND INTELLECTUAL PROPERTY

As between QLT and Kinetek:

         (a)      title to and ownership of all rights in and to all
                  Intellectual Property owned by QLT or licensed to QLT by Third
                  Parties as of the Effective Date shall at all times remain
                  with QLT and, except as expressly granted under this
                  Agreement, no rights in or to any such Intellectual Property
                  shall vest in Kinetek; and

         (b)      title to and ownership of all rights in and to all
                  Intellectual Property owned by Kinetek or licensed to Kinetek
                  by Third Parties as of the Effective Date shall at all times
                  remain with Kinetek and, except as expressly granted under
                  this Agreement, no rights in or to any such Intellectual
                  Property shall vest in QLT.

10.2     DISCLOSURE OF INVENTIONS

During the Term:

         (a)      Kinetek shall promptly disclose and supply to QLT, in a timely
                  fashion, all information in respect of inventions developed by
                  Kinetek arising from the performance of the Research Program;
                  and

         (b)      QLT shall promptly disclose and supply to Kinetek, in a timely
                  fashion, all information in respect of inventions developed by
                  QLT arising from the performance of the Research Program.

10.3     OWNERSHIP OF INVENTIONS

Any new inventions and discoveries developed by either party or its Affiliates
(directly or through others acting on its behalf) related to the Research
Program prior to and during the Term shall be treated as follows:

         (a)      if made solely by an employee or contractor of Kinetek or its
                  Affiliate, such inventions and discoveries shall be the
                  property of [*];

         (b)      if made solely by an employee or contractor of QLT or its
                  Affiliate, such inventions and discoveries shall be the
                  property of [*];

         (c)      if jointly made by employees or contractors of Kinetek and
                  QLT, as determined in accordance with United States laws of
                  inventorship ("JOINT INVENTIONS"), such inventions and
                  discoveries shall [*].

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -24-

                ARTICLE 11 - PATENTS; PROSECUTION AND LITIGATION

11.1     PROSECUTION OF PATENTS

         (a)      Kinetek shall have the right to prosecute and maintain all
                  Kinetek Patents, subject to the terms and conditions set out
                  in this Article 11, and shall do so in a timely manner under
                  the direction of the JTC.

         (b)      QLT shall have the right to prosecute and maintain all QLT
                  Patents subject to the terms and conditions set out in this
                  Article 11, and shall do so in a timely manner under the
                  direction of the JTC.

         (c)      [*] shall be responsible for the prosecution and maintenance
                  of Patents arising out of the Joint Inventions, subject to the
                  terms and conditions set out in this Article 11, and [*] shall
                  do so in a timely manner under the direction of the JTC.

11.2     PATENT REVIEW

         (a)      RECOMMENDATIONS QLT shall have the right to review, in respect
                  of all Kinetek Patents related to the Eligible Targets and
                  Compounds directed against the Eligible Targets, all draft
                  patent applications (prior to filing), pending patent
                  applications, patents, other proceedings, communications,
                  reports and observations with respect to all Kinetek
                  Patents, and make recommendations to Kinetek promptly, but
                  no more than 3 weeks after QLT's receipt of the aforesaid
                  information concerning such patents and patent applications
                  and their conduct, including, but not limited to, the
                  jurisdictions in which to seek patent protection, which
                  recommendations shall be incorporated by Kinetek as
                  determined by the JTC.

         (b)      DISCLOSURE Kinetek shall:

                  (i)      promptly disclose to QLT and keep QLT fully informed
                           of, and/or

                  (ii)     supply QLT in a timely fashion with;

                  the following:

                  (iii)    the complete texts of, and all relevant patent
                           applications filed and/or controlled by Kinetek for,
                           Kinetek Patents, and

                  (iv)     all information received concerning:

                           (A)      the institution or possible institution of
                                    any interference, opposition,
                                    re-examination, reissue, revocation,
                                    nullification or any official proceeding
                                    involving any Kinetek Patents, and

                           (B)      the course of substantive patent prosecution
                                    or other substantive proceedings related to
                                    any Kinetek Patents,

                           (C)      including, without limitation, by providing
                                    QLT with copies of substantive
                                    communications, search reports and Third
                                    Party observations submitted to or received
                                    from Patent offices.

         (c)      CONFIDENTIALLY QLT shall hold all information disclosed to it
                  under this section as Confidential Information of Kinetek
                  under Article 9.

11.3     PATENT COSTS

         (a)      Kinetek shall be responsible for all costs and expenses
                  relating to the drafting, prosecution and maintenance of all
                  Kinetek Patents.

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -25-

         (b)      QLT shall be responsible for all costs and expenses relating
                  to the drafting, prosecution and maintenance of all QLT
                  Patents.

         (c)      All costs and expenses relating to the drafting, prosecution
                  and maintenance of all Patents arising out of Joint Inventions
                  shall be [*].

11.4     RIGHT TO ASSUME PROSECUTION

In the event that Kinetek intends to finally abandon in any country in the
Territory any Kinetek Patent related to the Eligible Targets and Compounds
directed against the Eligible Targets or methods of use thereof, in whole or in
part, Kinetek shall promptly notify QLT. All rights granted to QLT to any such
Kinetek Patent or part of such Kinetek Patent in such country shall continue in
force provided that QLT assumes, at its own expense, responsibility for the
prosecution and maintenance of any such Kinetek Patent or part of such Kinetek
Patent in such country, and provided that if there are Third Parties with legal
interests in any such Kinetek Patent outside the Field, the costs of the
prosecution and maintenance of such Kinetek Patent shall be shared by QLT and
Kinetek on a basis to be mutually agreed to by the parties taking into account
the rights in such Kinetek Patent granted to QLT and the Third Parties
respectively. If the parties cannot agree on an allocation of the costs of the
prosecution and maintenance of such Kinetek Patent, the dispute shall be
resolved in accordance with Section 16.2.

11.5     DEFENSE OF INFRINGEMENT SUITS

In the event of the initiation of any suit in the Territory by a Third Party
against Kinetek or QLT or any of their respective Affiliates for Intellectual
Property infringement arising from the use of the Technology (an "INFRINGEMENT
SUIT"), the party sued shall promptly notify the other party in writing, and the
following shall apply:

         (a)      KINETEK PATENTS

                  (i)      In the event that the Infringement Suit is based on
                           Technology owned, controlled or licensed by Kinetek
                           which is not dependent on any Joint Inventions (an
                           "KINETEK INFRINGEMENT SUIT"), [*] shall have the
                           first right, but not the obligation, to defend the
                           Kinetek Infringement Suit and [*] shall assist and
                           co-operate with [*] in any such litigation.

                  (ii)     If [*] fails to defend the Kinetek Infringement Suit
                           within a reasonable time after receiving notice of
                           the Kinetek Infringement Suit, then [*] shall have
                           the right, but not the obligation, to defend the
                           Kinetek Infringement Suit and [*] shall assist and
                           co-operate with [*] in any such litigation.

                  (iii)    The party conducting the defense of a Kinetek
                           Infringement Suit shall have full control over its
                           conduct; provided neither party shall enter into any
                           settlement with respect to a Kinetek Infringement
                           Suit without the other's consent, which consent shall
                           not be unreasonably withheld, conditioned or delayed.

                  (iv)     The cost and expense of the defense of any Kinetek
                           Infringement Suit under this Section 11.5(a), whether
                           conducted by either party, shall be borne by [*].

         (b)      QLT PATENTS

                  (i)      In the event that the Infringement Suit is based on
                           QLT Technology that is not dependent on any Joint
                           Invention (a "QLT INFRINGEMENT SUIT"), [*] shall have
                           the right, but not the obligation, to defend QLT
                           Infringement Suit and [*] shall assist and co-operate
                           with [*] in any such litigation.

                  (ii)     The cost and expense of the defense of any QLT
                           Infringement Suit under this
                           Section 11.5(b) shall be borne by [*].

         (c)      JOINT INVENTIONS

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -26-

                  (i)      In the event that the Infringement Suit is based on
                           Technology arising solely out of a Joint Invention (a
                           "JOINT INFRINGEMENT SUIT"), [*] shall have the first
                           right, but not the obligation, to defend the Joint
                           Infringement Suit and [*] shall assist and co-operate
                           with [*] in any such litigation.

                  (ii)     If [*] fails to defend the Joint Infringement Suit
                           within a reasonable time after receiving notice of
                           the Joint Infringement Suit, then [*] shall have the
                           right, but not the obligation, to defend the Joint
                           Infringement Suit and [*] shall assist and cooperate
                           with [*] in any such litigation.

                  (iii)    The party conducting the defense of a Joint
                           Infringement Suit shall have full control over its
                           conduct; provided neither party shall enter into any
                           settlement with respect to a Joint Infringement Suit
                           without the other party's prior written consent,
                           which consent shall not be unreasonably withheld,
                           conditioned or delayed.

                  (iv)     The cost and expense of the defense of any Joint
                           Impingement Suit under this Section 11.5(c)
                           shall be [*].

11.6     INFRINGEMENT BY THIRD PARTIES

         (a)      KINETEK PATENTS

                  (i)      In the event that Kinetek or QLT becomes aware of
                           actual or threatened infringement by a Third Party of
                           a Kinetek Patent (a "KINETEK PATENT INFRINGEMENT"),
                           that party shall promptly notify the other party in
                           writing.

                  (ii)     [*] shall have the first right, but not the
                           obligation, to bring an infringement action against
                           any alleged infringer in the event of a Kinetek
                           Patent Infringement and [*] shall assist and
                           co-operate with [*] in any such litigation.

                  (iii)    If [*] fails to take action regarding a Kinetek
                           Patent Infringement within a reasonable time after
                           becoming aware of the Kinetek Patent Infringement,
                           then [*] shall have the right, but not the
                           obligation, to bring an infringement action against
                           the alleged infringer and [*] shall co-operate with
                           [*] in any such litigation.

                  (iv)     The party conducting the litigation in respect of a
                           Kinetek Patent Infringement shall have full control
                           over its conduct; provided neither party shall enter
                           into any settlement with respect to such suit without
                           the other's consent, which consent shall not be
                           unreasonably withheld, conditioned or delayed.

                  (v)      The cost and expense of any infringement action
                           against an alleged infringer under this
                           Section 11.6(a) shall be borne by [*].

                  (vi)     Any damages or other monies awarded or recovered in
                           settlement of such action shall be used to reimburse
                           the parties' costs and expenses in conducting the
                           infringement action and any excess shall be retained
                           by [*].

         (b)      QLT PATENTS

                  (i)      In the event that Kinetek or QLT becomes aware of
                           actual or threatened infringement by a Third Party of
                           a QLT Patent (a "QLT PATENT INFRINGEMENT"), that
                           party shall promptly notify the other party in
                           writing.

                  (ii)     [*] shall have the right, but not the obligation, to
                           bring an infringement action against any alleged
                           infringer in the event of a QLT Patent Infringement
                           and [*] shall assist and cooperate with [*] in any
                           such litigation.

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -27-

                  (iii)    Where [*] brings an action, [*] shall have full
                           control over the conduct of the litigation in respect
                           of a QLT Patent Infringement.

                  (iv)     The cost and expense of any infringement action
                           brought by [*] against an alleged infringer under
                           this Section 11.6(b) shall be borne by [*].

                  (v)      Any damages or other monies awarded or recovered in
                           settlement of such action shall be used to reimburse
                           the parties' costs and expenses in conducting the
                           infringement action and any excess shall be retained
                           by [*].

         (c)      JOINT INVENTIONS

                  (i)      In the event that Kinetek or QLT becomes aware of
                           actual or threatened infringement by a Third Party of
                           a Patent arising out of a Joint Invention (a "JOINT
                           PATENT INFRINGEMENT"), that party shall promptly
                           notify the other party in writing.

                  (ii)     [*] shall have the first right, but not the
                           obligation, to bring an infringement action against
                           any alleged infringer in the event of a Joint Patent
                           Infringement and [*] shall assist and co-operate
                           with[*] in any such litigation.

                  (iii)    If [*] fails to take action regarding a Joint Patent
                           Infringement within a reasonable time after becoming
                           aware of the Joint Patent Infringement, then [*]
                           shall have the right, but not the obligation, to
                           bring an infringement action against the alleged
                           infringer and [*] shall cooperate with [*] in any
                           such litigation.

                  (iv)     The party conducting the litigation in respect of a
                           Joint Patent Infringement shall have full control
                           over its conduct; provided neither party shall enter
                           into any settlement with respect to such suit without
                           the other party's prior written consent, which
                           consent shall not be unreasonably withheld,
                           conditioned or delayed.

                  (v)      The cost and expense of any infringement action
                           brought by [*] against an alleged infringer under
                           this Section 11.6(c) shall be borne by [*].

                  (vi)     Any damages or other monies awarded or recovered in
                           settlement of such action shall be used to reimburse
                           the parties' costs and expenses in conducting the
                           infringement action and any excess shall be shared
                           equally by both parties.

11.7     INTERFERENCE PROCEEDINGS

         (a)      In the event of the declaration of any interference proceeding
                  by any Patent authorities with respect to any Kinetek Patents,
                  Kinetek shall promptly notify QLT in writing. Kinetek shall
                  have the right to represent and manage Kinetek's and QLT's
                  interests in such proceeding. Kinetek and QLT shall assist one
                  another and co-operate in any such proceeding.

         (b)      In the event of the declaration of any interference proceeding
                  by any Patent authorities with respect to any QLT Patents or
                  Patents arising out of Joint Inventions, QLT shall promptly
                  notify Kinetek in writing. QLT shall have the right to
                  represent and manage QLT's and Kinetek's interests in such
                  proceeding. Kinetek and QLT shall assist one another and
                  co-operate in any such proceeding.

11.8     STATUS OF PROCEEDINGS

The parties shall keep one another informed of the status of their respective
activities regarding any litigation or settlement thereof concerning the
Technology or any Research Candidate, Prospective Lead Compound, Additional
Prospective Lead Compound or Lead Compound.

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -28-

                       ARTICLE 12 - SAFETY AND REGULATORY

12.1     COMPLIANCE WITH LAWS

         (a)      Kinetek shall, and if applicable, QLT shall, at all times in
                  manufacturing, handling, labelling, shipping and delivering
                  Compounds under this Agreement and in otherwise carrying out
                  their respective obligations under this Agreement:

                  (i)      comply with all applicable laws, rules, regulations
                           or other requirements applicable to their respective
                           business and to the manufacturing, handling,
                           labelling, shipping and delivery of Compounds; and

                  (ii)     obtain and maintain in full force and effect all
                           applicable licenses, permits, certificates,
                           authorizations or approvals from all governmental
                           authorities necessary to conduct their respective
                           business and to manufacture, handle, load, ship and
                           deliver Compounds.

         (b)      Kinetek and QLT shall at all times comply with all
                  environmental laws and obtain and maintain in full force and
                  effect all licenses, permits, certificates, authorizations or
                  approvals required by environmental laws in connection with
                  the activities then being undertaken by Kinetek or QLT, if
                  applicable, including those relating to the handling,
                  generation, transportation, treatment, storage and disposal or
                  other management of waste and regulated substances, including,
                  without limitation, hazardous and toxic substances.

12.2     SAFETY

During the Term, each party shall within a reasonable time inform the other
party of any information that it obtains or develops regarding the safety of any
Compounds, Research Candidates or Prospective Lead Compounds and shall promptly
report to the other party any confirmed information of serious or unexpected
reactions or serious or unexpected adverse events related to the utilization or
medical administration of such Compounds, Research Candidates or Prospective
Lead Compounds.

12.3     REGULATORY FILINGS

         (a)      Responsibility [*] shall be solely responsible for obtaining
                  and maintaining regulatory approvals in the Territory,
                  including the preparation and filing of the IND.

         (b)      [*] Ownership All regulatory approvals, including the IND,
                  shall be held by and in the name of [*], and [*] shall own all
                  submissions in connection therewith.

         (c)      Principal Interface [*] shall be the principal interface with
                  and will handle all interactions with regulatory agencies
                  concerning the regulatory approvals or otherwise in respect of
                  the Lead Compounds and/or Licensed Products and to the extent
                  legally possible, [*] shall be the sole contact with such
                  agencies in respect thereof.

             ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS

13.1     REPRESENTATIONS AND WARRANTIES OF KINETEK

Kinetek represents and warrants to QLT as follows:

         (a)      Kinetek has been duly organized and is validly subsisting and
                  in good standing in its jurisdiction of organization and has
                  the power to carry on the business as now being conducted by
                  it;

         (b)      Kinetek has the right to enter into this Agreement, and this
                  Agreement is a legal and valid obligation binding upon such
                  party and enforceable in accordance with its terms;

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -29-

         (c)      Kinetek has not made and will not make any commitments to
                  Third Parties inconsistent with or in derogation of Kinetek's
                  obligations under this Agreement and Kinetek is not subject to
                  any obligations that would prevent it from entering into or
                  carrying out its obligations under this Agreement;

         (d)      Kinetek owns or possesses adequate licenses or other rights to
                  use all Kinetek Technology relating to the Field and to grant
                  the licenses herein. The granting of the Development Election
                  to QLT hereunder will not violate any right known by Kinetek
                  to be held by any Third Party;

         (e)      as of the Effective Date, EXHIBIT A sets forth a complete list
                  of all Kinetek Patents, and Kinetek shall update this list
                  regularly during the Term in accordance with the terms of this
                  Agreement;

         (f)      as of the Effective Date, all issued Kinetek Patents in
                  existence as of the Effective Date are validly subsisting and
                  enforceable and do not, to the best of the knowledge of
                  Kinetek, after due inquiry, infringe any Patent rights of any
                  Third Parties;

         (g)      other than as contemplated in Section 2.5, Kinetek has not
                  granted to any Third Party any rights (whether by option,
                  license, sale or assignment) in, or waived any rights Kinetek
                  may have under any Third Party Licenses to, any Initial
                  Targets or Compounds directed against Initial Targets within
                  or outside the Field or to any Technology within the Field;

         (h)      except as disclosed in writing between the parties to this
                  Agreement or their respective agents, to the best of knowledge
                  of Kinetek, after due inquiry, there are no issued patents or
                  published pending patent applications that, if issued, would
                  be infringed by the development, manufacture, use or sale, as
                  the case may be, of a Research Candidate or Prospective Lead
                  Compound or the Technology pursuant to this Agreement;

         (i)      except as disclosed in writing between the parties to this
                  Agreement or their respective agents, there are no pending
                  actions, either actual or, to the best of the knowledge of
                  Kinetek, threatened, relating to the Kinetek Technology; and

         (j)      as of the Effective Date, EXHIBIT E sets forth a complete list
                  of all Third Party Licenses required for the conduct of the
                  Research Program and for the exercise by QLT of the license
                  granted under Section 5.5.

13.2     COVENANTS OF KINETEK

Kinetek hereby covenants to QLT as follows:

         (a)      all Compounds, Research Candidates and Prospective Lead
                  Compounds delivered to QLT under this Agreement will have been
                  manufactured in a competent, workmanlike fashion by qualified
                  personnel and in accordance with customary industry standards
                  and in accordance with all requirements under applicable laws
                  and regulations, including, when required for regulatory
                  submission, GLP and GMP standards;

         (b)      Kinetek has not made and will not make, in the performance of
                  this Agreement, any use of the Intellectual Property of any
                  Third Party, unless Kinetek has an express legal right to use
                  such Third Party Intellectual Property in the manner used by
                  it under this Agreement;

         (c)      Kinetek shall use all commercially reasonable efforts to
                  obtain all consents from Third Parties that may be necessary
                  in order for Kinetek to grant to QLT the sub-license(s) to the
                  Lead Compound(s) contemplated in the License Agreement on or
                  before the time that the JTC selects a Compound as a Research
                  Candidate; and

         (d)      To the extent sound and reasonable business practice and
                  judgment require, Kinetek shall utilize diligent efforts to
                  ensure that all Kinetek Patents issued after the Effective
                  Date shall be validly subsisting and enforceable when issued.

<PAGE>
                                       -30-

13.3     REPRESENTATIONS AND WARRANTIES OF QLT

QLT represents and warrants to Kinetek as follows:

         (a)      QLT has been duly organized and is validly subsisting and in
                  good standing in its jurisdiction of organization and has the
                  power to carry on the business as now being conducted by it;

         (b)      QLT has the right to enter into this Agreement and this
                  Agreement is a legal and valid obligation binding upon QLT and
                  enforceable in accordance with its terms;

         (c)      QLT has not made and will not make any commitments to Third
                  Parties inconsistent with or in derogation of QLT's
                  obligations under this Agreement and QLT is not subject to any
                  obligations that would prevent it from entering into or
                  carrying out its obligations under this Agreement; and

         (d)      to the best of the knowledge of QLT, as of the Effective Date,
                  QLT does not own any Patent which includes claims directly
                  related to the use of one or more of the Initial Targets,
                  except for any claims in such Patents, if any, that relate to
                  the general effect that photodynamic therapy may have on one
                  or more of the Initial Targets.

13.4     COVENANTS OF QLT

To the extent sound and reasonable business practice and judgment requires, QLT
shall utilize diligent efforts to ensure that all QLT Patents issued after the
Effective Date will be validly subsisting and enforceable when issued.

13.5     KINETEK CHANGE OF CONTROL

Forthwith after the completion of a transaction involving Kinetek and another
Person which may result in a "Change of Control", as defined and provided for in
the License Agreement, Kinetek will provide to QLT sufficient information
regarding the transaction to permit QLT reasonably to conclude that the
transaction does or does not constitute a Change of Control (the "TRANSACTION
NOTICE"). Within 30 days after its receipt of the Transaction Notice QLT will
advise Kinetek in writing of its conclusions, including its reasons therefor, as
to whether the said transaction does or does not constitute a Change of Control.
If QLT does not so respond to Kinetek within the said 30 days, the transaction
will be deemed not to constitute a Change of Control.

                        ARTICLE 14 - TERM AND TERMINATION

14.1     TERMINATION

This Agreement may not be terminated by either party except in accordance with
this Article 14. Termination of this Agreement, in whole or in part, before the
expiration of the Term shall be without prejudice to the right of any party
accrued to the effective date of termination, without prejudice to the remedies
in respect of any previous breach of any of the representations, warranties and
covenants herein contained and without prejudice to any rights to
indemnification set forth herein and to any other provision referred to in
Section 14.7.

14.2     TERM

         (a)      The term of this Agreement (the "TERM") shall commence on the
                  Effective Date and, subject to Section 14.2(b), shall expire
                  on the date that is the earlier of:

                  (i)      [*] after QLT enters into a License Agreement for the
                           [*] Lead Compound; and

                  (ii)     [*] pursuant to Section 4.6(b)(ii).

         (b)      If, prior to the expiry of the period set out in Section
                  14.2(a), QLT requests one or more Additional Prospective Lead
                  Compounds pursuant to Sections 4.3 and 4.6(e), the Term shall
                  expire on the date that is the earlier of:

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -31-

                  (i)      [*] after the date of delivery by Kinetek to QLT of
                           the Development Information in respect of the last
                           Additional Prospective Lead Compound; and

                  (ii)     [*] in respect of the last Additional Prospective
                           Lead Compound requested by QLT.

         (c)      Unless earlier terminated, this Agreement shall terminate on
                  the date that is 8 years after the Commencement Date.

14.3     TERMINATION BY QLT

QLT may terminate this Agreement, in whole or in part at any time upon [*] prior
written notice of termination to Kinetek, in which case:

         (a)      in the event QLT terminates this Agreement in its entirety,
                  then without further action on the part of either party:

                  (i)      all rights and licenses granted by Kinetek to QLT to
                           any Kinetek Technology pursuant to this Agreement
                           shall revert to Kinetek and QLT shall retain no
                           rights therein; and

                  (ii)     [*] which specifically relate to [*], but excluding
                           [*] interest in any other [*], which [*];

         (b)      in the event QLT terminates this Agreement in respect of a
                  particular Research Candidate or Prospective Lead Compound,
                  then without further action on the part of either party:

                  (i)      all rights and licenses granted by Kinetek to QLT to
                           any Kinetek Technology solely related to the
                           particular Research Candidate or Prospective Lead
                           Compound pursuant to this Agreement shall revert to
                           Kinetek and QLT shall retain no rights therein;

                  (ii)     [*] all its right, title and interest in [*] to the
                           particular Research Candidate or Prospective Lead
                           Compound to [*]; and

                  (iii)    forthwith after termination of all or part of this
                           Agreement, QLT shall deliver to Kinetek copies of all
                           material, documentation, analyses and other
                           information, if any and not previously made available
                           to Kinetek, held by QLT in respect of the portion of
                           the Research Program that was terminated.

14.4     TERMINATION FOR BREACH

         (a)      If either party materially breaches this Agreement and if the
                  breach is not cured within 60 days after receiving written
                  notice from the non-breaching party with respect to the
                  breach, except as otherwise set out in this Agreement, this
                  Agreement shall terminate in its entirety at the end of the
                  60-day period upon receipt of written notice from the
                  non-breaching party, without prejudice to any right accrued
                  to the effective date of termination, without prejudice to
                  the remedies in respect of any previous breach of any of
                  the representations, warranties and covenants herein
                  contained and without prejudice to any rights to
                  indemnification set forth herein and to any other
                  provisions hereof which by their terms call for performance
                  after such termination.

         (b)      If Kinetek terminates this Agreement for breach by QLT under
                  this Section 14.4, then without further action on the part of
                  either party:

                  (i)      all rights and licenses granted by Kinetek to QLT to
                           any Kinetek Technology pursuant to this Agreement
                           shall revert to Kinetek and QLT shall retain no
                           rights therein; and

                  (ii)     [*] all of [*] interest in any [*], but excluding [*]
                           interest in any other [*], which [*].

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -32-

14.5     TERMINATION ON BANKRUPTCY

Either party may immediately terminate this Agreement if at any time during the
Term the other party files in any court or agency pursuant to any statute or
regulation of Canada or of any individual state or foreign country:

         (a)      a petition in bankruptcy or insolvency;

         (b)      a petition for reorganization in connection with a
                  bankruptcy or insolvency;

         (c)      a petition for an arrangement in connection with a
                  bankruptcy or insolvency;

         (d)      a petition for the appointment of a receiver or trustee of the
                  party or of its assets;

         (e)      if the other party proposes a written agreement of composition
                  or extension of its debts;

         (f)      if the other party is served with an involuntary petition
                  against it, filed in any insolvency proceeding, and the
                  petition is not dismissed within 60 days after the filing
                  thereof;

         (g)      if the other party proposes or is a party to any dissolution
                  or liquidation; or

         (h)      if the other party makes an assignment for the benefit of
                  creditors.

Termination by a party under this Section 14.5 will be considered termination
for breach under Section 14.4, except that no notice and cure time for the
breach shall be required, and the consequences of termination and parties'
respective rights and remedies will be as set out in Section 14.4.

14.6     TERMINATION ON SCIENTIFIC GROUNDS

         (a)      If during the course of the Research Program the JTC, acting
                  reasonably, determines that Research Candidates directed
                  against Eligible Targets or Designated Targets cannot be
                  developed as Prospective Lead Compounds due to unforeseen
                  scientific reasons and, as a result, there is no reasonable
                  merit in pursuing the entire Research Program, and if the
                  JTC's conclusions are unanimously supported by the JMC, then
                  either Kinetek or QLT may, on 60 days notice to the other
                  party, terminate this Agreement.

         (b)      In the event of termination under this Section 14.6:

                  (i)      Kinetek shall thereafter be relieved of its
                           obligations to perform the Research Program;

                  (ii)     all rights and licenses granted by one party to the
                           other under this Agreement shall revert to the
                           granting party and the non-granting party shall
                           retain no interest therein; and

                  (iii)    the parties shall retain rights to:

                           (A)      their respective Technology; and

                           (B)      [*]

                           to the exclusion of the other party.

14.7     SURVIVAL

Expiration or early termination of this Agreement shall not relieve either party
of its obligations incurred prior to such expiration or early termination, nor
shall it affect the terms of any License Agreement in effect. In addition, the
following provisions shall survive any expiration or early termination of this
Agreement:

         (a)      Section 1.1 (Definitions);

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -33-

         (b)      Section 4.6(a), (c) and (e) (Failure to Deliver)

         (c)      Article 8 (Financial Matters);

         (d)      Article 9 (Confidentiality; Publicity and Publication);

         (e)      Article 10 (Intellectual Property);

         (f)      Section 11.3 (Patent Costs) shall survive any expiration or
                  early termination of this Agreement solely with respect to the
                  payment and reimbursement of any Patent-related costs and
                  expenses that were incurred prior to such termination or
                  expiration;

         (g)      Section 11.7 (Interference Proceedings) to the extent such
                  interference proceedings are called prior to termination;

         (h)      Section 12.3(b) ([*] Regulatory Approvals);

         (i)      Article 13 (Representations, Warranties and Covenants);

         (j)      Article 14 (Term and Termination);

         (k)      Article 15 (Indemnification); and

         (l)      Sections 16.2 (Dispute Resolution), 16.3 (Entire Agreement),
                  16.6 (Governing Law and Attornment), 16.8 (Notices) and
                  16.11 (Severability).

                          ARTICLE 15 - INDEMNIFICATION

15.1     MUTUAL INDEMNIFICATION

From and after the Effective Date, except as otherwise specifically provided in
this Agreement, each of the parties (in this section, an "INDEMNIFYING PARTY")
agrees to defend, indemnify and hold harmless the other party and the other's
Affiliates, successors and assigns, and their respective officers, directors,
shareholders, partners and employees (in this section, an "INDEMNIFIED PARTY")
from and against all losses, damage, liability and expense, including legal fees
but excluding punitive damages (in this Section 15.1, collectively, "DAMAGES")
incurred, caused, arising out of or relating to:

         (a)      any breach or violation of, or failure to properly perform,
                  any covenant or agreement made in this Agreement by the
                  Indemnifying Party, unless waived in writing by the applicable
                  Indemnified Party;

         (b)      any breach of any of the representations or warranties made
                  in this Agreement by the Indemnifying Party; or

         (c)      the gross negligence or wilful misconduct of the
                  Indemnifying Party;

except to the extent the Damages are attributable to the gross negligence or
wilful misconduct of the Indemnified Party.

15.2     INTELLECTUAL PROPERTY INDEMNITY

Kinetek agrees to defend, indemnify and hold harmless QLT and QLT's Affiliates,
successors and assigns, their respective officers, directors, shareholders,
partners and employees, from and against any and all loss, other than loss of
profits suffered by any of the foregoing Persons, damage, expense or liability
including legal fees resulting from, arising out of or relating to any claims by
a Third Party that the rights licensed or sub-licensed by Kinetek to QLT under
this Agreement, or the exploitation thereof, infringes the lawful property
rights of a Third Party including any rights in any valid patent, copyright, or
trade secret.

*Material has been omitted and filed separately with the commission.
<PAGE>
                                       -34-

15.3     INDEMNIFICATION PROCEDURE

If either QLT or Kinetek any of their respective Affiliates (in this section, an
"INDEMNIFIED PARTY"), receives any written claim which it believes is the
subject of, or otherwise believes that circumstances exist giving rise to, an
indemnity under this Agreement by either Kinetek or QLT, as the case may be (in
this section, an "INDEMNIFYING PARTY"), the Indemnified Party shall, as soon as
reasonably practicable after forming such belief, give notice of the claim or
circumstances to the Indemnifying Party, including full particulars of the claim
or circumstances to the extent known to the Indemnified Party, provided,
however, that the failure to give timely notice to the Indemnifying Party as
contemplated hereby shall not release the indemnifying Party from any liability
to indemnify any persons indemnified under this Article 15, and, subject to
Article 11 in respect of infringement claims and infringement actions, the
following shall apply:

         (a)      the Indemnifying Party shall have the right, by prompt notice
                  to the Indemnified Party, to assume the defense of the claim
                  with counsel reasonably satisfactory to the Indemnified Party,
                  and at the cost of the Indemnifying Party;

         (b)      if the Indemnifying Party does not so assume the defense of
                  the claim, the Indemnified Party may assume the defense with
                  counsel of its choice at the sole expense of the Indemnifying
                  Party;

         (c)      if the Indemnifying Party assumes the defense of the claim,
                  the Indemnified Party may participate therein through counsel
                  of its choice, but the cost of such counsel shall be borne
                  solely by the Indemnified Party;

         (d)      any party not assuming the defense of a claim shall render all
                  reasonable assistance to the party assuming the defense, and
                  all out-of-pocket costs of this assistance shall be borne
                  solely by the Indemnifying Party; and

         (e)      no claim shall be settled other than by the party defending
                  the claim, and then only with the consent of the other party,
                  which shall not be unreasonably withheld, provided, however,
                  that the Indemnified Party shall have no obligation to consent
                  to any settlement of any claim which imposes on the
                  Indemnified Party any liability or obligation which cannot be
                  assumed and performed in full by the Indemnifying Party.

                           ARTICLE 16 - MISCELLANEOUS

16.1     ASSIGNMENT; ENUREMENT

Neither this Agreement nor any interest under this Agreement shall be assignable
by either party without the prior written consent of the other, provided,
however, that either party may assign this Agreement and any of its Patents
related to this Agreement without obtaining the consent of the other party to:

         (a)      any of its Affiliates;

         (b)      any Third Party with which it may merge or consolidate; and/or

         (c)      any Third Party to which it may transfer all or substantially
                  all of its assets.

Assignment in contravention of this Section 16.1 shall be considered a material
breach of this Agreement pursuant to Section 14.4. All rights and obligations
under this Agreement and the licenses granted in this Agreement shall be binding
upon and inure to the benefit of the successors in interest of the respective
parties. Any assignment in violation of the foregoing shall be null and void.

16.2     DISPUTE RESOLUTION

         (a)      In the event of any dispute, controversy or claim arising out
                  of or in relation to this Agreement or the breach,
                  termination or invalidity of this Agreement (each, a
                  "DISPUTE"), the parties shall, and either party may,
                  initially refer such dispute to the JMC, and failing
                  resolution of the controversy or claim within 30 days after
                  such referral, the matter shall be referred to the Chief
                  Executive Officer of Kinetek
<PAGE>
                                       -35-

                  and the Chief Executive Officer of QLT who shall, as soon
                  as practicable, attempt in good faith to resolve the
                  controversy or claim.  If such controversy or claim is not
                  resolved within 60 days of the date of initial referral of
                  the matter to the JMC, either party shall resolve the
                  dispute pursuant to this Section 16.2.

         (b)      Except as otherwise set out in this Section 16.2, any Dispute
                  that cannot be settled amicably by agreement of the parties
                  pursuant to Section 16.2(a) shall be finally settled by an
                  arbitrator(s) appointed pursuant to the provisions of the
                  Commercial Arbitration Act of British Columbia, or any
                  successor legislation then in force, provided that the
                  appointed arbitrator(s) shall have appropriate experience in
                  the biopharmaceutical industry.

         (c)      The place of arbitration shall be Vancouver, British Columbia,
                  Canada and the language to be used in the arbitration
                  proceedings shall be English.

         (d)      The award rendered in any arbitration shall be final and
                  binding upon both parties. The judgement rendered by the
                  arbitrator(s) shall include costs of arbitration, reasonable
                  legal fees and reasonable costs for any expert and other
                  witnesses.

         (e)      Nothing in this Agreement shall be deemed as preventing either
                  party from seeking injunctive relief (or any other provisional
                  remedy) from any court having jurisdiction over the parties
                  and the subject matter of the Dispute as necessary to protect
                  either party's name, Confidential Information or Intellectual
                  Property.

         (f)      Judgment upon the award may be entered in any court having
                  jurisdiction, or application may be made to such court for
                  judicial acceptance of the award and/or an order of
                  enforcement as the case may be.

         (g)      Notwithstanding the provisions of Sections 16.2(b) through
                  16.2(f), inclusive, either party shall be free to submit any
                  Dispute relating to Intellectual Property to any court having
                  jurisdiction over the parties and the subject matter of the
                  Dispute and to seek such relief and remedies as are available
                  in that court.

16.3     ENTIRE AGREEMENT

This Agreement and all Exhibits attached to this Agreement (which shall form an
integral part of this Agreement), entered into as of the date first written
above, constitute the entire agreement between the parties relating to the
subject matter hereof and supersede all previous writings and understandings. No
terms or provisions of this Agreement shall be varied or modified by any prior
or subsequent statement, conduct or act of either of the parties, except that
the parties may mutually amend this Agreement by written instruments
specifically referring to and executed in the same manner as this Agreement. In
the event of conflict between the terms and conditions of this Agreement and
those of any Exhibit attached to this Agreement or any other agreement executed
by the parties, the terms and conditions of this Agreement shall govern, unless
the parties expressly provide that the conflicting term or condition of such
Exhibit or agreement shall supersede the corresponding term or condition of this
Agreement.

16.4     FORCE MAJEURE

If the performance of any part of this Agreement by either party, or of any
obligation under this Agreement, is prevented, restricted, interfered with or
delayed by reason of any cause beyond the reasonable control of the party liable
to perform, including acts of God, governmental restrictions, wars,
insurrections, labor disturbances, destruction of facilities or materials by
fire, earthquake, storm or other casualty, judgment or injunction of any court,
epidemic or failure of public utilities, unless conclusive evidence to the
contrary is provided, the party so affected shall, upon giving written notice to
the other party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected party
shall use its reasonable commercial efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch whenever
the causes are removed. When such circumstances arise, the parties shall discuss
what, if any, modification of the terms of this Agreement may be required in
order to arrive at an equitable solution. The parties agree that this Section
16.4 is not intended to apply to delays caused by the risks inherent in the
process of scientific research and development.
<PAGE>
                                       -36-

16.5     FURTHER ASSURANCES

The parties shall both execute and deliver such further instruments and do such
further acts as may be required to implement the intent of this Agreement.

16.6     GOVERNING LAW AND ATTORNMENT

         (a)      This Agreement shall be governed by and construed in
                  accordance with the laws of the Province of British Columbia
                  and the laws of Canada applicable therein.

         (b)      Subject to the arbitration provisions of Section 16.2, the
                  parties agree that the courts of the Province of British
                  Columbia will have exclusive jurisdiction to determine all
                  disputes and claims arising between the parties.

16.7     INSURANCE

Kinetek currently maintains, and shall continue to maintain during the Term of
Agreement, the insurance coverage described in EXHIBIT F.

16.8     NOTICES

All notices in connection with this Agreement shall be in writing and shall be:

         (a)      delivered personally;

         (b)      sent by express courier service (receipt verified); or

         (c)      sent by facsimile transmission (with confirmation notice sent
                  as described above);

to the following addresses of the parties:

<TABLE>
<S>                                                             <C>
If to Kinetek:                                                  with a copy to:

      Kinetek Pharmaceuticals, Inc.                                  Blake, Cassels & Graydon LLP
      850 - 1200 West 73rd Avenue, Vancouver,                        Suite 2600, Three Bentall Centre
      British Columbia, V6P 6G5                                      595 Burrard Street
                                                                     P.O. Box 49314
      Attention:  President and Chief Executive                      Vancouver BC, Canada
                  Officer
                                                                     Attention:  Peter J. O'Callaghan
      Facsimile:  (604) 267-7667
                                                                     Facsimile:  (604) 631-3309

If to QLT:                                                      with a copy to:

      QLT Inc.                                                       Farris, Vaughan, Willis & Murphy
      887 Great Northern Way, Vancouver, British                     P.O. Box 10026, Pacific Centre South
      Columbia V5T-4T5                                               Toronto Dominion Bank Tower
                                                                     700 West Georgia Street, 26th Floor
      Attention:  President and Chief Executive                      Vancouver, British Columbia
                 Officer                                             V7Y 1B3  CANADA

      Facsimile:  (604) 873-0816                                     Attention:  R. Hector MacKay-Dunn

                                                                     Facsimile:  (604) 661-9349
</TABLE>
<PAGE>
                                       -37-

Any notice shall be deemed to have been received:

         (d)      on the date of delivery, if delivered personally or by
                  express courier; or

         (e)      on the next Business Day following the date of transmission
                  if sent by facsimile transmission.

16.9     CHANGE OF ADDRESS

Either party may, at any time, give notice of any change of address to the other
and the address specified in the notice shall be that party's address for the
purpose of receiving notices.

16.10    RIGHTS AND REMEDIES

The rights and remedies available under this Agreement shall be cumulative and
not alternative and shall be in addition to and not a limitation of any rights
and remedies otherwise available to the parties at law or in equity.

16.11    SEVERABILITY

In the event any portion of this Agreement is held illegal, void or ineffective,
the remaining portions of this Agreement shall remain in full force and effect.
If any of the terms or provisions of this Agreement are in conflict with any
applicable statute or rule of law, then such terms or provisions shall be deemed
inoperative to the extent that they may conflict therewith and shall be deemed
to be modified to conform with such statute or rule of law.

16.12    COUNTERPARTS; FACSIMILE

This Agreement may be executed in any number of counterparts (either originally
or by facsimile), each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute one and the same instrument.

16.13    WAIVER

A waiver of any default, breach of non-compliance under this Agreement is not
effective unless in writing and signed by the party to be bound by the waiver.
No waiver will be inferred from or implied by any failure to act or delay in
acting by a party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other party. The waiver by a party of
any default, breach or non-compliance under this Agreement will not operate as a
waiver of that party's rights under this Agreement in respect of any continuing
or subsequent default, breach or nonobservance (whether of the same or any other
nature).
<PAGE>
                                       -38-

IN WITNESS WHEREOF, each of the parties hereto has caused this Research and
Early Development Agreement to be executed by its duly authorized officer as of
the date first written above.

<TABLE>
<S>                                             <C>
KINETEK PHARMACEUTICALS, INC.                   QLT INC.
by its authorized signatory:                    by its authorized signatory:

/s/ Andre Archimbaud                            /s/ Edwin Levy
_____________________________________           ______________________________________________
Andre Archimbaud                                Edwin Levy
President and Chief Executive Officer           Senior Vice President, Corporate Development

                                                /s/ Celia Courchene
                                                ______________________________________________
                                                Celia Courchene
                                                Vice President, Business Development and
                                                Legal Affairs

</TABLE>
<PAGE>
                                    EXHIBIT A

                                 KINETEK PATENTS

                                       [*]

*Material has been omitted and filed separately with the commission.
<PAGE>
                                    EXHIBIT B

                                   QLT PATENTS

                                       NIL
<PAGE>
                                    EXHIBIT C

                      GENERAL GUIDELINES FOR RESEARCH PLAN

                                   PRECLINICAL
                                       [*]

                                  MANUFACTURING

                                       [*]

*Material has been omitted and filed separately with the commission.
<PAGE>
                                    EXHIBIT D

              LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

                                       [*]

*Material has been omitted and filed separately with the commission.
<PAGE>
                                    EXHIBIT E

                              THIRD PARTY LICENSES

                                       [*]

*Material has been omitted and filed separately with the commission.
<PAGE>
                                    EXHIBIT F

                           KINETEK INSURANCE COVERAGE
                                       [*]

*Material has been omitted and filed separately with the commission.<PAGE>

                                                                   EXHIBIT 10.74

                              AMENDING AGREEMENT TO

                   PDT PRODUCT DEVELOPMENT, MANUFACTURING AND
                             DISTRIBUTION AGREEMENT

         THIS AMENDING AGREEMENT is made effective July 23, 2001.

         BETWEEN:

                  NOVARTIS OPHTHALMICS AG (formerly CIBA Vision AG), a Swiss
                  corporation having a principal place of business at
                  Riethofstrasse 1, CH-8442 Hettlingen, Switzerland

                  ("NVO")

         AND:

                  QLT INC. (formerly Quadra Logic Technologies Inc.), a British
                  Columbia company having a principal place of business at 887
                  Great Northern Way, Vancouver, British Columbia, Canada, V5T
                  4T5

                  ("QLT")

         WHEREAS:

A.       NVO and QLT entered into a PDT Product Development, Manufacturing and
         Distribution Agreement made effective July 1, 1994 (the "CO-DEVELOPMENT
         AGREEMENT") under which NVO and QLT agreed to cooperate in the
         development, manufacturing and distribution of photosensitizers in
         photodynamic therapy for the treatment, diagnosis and prevention of
         ophthalmological conditions;

B.       Pursuant to the Co-Development Agreement, NVO and QLT have and continue
         to co-develop Verteporfin (as defined in this Amending Agreement) for
         use in certain ophthalmological indications;

C.       Verteporfin is now being marketed and sold by NVO pursuant to the
         Co-Development Agreement under the trade-mark Visudyne(TM)for use in
         wet age-related macular degeneration and pathological myopia and both
         parties wish to further the development of and to promote and defend
         the marketing of Visudyne(TM);

D.       QLT completed a Phase IIb clinical study using photodynamic therapy
         with Verteporfin for the treatment of non-melanoma skin cancer
         ("NMSC");
<PAGE>
                                        2

E.       NVO and QLT wish to co-develop Verteporfin for the treatment of NMSC
         and other indications within the PDT Derm Field of Collaboration (as
         defined in this Amending Agreement); and

F.       NVO and QLT wish to enter into this Amending Agreement to include
         within the scope of the Co-Development Agreement the development,
         manufacture and distribution of Verteporfin for the treatment of NMSC
         and other indications within the PDT Derm Field of Collaboration and to
         make all consequential amendments resulting from that inclusion, all on
         and subject to the terms and conditions set out in this Amending
         Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained in this Amending Agreement, NVO and QLT agree as follows:

1.       DEFINITIONS IN THE CO-DEVELOPMENT AGREEMENT TO APPLY

All capitalized terms used in this Amending Agreement and not otherwise defined
will have the meaning given to them in the Co-Development Agreement.

2.       SECTION 1.1 - NEW OR AMENDED DEFINITIONS

All references in the Co-Development Agreement to "CIBA VISION" and references
in this Amending Agreement to "NVO" will be deemed to be one and the same. In
addition, Section 1.1 of the Co-Development Agreement is amended as follows:

         (a)      APPROVED PRODUCT - the definition of "Approved Product" in
                  Section 1.1.5 of the Co-Development Agreement is amended by
                  deleting the words "specific ophthalmological indication" in
                  the second line and replacing them with the words "specific
                  indications within the Field of Collaboration";

         (b)      BPD - the definition of "BPD" in Section 1.1.7 of the
                  Co-Development Agreement is amended by adding the words "and,
                  for greater certainty, includes Verteporfin" after the words
                  "means any pharmaceutical product which contains
                  Benzoporphyrin derivative as an active ingredient for use in
                  PDT";

         (c)      DEVELOPMENT PROGRAM - the definition of "Development Program"
                  in Section 1.1.12 of the Co-Development Agreement is amended
                  by deleting the words "specific ophthalmological indications
                  within the Field of Collaboration" in the third and fourth
                  lines and replacing them by the words "specific indications
                  within the Field of Collaboration";

         (d)      FIELD OF COLLABORATION - the definition of "Field of
                  Collaboration" in Section 1.1.14 of the Co-Development
                  Agreement is deleted and replaced with the following:
<PAGE>
                                        3

                           "1.1.14  "FIELD OF COLLABORATION" means,
                                    collectively, the Ocular Field of
                                    Collaboration and the PDT Derm Field of
                                    Collaboration;";

         (e)      MARKETING APPROVAL - the definition of "Marketing Approval" in
                  Section 1.1.20 of the Co-Development Agreement is amended by
                  deleting the words "specific ophthalmological indication" in
                  the third and fourth lines and replacing them with the words
                  "specific indication within the Field of Collaboration";

         (f)      NMSC - the following definition is added as a new Section
                  1.1.24A to the Co-Development Agreement:

                           "1.1.24A "NMSC" means non-melanoma skin cancer,
                                    including basal cell carcinoma, squamous
                                    cell carcinoma and basal cell nevus
                                    syndrome;"

         (g)      OCULAR FIELD OF COLLABORATION AND PDT DERM FIELD OF
                  COLLABORATION - the following definitions are added as new
                  Sections 1.1.24B, 1.1.24C and 1.1.24D to the Co-Development
                  Agreement:

                           "1.1.24B "OCULAR FIELD OF COLLABORATION" means
                                    any usage of PDT for the treatment,
                                    diagnosis or prevention of ophthalmological
                                    conditions, including but not limited to,
                                    age-related macular degeneration (AMD),
                                    diabetic retinopathy, corneal
                                    neovascularization, ocular tumours and
                                    epithelial overgrowth following cataract
                                    surgery (secondary cataracts);

                           1.1.24C  "PDT DERM FIELD OF COLLABORATION" means
                                    any usage of Verteporfin in PDT for the
                                    treatment, diagnosis or prevention of:

                                .1  dermatological tumours, including NMSC
                                    but excluding [*]; and

                                .2  pathological conditions of the skin in
                                    which the primary cause is attributable to
                                    vascular abnormality, including Bowen's
                                    disease, cutaneous T-cell lymphoma,
                                    hemangioma and vascular malformations but,
                                    for greater certainty, excluding psoriasis;

                           1.1.24D  "[*]" means the use of a photosensitizer in
                                    the photodynamic treatment of [*]";

*Material has been omitted and filed separately with the Commission.
<PAGE>
                                        4

         (h)      PRODUCT - the definition of "Product" in Section 1.1.28 of the
                  Co-Development Agreement is deleted and replaced by the
                  following:

                           "1.1.28  "PRODUCT" means:

                                .1  with respect to the Ocular Field of
                                    Collaboration:

                                    (a) BPD;

                                    (b) ZnPc; and/or

                                    (c) any Additional Photosensitzer;

                                .2  with respect to the PDT Derm Field of
                                    Collaboration, Verteporfin.";

         (i)      VERTEPORFIN - the following definition is added as a new
                  Sections 1.1.41A to the Co-Development Agreement:

                           "1.1.41A "VERTEPORFIN" means benzoporphyrin
                                    derivative - mono acid ring A, as more
                                    fully described in Exhibit A;".

3.       SECTION 2.1 - DEVELOPMENT COMMITMENT

Section 2.1 of the Co-Development Agreement is amended by adding the word
"respective" to the first line before the words "Field of Collaboration".

4.       SECTION 2.4 - DEVELOPMENT PROGRAMS AND BUDGETS

Section 2.4 of the Co-Development Agreement is amended as follows:

         (a)      by adding the following as a new Section 2.4.4 to the
                  Co-Development Agreement:

                           "2.4.4   the development of Verteporfin in NMSC
                                    substantially in accordance with the
                                    development plan for that Development
                                    Program attached as Exhibit B to this
                                    Amending Agreement. For greater certainty,
                                    the Development of any Additional
                                    Photosensitizers (other than Verteporfin)
                                    within the PDT Derm Field of Collaboration
                                    is excluded from the scope of this
                                    Agreement;";
<PAGE>
                                        5

         (b)      by deleting from Section 2.4 of the Co-Development Agreement
                  the following sentence:

                                    "There will be at least one Development
                                    Program, and, where appropriate, the JCC may
                                    establish additional Development Programs
                                    for significant ophthalmological
                                    applications.";

                  and replacing that sentence with the following sentence:

                                    "There will be at least [*]in each of the
                                    Ocular Field of Collaboration and the PDT
                                    Derm Field of Collaboration, and, where
                                    appropriate, the JCC may establish
                                    additional Development Programs for
                                    significant indications within the Field of
                                    Collaboration."; and

         (c)      by adding the following to the end of the last paragraph of
                  Section 2.4:

                                    "The goal of the initial Development Program
                                    for Verteporfin in the PDT Derm Field of
                                    Collaboration is to [*]. If either NVO or
                                    QLT wish to pursue a Development Program for
                                    Verteporfin in any NMSC indications [*] to
                                    achieve that objective, including the
                                    financial terms and cost sharing
                                    arrangements related to that Development
                                    Program."

5.       SECTION 4.3 - PDT DEVICES

Section 4.3 of the Co-Development Agreement is deleted and replaced with the
following:

         "4.3     PDT DEVICES

         Costs related to the development and acquisition of PDT devices
               which are necessary for clinical and non-clinical use in
               Development Programs will be considered as Development
               Expenses as provided for in Section 1.1.11."

6.       SECTION 12 - MANDATORY RIGHT OF FIRST REFUSAL ON ADDITIONAL
         PHOTOSENSITIZERS

NVO and QLT acknowledge that Section 12 of the Co-Development Agreement is not
intended to provide the other with a right of first refusal for the use of
Additional Photosensitizers in the PDT Derm Field of Collaboration but is
intended only to apply to the use of Additional Photosensitizers in the Ocular
Field of Collaboration. Therefore, Sections 12.1 to and including 12.5 of the
Co-Development Agreement are amended by

*Material has been omitted and filed separately with the Commission.
<PAGE>
                                        6

deleting each reference to the "Field of Collaboration" in those Sections and
replacing them with the "Ocular Field of Collaboration".

In addition, Section 12.1 of the Co-Development Agreement is amended by adding
the following sentence to the end of Section 12.1:

         "This Section 12 will not apply to the use (or proposed use) of any
         Additional Photosensitizers in the PDT Derm Field of Collaboration.
         However, while NVO will not be entitled to a right of first refusal
         with respect to any Additional Photosensitizer in the PDT Derm Field of
         Collaboration, [*] Field of Collaboration. QLT will provide that notice
         following completion by QLT of the corresponding proof of principle
         with that Additional Photosensitizer, or earlier at QLT's discretion."

The following is added as a new Section 12A to the Co-Development Agreement:

         "12A     RIGHT OF FIRST REFUSAL ON VERTEPORFIN IN OTHER DERM
                  INDICATIONS

         12A.1    DERM RFR NOTICE

         During the term of this Agreement, QLT will notify NVO in a timely
         manner through the JCC (the "DERM RFR NOTICE") of any opportunities for
         the development and commercialization of Verteporfin in PDT in the
         treatment, prevention or diagnosis of any dermatological conditions
         that are outside of the PDT Derm Field of Collaboration (the
         "ADDITIONAL DERM FIELDS") that QLT may have developed, licensed,
         acquired or otherwise has commercial access. QLT will provide the Derm
         RFR Notice following completion by QLT of the corresponding proof of
         principle for that opportunity, or earlier at QLT's discretion.

         12A.2    TERMS OF DERM RFR NOTICE

         The Derm RFR Notice will state a reasonably clear and complete
         description of the opportunity which is the subject of the Derm RFR
         Notice, and the terms on which QLT proposes to offer the opportunity to
         NVO, including all monetary terms, all of which terms other than the
         financial terms will be reasonably consistent with this Agreement.

         12A.3    PROOF OF PRINCIPLE REQUIRED

         The Derm RFR Notice will also be accompanied by sufficient preliminary
         testing to establish the proof of principle for the use of Verteporfin
         in PDT in the specified Additional Derm Field.

         12A.4    VERTEPORFIN ACCEPTANCE NOTICE

         Upon receipt of the Derm RFR Notice, NVO may elect to extend the terms
         of this Agreement, as modified by the terms proposed in the Derm RFR
         Notice, to

*Material has been omitted and filed separately with the commission.
<PAGE>
                                        7

         include the development and commercialization of Verteporfin in PDT in
         the Additional Derm Field specified in the Derm RFR Notice by
         delivering to QLT notice of its intention to do so within [*] days
         following receipt by NVO of the Derm RFR Notice (the "DERM ACCEPTANCE
         NOTICE"). Thereafter, QLT and NVO will negotiate in good faith any
         amendments necessary to this Agreement to reflect those terms.

         12A.5    CONSEQUENCES SHOULD NVO NOT ACCEPT

         If NVO fails to deliver the Derm Acceptance Notice in the time period
         set out in Section 12A.4, then:

                                .1  subject to Section 12A.5.2 below, QLT
                                    may pursue alone or offer and agree with
                                    any Third Party for the development and/or
                                    commercialization of Verteporfin in PDT in
                                    the Additional Derm Field specified in the
                                    Derm RFR Notice on terms and conditions no
                                    more favourable than those set out in the
                                    Derm RFR Notice; and

                                .2  notwithstanding Section 12A.5.1, QLT will
                                    not commercialize Verteporfin in PDT alone
                                    or with/by any Third Parties in any
                                    Additional Derm Field, other than the use
                                    of [*], without the prior written consent
                                    of NVO. The consent of NVO will not be
                                    required for QLT to pursue the
                                    commercialization of [*]."

7.       SECTION 13.2 - FUNDING FORMULA FOR DEVELOPMENT EXPENSES

Section 13.2 of the Co-Development Agreement is amended by adding the following
as a new Section 13.2.4:

"13.2.4           the Development Expenses and regulatory fees related to the
                  Development Program for North America and Europe for the use
                  of Verteporfin in NMSC (as part of the Development Program
                  outlined in Exhibit B) will be paid fully (100%) by NVO until
                  the first to occur of the following events:

                                .1  NVO has expended CDN$15,000,000 on those
                                    Development Expenses; or

                                .2  the filing for Marketing Approval in the
                                    United States and Europe for the use of
                                    Verteporfin for one or more NMSC
                                    indications; and

*Material has been omitted and filed separately with the Commission.
<PAGE>
                                        8

                  thereafter those Development Expenses and regulatory fees
                  will be split 50% to NVO and 50% to QLT."

8.       NMSC MILESTONE PAYMENTS

The following is added as a new Section 14A to the Co-Development Agreement:

"14A              NVO will make the following payments to QLT with respect to
                  the first Product which has received Marketing Approval for
                  use in the PDT Derm Field of Collaboration:

                                .1  [*] upon filing of a submission for
                                    Marketing Approval for the use of
                                    Verteporfin in an indication within the
                                    PDT Derm Field of Collaboration in the
                                    first of North America or Europe; and

                                .2  [*] upon receipt of Marketing Approval
                                    for the use of Verteporfin in an
                                    indication within the PDT Derm Field of
                                    Collaboration in the first of North
                                    America or Europe;

                  subject to adjustment as set out below. The milestone
                  payments set out above will be paid only the first time the
                  events referred to in Sections 14A.1 and 14A.2 occur.

                  Each milestone payment will be made by cheque or wire
                  transfer payable to QLT within 30 days after the date that
                  the corresponding milestone event occurs.

9.       SECTION 23.1 - TERM

NVO and QLT hereby exercise their right under Section 23.1 of the Co-Development
Agreement to renew the term of the Co-Development Agreement for an additional
period of 5 years beyond the current 20 year term. Therefore, effective upon
execution of this Amending Agreement, the term of the Co-Development Agreement
will extend until June 30, 2019, subject to any further renewal rights that may
be exercised pursuant to Section 23.1 of the Co-Development Agreement.

10.      SECTION 24.12 - NOTICE

The address for notice for QLT in Section 24.12 of the Co-Development Agreement
is deleted and replaced with the following:

         "If to QLT:

         QLT Inc.
         887 Great Northern Way

*Material has been omitted and filed separately with the Commission.
<PAGE>
                                        9

         Vancouver, British Columbia, Canada
         V5T 4T5
         Attention:  President and Chief Executive Officer

         with a copy to:

         Farris, Vaughan, Wills & Murphy
         Barristers & Solicitors
         P.O. Box 10026 Pacific Centre
         2600 - 700 West Georgia Street
         Vancouver, British Columbia, Canada
         V7Y 1B3
         Attention:  R. Hector MacKay-Dunn"

11.      CONFIRMATION

Other than as expressly amended by the terms of this Amending Agreement, the
Co-Development Agreement remains in full force and effect in accordance with its
terms.

12.      INTERPRETATION/GENERAL

Sections 24.1 to and including 24.10 of the Co-Development Agreement and
Sections 24.12, 24.13, 24.15 and 24.18 of the Co-Development Agreement are
incorporated by reference into this Amending Agreement.

13.      COUNTERPARTS

This Amending Agreement may be signed in any number of counterparts (including
by facsimile) and each counterpart will constitute an original document and all
counterparts, taken together, will constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Amending Agreement as of the
day and year first written above.

         QLT INC.                                  NOVARTIS OPHTHALMICS AG
         by its authorized signatory:              by its authorized signatory:

         Per:                                      Per:
         /s/ Julia Levy                            /s/ Luzi von Bidder
         ----------------------------              ----------------------------
         Name:  Julia Levy                         Name:  Luzi von Bidder
         Title: President and CEO                  Title: President, Ophthalmics
                                                          Business Unit

         Per:                                      Per: /s/ Dr. Gustave Huber
                                                   ----------------------------
                                                   Name:  Dr. Gustave Huber
                                                   Title: Vice President,
                                                          Business Development
                                                          and Licensing
<PAGE>
                                       10

         /s/ Edwin Levy
         ----------------------------
         Name:  Edwin Levy
         Title: Senior Vice President,
                Corporate Development
<PAGE>
EXHIBIT A

VERTEPORFIN

         [MOLECULAR STRUCTURES]
<PAGE>
                                   EXHIBIT B

                       NMSC OUTLINE OF DEVELOPMENT PROGRAM

         The following is a high level summary of the proposed Development
Program for the first indication to be pursued within the PDT Derm Field of
Collaboration, as contemplated in Section 2.4.4 of the Co-Development Agreement:

INDICATION:       [*].

DRUG:             Verteporfin.

FORMULATION:      [*].

CLINICAL DEVELOPMENT PLAN AND ASSUMPTIONS:

         [*]

*Material has been omitted and filed separately with the Commission.
<PAGE>
                                        2

PROPOSED DEVELOPMENT TIMELINE (US DRIVEN):

         [*]

*Material has been omitted and filed separately with the Commission.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]