Document:

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

                                                                    EXHIBIT 10.5

                                LICENSE AGREEMENT

         THIS AGREEMENT (the "Agreement") is made and entered into this December
15, 1997 ("Effective Date") by and between G.D. SEARLE & CO., a Delaware
corporation with offices at 5200 Old Orchard Road, Skokie, Illinois 60077
("Searle"), and BIOMEDICINES, INC., a Delaware corporation, with offices at 909
Marina Village Parkway, #583, Alameda, CA 94501 ("BioMedicines").

         WHEREAS, Searle is the owner of certain Patent Rights, Know-How and the
Licensed Process (each as hereinafter defined) and has the right to grant the
license set forth herein under said Patent Rights, Know-How and Licensed
Process; and

         WHEREAS, Searle desires to have BioMedicines determine whether Licensed
Product (as hereinafter defined) is useful in treating patients with oncology-
or immunology-related disorders and is willing to grant an exclusive license to
BioMedicines to effect such determination and to proceed with commercial
development, as appropriate; and

         WHEREAS, BioMedicines desires to obtain an exclusive right and license
within the Fields (as hereinafter defined) under the Patent Rights, Licensed
Process and Know-How in the Territory (as hereinafter defined).

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the Parties (as
hereinafter defined) hereto agree as follows:

SECTION 1.  DEFINITIONS

         Certain words or phrases used in the Agreement shall have meanings as
defined below:

         1.1 "AFFILIATE" shall mean any corporation or business entity
controlled by, controlling or under common control with Searle or BioMedicines,
as the case may be. For this purpose, control shall mean direct or indirect
beneficial ownership of more than fifty percent (50%) of the voting stock of, or
a fifty percent (50%) or greater interest in the income of such corporation or
other business entity, or fifty percent (50%) or greater management control over
a joint venture, or such other relationship as, in fact, constitutes actual
control.

         1.2 "CLINICAL TRIAL" shall mean a clinical trial conducted pursuant to
a Protocol.

         1.3 "COMPOUND" shall mean [*] (identified by Searle as [*]) and any
salts thereof.

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

                                       1.
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         1.4 "DEVELOPMENTAL ACTIVITIES" shall mean any and all developments,
clinical trials data, improvements, formulation data, methods, processes and
techniques developed by BioMedicines in furtherance of this Agreement.

         1.5 "EFFECTIVE DATE" shall mean the date on which the Agreement is made
as set forth above.

         1.6 "FIELDS" shall mean the fields of treating patients with oncology
or immunology-related disorders.

         1.7 "KNOW-HOW" shall mean proprietary technical data and information,
which relates to the Licensed Product, Licensed Process, Compound, and Patent
Rights including, without limitation, all chemical, pharmacological,
toxicological, clinical, assay control, manufacturing data used or useful for
the development, manufacture, and/or marketing of the Licensed Product.

         1.8 "LICENSED PROCESS" shall mean any process for manufacturing
Licensed Product from Compound or any process for manufacturing Compound for use
in the manufacture of Licensed Product which is covered in whole or in part by a
claim contained in the Patent Rights or by Know-How.

         1.9 "LICENSED PRODUCT(S)" shall mean one or more pharmaceutical
products suitable for the treatment of humans which contain Compound as the
active ingredient.

         1.10 "NET SALES" shall mean the actual gross amount invoiced by a
Party, or its Affiliates or Sublicensees, for sales of the Licensed Product
within the Fields in the Territory to Third Parties during a calendar year;
provided that:

              (a)      Net Sales shall not include the following:

                       (i) direct transportation charges, including
insurance;

                       (ii) any sales, use, value-added taxes, excise taxes
and/or duties or allowances based on the selling price of the Licensed Product
which fall due and are paid as a consequence of such sales;

                       (iii) trade, quantity and cash discounts and rebates
actually allowed and taken to the extent customary in the trade, including,
without limitation, governmental rebates; or

                       (iv) allowances or credits, including but not limited
to, allowances or credits to customers on account of rejection or return of the
Licensed Product.

              (b) Moreover, a sale or transfer to an Affiliate of either
Party for re-sale by such Affiliate shall not be considered a sale for the
purpose of this provision, but the resale by such Affiliate shall be a sale for
such purposes, and a "sale" shall include a transfer or other disposition for
consideration, but not such transfers or dispositions for pre-clinical,
clinical, regulatory, or governmental purposes for which no consideration is
received whether before or after marketing approval; and

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

                                       2.
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              (c) Licensed Product shall be considered sold upon receipt of
either Party of payment for such Licensed Product ("Sold").

         1.11 "OTHER INTELLECTUAL PROPERTY RIGHTS" shall mean all of the
following intellectual property of BioMedicines: the trademarks, service marks,
and tradenames, or any applications pertaining thereto, as shall be selected,
chosen, created or developed by BioMedicines pursuant to the Agreement.

         1.12 "PARTY(IES)" shall mean a person(s) or an entity(ies) who is (are)
a party to the Agreement.

         1.13 "PATENT RIGHTS" shall mean all of the following intellectual
property of Searle:

              (a) the patent and patent applications listed in Appendix A;

              (b) the patents issued from the applications listed in
Appendix A and from divisionals, continuations, and continuations-in-part, of
these applications;

              (c) any reissue, re-examination, or extension of said patents;

              (d) any improvement patent dominated by the claims of the
Patent Rights; and

              (e) any foreign counterparts of the foregoing.

         1.14 "PHASE Ib/II CLINICAL TRIAL" shall mean a Clinical Trial in
patients having a designated disease or disorder.

         1.15 "PROTOCOL" shall mean a protocol for a Clinical Trial of Licensed
Product.

         1.16 "PROPOSED REVERSION TERMS" shall mean terms proposed by Searle
upon exercise of its Reversion Option to BioMedicines under which Searle would
accept reversion of the License. In the event such terms are accepted by
BioMedicines such Proposed Reversion Terms become Reversion Terms.

         1.17 "REVERSION TERMS" shall mean the terms agreeable to the Parties
under which the License granted hereunder in Section 2 shall revert to Searle.

         1.18 "SUBLICENSE" shall mean a sublicense granted by BioMedicines
pursuant to the terms of Sections 3 of the Agreement.

         1.19 "SUBLICENSEE" shall mean any Third Party licensed to make, have
made, import, export, use or sell any Licensed Product.

         1.20 "TERRITORY" shall mean all countries worldwide.

         1.21 "THIRD PARTY(IES)" shall mean a person(s) or entity(ies) who or
which is (are) neither a Party nor an Affiliate of a Party.

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

                                       3.
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SECTION 2.   GRANT

         2.1 Subject to the terms and conditions of the Agreement, and upon
receipt by Searle of the payment(s) pursuant to Section 6 herein, Searle hereby
grants to BioMedicines and BioMedicines hereby accepts from Searle an exclusive
(even as to Searle) royalty-bearing right and license within the Fields in the
Territory (the "License"), including the right to sublicense within the Fields
in the Territory, under the Patent Rights, Licensed Process and Know-How, to
develop, make or have made Licensed Product from Compound, and to use,
manufacture, market, and sell Licensed Product within the Fields in the
Territory.

SECTION 3.   DATA REVIEW, REVERSION OPTION, SUBLICENSING

         3.1 For each indication within the Fields ("Indication") developed by
BioMedicines using the Licensed Product, Searle shall have the right review the
data from the first Phase Ib/II Clinical Trial. The sole purpose of such review
shall be for Searle to determine whether it wishes to have the License granted
to BioMedicines by the Agreement revert to Searle for this Indication (the
"Reversion Option"). Within sixty (60) days of receipt of the data from said
Clinical Trial, Searle shall notify BioMedicines in writing of Searle's desire
to exercise the Reversion Option or its decision to decline to exercise the
Reversion Option.

         3.2 In the event that Searle exercises its Reversion Option for an
Indication, Searle and BioMedicines shall negotiate in good faith for a period
of not more than sixty (60) days the terms ("Reversion Terms") under which the
License shall revert for that Indication. Searle, at its sole discretion, may
offer Proposed Reversion Terms for each Indication upon exercise of the
Reversion Option. BioMedicines agrees to respond in writing within 15 days after
said offer of the Proposed Reversion Terms.

         3.3 In the event that BioMedicines and Searle agree to Reversion Terms
for a particular Indication, the current Agreement will be modified in
accordance with the mutually agreed Reversion Terms with regard to each such
Indication; and

             (a) All rights previously granted to BioMedicines pursuant to
Section 2 of the Agreement shall terminate and revert to Searle for such
Indication; and

             (b) BioMedicines shall grant to Searle an exclusive license to
use the data and materials resulting from Developmental Activities by
BioMedicines with Licensed Products solely for said reverted Indication; and

             (c) Searle shall use its good faith efforts to further
develop, obtain regulatory approvals and commercialize the Licensed Product for
the Indication in the Territory where such good faith efforts would be justified
by sound business judgment. Searle shall take such actions as are reasonably
necessary and customary to obtain and maintain the authorization and/or ability
to market the Licensed Product for the Indication in such countries in the
Territory in which Searle shall choose to introduce Licensed Product for the
Indication; and

             (d) Searle shall bear sole responsibility for all expenses of
such development, commercialization and regulatory compliance for the
Indication; and

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

                                       4.
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                  (e) In the event that Searle does not make such good faith
efforts to pursue the further development and commercialization of the Licensed
Product for the Indication for any country in the Territory after exercising its
Reversion Option for the Indication, the Reversion Option with regard to the
Indication for each such country shall immediately expire and all rights
obtained by Searle with regard to the Indication through its exercise of the
Reversion Option shall be returned to BioMedicines under the terms of this
Agreement.

         3.4 If Searle elects not to exercise the Reversion Option for an
Indication, then BioMedicines shall be free thereafter, in its sole discretion,
to continue development on its own behalf or to offer a Sublicense to a Third
Party(ies) for that Indication and to conclude a sublicensing agreement with the
Third Party(ies) for that Indication consistent with BioMedicines' obligations
under this Agreement.

         3.5 If, however, Searle proposes to exercise the Reversion Option for
and Indication but BioMedicines shall decline to accept Searle's Proposed
Reversion Terms for that Indication or the Parties are unable to reach agreeable
Reversion Terms for that Indication after good-faith negotiations during the
sixty (60) day negotiating period of Section 3.2, BioMedicines shall be free; in
its sole discretion, to offer a Sublicense to a Third Party for that Indication.
Any resulting sublicensing agreement for an Indication with a Third Party,
however, may not be on terms more favorable to the Third Party than were the
Reversion Terms offered to Searle for that Indication unless BioMedicines shall
first offer said more favorable terms for that Indication ("Revised Terms") in
writing to Searle. Searle must respond in writing within thirty (30) days of
receipt of said offer of the Revised Terms whether it wishes to exercise the
Reversion Option for that Indication based on the Revised Terms. In the event
that Searle accepts the Revised Terms for that Indication, then the Parties will
promptly execute an agreement based on the Revised Terms for that Indication,
and the requirements of Section 3.3 shall then apply. In the event that Searle
declines the Revised Terms for an Indication, then BioMedicines shall be free to
conclude the aforesaid sublicensing agreement for that Indication with the Third
Party on the basis of the Revised Terms for that Indication.

SECTION 4.   DATA AND MATERIALS

         4.1 Searle shall make available to BioMedicines, to the best of
Searle's knowledge any and all preclinical and clinical data, formulation data,
manufacturing process information, or other data generated from preclinical or
clinical research with regard to the development of the Licensed Product, and
shall deliver to BioMedicines those documents relating to Compound or Licensed
Product requested by BioMedicines from time to time during the term of the
Agreement within thirty (30) days of such request; provided, however, that
Searle shall be obliged to make available only those data or documents already
in Searle's possession as of the Effective Date or which subsequently come into
Searle's possession. If BioMedicines requests non-U.S, data or reports from
Searle, BioMedicines agrees to be responsible for the translation of any such
data or reports into English if such translation would not otherwise be
performed by Searle.

         4.2 In the event that Searle exercises the Reversion Option,
BioMedicines likewise agrees to make available to Searle data or documents
generated by BioMedicines pursuant to BioMedicines' Developmental Activities
with Licensed Product.

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

                                       5.
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         4.3 Searle shall, upon BioMedicines' reasonable request, deliver to
BioMedicines, free of charge to BioMedicines a total of [*].

         4.4 In addition to the report(s) identified in Section 3.1,
BioMedicines shall during the term of the Agreement periodically provide to
Searle reports regarding the developmental and regulatory status and progress
towards commercialization of Licensed Product. The content and frequency of such
reports shall be negotiated in good faith from time to time during the term of
the Agreement.

SECTION 5.   MANUFACTURING AND COMMERCIALIZATION

         5.1 BioMedicines will be solely responsible, as between BioMedicines
and Searle, for manufacturing of the Licensed Product from Compound unless the
rights granted hereunder to BioMedicines revert to Searle.

         5.2 BioMedicines shall have the exclusive right, but not the
obligation, at its sole option and in its sole discretion, to select, choose,
create or develop Other Intellectual Property Rights for any and all Licensed
Products unless the rights granted hereunder to BioMedicines revert to Searle.

         5.3 BioMedicines shall use its good faith efforts to develop, obtain
regulatory approval and commercialize the Licensed Product in the Field in each
country of the Territory where such good faith efforts would be justified by
sound business judgment and shall require any Affiliates and/or Sublicensees to
agree to be bound substantially by this obligation. BioMedicines shall take such
actions as are reasonably necessary or customary to obtain and maintain the
authorization and/or ability to market the Licensed Product in such countries in
the Territory in which BioMedicines shall choose to introduce the Licensed
Product. BioMedicines shall bear sole responsibility for all expenses of such
development, commercialization and regulatory compliance. In the event that
BioMedicines does not make such good faith efforts to pursue the development and
commercialization of the Licensed Product, all rights granted hereunder shall
revert to Searle, or in the event that an Affiliate or Sublicensee of
BioMedicines shall not make good faith efforts to pursue the development and
commercialization of the Licensed Product, all rights granted by BioMedicines to
such Affiliate or Sublicensee shall revert to Searle unless BioMedicines agrees
to re-assume responsibility for development and commercialization on behalf of
the Sublicensee.

SECTION 6.   ROYALTIES AND OTHER COMPENSATION; RECORDS

         6.1 In consideration of the grant of the License pursuant to Section
2.1 herein, BioMedicines shall pay to Searle the sum of [*] within 45 days of
the Effective Date.

         6.2 In the event that BioMedicines commences clinical trials with
Compound within the territory, BioMedicines shall pay to Searle the sum of [ * ]
within forty-five (45) days after the first such filing only.

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

                                       6.
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         6.3 In the event that BioMedicines commences phase III clinical trials
or its equivalent for the Licensed Product in the Territory, BioMedicines shall
pay to Searle the sum of [ * ] within forty-five (45) days after the
commencement of the first such phase III trials only.

         6.4 Upon the receipt by BioMedicines of regulatory approval for the
Licensed Product for either the European Union or for the United States,
BioMedicines shall pay to Searle the sum of [ * ] within forty-five (45) days
after the first such approval only.

         6.5 The sums payable under Sections 6.1-6.4 shall not be refundable
unless there is a material breach of the Agreement by Searle which material
breach remains uncured for a period of sixty (60) days. Said sums paid by
BioMedicines to Searle shall then be refunded by Searle to BioMedicines within
thirty (30) days thereafter.

         6.6 (A)           Upon commercialization, BioMedicines shall pay to
Searle an earned patent royalty on BioMedicines' Net Sales in the Territory
as follows:

                           (1) If total Net Sales are less than [ * ], the
patent royalty rate shall be [ * ] of total Net Sales;

                           (2) If total Net Sales are from [ * ] the patent
royalty rate shall be [ * ] of total Net Sales;

                           (3) If total Net Sales are in excess of [ * ] the
patent royalty rate shall be [ * ] of total Net Sales;

             (B)           Upon commercialization, BioMedicines shall pay to
Searle an earned know-how royalty on BioMedicines' Net Sales in the Territory
as follows:

                           (1) If total Net Sales are less than [ * ], the
know-how royalty rate shall be [ * ] of total Net Sales;

                           (2) If total Net Sales are from [ * ] the know-how
royalty rate shall be [ * ] of total Net Sales;

                           (3) If total Net Sales are in excess of [ * ] the
know-how royalty rate shall be [ * ] of total Net Sales; and

             (C)           BioMedicines shall pay such patent royalty to
Searle until:

                           (1) the expiration of the last-to-expire or
become-abandoned of the Patent Rights in such country; or

                           (2) for [ * ] years from the date that Licensed
Product is first marketed in such country, whichever is longer; and

             (D)           BioMedicines shall pay such know-how royalty on
each sale of the Licensed Product.

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

                                       7.
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         6.7 In the event that BioMedicines shall sublicense to a Third Party
all or any part of the License granted hereunder, BioMedicines shall pay to
Searle [ * ] of all remuneration received from such Sublicensee for all or any
part of the Sublicense granted in lieu of the royalties set forth in Section 6.6
and BioMedicines shall continue to pay royalties in accordance with Section 6.6
for any portion of the License grant retained by BioMedicines. In the event any
remuneration to be received by BioMedicines pursuant to such Sublicense would
involve an element of non-cash consideration, BioMedicines shall, prior to
entering into such sublicense agreement, negotiate in good faith with Searle for
a period not to exceed thirty (30) days to obtain Searle's approval of the cash
value of said non-cash consideration to be paid by BioMedicines to Searle, such
approval not to be unreasonably withheld. If, after thirty (30 days) of good
faith negotiations between the Parties, the Parties cannot agree on the cash
value to be paid, the Parties agree to obtain an independent fairness opinion
regarding said cash value from a suitably qualified third party (chosen jointly
by the Parties) whose judgment shall be binding upon both Parties.

         6.8 In the event that Searle exercises the Reversion Option for an
Indication pursuant to Section 3 of the Agreement, Searle shall pay to
BioMedicines such sums as shall be mutually agreed.

         6.9 The Party marketing a Licensed Product for an Indication in the
Territory shall deliver to the other written reports (consistent with generally
accepted accounting principles) within sixty (60) days after the close of each
calendar quarter showing separately for each Licensed Product: (i) gross sales,
broken down both by units sold and revenue, and the calculation of Net Sales;
(ii) details of the quantities sold in each country where there are sales; and
(iii) royalties due pursuant to Section 6 hereof. Concurrently with the making
of such report, the Party selling Licensed Product shall pay the royalties due
on Net Sales during the preceding calendar quarter. The Party marketing a
Licensed Product for an Indication in the Territory shall deliver to the other a
written report (consistent with generally accepted accounting principles) within
sixty (60) days after the close of the calendar year showing (i), (ii), and
(iii) above for each Licensed Product for the calendar year. Any adjustment(s)
needed to adjust the royalty payments based on total Net Sales to be consistent
with Section 6.6 shall be made concurrently with the delivery of the report.

         6.10 All royalties to be paid under the Agreement shall be paid in U.S.
dollars. In the event that currency conversions shall be required, such
conversion shall be made using the foreign exchange rates published in the
Midwest edition of the Wall Street Journal (or a successor publication) as of
the last business day closest to the end of the quarter in question.

         6.11 If either Party shall fail to make a payment when due pursuant to
Section 6 of the Agreement, such Party shall have an additional five (5)
business days from the date such payment was due to cure such non-payment.

         6.12 The Party selling Licensed Product shall keep complete and
accurate records in sufficient detail to properly reflect all gross sales,
deductions from Net Sales, and to enable the royalties payable hereunder to be
determined. Upon the written request of the non-selling Party not more than once
in each calendar year, the selling Party shall permit an independent certified
public accounting firm of nationally recognized standing, selected by the
non-selling Party and

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

                                       8.
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reasonably acceptable to the selling Party, and at the non-selling Party's
expense (except as provided below), to have access during normal business hours
to such of the records of the selling Party as may be reasonably necessary to
verify the accuracy of the royalty reports hereunder for any year ending not
more than twenty-four (24) months prior to the date of such request. The
accounting firm shall disclose all information gathered or concluded to the
selling Party. The accounting firm shall disclose to the non-selling Party only
whether the records are correct or not and the specific details concerning any
discrepancies. No other information shall be shared with the non-selling Party.
If the accounting firm concludes that additional royalties were owed during such
period (exceeding [ * ] of royalties paid during the period), the selling Party
shall pay all costs associated with the audit and the unpaid royalties within
thirty (30) days of the date the accounting firm delivers the firm's written
report to the Parties, with interest thereon at the prime rate reported by the
Citibank of New York, or another bank of nationally recognized standing in the
event that Citibank shall cease to exist, on the last calendar day of the
quarter in which such payments were due. Should the accounting firm conclude
that the selling Party has overpaid any royalties, the non-selling Party shall
credit any overpayment to the selling Party against amounts later due the
non-selling Party.

         6.13 Each Party shall deduct any withholding taxes from the payments
due under the Agreement and pay them to the proper tax authorities as required
by the laws applicable at the date of payment. Neither Party shall deduct any
other withholding or any other governmental charges from the payments due under
the Agreement. Each Party shall annually provide the other Party with official
receipts of payment of any withholding taxes and forward these receipts to such
other Party.

SECTION 7.   CONFIDENTIALITY

         7.1 Any information which is transmitted by one Party to the other
Party in connection with the entering into or the performance of the Agreement,
shall be kept confidential by the receiving Party and its Affiliates and/or
Sublicensees prior to the expiration or termination of the Agreement and for a
period of five (5) years after its expiration. The foregoing obligation shall
not apply to:

             (a) any information which at the time of disclosure or
acquisition is part of the public knowledge or literature, or thereafter becomes
part of the public knowledge or literature otherwise than by unauthorized
disclosure by the recipient;

             (b) any disclosure of information to the United States Food
and Drug Administration or other similar governmental authorities for the
purpose of complying with regulatory requirements with respect to the Licensed
Processes or Licensed Product;

             (c) any information which at the time of disclosure or
acquisition was in the recipient's possession as evidenced by its written
records;

             (d) any information which became available to the recipient
from another source not bound to secrecy to the disclosing Party with respect to
such information;

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

                                       9.
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             (e) disclosure by the recipient to Third Parties under
provisions of confidentiality substantially similar to those contained in the
Agreement for the purposes of development or marketing of the Licensed Product;
and

             (f) any disclosure of information required by law.

         7.2 Notwithstanding the provisions of Section 7.1 herein, in the event
that either Party, its Affiliates and/or Sublicensees shall determine that it
wishes to disclose any information, the disclosure of which would be prohibited
by Section 7.1 herein, such Party shall present the other Party with a written
request to disclose such information. The other Party shall have a period of
thirty (30) calendar days to approve the disclosure contained in such written
request, which approval shall not be unreasonably withheld.

SECTION 8.   COMPETITION

         8.1 Unless Searle exercises the Reversion Option, Searle shall not,
during the term of the Agreement, develop, manufacture or market within the
Fields within the Territory any product or substance incorporating Compound
without the prior consent of BioMedicines.

SECTION 9.   PATENT MATTERS

         9.1 BioMedicines shall, subject to good business judgment, after the
Effective Date

             (a) maintain the Patent Rights in Appendix A and

             (b) prosecute and/or defend any infringement of and/or
challenge to the Patent Rights.

         9.2 INFRINGEMENT SUITS

             (a) In any infringement suit either Party may institute to
enforce the Patent Rights pursuant to the Agreement, or in any suit brought
by a Third Party in which either Party is defending the Patent Rights, the
other Party hereto shall, at the request and expense of the Party initiating
or defending such suit, as the case may be, cooperate in all reasonable
respects and, to the extent practicable, have its employees and, if
practicable, former employees, testify when requested and make available
relevant records, papers, information, samples, specimens and the like.

             (b) If, as a result of any such suit, the Patent Rights are held
in any country to be not enforceable or invalid pursuant to a judgment
rendered by a court of final determination and not subject to appeal, then,
from and after the date of the filing of the action which resulted in such
judgment, the royalties on Net Sales in that country payable pursuant to
Section 6 hereunder shall be reduced by [ * ]. If BioMedicines elects to
prosecute any alleged infringement, Searle hereby agrees that Searle, at the
request of BioMedicines, shall assist and cooperate with BioMedicines in any
suit in all reasonable respects and to the extent practicable have its
employees and former employees testify when requested and make available
relevant records, papers, information, samples specimens and the like.
BioMedicines alone shall retain any recovery or damages in excess of cost and
fees incurred in obtaining the same for past

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

                                      10.
<PAGE>

infringement derived from any such infringement action prosecuted or defended by
BioMedicines after first reimbursing Searle for such royalties and payments as
Searle may have lost under Section 9.4 hereunder.

         9.3 Each of the Parties shall notify the other promptly in the event
that it becomes aware of any alleged infringement of the Patent Rights by a
Third Party and of any available evidence thereof.

         9.4 In the event that BioMedicines shall undertake the enforcement or
defense of the Patent Rights in any country in the Territory by litigation
pursuant to Section 9 of the Agreement or otherwise, BioMedicines may withhold
any payments or royalties due Searle on Net Sales in such country hereunder,
pursuant to Section 6 of the Agreement, and apply the same toward reimbursement
of its expenses, including attorney's fees, in connection therewith, until
BioMedicines is reimbursed therefore provided that in no case that such payments
or royalties be reduced by more than [ * ].

SECTION 10.   REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATIONS

         10.1 Each Party represents and warrants to the other Party that: (i) it
is free to enter into the Agreement and has the full right and authority to do
so; (ii) it has taken all corporate action necessary to authorize the execution
and delivery of the Agreement and the performance of its obligations under the
Agreement; (iii) it is not aware of any impediment that would inhibit its
ability to perform in all material respects its obligations under the Agreement;
and (iv) the execution, delivery and performance of the Agreement will not
violate any provision of, conflict with or result in any breach of any of the
terms of, or constitute a default under either Party's respective certificate of
incorporation, by-laws, or any material indenture, lease, agreement or other
material instrument to which it is a party, or any decree, judgment or order
applicable to such party or any law, statute, rule or regulation applicable to
such party.

         10.2 Searle hereby represents to BioMedicines that:

              (a) It is the assignee of the Patent Rights covered by the
Agreement;

              (b) It has the legal power to convey the rights granted to
BioMedicines in the Agreement;

              (c) It has no knowledge of any facts which would rebut the
presumption of validity accorded any issued patents within the Patent Rights and
it has disclosed to the United States Patent and Trademark office all
information "material to patentability," as such is defined in 37 C.F.R.
Section 1.56;

              (d) It has no knowledge of any adverse claims to the Patent
Rights;

              (e) All patent applications included in the Patent Rights are
pending and have not been abandoned and are enforceable pursuant to a valid
assignment;

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

                                      11.
<PAGE>

              (f) To its best knowledge and belief, as of the Effective
Date, there are no asserted or unasserted claim or demand which may be enforced
against any of the Patent Rights or Know-How;

              (g) To its best knowledge and belief, on the Effective Date
the practice of any processes and/or products disclosed in the Patent Rights or
Know-How do not infringe upon any Third Party patents;

              (h) Searle has not entered into any agreement with any Third
Party which is in conflict with the rights granted to BioMedicines pursuant to
the Agreement; and

              (i) To its best knowledge and belief, the reports and existing
good laboratory compliance (GLP) statements provided on the Compound and
Licensed Product are complete and accurate.

         10.3 BioMedicines shall obtain and maintain at all times and at its own
expense adequate insurance to cover any risk of injury to humans that may arise
out of activities contemplated in this Agreement with respect to the Compound or
Licensed Products.

         10.4 BioMedicines represents and warrants that it shall comply with all
applicable laws and regulations, including Food, Drugs and Cosmetics Act,
current Good Clinical Practices and investigational new drug regulations and
applicable guidelines.

         10.5 ANY MATERIALS PROVIDED BY SEARLE PURSUANT TO THE AGREEMENT ARE
PROVIDED "AS IS" WITHOUT ANY WARRANTY OF FITNESS OR MERCHANTABILITY FOR ANY
PARTICULAR PURPOSE. TO THE EXTENT PROVIDED BY LAW. SEARLE SHALL NOT BE LIABLE
UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABILITY
THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.

         10.6 BioMedicines shall defend, indemnify and hold Searle and its
Affiliates and their respective officers, directors and employees harmless from
and against any and all claims, demands, losses, damages, liabilities (including
without limitation product liability), settlement amounts, costs or expenses
whatsoever (including reasonable attorneys' fees and costs) arising from or
relating to any claim, action or proceeding made or brought against such person
or party by a third party as a result of BioMedicines' development, use,
manufacture, marketing or sale of Licensed Product or Compound (including
without limitation product liability claims) unless such liability arises from
Searle's negligent act or omission.

SECTION 11.   ASSIGNMENT

         11.1 The Agreement shall not be assignable by BioMedicines without the
prior written consent of Searle, which consent shall not be unreasonably
withheld.

         11.2 Notwithstanding Section 11.1 herein, Searle agrees to waive its
rights to withhold consent for assignment by BioMedicines if a Sublicense has
been granted to a Third Party or if the Licensed Product for an Indication has
been approved for marketing in the U.S. or in the E.U.

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

                                      12.
<PAGE>

         11.3 Searle may freely assign this Agreement on notice to, but without
the necessity of securing the consent of BioMedicines.

SECTION 12.   TERM AND TERMINATION

         12.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to Sections 3 or 11 of the Agreement, the Agreement and the
licenses and rights granted hereunder, shall remain in full force and effect for
as long as royalties are payable under Section 6 of the Agreement in any country
of the Territory.

         12.2 Either Party shall have the right to terminate the Agreement with
thirty (30) days notice in written form to the other Party in the event that the
other Party fails to remedy any material failure to fulfill its obligations
under the Agreement or remains in material breach of the terms or conditions
hereof within sixty (60) days after receipt of notice in written form specifying
the circumstances giving rise to such failure or breach.

         12.3 Either Party may terminate the Agreement with immediate effect by
notice in written form in the event that the other Party becomes insolvent, is
declared bankrupt or adopts a plan of liquidation and dissolution.

         12.4 Upon termination of the Agreement pursuant to Sections 12.2 or
12.3 herein, any licenses or sublicenses granted under the Agreement may
continue in effect at the option of the non-breaching or non-bankrupt Party, as
long as the non-breaching or non-bankrupt Party abides by the terms of the
license and the surviving provisions of the Agreement, including but not limited
to the obligation to pay milestone payments and royalties under Section 6, and
subject to later expiration under this Section 12. Any court-awarded damages
granted to one Party arising from material breach or bankruptcy of the other
Party may be deducted from milestone, royalty and/or other payments which may be
subsequently due to the other Party.

         12.5 Upon termination of the Agreement pursuant to Sections 12.2 or
12.3 herein, nothing herein shall be construed to release either Party from any
obligation that matured prior to the effective date of such termination. Either
Party or any Affiliate or Sublicensee thereof may after the effective date of
such termination sell all Licensed Products manufactured or in process of
manufacture on the effective date of such termination.

         12.6 Upon termination of the Agreement by either Party pursuant to
Section 12.2 herein, the other Party will transfer or have transferred to the
Party terminating the Agreement any authorizations for clinical trials or sale
of Licensed Product owned by the other Party, its Affiliates or Sublicensees,
such transfer to be free of charge to the terminating Party with the right to
use the same, subject to the provisions of Section 12.5 herein.

         12.7 Upon termination of the Agreement by either Party pursuant to
Section 12.3 herein, the other Party will transfer or have transferred to the
terminating Party any authorizations for clinical trials or sale of Licensed
Product owned by the other Party, its Affiliates or Sublicensees upon payment to
the other Party in cash an amount representing fair market value of the assets
to be transferred upon which payment the terminating Party shall have the right
to use the same.

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

                                      13.
<PAGE>

SECTION 13.   PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

         13.1 Any payment, notice or other communication pursuant to the
Agreement shall be sufficiently made or given on the date of mailing if sent to
such Party by certified or registered first class mail, postage prepaid, or by
recognized public courier (e.g. Federal Express) addressed to it at its address
below or as it shall designate by written notice given to the other Party:

                In the case of Searle:                       with a copy to:

                G.D. Searle & Co.                            Legal Department
                5200 Old Orchard Road
                Skokie, IL 60077
                Attention: Corporate Licensing

                In the case of BioMedicines:                 with a copy to:

                BioMedicines, Inc.                           Corporate Legal
                909 Marina Village Blvd. #583
                Alameda, CA 94501

SECTION 14.   MISCELLANEOUS PROVISIONS

         14.1 The Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of California, except that questions
affecting the construction and effect of any patent shall be determined by the
law of the country in which the patent was granted and disputes arising out of
the Agreement which cannot be settled between the Parties will be brought before
the courts of California.

         14.2 The Parties hereto acknowledge that the Agreement sets forth the
entire agreement and understanding of the Parties hereto as to the subject
matter hereof, and no oral or written communications between the Parties with
respect to the License granted hereunder shall be of any force or effect, nor
shall the Agreement be subject to any change or modification, except by the
execution of a subsequent written instrument subscribed to by the Parties
hereto.

         14.3 The provisions of the Agreement are severable, and in the event
that any provisions of the Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.

         14.4 The failure of either Party to assert a right hereunder or to
insist upon compliance with any term or condition of the Agreement shall not
constitute a waiver of that right or excuse a subsequent failure to perform any
term or condition by the other Party.

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

                                      14.
<PAGE>

         14.5 Except as required by U.S. regulatory authorities, no press
releases, publicity, announcements or other disclosures of the Agreement shall
be made by either Party without the prior written consent of the other Party.

         14.6 The Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.

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

                                      15.
<PAGE>

         IN WITNESS WHEREOF, the Parties have hereunto duly executed the
Agreement as of the day and year set forth above.

BIOMEDICINES, INC.                               G.D. SEARLE & CO.

By:  /s/ S. M. Moran                             By:  /s/ R. De Schutter
   -----------------------------------              ----------------------------
Name:    S. Mark Moran, M.D., M.B.A.             Name:    Richard U. De Schutter

Title:   President and CEO                       Title:   President and CEO

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

                                      16.
<PAGE>

                                   APPENDIX A

                              PATENTS/APPLICATIONS

PATENT NO.                    FILING DATE                            ISSUE DATE

                                        [ * ]

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

                                      17.<PAGE>

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

                                                                  EXHIBIT 10.6

                                OMEGA INTERFERON

                                LICENSE AGREEMENT

                                    EXECUTED

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

                                       1.

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>     <C>                                                                                                   <C>
1.       DEFINITIONS..............................................................................................1

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

         1.2      Effective Date..................................................................................1

         1.3      Field...........................................................................................1

         1.4      Non-Manufacturing Know-How......................................................................1

         1.5      Manufacturing Know-How..........................................................................2

         1.6      Licensed Product(s).............................................................................2

         1.7      Manufacturing Process...........................................................................2

         1.8      Net Sales.......................................................................................2

         1.9      Patent Rights...................................................................................3

         1.10     Phase II........................................................................................3

         1.11     Phase III.......................................................................................3

         1.12     R&D Agreement...................................................................................3

         1.13     Settlement Agreement between BII and [*]........................................................4

         1.14     Sublicensee.....................................................................................4

         1.15     Territory.......................................................................................4

2.       GRANT....................................................................................................4

         2.1      Grant...........................................................................................4

         2.2      Sublicense......................................................................................4

         2.3      BII Obligations for the United States...........................................................4

3.       DUE DILIGENCE BY BMI.....................................................................................4

         3.1      Development Planning............................................................................4

         3.2      Exercise of Diligence...........................................................................5

         3.3      Commercialisation Plans in Certain Countries....................................................5

         3.4      Potential Abandonment of Rights by BMI..........................................................5

         3.5      Periodic Reporting..............................................................................5

         3.6      Need for Approval of Regulatory Authorities.....................................................5

4.       SUBLICENSING.............................................................................................5

         4.1      Characteristics of Potential Sublicensees.......................................................5

         4.2      BMI Duty to Inform..............................................................................6
</TABLE>

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

                                       i.

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>     <C>                                                                                                   <C>
5.       BII REVIEW RIGHTS AND TERRITORIAL REVERSION RIGHTS.......................................................6

         5.1      BII Clinical Data Review Rights.................................................................6

         5.2      BII Reversion Rights............................................................................6

         5.3      One-Time Rights.................................................................................7

6.       DATA.....................................................................................................7

         6.1      Preclinical and Clinical Data, Non-Manufacturing Know-How.......................................7

         6.2      Additional Reports..............................................................................7

7.       MANUFACTURING: PHASE II..................................................................................7

         7.1      Responsibility for Phase II Manufacturing.......................................................8

         7.2      Manufacturing Standards for Phase II Manufacturing..............................................8

         7.3      Supplies for Phase II Clinical Trial described in Appendix D....................................8

         7.4      [*].............................................................................................8

         7.5      Cooperation During Manufacturing................................................................8

8.       MANUFACTURING: PHASE III AND COMMERCIAL SUPPLY...........................................................9

         8.1      Responsibility for Phase Ill Manufacturing and for Commercial Supply............................9

         8.2      Price for Commercial Supplies/Minimum Order.....................................................9

         8.3      Floor Price.....................................................................................9

         8.4      Payment Schedule and Cost Verification.........................................................10

         8.5      Supply Agreement and Duration..................................................................10

         8.6      Payments for Supply in Deutsche Mark...........................................................10

9.       PAYMENTS/ROYALTIES AND RELATED MATTERS..................................................................10

         9.1      All Payments...................................................................................10

         9.2      Initial Fee....................................................................................10

         9.3      Milestones.....................................................................................10

         9.4      Royalty Payments...............................................................................11

         9.5      When Royalty Payments Are Not Due and Limitations Thereon......................................11

         9.6      Not Due Royalty Payments on Supplies for Clinical Trials.......................................11

         9.7      Other Payments for Sales Within the United States..............................................11

         9.8      Sales Reporting................................................................................12

         9.9      Timelines of Payments..........................................................................12
</TABLE>

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

                                       ii.

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>     <C>                                                                                                   <C>
         9.10     Financial Records and Verification.............................................................12

         9.11     Taxes..........................................................................................13

10.      INTELLECTUAL PROPERTY MATTERS...........................................................................13

         10.1     Maintenance....................................................................................13

         10.2     Patent Term Extension or Equivalent............................................................14

         10.3     Notification Regarding Infringement............................................................14

         10.4     Litigation.....................................................................................14

         10.5     Payments and Patent Litigation.................................................................15

         10.6     Other Intellectual Property....................................................................15

         10.7     Improvements to the Manufacturing Process......................................................15

11.      REPRESENTATIONS AND WARRANTIES..........................................................................15

         11.1     Freedom to Execute Agreement...................................................................15

         11.2     Patent Rights..................................................................................16

         11.3     [*]............................................................................................16

         11.4     BII Affiliate(s)...............................................................................16

         11.5     BMI Sublicensee(s).............................................................................17

12.      ASSIGNMENT, CHANGE IN CONTROL...........................................................................17

         12.1     Ability of BMI to Assign Agreement.............................................................17

         12.2     Waiver of Consent..............................................................................17

         12.3     Change in Control..............................................................................17

13.      TERM AND TERMINATION....................................................................................17

         13.1     Duration of Agreement..........................................................................17

         13.2     Paid-Up License................................................................................17

         13.3     Termination Because of Unremedied Breach.......................................................17

         13.4     Termination Because of Insolvency..............................................................18

         13.5     Court-Awarded Damages..........................................................................18

         13.6     Continuation of Obligations....................................................................18

         13.7     Duties of BMI After Breach.....................................................................18

         13.8     Duties of BMI After Bankruptcy.................................................................18

14.      CONFIDENTIALITY.........................................................................................18
</TABLE>

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

                                       iii.

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>     <C>                                                                                                   <C>
         14.1     Transmittal of Information.....................................................................18

         14.2     Approval of Public Disclosure..................................................................19

         14.3     Acknowledgment of Private Disclosure...........................................................19

15.      COMMUNICATIONS..........................................................................................19

         15.1     Instructions for Communications................................................................19

16.      MISCELLANEOUS PROVISIONS................................................................................20

         16.1     Governance of Agreement........................................................................20

         16.2     Entire Agreement...............................................................................20

         16.3     Severability...................................................................................20

         16.4     Original Agreement and Counterparts............................................................20

         16.5     No Waiver of Rights............................................................................20

         16.6     Section Titles.................................................................................20
</TABLE>

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

                                       iv.

<PAGE>

                                LICENSE AGREEMENT

     This agreement ("Agreement")is made and entered into this JULY 17, 1998
by and between BOEHRINGER INGELHEIM INTERNATIONAL GMBH, a corporation with
offices at D 55216 Ingelheim/Rhein, Germany ("BII"), and BIOMEDICINES, INC.,
a Delaware corporation, with an address for purposes of the Agreement at 909
Marina Village Parkway #583 Alameda, California, United States of America
(U.S.A.) 94501 ("BMI").

     WHEREAS, BII is the owner of certain Patent Rights, Know-How, and the
Manufacturing Process (each as hereinafter defined) and has the right to grant
the license ("License") set forth herein and, moreover, BII has developed
certain pharmaceutical formulations containing Omega Interferon ("Licensed
Product" as defined below) and has conducted Phase I clinical trials; and

     WHEREAS, BMI desires to establish whether the Licensed Product is useful in
treating patients with various diseases and, if so, to complete the development
of Licensed Product in order to commercialise Licensed Product; and

     WHEREAS, BMI desires to obtain an exclusive License in the Territory (as
hereinafter defined) under the Patent Rights and Know-How;

     NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, BII and BMI agree
as follows:

1.   DEFINITIONS

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

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

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

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

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

     1.2  EFFECTIVE DATE shall mean the date of execution of the Agreement as
shown above.

     1.3  FIELD shall mean the treatment of humans for diseases, disorders,
conditions, and the like by the administration of Licensed Product.

     1.4  NON-MANUFACTURING KNOW-HOW shall mean any and all technical data or
non-technical information, expertise, knowledge and the like which relates to
the Licensed Product or to the Patent Rights but excluding Manufacturing
Know-How. Such data or information shall

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

                                       1.

<PAGE>

include, without limitation, all pharmacological, toxicological, clinical, and
marketing or sales-related information as well as any other data, information or
designs used or specifically useful for the development or commercialisation of
the Licensed Product. Furthermore, Non-Manufacturing Know-How includes similar
data or information as described herein that may now be known to, or is now in
the possession of BII or its Affiliate(s) or which may become known to or may
come into the possession of BII or its Affiliate(s) after the Effective Date
provided that, in the event such data or information is received from a third
party, BII shall be entitled to pass on such data and information to BMI.

     1.5  MANUFACTURING KNOW-HOW shall mean any and all assay, chemical,
control, and manufacturing information or data useful or necessary for the
successful development, registration, and commercialisation of the Licensed
Product.

     1.6  LICENSED PRODUCT(S) shall mean one or more pharmaceutical products
initially developed by BII and containing Omega Interferon (which is described
more fully in Appendix A) and for use in the Field including new formulations,
if any, developed by BII or BMI after the Effective Date.

     1.7  MANUFACTURING PROCESS shall mean:

               (a) any process for manufacturing Licensed Product which is
covered in whole or in part by any claim contained in the Patent Rights or by
Manufacturing Know-How;

               (b) any information or description of any process for
manufacturing the Licensed Product contained in a Drug Master File or similar
document; or

               (c) any modification or improvement thereto suggested, developed
or introduced by BII, BMI or Affiliates thereof during the course of either
development or commercialisation of the Licensed Product, provided, however,
that any modifications by BMI necessary to permit administration of Omega
Interferon by other than subcutaneous injection shall not necessarily become a
part of the Manufacturing Process as defined herein but shall be the subject of
good faith negotiations between BII and BMI.

     1.8  NET SALES shall mean the actual gross amount invoiced by BMI, or by
its Affiliates or Sublicensees as the case may be, for sales of the Licensed
Product in the Territory to a third party during a calendar year after
deduction of:

               (a) direct transportation charges, including insurance therefor;

               (b) any sales, use, value-added taxes, excise taxes and/or other
similar duties or allowances based on the selling price of the Licensed Product
which become due and are paid by BMI or paid by its Affiliates or Sublicensees
as a consequence of such sales;

               (c) trade, quantity or cash discounts or rebates actually allowed
or taken to the extent customary in the trade, including (without limitation)
governmental rebates; and

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

                                       2.

<PAGE>

               (d) allowances or credits, including but not limited to,
allowances or credits to customers on account of rejection or return of the
Licensed Product.

     The sale or transfer by BMI to an Affiliate or Sublicensee for ultimate
re-sale by such Affiliate or Sublicensee shall not be considered a sale by BMI
for the purpose of this provision. (However, the actual resale by such Affiliate
or Sublicensee shall be a sale for purposes of calculating Net Sales.)

     Any transfers or dispositions of Licensed Product by BMI or its
Affiliate(s) or its Sublicensee(s) solely for pre-clinical, clinical,
regulatory, or governmental purposes, whether prior to or after a marketing
approval may be granted in any country, shall not be considered a sale by BMI
for the purposes of this provision.

     1.9  PATENT RIGHTS shall mean all of the following intellectual property of
BII:

               (a) the patents and patent applications listed in Appendix B;

               (b) the patents issued from the applications listed in Appendix B
and from divisionals and continuations of these applications;

               (c) any reissue or extension of patents in Appendix B; and

               (d) any improvement patent dominated by the claims of the Patent
Rights.

     1.10 PHASE II shall mean

               (a) those clinical studies performed in patients rather than
normal volunteers; and

               (b) utilizing drug supplies manufactured by the BII's Affiliate
Bender + Co., GmbH and/or BII's Affiliate Boehringer Ingelheim Pharma KG.

     1.11 PHASE III shall mean

               (a) those clinical studies performed in patients rather than
normal volunteers where the purpose of said studies is specifically to obtain
clinical data in support of registration and subsequent commercialisation; and

               (b) utilizing drug supplies manufactured by BII's Affiliate
Boehringer Ingelheim Pharma KG.

     1.12 R&D AGREEMENT shall mean an agreement between BMI and Boehringer
Ingelheim Pharma KG of even date with the Agreement for the manufacture of
Licensed Product.

     1.13 SETTLEMENT AGREEMENT BETWEEN BII AND [*] shall mean the agreement
between BII and the United States corporation [*], Inc. dated [*] (the
Settlement Agreement).

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

                                       3.

<PAGE>

     1.14 SUBLICENSEE shall mean a person or legal entity to which BMI grants a
sublicense of some or all of the rights granted to BMI under Section 2.1.

     1.15 TERRITORY The territory ("Territory) shall be worldwide with the
exception of [*]. Asia ("Asia") shall mean those countries of the Territory
shown in Appendix C. The European Union ("European Union") shall be those
countries of the Territory officially recognised as members by the European
Parliament as of the Effective Date. In addition, BMI territorial rights as
described in the Agreement shall not be abridged because of a change in the
official country name or a change in geographic boundaries.

2.   GRANT

     2.1  GRANT. Subject to the terms and conditions of the Agreement, BII
hereby grants to BMI, and BMI hereby accepts from BII, under the Patent Rights
and on-Manufacturing Know-How an exclusive royalty-bearing right and license
(the "License"), even as to BII, to use, develop, market, and sell Licensed
Product in the Territory for uses within the Field and to use the Manufacturing
Know-How to the extent necessary to develop, register and commercialise Licensed
Product under the Agreement. BMI shall have no rights to use the Manufacturing
Know-How to manufacture Licensed Product or to have it manufactured except by
BII or by a BII Affiliate, as provided herein and in the R&D Agreement, or
unless otherwise approved by BII.

     2.2  SUBLICENSE. BII also grants to BMI the right to sublicense Licensed
Product as provided for in this and in other Sections of the Agreement.

     2.3  BII OBLIGATIONS FOR THE UNITED STATES. BII will utilise its best
reasonable efforts pursuant to Clause 11.3 to grant BMI a sublicense under the
Settlement Agreement.

3.   DUE DILIGENCE BY BMI

     3.1  DEVELOPMENT PLANNING. Prior to initiating clinical testing with the
Licensed Product, BMI has provided BII a copy of the first clinical protocol for
a Phase II clinical trial for the indication of treating viral hepatitis. Such
protocol is attached to this Agreement as Appendix D. Both BII and BMI
acknowledge that such protocol is subject to regulatory approval and to
agreement with clinical investigators.

     Prior to initiating additional clinical trials for viral hepatitis or
clinical testing for any other indication, BMI will also provide to BII a
suitably detailed protocol or protocol outline for any other said clinical
trial. BII will have the right but not the obligation to provide comments on
each protocol or protocol outline to BMI. BMI may, at BMI's discretion, modify
any protocol in response to the comments or suggestions made by BII.

     3.2  EXERCISE OF DILIGENCE. BMI agrees to exercise due diligence,
consistent with good business judgment, to develop Licensed Product in the
Territory, in particular in the European Union and in Japan. In this regard, BMI
shall use its good faith efforts to further develop, obtain regulatory approvals
and commercialise the Licensed Product in the Territory. It

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

                                       4.

<PAGE>

is understood, however, that not all of the countries in the Territory outside
the European Union and Japan will necessarily be subject to initial development
or commercialisation.

     BMI shall bear the responsibility for ensuring regulatory compliance,
development, and commercialisation when such activities are undertaken by BMI,
BMI's Affiliates or Sublicensees.

     3.3  COMMERCIALISATION PLANS IN CERTAIN COUNTRIES. Within twelve (12)
months after the first filing for marketing approval of Licensed Product for the
European Union or Japan, whichever is earlier, BMI must disclose in writing to
BII its plans to develop, register and commercialise Licensed Product in
countries outside the European Union and Japan. Within sixty (60) days after
receipt of said plans by BII, BMI and BII agree to discuss said plans and to
discuss in good faith any reasonable modification thereof.

     3.4  POTENTIAL ABANDONMENT OF RIGHTS BY BMI. In the event that registration
and commercialisation of Licensed Product under Section 3.2 is not consistent
with good business judgment in any country of the Territory, then such country
shall be deleted from the Territory and BII shall be entitled to make use in
such country of any data generated by BMI under such terms as are agreed by BII
and BMI taking into account the costs incurred by BMI generating such data and
the sales potential in such country.

     3.5  PERIODIC REPORTING. BMI will provide periodic reports to BII during
the course of development in sufficient detail for BII to assess whether BMI is
in compliance with the diligence obligations in Section 3.2. BII may make
reasonable requests for additional information and BMI will make reasonable
efforts to comply with said requests for additional information consistent with
good business judgment.

     3.6  NEED FOR APPROVAL OF REGULATORY AUTHORITIES. BII acknowledges that
approval by regulatory authorities may be necessary prior to the commencement of
any clinical development activities by BMI or BMI Sublicensees. No guarantee can
be provided that such regulatory approval will be obtained. Accordingly, while
development plans, protocols, protocol outlines, and the like will be provided
in good faith to BII by BMI, such plans or proposals must be viewed as tentative
and subject to regulatory approval.

4.   SUBLICENSING

     4.1  CHARACTERISTICS OF POTENTIAL SUBLICENSEES. In granting a sublicense,
BMI agrees to consider whether past or present activities by the potential
Sublicensee would substantially prejudice the relationship of either BMI or BII
with recognised health authorities in the United States, Europe, or Japan and to
determine whether the potential Sublicensee is engaged in substantive litigation
involving BII.

     4.2  BMI DUTY TO INFORM. If BMI intends to grant a sublicense, BMI must
inform BII in writing as soon as commercial terms have been substantively agreed
but in any event at least thirty (30) days in advance of the granting of each
sublicense in order that BMI can consider possible objections by BII under
Section 4.1.

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

                                       5.

<PAGE>

5.   BII REVIEW RIGHTS AND TERRITORIAL REVERSION RIGHTS

     5.1  BII CLINICAL DATA REVIEW RIGHTS. Within thirty (30) days of the
availability within or to BMI of a clinical trial report for any completed
trial, BMI shall provide a copy of the report to BII.

     5.2  BII REVERSION RIGHTS

          5.2.1 INTERESTS OF THE PARTIES. BII has a possible interest in the
reversion of some or all of the rights granted under this Agreement in the event
BMI can demonstrate to BII's satisfaction clinical benefits of Licensed Product.
BMI has a possible interest in granting a sublicense in Asia before such
clinical benefits have been demonstrated.

          5.2.2 FOR [*]. Notwithstanding Section 5.2.3, BII agrees that BMI
shall be free to conclude a sublicensing agreement with a third party for [*]
and/or other countries [*] at any time after the Effective Date and on any terms
acceptable to BMI provided, however, that such terms must also be in compliance
with the terms of the Agreement.

     In the event, BMI sends to a prospective [*] Sublicensee any preclinical or
clinical data concerning Licensed Product that did not originate from or within
BII or a BII Affiliate ("New Data"), then BMI will send such New Data to BII on
or before the date such New Data is sent to such prospective Sublicensee and BII
shall have the opportunity to negotiate for the reversion of the rights granted
under this Agreement.

          5.2.3 RIGHTS OF FIRST REFUSAL. Within thirty (30) days after receiving
from BMI the final clinical trial report for the clinical study described in
Appendix D, BII shall inform BMI in writing whether it wishes to negotiate the
reversion of some or all of the rights granted to BMI under this Agreement in
the countries of the Territory except for countries where BMI has granted a
Sublicense under Clause 5.2.2. If BII does so wish, then both BMI and BII agree
to negotiate in good faith for no more than an additional sixty (60) days the
potential terms of such reversion ("Reversion Terms"). Until the expiration of
this sixty (60) day period, BMI may not conclude a Sublicense agreement with any
third party except for countries in Asia pursuant to Section 3.2.

     In the event that BMI rejects said Reversion Terms, then BMI shall be free
thereafter to conclude one or more new sublicensing agreements with a third
party for any country provided that the sublicense terms agreed with the third
party for any such country must be on terms no more favorable to the third party
than were the Reversion Terms previously offered by BII to BMI.

     If both BII and BMI agree to Reversion Terms, however, then BII and BMI
shall conclude a new agreement embodying said Reversion Terms as soon as
practicable. Due diligence by BII will be determined by the terms of the new
agreement embodying said Reversion Terms.

     BII may decline, however, to review such clinical trial report. If BII
declines, then BII waives its rights under this Section 5.2.3.

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

                                       6.

<PAGE>

     5.3  ONE-TIME RIGHTS. Both BII and BMI agree that the reversion rights
described in this Section 5 shall be "one-time" rights only and shall expire
following the earliest of the following independent and mutually exclusive
events:

               (a) the decision by BII to decline to review the report regarding
the clinical study of Appendix D; or

               (b) the end of the thirty(30)-day review period referred to in
Section 5.2.3 but then if, and only if, BII has not yet informed BMI in writing
of BII's wish to negotiate Reversion Terms; or

               (c) the end of sixty-day negotiation period referred to in
Section 5.2.3 but then if, and only if, BII and BMI have not yet agreed on said
Reversion Terms.

6.   DATA

     6.1  PRECLINICAL AND CLINICAL DATA, NON-MANUFACTURING KNOW-HOW. BII shall
make available to BMI, in English where available in English, and in German
where unavailable in English, Non-Manufacturing Know-How, any and all
preclinical and clinical data, or other data or information generated by BII or
its Affiliate(s) from preclinical or clinical research with regard to the
development of the Licensed Product.

     BII shall deliver to BMI such Non-Manufacturing Know-How, data, information
or documents reasonably requested by BMI from time to time during the term of
the Agreement. Such delivery will occur within sixty (60) days of such request
by BMI.

     BMI acknowledges, however, that BII shall be obliged to make available only
those data or documents already in the possession of BII or an Affiliate as of
the Effective Date or which come into the possession of BII or an Affiliate as a
result of BII's own development activities or those of said BII Affiliate.

     6.2  ADDITIONAL REPORTS

     In addition to reports provided by BMI pursuant to Section 3.5, BMI shall
during the term of the Agreement provide BII with such written reports and
analyses as BII shall reasonably request regarding the development, regulatory
approval and/or commercialisation of Licensed Product. BI acknowledges, however,
that BMI shall be obliged to make available only those data or documents already
in the possession of BMI or a BMI Affiliate or Sublicensee.

7.   MANUFACTURING: PHASE II

     7.1  RESPONSIBILITY FOR PHASE II MANUFACTURING. Bender + Co. GmbH (an
Affiliate of BII located in Vienna, Austria) will be responsible for
manufacturing Licensed Product for the Phase II clinical trial described in
Appendix D and possibly for additional Phase II clinical trials. Such
manufacturing will be performed according to the currently established
Manufacturing Process. Bender + Co. will manufacture Licensed Product
exclusively for BMI in the Territory.

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

                                       7.

<PAGE>

     7.2  MANUFACTURING STANDARDS FOR PHASE II MANUFACTURING. Manufacturing of
Licensed Product for the Phase II clinical trial described in Appendix D will be
performed according to manufacturing standards set by the currently applicable
regulations, directives, or decisions of the European Union (as now published in
the Official Journal of the European Community or its successor publication).

     7.3  SUPPLIES FOR PHASE II CLINICAL TRIAL DESCRIBED IN APPENDIX D.
Utilising the services of BII's Affiliate Bender + Co. GmbH, BII shall, upon
BMI's reasonable request, deliver to BMI (and otherwise free of charge to BMI)
[*] of Licensed Product and [*] of placebo. The Licensed Product shall be [*] in
bulk unlabelled [*], without final packaging, having undergone successful
release testing, ex works. Each [*] shall contain a withdrawable amount of [*]
of Omega Interferon in addition to the standard excipients. The placebo [*] will
be identical except that there shall be no Omega Interferon contained therein.

     Temporary storage of undelivered [*] for up to [*] months will be provided
for BMI as reasonably required by BMI, also without additional charge. Costs for
labeling, final packaging, insurance, and shipping, however, will be the
responsibility of BMI. The shelf life, or time until expiry, of such [*] will be
sufficient to permit reasonable completion of the clinical trial described in
Appendix D.

     These supplies will be available for delivery at a time reasonably agreed
by both BII (or its Affiliate, as appropriate) and BMI.

     7.4  ADDITIONAL PHASE II CLINICAL SUPPLIES. While it is understood that BMI
intends to perform the study described in Appendix D, additional studies may be
required in one or more indications before Phase III studies can commence. BII,
again through its Affiliate Bender + Co. GmbH, agrees to supply to BMI at
mutually agreed intervals additional [*] of Licensed Product or matching
placebo. The actual supply price for up to [*] manufactured by Bender and Co.
will be:
<TABLE>
<CAPTION>
              Quantity* ((mg)g/[*])       0 (Placebo)             [*]                  [*]                  [*]
              ---------------------   ------------------   ------------------   ------------------   ------------------
             <S>                     <C>                  <C>                  <C>                  <C>
                    Price**
                    DM/[*]                   [*]                  [*]                  [*]                  [*]
              ---------------------   ------------------   ------------------   ------------------   ------------------
</TABLE>

     * The Quantity ((mg)g/[*]) will be such that the withdrawable quantity of
drug per [*] will be at least [*] (mg)g.

     ** The price shown in DM will be converted to Euro at such time as the Euro
replaces the DM.

     7.5  COOPERATION DURING MANUFACTURING. It is understood by both BII and BMI
that manufacturing activities require time and appropriate planning and that,
therefore, reasonable requests with regard to timing, the number of [*], and the
quantity per [*] will be essential. BMI specifically acknowledges this need for
reasonableness. Similarly, BII acknowledges that good faith efforts are
essential in promoting efficient development and commercialisation. BII agrees
to obligate its Affiliate to cooperate with BMI in managing all aspects of the
Manufacturing Process. Such cooperation will be based on the principles of good
faith negotiations and reasonableness in all matters.

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

                                       8.

<PAGE>

8.   MANUFACTURING: PHASE III AND COMMERCIAL SUPPLY

     8.1  RESPONSIBILITY FOR PHASE ILL MANUFACTURING AND FOR COMMERCIAL
SUPPLY. BMI shall be responsible for supply of Licensed Product in support of
Phase III clinical testing and subsequent commercialisation. For this
purpose, BMI has concluded the R&D Agreement with BI Pharma KG, which
addresses the basic issues of an intended supply agreement.

     8.2  PRICE FOR COMMERCIAL SUPPLIES/MINIMUM ORDER. BMI shall purchase its
requirements of Licensed Product at a price which will be the higher of

               (i) a percentage of the [*] by BMI, BMI's Affiliate or
Sublicensee in the Territory as laid down in Art. 9 below; or

               (ii) the floor price per [*] according to Section 8.3 below. The
minimum quantity per order will be [*].

     8.3  FLOOR PRICE. Notwithstanding the above Section 8.2, under no
circumstances will BII be obliged to sell commercial quantities of Licensed
Product at a price below the following prices in Deutsche Mark per [*] dependent
on the number of [*] ordered and bought and the withdrawable quantity of drug
per [*]:
<TABLE>
<CAPTION>
                                                        Quantity ((mg)g/[*])
              ------------------   ------------------   --------------------   ------------------
             <S>                  <C>                  <C>                    <C>
                                           [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
                  [*] ordered
              ------------------   ------------------   --------------------   ------------------
                           [*]             [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
                           [*]             [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
                           [*]             [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
                           [*]             [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
                           [*]             [*]                  [*]                  [*]
              ------------------   ------------------   --------------------   ------------------
</TABLE>

     The above floor prices per [*] shall remain valid for a period up until [*]
years after first introduction of Licensed Product in the Territory. BII will be
entitled to increase the floor prices to apply after such period in the event
BII's manufacturing costs specific to Licensed Product increase by more than [*]
between the date of first supply under this Section 8 and the end of such
period. Such increase in floor price will be equal to the [*] in BII's
manufacturing costs specific to Licensed Product from the date of first supply
to the end of such period. BMI shall be entitled to have such increase verified
by an independent accountant according to international generally accepted
accounting principles.

     8.4  PAYMENT SCHEDULE AND COST VERIFICATION. BMI will pay to BII within 30
days of delivery of each batch of Licensed Product the floor price as defined in
Section 8.3 above. In the event such price is calculated according to Section
8.3 i) above (based on BII's manufacturing cost), BII will at the request of BMI
permit an independent accountant to verify such manufacturing costs according to
generally accepted good accounting practices.

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

                                       9.

<PAGE>

     8.5  SUPPLY AGREEMENT AND DURATION. Approximately [*] prior to launch of
Licensed Product BMI and BII or a BII Affiliate will conclude a detailed supply
agreement based on the terms of the above Sections 8.1 to 8.4.

     8.6  PAYMENTS FOR SUPPLY IN DEUTSCHE MARK. Payment for supplies of Licensed
Product will be in Deutsche Mark or Euro at such time as the Euro replaces the
Deutsche Mark. Any currency conversions shall be made using the average
quarterly exchange rates published regularly by Citibank, New York, or its
successor. The average will be calculated by summing the exchange rates for the
final business day of each of the three (3) months in the applicable calendar
quarter and dividing by three (3). All currency conversions will be calculated
to an accuracy of three (3) digits after the decimal point.

9.   PAYMENTS/ROYALTIES AND RELATED MATTERS.

     9.1  ALL PAYMENTS. All payments under the following Sections 9.2 and 9.3
shall be made in United States (U.S.) dollars ($.)

     9.2  INITIAL FEE. Within thirty (30) days of signing the Agreement, BMI
shall pay to BII the sum of [*]. This sum shall include payment to BII for
the drug supplies for the first Phase II clinical trial as described in
Section 7.3.

     9.3  MILESTONES. BMI shall pay to BII each of the following sums within
forty-five (45) days of:

          (a) filing an application to the health authorities for marketing
approval:

<TABLE>
<CAPTION>
                    Location             Amount ($ U.S.)
                  ------------------   ------------------
                 <S>                  <C>
                    European Union*      [*]
                  ------------------   ------------------
                    Japan                [*]
                  ------------------   ------------------
</TABLE>

     * to be adjusted pro rata on the basis of population in the event of
national filing(s)

          (b) receiving the first approval for marketing from the health
authorities in:

<TABLE>
<CAPTION>
                    Location             Amount ($ U.S.)
                  ------------------   ------------------
                 <S>                  <C>
                    European Union*      [*]
                  ------------------   ------------------
                    Japan                [*]
                  ------------------   ------------------
</TABLE>

     * to be adjusted pro rata on the basis of population in the event of
national approval(s)

No milestone payments will be due in the event of filing a marketing application
or for the receipt of a regulatory approval elsewhere in the Territory. The
milestone amounts identified in a) and b) above shall be payable to BII after
the occurrence of the stated event(s) regardless of whether BMI has signed a
sublicensing agreement for the country in question.

     9.4  ROYALTY PAYMENTS. BMI shall pay to BII royalties on aggregate Net
Sales by BMI, BMI's Affiliate or Sublicensee in the Territory as follows:

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

                                       10.

<PAGE>

<TABLE>
<CAPTION>
                       Net Sales          Royalty Rate
                  ($ millions U.S.)            (%)
                  ------------------   ------------------
                 <S>                  <C>
                         [*]                   [*]
                  ------------------   ------------------
                         [*]                   [*]
                  ------------------   ------------------
                         [*]                   [*]
                  ------------------   ------------------
</TABLE>

Such royalty shall be payable until the last to expire of the Patent Rights in
each country or for a period of [*] years from the date of market introduction
of Licensed Product in such country, whichever period is longer.

     9.5  WHEN ROYALTY PAYMENTS ARE NOT DUE AND LIMITATIONS THEREON.
Notwithstanding the foregoing provisions of Section 9.4, royalty payments shall
not be due to BII for the sale of any [*] of Licensed Product purchased and paid
for by BMI under the R & D Agreement:

          (a) manufactured, of necessity, as a condition of obtaining regulatory
approval to market Licensed Product (so-called "Qualifying Batches"); and

          (b) not used in clinical testing.

In no event, however, will the total number of royalty-free [*] exceed one and
one-half (1.5) times the number of [*] in any one standard, commercial-sized
batch manufactured at any time after the manufacture of the Qualifying Batches.

     It is currently anticipated that the standard commercial-sized batch will
be [*]. Therefore, it is anticipated that the maximal number of royalty-free [*]
may not exceed [*] in number.

     9.6  NOT DUE ROYALTY PAYMENTS ON SUPPLIES FOR CLINICAL TRIALS. In addition,
royalty payments shall not be due on supplies manufactured to support clinical
trials by BMI or by BMI Affiliates or Sublicensees including Phase IV clinical
trials carried out after market introduction. The Floor Price per [*] will be
due to BII in lieu of the payments described in Section 9.5 for all of Licensed
Product used in clinical trials.

     9.7  OTHER PAYMENTS FOR SALES WITHIN THE UNITED STATES. In the event, BII
grants BMI a sublicense in the United States, BMI will pay BII the following:

          (a) any royalty or other payment due according to the terms of
Sections 8.2, 8.3, 9.4, 9.5, and 9.6 of the Agreement; and

          (b) plus [*] of any similarly calculated compensation, royalty or
other similar payment due from BII to [*] Inc., if any, and according to the
terms of the Bll-[*] Settlement Agreement ("Supplemental U.S. Royalty"). Because
the current royalty rate due to [*] Inc. from BII is now [*] of Net Sales, the
Supplemental U.S. Royalty would be [*] of Net Sales, provided, however, that the
payment by BMI to BII in any calendar year shall be no less than the [*].

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

                                       11.

<PAGE>

     9.8  SALES REPORTING. BMI will oblige any party marketing Licensed Product
in the Territory to deliver to BII periodic financial reports. These reports
will be consistent with generally accepted accounting principles and in a format
consistent with BII's internal accounting policies. The reports will be
delivered to BII within sixty (60) days after the close of each calendar quarter
and will show separately for each Licensed Product:

          (a) gross sales, categorised by units sold and by total revenue;

          (b) Net Sales, detailing the deductions allowed under Section 1.8;

          (c) details of the quantities sold in each country;

          (d) royalties or other like compensation due pursuant to the
Agreement; and

          (e) the respective Floor Price already paid for the [*] bought from
BII or its Affiliates.

BII agrees to make available sufficient information regarding its internal
accounting policies to facilitate preparation of the required reports.

     9.9  TIMELINES OF PAYMENTS. Concurrently with the making of any such
financial reports as described above (i. e. within sixty (60) days of the end of
such calendar quarter), BMI shall pay the amount of royalties due on Net Sales
during the preceding calendar quarter. BMI shall be allowed to deduct all
payments already made in the respective quarter for the supply of Licensed
Product according to Section 8.3 above.

     If BMI shall fail to make said payment when due, such party shall have an
additional five (5) business days from the date such payment was due to cure
such non-payment.

     9.10 FINANCIAL RECORDS AND VERIFICATION. BMI, or its Affiliates or
Sublicensees as appropriate (each a "Selling Party" for purposes of this
Section), shall keep sufficiently complete and accurate records

a) to properly reflect all gross sales and deductions from Net Sales; and

b) to enable the amounts payable hereunder to be determined.

     Upon the written request of BII, the Selling Party shall permit an
independent certified public accounting firm to verify the accuracy of reports
and amounts paid to BII. This process of verification may apply to either or
both of the two most recent fiscal years of the Selling Party. The accounting
firm will be selected by BII, will be of international standing, and will be
otherwise reasonably acceptable to the Selling Party. The activities of the
accounting firm will be paid for solely by BII except as provided below.

     Representatives of the accounting firm will be permitted to have reasonable
access, for reasonable periods of time, to certain financial records of the
Selling Party. Such access will be limited to that reasonably necessary for the
accounting firm to verify the appropriateness of the payments made previously to
BII. The accounting firm shall disclose in writing all information

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

                                       12.

<PAGE>

gathered to the Selling Party. In the form of a written report, the accounting
firm shall disclose to BII only whether or not payments made to BII were
reasonably correct and the specific details concerning any purported
discrepancies. No other information shall be shared with BII. The accounting
firm will provide its report simultaneously to BII and to BMI and to the BMI
Affiliate or Sublicensee as appropriate.

     If, and only if, the accounting firm concludes that additional royalties or
other compensation are definitely owed for the audited period, and the
additional amount owed exceeds, in aggregate, five percent (5%) of amount
actually paid, then the Selling Party shall take additional actions to remedy
this underpayment. BMI will then:

          (a) pay all reasonable costs associated with the audit that
demonstrated the underpayment (or repay BII for said audit costs, as
appropriate);

          (b) pay the underpaid amount within thirty (30) days of the date the
accounting firm delivered the report to BII and BMI; and

          (c) pay interest on the underpaid amount only (The interest rate will
be the average prime rate of interest calculated from end-of-quarter data
reported by the Deutsche Bank, Frankfurt am Main, utilising data from all
quarters since the end of the audited period.)

Should, however, the accounting firm conclude that the Selling Party has
overpaid royalties or other compensation to BII, then BII shall credit any such
overpayment to BMI (or otherwise to a Selling Party as appropriate). This credit
will be applied during the next complete calendar quarter for which payments are
due to BII.

     9.11 TAXES. BMI shall be entitled to deduct any withholding taxes from the
payments due under this Agreement. BMI will then pay the withheld amount to the
proper tax authorities as required by the laws of the country in the Territory
applicable at the date of payment. BMI shall use reasonable best efforts to
ensure that any withholding taxes imposed and paid are reduced or eliminated as
far as possible under the terms of the current or any future "double-taxation"
agreement between the United States of America and Germany.

10.  INTELLECTUAL PROPERTY MATTERS.

     10.1 MAINTENANCE

          (a) BII shall, subject to good business judgment, at its sole cost and
expense maintain the Patent Rights in Appendix A.

          (b) If BII shall elect not to maintain Patent Rights in any country
within the Territory, BMI shall have the right to assume, at BMI's sole cost and
expense, the maintenance of any such Patent Rights and BMI shall be entitled to
deduct its expenses in maintaining such Patent Rights from any milestone or
other payments to BII for sales of Licensed Product in said country.

          (c) Maintenance shall include the continuing effort, on the basis of
good business judgment, to obtain issued patents where patent applications are
now pending.

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

                                       13.

<PAGE>

     (d) BI will provide BMI with annual reports regarding the status and
maintenance of Patent Rights and probable or actual changes thereto.

     10.2 PATENT TERM EXTENSION OR EQUIVALENT.

          (a) In the event an extension of a patent is available, BII shall have
the right to designate the patent or patents for which such extension will be
applied.

          (b) If BII shall elect not to extend Patent Rights in any country
within the Territory, BMI shall have the right to extend, at BMI's sole cost and
expense, any Patent Rights not otherwise extended by BII and BMI shall be
entitled to deduct such costs and expenses from any milestone or royalty
payments due to BII by BMI, its Affiliates or Sublicensees for sales of Licensed
Product in said country.

     10.3 NOTIFICATION REGARDING INFRINGEMENT. Each of the Parties shall notify
the other promptly in the event that it becomes aware of any alleged
infringement of the Patent Rights by a third party and of any available evidence
thereof.

     10.4 LITIGATION.

          (a) BII agrees, subject to good business judgment, to prosecute and/or
defend Patent Rights against challenge or infringement by any third party or
parties.

          (b) In the event that BII shall elect not to defend Patent Rights
against challenge or infringement, BMI, its Affiliates or Sublicensees, may
prosecute and/or defend any infringement and/or challenge to the Patent Rights.

          (c) In any infringement suit BMI, its Affiliates or Sublicensees may
institute to enforce the Patent Rights pursuant to the Agreement, or in any suit
brought by a third party in which BMI, its Affiliates or Sublicensees is
defending the Patent Rights, BII shall cooperate in all reasonable respects and,
to the extent practicable, have its employees and, if practicable, former
employees, testify when requested. BII will also make available relevant
records, papers, information, samples, specimens and the like. BII will obligate
its own Affiliates to cooperate in a similar manner.

          (d) If, as a result of any such suit, the Patent Rights are held in
any country to be not enforceable or invalid pursuant to a judgment rendered by
a court of final determination and not subject to appeal, then, from and after
the date of the filing of the action which resulted in such judgment, the
royalties or other payments computed on the basis of Net Sales in that country,
and payable pursuant to the Agreement hereunder, shall be reduced by fifty
percent (50%). Notwithstanding the possible reduction of fifty percent, however,
the royalties or ether payments are still subject to the Floor Price of Section
8.3.

     10.5 PAYMENTS AND PATENT LITIGATION. If BMI, its Affiliates or
Sublicensees, shall undertake the enforcement or defense by litigation of the
Patent Rights in any country in the Territory, any royalties or other payments
due to BII on Net Sales in such country may be withheld. Such withholding may be
applied only toward the reimbursement of expenses,

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

                                       14.

<PAGE>

including attorney's fees, related to said litigation. Such withholding shall
not, however, exceed fifty percent (50%) of the amount that would otherwise have
been due to BII. If such withheld sums are specifically recovered, however, from
an offending third party, then the recovered sum will be remitted to BII. The
remission will occur within sixty days of the recovery. No interest shall be
paid on the sums withheld. Notwithstanding the foregoing in this Section 10.5,
however, the royalties or other payments are still subject to the Floor Price of
Section 8.3.

     10.6 OTHER INTELLECTUAL PROPERTY. Trademarks, service marks, and
tradenames, or any applications pertaining thereto, as shall be selected,
chosen, created or developed by BMI, its Affiliates or Sublicensees, pursuant to
any effort to develop and commercialise the Licensed Product shall be the
exclusive property of BMI, its Affiliates or Sublicensees, as appropriate.

     10.7 IMPROVEMENTS TO THE MANUFACTURING PROCESS. Any improvements to the
Manufacturing Process proposed by BMI, paid for by BMI, whether in whole or in
part, and implemented by BII or a BII Affiliate to manufacture Licensed Product
shall be licensed exclusively but for BII or its Affiliates or Licensees to BMI
for the duration of this Agreement. However, such improvements may not be
utilised to manufacture any other product containing Omega Interferon without
the written consent of BMI.

11.  REPRESENTATIONS AND WARRANTIES.

     11.1 FREEDOM TO EXECUTE AGREEMENT. Each of BII and BMI represent and
warrant to the other party that:

          (a) it is free to enter into the Agreement and has the full right and
authority to do so;

          (b) it has taken all corporate action necessary to authorise the
execution and delivery of the Agreement and the performance of its obligations
under the Agreement;

          (c) it is not aware of any impediment that would inhibit its ability
to perform in all material respects its obligations under the Agreement; and

          (d) the execution, delivery and performance of the Agreement will not
violate any provision of, conflict with or result in any breach of any of the
terms of, or constitute a default under either party's respective certificate of
incorporation, by-laws, or any material indenture, lease, any other agreement
(including specifically the Settlement Agreement) or other material instrument
to which it is a party, or any decree, judgment or order applicable to such
party or any law, statute, rule or regulation applicable to such party.

     11.2 PATENT RIGHTS. BII hereby represents and warrants to BMI that:

          (a) it is the legal assignee of the Patent Rights covered by the
Agreement;

          (b) it has the full legal power to convey the rights granted to BMI in
the Agreement;

          (c) it has no knowledge of any facts which would rebut the presumption
of validity accorded any issued patents within the Patent Rights;

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

                                       15.

<PAGE>

          (d) it has disclosed to the United States Patent and Trademark Office,
or to other similar offices in other countries, all information "material to
patentability," as such is defined in 37 C.F.R. Section 1.56;

          (e) it has no knowledge of any adverse claims to the Patent Rights;

          (f) all patent applications included in the Patent Rights are pending
and have not been abandoned and are enforceable as of the Effective Date
pursuant to a valid assignment;

          (g) to its best knowledge and belief, as of the Effective Date, there
is no asserted or unasserted claim or demand which may be enforced against any
of the Patent Rights;

          (h) to its best knowledge and belief, on the Effective Date the
practice of any processes and/or products disclosed in the Patent Rights do not
infringe upon any third party patents; and, in addition, that

          (i) BII has not entered into any agreement with any other party which
is in conflict with the rights granted to BMI pursuant to the Agreement.

     11.3 [*] INC. BII further hereby represents that it will work diligently
and in good faith with BMI in a continuing effort to reduce, relieve, or (if
possible) eliminate the [*] regarding [*] of Licensed Product in the United
States as set by the Settlement Agreement. If BII concludes that such good faith
efforts have failed or are not likely to succeed, BII and BMI agree to discuss
possible alternatives, and to implement at the sole risk of BMI any mutually
agreeable alternative, that will:

          (a) permit BII to keep its prior binding commitments to [*] Inc.; and

          (b) notwithstanding (a), will nonetheless permit the timely [*] by BMI
or its Affiliates or Sublicensees, of the Licensed Product in the United States.

     11.4 BII AFFILIATE(S). BII represents and warrants that it will
contractually obligate its Affiliate(s) to adhere substantially to the terms
of the Agreement regarding any responsibilities transferred by BII to said
Affiliate pursuant to the Agreement, if any. BII further warrants and
represents that it will indemnify BMI against financial losses, direct or
indirect, incurred by BMI because of breach of any contractual obligations of
any BII Affiliate to BMI or because of gross negligence by a BII Affiliate
with regard to its duties to BMI within the limitations in the R&D-Agreement
and subsequent supply agreements.

     11.5 BMI SUBLICENSEE(S). BMI represents and warrants that it will
contractually obligate its Affiliate(s) and Sublicensee(s) to adhere
substantially to the terms of the Agreement regarding any responsibilities
transferred by BMI to said Affiliate(s) or Sublicensee(s) pursuant to the
Agreement. BMI further warrants and represents that it will indemnify BII
against financial losses, direct or indirect, incurred by BII because of breach
of any contractual obligations of BMI to BII or because of gross negligence by a
BMI Affiliate or sublicensee with regard to duties to BII BMI has transferred to
its Affiliate or sublicensee.

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

                                       16.

<PAGE>

12.  ASSIGNMENT, CHANGE IN CONTROL

     12.1 ABILITY OF BMI TO ASSIGN AGREEMENT. The Agreement shall be assignable
by BMI with the prior written consent of BII, which consent shall not be
unreasonably withheld.

     12.2 WAIVER OF CONSENT. BII agrees to waive its rights to withhold consent
for assignment by BMI if a sublicense has been granted for each country and only
in such country or if the Licensed Product has been approved for marketing
(whether or not Licensed Product has actually been sold) in the European Union
or Japan.

     12.3 CHANGE IN CONTROL. A change in control in BMI (as evidenced by the
acquisition by one person or entity of more than fifty percent {50%} of voting
stock), except for that occasioned by the bankruptcy of BMI, shall not affect
the right of BMI to assign the Agreement. BMI agrees, however, to inform BII
promptly upon any such change in control. In addition, acquisition of voting
control of BMI by any or all of current BMI shareowners shall not, for purposes
of the Agreement, constitute a change in control.

13.  TERM AND TERMINATION

     13.1 DURATION OF AGREEMENT. Except as otherwise specifically provided
herein, or unless sooner terminated pursuant to other provisions within the
Agreement, the Agreement and the licenses and rights granted to BMI hereunder
shall remain in full force and effect for as long royalties are payable on sales
in any country of the Territory pursuant to Section 9.4.

     13.2 PAID-UP LICENSE. Following expiration of the Agreement pursuant to
Section 13.1 hereof, BMI and/or its Sublicensee(s) as applicable, shall have a
perpetual, fully paid up non-exclusive license under the rights granted.

     13.3 TERMINATION BECAUSE OF UNREMEDIED BREACH. Either BII or BMI shall have
the right to terminate the Agreement with thirty (30) days' notice in written
form to BMI or BII, respectively, in the event that:

          (a) BMI or BII, respectively, fails to remedy any material failure to
fulfill its obligations under the Agreement; or

          (b) a material breach of the terms or conditions hereof is not cured
within sixty (60) days after receipt of notice in written form specifying the
circumstances giving rise to failure or breach.

     13.4 TERMINATION BECAUSE OF INSOLVENCY. Either BII or BMI may terminate the
Agreement with immediate effect by notice in written form in the event that BMI
or BII, respectively, becomes insolvent, is declared bankrupt or adopts a plan
of liquidation and dissolution.

     13.5 COURT-AWARDED DAMAGES. Any court-awarded damages granted to BMI
arising from material breach or bankruptcy, respectively, may be deducted from
milestone, royalty, or other like payments which may be subsequently due to BII,
respectively.

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

                                       17.

<PAGE>

     13.6 CONTINUATION OF OBLIGATIONS. Upon termination of the Agreement
pursuant to provisions contained herein, nothing herein shall be construed to
release either BII or BMI from any obligation that matured prior to the
termination.

     13.7 DUTIES OF BMI AFTER BREACH. Upon termination of the Agreement by BII
pursuant to Section 13.3 herein, BMI will transfer or have transferred to BII
any approvals for clinical trials or sale of Licensed Product granted to and/or
owned by BMI or its Affiliates or Sublicensees and will do so free of charge to
BII. BII may use such authorisations freely in its sole discretion.

     13.8 DUTIES OF BMI AFTER BANKRUPTCY. Upon termination of the Agreement by
BII pursuant to Section 13.4 herein, BMI will transfer or have transferred to
BII any authorisations for clinical trials or sale of Licensed Product granted
to and/or owned by BMI or by its Affiliates, but not by its Sublicensees, upon
payment to BMI by BII of an amount representing the fair market value of the
assets to be transferred. Following such transfer, BII may use such
authorisations freely in its sole discretion.

14.  CONFIDENTIALITY

     14.1 TRANSMITTAL OF INFORMATION. Any information which is transmitted by
one party to the other party in connection with the entering into or the
performance of the Agreement, shall be kept confidential by the receiving party
and its Affiliates and/or Sublicensees prior to the expiration or termination of
the Agreement and for a period of five (5) years thereafter its expiration. The
foregoing obligation shall not apply to:

          (a) any information which at the time of disclosure or acquisition is
part of the public knowledge or literature, or thereafter becomes part of the
public knowledge or literature otherwise than by unauthorised disclosure by the
recipient;

          (b) any disclosure of information to the United States Food and Drug
Administration ("FDA") or other similar governmental authority for the purpose
of complying with regulatory requirements regarding Licensed Product;

          (c) any information which at the time of disclosure or acquisition was
in the recipient's possession as evidenced by its written records;

          (d) any information which became available to the recipient from
another source not bound to secrecy to the disclosing party with respect to such
information;

          (e) disclosure by the recipient to third parties under provisions of
confidentiality similar to those contained in the Agreement for the purposes of
development or marketing of the Licensed Product or financing thereof; and

          (f) any disclosure of information required by law; provided; however,
that BII shall have the right to review any press releases relating to the
Agreement prior to dissemination by BMI.

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

                                       18.

<PAGE>

     14.2 APPROVAL OF PUBLIC DISCLOSURE. Notwithstanding the provisions of
Section 14.1 herein, in the event that either BII or BMI, its Affiliates and/or
Sublicensees, shall determine that it wishes to disclose publicly any
information regarding the Agreement, such party shall present to BMI or BII, as
appropriate, a written request for such disclosure. The recipient of the request
to permit disclosure shall have a period often (10) calendar days to approve the
requested disclosure. The requested approval shall not be unreasonably withheld.

     14.3 ACKNOWLEDGMENT OF PRIVATE DISCLOSURE. Notwithstanding the provisions
of Sections 14.1 and 14.2 herein, BMI may disclose to a third party or parties
confidential or nonconfidential information regarding the Licensed Product or
the Agreement in the pursuit of commercialisation of the Licensed Product.

15.  COMMUNICATIONS

     15.1 INSTRUCTIONS FOR COMMUNICATIONS. Any payment, notice or other
communication pursuant to the Agreement shall be sufficiently made or given on
the date of mailing if sent to such party by certified or registered first class
mail, postage prepaid, or by recognised public courier (for example, "Federal
Express") addressed to it at its address below or as it shall otherwise
subsequently designate by written notice:

     IN THE CASE OF BII:

     Boehringer Ingelheim International GmbH
     D-55216 Ingelheim/Rhein, Germany
     Attention: Corporate Licensing
     with a copy to: Legal Department

     IN THE CASE OF BMI:

     BioMedicines, Inc.
     909 Marina Village Parkway #583
     Alameda, CA 94501
     with a copy to: Legal Department

16.  MISCELLANEOUS PROVISIONS

     16.1 GOVERNANCE OF AGREEMENT. The Agreement shall be construed, governed,
     interpreted and applied in accordance with the laws of Germany, except that
     questions affecting the construction and effect of any patent shall be
     determined by the law of the country in which the patent was granted; and
     disputes arising out of the Agreement which cannot be settled between the
     Parties will be brought before the courts of Germany.

     16.2 ENTIRE AGREEMENT. Both BII and BMI acknowledge that the Agreement sets
     forth the entire agreement and understanding of both BII and BMI as to the
     subject matter hereof. No other previous oral or previous written
     communications between BII and BMI with respect to the License granted
     hereunder shall be of any force or effect. In addition, the

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

                                       19.

<PAGE>

Agreement may be modified only by the execution of a subsequent written
amendment approved by both BII and BMI.

     16.3 SEVERABILITY. The provisions of the Agreement are severable, and in
the event that any provision(s) of the Agreement shall be determined to be
invalid or unenforceable under any controlling body of the law, such invalidity
or unenforceability shall not in any way affect the validity or enforceability
of the remaining provisions hereof.

     16.4 ORIGINAL AGREEMENT AND COUNTERPARTS. The Agreement may be executed in
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

     16.5 NO WAIVER OF RIGHTS. The failure of either BII or BMI to assert a
right hereunder or to insist upon compliance with any term or condition of the
Agreement shall not constitute a waiver of that right or excuse a subsequent
failure to perform any term or condition by BMI or BII, respectively.

     16.6 SECTION TITLES. The titles or headings of various numbered or
unnumbered Sections in the Agreement are for reference only and do not limit or
modify the substance of the Agreement in any way.

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

                                       20.

<PAGE>

     IN WITNESS WHEREOF, the BII and BMI have hereunto duly executed the
Agreement as of the day and year set forth above.

BOEHRINGER INGELHEIM INTERNATIONAL GMBH

By: /s/ C. Hauke      /a/ D. A. Mitchard
    ------------------------------------------
Name: Dr. C. Hauke          Dr. D. Mitchard
      (Authorised Signatories)
      28.6.1998

BIOMEDICINES, INC,

By: /s/ S. M. Moran
    ------------------------------------------
Name:  S. M. Moran, M.D.
Title: Chief Executive Officer
       23 July, 1998

APPENDICES

       A    Structure of Omega Interferon
       B    Patents and Patent Applications
       C    Countries of Asia
       D    Clinical Trial Protocol

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

                                       21.

<PAGE>

                                   APPENDIX A

                          STRUCTURE OF OMEGA INTERFERON

         The following figure shows the amino acid sequence of human [*]
(underlined).

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

                                       1.

<PAGE>

                                   APPENDIX B
                         PATENTS AND PATENT APPLICATIONS

          [*]

The legal status of the patents or patent applications corresponding to [*] in
other countries is as follows:

          [*]

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

                                       1.

<PAGE>

                                   APPENDIX C
                                COUNTRIES OF ASIA

Afghanistan
Armenia
Azerbaijan
Bahrain
Bangladesh
Belorussia
Brunei
Cambodia
China
Georgia
Hong Kong
India
Indonesia
Iran
Iraq
Israel
Japan
Jordan
Kazakhstan
Kirghizia
Korea (North and South)
Kuwait
Laos
Lebanon
Malaysia
Mongolia
Myanmar
Nepal
Oman
Pakistan
Philippines
Qatar
Russia
Saudi Arabia
Singapore
Sri Lanka
Syria
Tadzhikistan
Taiwan
Thailand
Turkey
Turkmenistan
Ukraine

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

                                       1.

<PAGE>

United Arab Emirates
Uzbekistan
Viet Nam
Yemen

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

                                       2.

<PAGE>

                                   APPENDIX D
                           CLINICAL TRIAL DESCRIPTION

                                       [*]

          .

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

                                       1.

<PAGE>

          [*]

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

                                       1.

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