Document:

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                                                                    EXHIBIT 10.9

              CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN
               PORTIONS OF THIS DOCUMENT. SUCH PORTIONS HAVE BEEN
                REDACTED AND MARKED WITH ASTERISKS (**). THE NON-
            REDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED WITH THE
                 SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
                   AN APPLICATION FOR CONFIDENTIAL TREATMENT.

                                                                  EXECUTION COPY

                       COLLABORATION AND LICENSE AGREEMENT

                                 by and between

                          PHARMACEUTICAL PEPTIDES, INC.

                                       and

                     BOEHRINGER INGELHEIM INTERNATIONAL GmbH

                           dated as of August 1, 1996
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                                TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS..............................................1
            1.1  AAI................................................1
            1.2  Abandonment Date...................................1
            1.3  Affiliate..........................................1
            1.4  Applicable Base Royalty Rate.......................2
            1.5  BI Compound........................................2
            1.6  BI Patent Rights...................................2
            1.7  BI Product.........................................2
            1.8  Develop or Development.............................2
            1.9  Designated BI Compound.............................2
            1.10  Effective Date....................................2
            1.11  Exchange Information..............................3
            1.12  Exclusivity Period................................3
            1.13  First Commercial Sale.............................3
            1.14  FTE...............................................3
            1.15  Indemnitee........................................3
            1.16  Indemnitor........................................3
            1.17  Information.......................................3
            1.18  Licensed Diagnostic Compound......................3
            1.19  Marketing Authorization...........................3
            1.20  Net Sales.........................................3
            1.21  Patent Expiration Date............................4
            1.22  Phase 0...........................................4
            1.23  Phase I...........................................5
            1.24  Phase II..........................................5
            1.25  Phase III.........................................5
            1.26  PPI Change of Control Transaction.................5
            1.27  PPI Compound......................................5
            1.28  PPI Information...................................5
            1.29  PPI Patent Rights.................................6
            1.30  PPI Product.......................................6
            1.31  Publishing Party..................................6
            1.32  Recognized Agent..................................6
            1.33  Reviewing Party...................................7
            1.34  Sale Date.........................................7
            1.35  SAR Information...................................7
            1.36  Screening Data....................................7
            1.37  Screening Program.................................7
            1.38  Screening Term....................................7
            1.39  Screening Term Year...............................7
            1.40  SEC...............................................7
            1.41  Section 10.4.1(a) Notice..........................7
            1.42  Territory.........................................7
            1.43  Third Party.......................................7

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            1.44  Third Party AD Product............................7
            1.45  Work Plan.........................................8
            1.46  ***% Royalty Rate.................................8
            1.47  ***% Royalty Rate.................................8

ARTICLE 2. SCREENING PROGRAM........................................8
            2.1  Screening Services.................................8
            2.2  Payments...........................................8
            2.3  Expense Reimbursement..............................9
            2.4  Screening Term.....................................9
            2.5  Exclusivity.......................................10

ARTICLE 3. LICENSE GRANTS; DEVELOPMENT, MANUFACTURING
               AND MARKETING OF BI PRODUCTS........................11
            3.1  Grant of License Rights by PPI to BI..............11
            3.2  Sublicense Rights.................................12
            3.3  Diligence; Limit on Sales to
                    Recognized Agents..............................12
            3.4  Failure to Market Due to Currency
                    Difficulties...................................12
            3.5  Future License Rights.............................13
                    3.5.1  PPI's Future License Right..............13
                    3.5.2  BI's Right of First
                             Refusal...............................14

ARTICLE 4. EXCHANGE OF INFORMATION.................................15
            4.1  Information to be Provided........................15
            4.2  Information Not Required to be
                    Provided; Restriction on Certain
                    Research Activities............................16

ARTICLE 5. INTELLECTUAL PROPERTY RIGHTS............................16

ARTICLE 6. ROYALTIES...............................................17
            6.1  Royalties on Net Sales............................17
                    6.1.1  Royalty Rate............................17
                    6.1.2  Third Party Patents;
                           Combination BI Products; Bundled
                           Products ...............................19
                    6.1.3  Sublicense Royalties....................19
            6.2  Royalty Reports; Exchange Rates...................20
            6.3  Audits............................................20
            6.4  Royalty Payment Terms.............................21
            6.5  Withholding Taxes.................................21
            6.6  Application for Tax Exemption.....................22
            6.7  Interest on Late Payments.........................22

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            6.8  Duration of Royalties; Step Down..................22

ARTICLE 7. CONFIDENTIALITY.........................................23
            7.1  Nondisclosure Obligations.........................23
                    7.1.1  General.................................23
                    7.1.2  Limitations.............................23
            7.2  Terms of this Agreement...........................24
            7.3  Publications......................................25
                    7.3.1  Procedure...............................25
                    7.3.2  Delay...................................25
                    7.3.3  Resolution..............................25
            7.4  Injunctive Relief.................................26

ARTICLE 8. REPRESENTATIONS AND WARRANTIES..........................26

ARTICLE 9. INDEMNITY...............................................26
            9.1  BI Indemnity Obligations..........................26
            9.2  PPI Indemnity Obligations.........................27
            9.3  Procedure.........................................27
            9.4  Insurance.........................................28

ARTICLE 10. TERMINATION............................................28
            10.1  Termination......................................28
                    10.1.1  Material Breach........................28
                    10.1.2  Failure of BI to Pay...................28
                    10.1.3  Failure of BI to Use
                              Diligent Efforts.....................29
                  10.1.4  Bankruptcy...............................29
                  10.1.5  Change of Control........................29
            10.2  Effect of Termination Generally..................29
                  10.2.1  Existing Obligations.....................29
                  10.2.2  Survival.................................29
            10.3  Effect of Termination by PPI.....................30
                  10.3.1  Termination by PPI Prior
                             to Commencement of Phase III..........30
                  10.3.2  Termination By PPI After
                             Commencement of Phase III.............30
            10.4  Effect of Termination by BI......................30
                  10.4.1  Termination for PPI Breach...............30
                  10.4.2  Termination for Change of
                             Control...............................32

ARTICLE 11. MISCELLANEOUS..........................................32
            11.1  Force Majeure....................................32
            11.2  Assignment.......................................33
            11.3  Severability.....................................33

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            11.4  Notices..........................................34
            11.5  Applicable Law...................................35
            11.6  Dispute Resolution; Choice of
                        Forum......................................35
            11.7  Arbitration......................................35
            11.8  Entire Agreement.................................35
            11.9  Headings.........................................36
            11.10  Independent Contractors.........................36
            11.11  Agreement Not to Solicit
                        Employees..................................36
            11.12  Exports.........................................36
            11.13  Waiver..........................................37
            11.14  Counterparts....................................37

Appendix A - PPI Patent Rights
Appendix B - Recognized Agents of BI
Appendix C - Work Plan

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                       COLLABORATION AND LICENSE AGREEMENT

            This COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is made
as of August 1, 1996, by and between Pharmaceutical Peptides, Inc., a Delaware
corporation having its principal place of business at One Hampshire Street,
Cambridge, Massachusetts 02139-1572 ("PPI"), and Boehringer Ingelheim
International GmbH, a limited liability company organized under the laws of the
Federal Republic of Germany having its principal place of business at D-55216
Ingelheim Rhein Germany ("BI").

            WHEREAS, PPI is the owner of certain proprietary screening
technology which enables PPI to identify compounds as lead candidates for
discovery program for compounds and drug development; and

            WHEREAS, PPI has a discovery program for compounds which exhibit
A(beta) peptide amyloid aggregation inhibition activity with a view to
developing and commercializing such compounds as pharmaceutical products; and

            WHEREAS, BI possesses certain compounds which it desires to have
screened by PPI in order to identify if any such compounds or their derivatives
exhibit A(beta) peptide amyloid aggregation inhibition activity with a view to
developing and commercializing such compounds as pharmaceutical products;

            NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                             ARTICLE 1. DEFINITIONS

            1.1 "AAI" shall mean amyloid aggregation inhibition.

            1.2 Abandonment Date" shall have the meaning set forth in Section
3.5.

            1.3 "Affiliate" shall mean any corporation or other entity which
controls, is controlled by, or is under
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common control with a party to this Agreement. A corporation or other entity
shall be regarded as in control of another corporation or entity if it owns or
directly or indirectly controls more than fifty percent (50%) of the voting
stock or other ownership interest of the other corporation or entity, or if it
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the corporation or other entity or the power to
elect or appoint fifty percent (50%) or more of the members of the governing
body of the corporation or other entity.

            1.4 "Applicable Base Royalty Rate" shall have the meaning set forth
in Section 6.1.

            1.5 "BI Compound" shall mean and include any of (i) any compound
which is screened by PPI pursuant to Article 2 hereof and exhibits AAI activity
in any of such screens or (ii) any compound which is developed by BI utilizing,
or is based upon, any PPI Information.

            1.6 "BI Patent Rights" shall mean all patents, patent applications,
patent extensions, certificates of invention or applications for certificates of
invention, together with any divisions, continuations or continuations-in-part
thereof, which are owned or controlled by, or licensed (or sublicensed) to, BI
with respect to any Designated BI Compound. BI agrees to provide a list to PPI
of BI Patent Rights at least annually.

            1.7 "BI Product" shall mean any pharmaceutical preparation or
product containing a BI Compound, whether as the sole active ingredient or mixed
with any other active ingredient.

            1.8 "Develop" or "Development" shall mean all work involved in
Phases O, I, II and III, as applicable, with respect to a BI Compound or a BI
Product.

            1.9 "Designated BI Compound" shall mean any BI Compound referred to
in clause (i) of the definition of BI Compound (Section 1.5) which exhibits AAI
activity in each of the Nucleation Assay and the Neurotoxicity Assay referred to
in Section I of the Work Plan.

            1.10 "Effective Date" shall mean the date first written above.

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            1.11 "Exchange Information" shall have the meaning set forth in
Section 4.1.

            1.12 "Exclusivity Period" shall have the meaning set forth in
Section 2.5.

            1.13 "First Commercial Sale" shall mean the first sale for use or
consumption by the general public of a BI Product, PPI Product or a product
containing a Licensed Diagnostic Compound, as applicable, in any country based
upon the required marketing and pricing approval granted by the governing health
authority of such country.

            1.14 "FTE" shall mean a full time professional employee dedicated to
the Screening Program.

            1.15 "Indemnitee" shall have the meaning set forth in Section 9.3.

            1.16 "Indemnitor" shall have the meaning set forth in Section 9.3.

            1.17 "Information" shall have the meaning set forth in Section 7.1.

            1.18 "Licensed Diagnostic Compound" shall have the meaning set forth
in Section 3.5.1.

            1.19 "Marketing Authorization" shall mean all allowances and
approvals (including pricing and reimbursement approvals) granted by the
appropriate federal, state and local regulatory agencies, departments, bureaus
or other governmental entities within a country necessary to market and sell a
BI Product.

            1.20 "Net Sales" shall mean the invoiced sales price per unit for
each of the BI Products or PPI Products, as applicable, billed to independent
customers or Recognized Agents by a party or its Affiliates, or permitted
sublicensees of either party, less, to the extent such amounts are included in
the invoiced sales price, actual (a) credited allowances to such independent
customers for such BI Products or PPI Products which were spoiled, damaged,
out-dated or returned; (b) freight and insurance costs incurred in transporting
BI Products or PPI Products to such customers; (c) quantity and other trade
discounts

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actually allowed and taken; (d) sales, use, value added and other taxes or
governmental charges incurred in connection with the sale, exportation or
importation of the BI Products or PPI Products in finished packaged form; and
(e) charge back payments and/or rebates provided to managed health care
organizations or federal, state and local governments, their agencies,
purchasers and reimburses, including reimbursements to social security
organizations. The transfer of the BI Products or PPI Products by a party or one
of its Affiliates to (i) another Affiliate of such party or (ii) a permitted
sublicensee of such party shall not be considered a sale; in such cases, Net
Sales shall be determined based on the invoiced sales price by the Affiliate or
permitted sublicensee to its customer, less the deductions allowed under this
Section. Every other commercial use or disposition of BI Products or PPI
Products by a party, its Affiliates or permitted sublicensees, other than
reasonable quantities of promotional samples or bona fide sale to a bona fide
customer, shall be considered a sale of the BI Products or PPI Products at the
weighted average Net Sales price then being invoiced by the seller in arm's
length transactions.

            A party or its Affiliates shall be deemed to have sold a "Bundled
Product" if the BI Products or PPI Products are sold by a party or its
Affiliates pursuant to an agreement with an independent customer or a Recognized
Agent specifying, for a combination of products or services, (i) a single
price, (ii) other terms of purchase not separately identifying either a price
per product or the effective deductions referred to above per product or (iii) a
price for units of the BI Products or PPI Products which is discounted below a
party's or its Affiliates' standard invoice price per unit of the BI Products or
PPI Products by at least five percentage points more than the amount that any
other product of service in the Bundled Product is discounted below such other
product's or service's standard invoice price.

            1.21 "Patent Expiration Date" shall have the meaning set forth in
Section 6.8

            1.22 "Phase 0" shall mean that portion of Development which starts
after a candidate has been selected and approved by BI or a Third Party licensee
thereof for start of development as a product as evidenced by the approval in
writing of such start of development by

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BI's International Steering Committee or equivalent body. Phase 0 generally
includes toxicological and pharmacological studies as well as drug substance
and drug product formulation and manufacturing development necessary to obtain
the permission of regulatory authorities to begin and continue human clinical
testing.

            1.23 "Phase I" shall mean that portion of Development which starts
with the first introduction into humans of a product with the purpose of
determining safety, metabolism, absorption, elimination and other
pharmacological action in humans as well as additional development work on
animal toxicity, metabolism, drug substance and drug product formulation and
manufacturing development to ensure continuation of human clinical testing.

            1.24 "Phase II" shall mean that portion of Development which
includes initial trials on a limited number of patients for the purposes of
determining dose and evaluating safety and preliminary efficacy data in the
proposed therapeutic indication as well as additional development work on animal
toxicity, metabolism, drug substance and drug product formulation and
manufacturing development to ensure continuation of human clinical testing.

            1.25 "Phase III" shall mean that portion of Development which
includes continued trials in sufficient numbers of patients to establish safety
and efficacy to support Marketing Authorization in the proposed indication. In
addition, all other development work on animal toxicity, metabolism, drug
substance and drug product formulation and manufacturing development will be
finalized.

            1.26 "PPI Change of Control Transaction" shall mean any transaction
described in Section 10.1.5.

            1.27 "PPI Compound" shall mean any compound owned by or licensed
(with the right to sublicense) to PPI which exhibits AAI activity.

            1.28 "PPI Information" shall mean information, knowledge and
know-how (i) possessed by PPI before the Effective Date relating to the
Screening Program or (ii) generated solely by PPI personnel during the Screening
Program, including but not limited to screening methods and results during the
Screening Term in the course of performing the Screening Program, as well as SAR
Information with

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respect to PPI Compounds, which in each case is disclosed to BI hereunder.

            1.29 "PPI Patent Rights" shall mean (i) the specific composition of
matter claims and the specific methods claims listed on Appendix A hereto (under
the heading "Claims Included") contained in the patent application and the
continuation in part thereof listed on Appendix A, as such claims are pending in
said applications as of the Effective Date, (ii) the claims referred to in
clause (i) to the extent granted in any resultant U.S. letters patent, (iii) the
claims referred to in clauses (i) and (ii) to the extent contained in any
corresponding Patent Co-operation Treaty applications, European Patent
Convention applications or applications under similar administrative
international conventions, or in any corresponding national patents and patent
applications, (iv) equivalents of the claims referred to in clauses (i), (ii)
and (iii) and (v) any divisional, continuation, substitution, reissue,
extension, supplementary protection certificate or other application solely to
the extent based on the claims referred to in clauses (i) through (iv). PPI
Patent Rights shall exclude all other claims set forth on Appendix A hereto
under the heading "Claims Excluded."

            1.30 "PPI Product" shall mean any pharmaceutical preparation
containing a PPI Compound, whether as the sole active ingredient or mixed with
any other active ingredient and which is intended for prophylactic or
therapeutic purposes.

            1.31 "Publishing Party" shall have the meaning set forth in Section
7.3.

            1.32 "Recognized Agent" shall mean an entity, other than an
Affiliate of PPI or BI, as applicable, through which PPI or BI, as applicable,
distributes and sells its products in a particular country or region. From and
after the First Commercial Sale of a BI Product, PPI Product or a product
containing a Licensed Diagnostic Compound, the selling party will provide the
other party with a complete list of its Recognized Agents and will update such
list at least once annually.

            1.33 "Reviewing Party" shall have the meaning set forth in Section
7.3.

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            1.34 "Sale Date" shall have the meaning set forth in Section 6.8.

            1.35 "SAR Information" shall mean and include structure activity
relationships information, and information with respect to chemical structure,
in each case with respect to PPI Compounds, whether in existence on the
Effective Date or generated thereafter.

            1.36 "Screening Data" shall have the meaning set forth in Section
7.3.

            1.37 "Screening Program" shall mean the collaboration by PPI and BI
during the Screening Term provided for in Article 2.

            1.38 "Screening Term" shall mean the two-year period commencing on
the Effective Date, as extended pursuant to Section 2.4 hereof, unless this
Agreement is earlier terminated in accordance with Article 10 below, in which
event the Screening Term shall terminate on the effective date of such
termination.

            1.39 "Screening Term Year" shall have the meaning set forth in
Section 2.3.

            1.40 "SEC" shall mean the United States Securities and Exchange
Commission.

            1.41 "Section 10.4.1(a) Notice" shall have the meaning set forth in
Section 10.4.

            1.42 "Territory" shall mean all countries and territories in the
world.

            1.43 "Third Party" shall mean any entity other than PPI and BI,
their respective Affiliates and Recognized Agents.

            1.44 "Third Party AD Product" shall mean a pharmaceutical product
(other than a BI Product or a PPI Product) for the prevention or treatment of
Alzheimer's Disease which achieves its prophylactic or therapeutic effect
through A(beta) peptide AAI activity.

            1.45 "Work Plan" shall mean the description of, and certain terms
and conditions applicable to, the

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screening services to be carried out by PPI pursuant to this Agreement,
including the scope and timing of such work, the in vitro and in vivo assays to
be utilized by PPI in performing such work, the anticipated annual capital
budget (and particular items of equipment to be purchased by PPI) in connection
with performing such work, as set forth in Appendix B, as it may be amended by
mutual agreement of the parties from time to time.

            1.46 "***% Royalty Rate" shall have the meaning set forth in Section
6.1.

            1.47 "***% Royalty Rate" shall have the meaning set forth in Section
6.1.

                          ARTICLE 2. SCREENING PROGRAM

            2.1 Screening Services. Subject to and in accordance with the terms
and provisions of the Work Plan, during the Screening Term, PPI shall screen
compounds provided by BI.

            2.2 Payments. Subject to the last two sentences of Section 11.1, BI
shall pay PPI *** Approximately 15 lines omitted ***. In the event the
conditions for payment in the preceding sentence are not met on the first
anniversary of the Effective Date for reasons associated with the nature of the
compounds provided by BI (PPI agreeing to use best efforts, but without
incurring significant additional expense or materially adversely delaying the
Work Plan, to minimize or eliminate any such reasons) or because of delays to
the Work Plan caused by BI, BI agrees to make such payment on such first
anniversary, provided PPI is then in compliance in all material respects with
the terms and provisions of this Agreement (other than any non-compliance for
reasons associated with the nature of the compounds provided by BI or because of
delays to the Work Plan caused by BI).

            2.3 Expense Reimbursement.

                  (a) BI shall reimburse PPI for the following expenses in
respect of each consecutive twelve-month period during the Screening Term (a
"Screening Term Year"): (i) $250,000 per FTE; provided, that BI shall not be

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required to reimburse PPI for more than four FTEs, and (ii) actual amounts
expended for capital budget items as set forth in the Work Plan; provided,
however, that BI shall not be required to reimburse PPI pursuant to this Section
2.3 for expenses in excess of an aggregate of $2.5 million in respect of the
first two Screening Term Years and an aggregate of $1.25 million in respect of
any Screening Term Year.

                  (b) BI shall reimburse PPI at the end of each quarter for
expenses incurred by PPI during such quarter pursuant to paragraph (a) above,
such reimbursement payments to be received by PPI within fifteen days of BI's
receipt of a reasonably itemized invoice for such expenses prepared by PPI. For
purposes of this clause (b), expenses incurred by PPI for any FTE hired prior to
the Effective Date shall be deemed to be reimbursable expenses under paragraph
(a) above and shall be included in the first quarterly invoice prepared by PPI.

            2.4 Screening Term.

                  (a) BI shall have the option, exercisable on any number of
occasions by delivering written notice to PPI not later than six months prior to
the expiration of the Screening Term then in effect, to extend such Screening
Term for an additional one (1) year period commencing on the later of the
expiration of the Screening Term then in effect or the expiration of any
extension thereof pursuant to subsection 2.4(b), provided that on or prior to
the commencement of such additional one (1) year period (i) BI pays (and
delivery of such notice shall constitute BI's agreement to pay) PPI $ 1
million in cash and (ii) the parties have agreed in writing to an amended Work
Plan.

                  (b) Notwithstanding subsection 2.4(a), if (i) BI is in
compliance with the terms and provisions of this Agreement (including without
limitation the Work Plan), and (ii) at the expiration of the Screening Term then
in effect, PPI has not completed the screening contemplated by the Work Plan
then in effect, then (A) PPI shall, if BI so requests by written notice to PPI
within fifteen (15) days after expiration of the Screening Term then in effect,
complete any such screening and the Screening Term shall be automatically
extended until the completion of such screening and (B) BI shall not be required
to pay PPI the $ 1 million in cash referred to in subsection 2.4(a) in

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respect of the extension of the Screening Term pursuant to this subsection
2.4(b) or to reimburse PPI in accordance with Section 2.3 for expenses incurred
by PPI during such extension.

            2.5 Exclusivity.

                  (a) So long as (i) the Screening Term is in effect and BI has
supplied PPI with compounds in accordance with the Work Plan or (ii) BI is
pursuing Development or marketing of any BI Compound or BI Product with diligent
efforts at least consistent with those of BI with respect to other BI products
with similar commercial potential (the "Exclusivity Period"), PPI shall not
screen any Third Party compounds for A(beta) peptide AAI activity; provided,
however, that this restriction on screening during the Exclusivity Period only
applies to screening of compounds as potential prophylactics or therapeutics.
Without limitation of the foregoing restriction, PPI covenants and agrees with
BI that during the Exclusivity Period, if PPI enters into any agreement with a
Third Party to screen compounds of such Third Party for AAI activity, such
agreement shall provide that such Third Party shall not (i) utilize any
information provided by PPI to such Third Party in connection with the
development of, or (ii) develop, any such Third Party compound for use as a
prophylactic or therapeutic product for Alzheimer's Disease. PPI shall use its
reasonable efforts to enforce any such provision in any such agreement with such
a Third Party. For purposes of this Section 2.5(a), "Third Party" includes any
Recognized Agent of PPI.

                  (b) During the Exclusivity Period, BI shall not provide any
compounds to any Third Party for screening for A(beta) peptide AAI activity.
Without limitation of the foregoing restriction, BI covenants and agrees with
PPI that during the Exclusivity Period, if BI provides any compounds to any
Third Party for screening for AAI activity, BI will not, and will obtain an
agreement from such Third Party that such Third Party will not, (i) utilize any
information provided to or by such Third Party pursuant to such arrangement in
connection with the development of, or (ii) develop, any such compounds for use
as a prophylactic, therapeutic or diagnostic product for Alzheimer's Disease. BI
shall use its reasonable efforts to enforce any such provision in any such
agreement with such a Third Party. For purposes of this Section 2.5(b), "Third
Party" includes any Recognized Agent of BI.

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                     ARTICLE 3. LICENSE GRANTS; DEVELOPMENT,
                   MANUFACTURING AND MARKETING OF BI PRODUCTS

            3.1 Grant of License Rights by PPI to BI. Subject to the terms and
conditions of this Agreement, PPI hereby grants to BI an exclusive (except as to
PPI, its Affiliates and their respective sublicensees) right and license in the
Territory during the Exclusivity Period, under the PPI Information and the PPI
Patent Rights, to develop BI Compounds, and to develop, manufacture or have
manufactured, use and sell or have sold BI Compounds as incorporated into a BI
Product, in each case solely for use (i) as a prophylactic or therapeutic or
(ii) as a diagnostic solely to the extent that any such BI Compound is required
as a diagnostic in order to commercialize a BI Compound, and sell the
corresponding BI Product, as a prophylactic or therapeutic. It is understood
that BI will have no right to, and BI agrees that it will not, develop,
manufacture or have manufactured, use, sell or have sold any BI Compound or BI
Product for use as a diagnostic, except as and to the extent that such BI
Compound or BI Product is required as a diagnostic in order for BI to
commercialize a BI Compound, and for BI to sell the corresponding BI Product,
as a prophylactic or therapeutic.

            3.2 Sublicense Rights. BI shall have the right to grant sublicenses
with respect to the license granted in Section 3.1 to Affiliates of BI, BI's
Recognized Agents and third parties.

            3.3 Diligence; Limit on Sales to Recognized Agents. BI shall (i) use
diligent efforts at least consistent with BI's normal business practices with
respect to other BI products with similar commercial potential, to (A) Develop
BI Compounds (and shall immediately advise PPI in writing if a BI Compound has
been selected and approved for start of development as described in the
definition of Phase 0 (Section 1.22)), manufacture, market and distribute the
corresponding BI Products throughout the Territory and obtain all requisite
regulatory licenses, permits or approvals relating thereto and (B) obtain and
enforce patent and other relevant intellectual property protection in the
Territory for BI Compounds and BI Products with respect to which BI is required
to use diligent efforts pursuant to clause (A) immediately above, and (ii)
provide PPI on a semi-annual basis with status reports in reasonable detail
with respect to such activities. BI covenants

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and agrees with PPI that in no event will the amount of Net Sales in any year of
any BI Product in the Territory to BI's Recognized Agents exceed 10% of the
total amount of Net Sales of such BI Product in the Territory during such year.

            3.4 Failure to Market Due to Currency Difficulties. It shall not be
considered a breach of BI's obligations under Section 3.3 if BI reduces or
halts shipments of BI Products to a country which by law, regulation or fiscal
policy, has restricted or forbidden the transfer of funds of a convertible
currency to Germany, provided that BI notifies PPI of any such circumstance and
resumes the obligations to market the BI Products in such country promptly after
such circumstance no longer exists. BI shall, however, remain obligated to pay
royalties to PPI on its Net Sales, if any, in such country as provided in
Article 6.

            3.5 Future License Rights.

                  3.5.1 PPI's Future License Right. In the event (i) BI has not,
within *** after the end of the Screening Term, either (A) commenced Development
of at least one BI Compound or (B) granted a license to at least one BI Compound
to a Third Party which is financially and otherwise reasonably capable of
pursuing the development and commercialization of such BI Compound and which
imposes on such Third Party diligence obligations no less stringent than those
imposed upon BI pursuant to this Agreement, or (ii) if after commencing such
Development or granting such a license to such a Third Party, BI or such Third
Party ceases to pursue such Development or such license is terminated, PPI
shall have the right to obtain an exclusive royalty-bearing license in the
Territory, with the right to grant sublicenses, under any and all applicable BI
Patent Rights and BI know-how, on royalty and other customary terms to be
negotiated in good faith by the parties hereto, to use, develop, manufacture and
have manufactured, any one BI Compound, and to use, manufacture, have
manufactured, distribute for sale, sell and have sold, any corresponding BI
Product. PPI shall have the same license right, to the same extent set forth in
the immediately preceding sentence, with respect to any BI Compound, and
corresponding BI Product, which PPI determines it will seek to develop and
commercialize as a diagnostic, other than any such BI Compound which is required
by BI as a diagnostic in order

                                       12
<PAGE>

to commercialize any BI Compound, and sell the corresponding BI Product, as a
prophylactic or therapeutic, and of which BI or a Third Party licensee thereof
has commenced and not ceased Development (any such BI Compound as to which PPI
makes such a determination being referred to as a "Licensed Diagnostic
Compound"). BI or any Third Party referred to above shall be deemed to have
ceased Development of a BI Compound if, (i) in the case of BI, it fails to meet
the diligence requirements set forth in Section 3.3 above with respect to
Development of such BI Compound or, in the case of such Third Party it fails to
meet the analogous diligence requirements in the applicable license to such
Third Party or (ii) BI or any Third Party referred to above abandons Development
of such BI Compound or the license held by such Third Party terminates prior to
the Development and commercialization of such BI Compound (the date of any such
cessation or abandonment being referred to herein as an "Abandonment Date"). In
order that PPI may realize the benefits of this Section 3.5.1, (i) BI shall
promptly provide PPI with such information as PPI may reasonably require and
request with respect to each Designated BI Compound if BI has not taken either
of the actions referred to in clause (i) of the first sentence of this Section
3.5.1 within the time period specified in such clause and (ii) BI shall promptly
notify PPI in writing after becoming aware of the occurrence of an Abandonment
Date. Upon the occurrence of an Abandonment Date, or, with respect to any
Licensed Diagnostic Compound, upon notice from PPI that it will seek to develop
such Licensed Diagnostic Compound, BI shall promptly provide PPI with such
information as PPI may reasonably require and request with respect to the BI
Compound which is the subject of such Abandonment Date and/or with respect to
such Licensed Diagnostic Compound, subject to PPI's execution of an appropriate
confidentiality agreement reasonably acceptable to BI, and within fifteen (15)
days of the written request of PPI, the parties shall commence good faith
negotiations with respect to the royalty and other terms of the license of such
BI Compound(s) and/or Licensed Diagnostic Compound(s) to PPI in accordance with
this Section 3.5.1. If within sixty (60) days of the commencement of such
negotiations the parties have not entered into a definitive license agreement
with respect to such BI Compound(s) and/or Licensed Diagnostic Compound(s), the
terms of such license agreement shall be determined by binding arbitration in
accordance with Section 11.7 hereof, and the par-

                                       13
<PAGE>

ties shall be obligated to promptly execute and deliver a definitive license
agreement containing such terms.

                  3.5.2 BI's Right of First Refusal. BI shall, subject to and in
accordance with the provisions set forth below, have a right of first
negotiation to obtain an exclusive royalty-bearing license in the Territory with
respect to any PPI Compound, solely for use as a prophylactic or therapeutic
for Alzheimer's Disease, which PPI has determined to seek to license to a Third
Party. PPI shall promptly notify BI of such determination (a "PPI License
Notice"), and BI shall have twenty (20) days after receipt of a PPI License
Notice to notify PPI (an "Initial BI License Response Notice") that it may seek
to enter into such negotiations and, as part of such Initial BI License Response
Notice, to request such information with respect to such PPI Compound as it
reasonably requires to determine whether to enter into such negotiations. If BI
has timely delivered an Initial BI License Response Notice, PPI shall promptly
provide such information with respect to such PPI Compound as BI has requested
in the Initial BI License Response Notice and is available to PPI, subject to
BI's execution of an appropriate confidentiality agreement reasonably acceptable
to PPI. BI shall have thirty (30) days after PPI's substantial compliance with
the information request included as part of the Initial BI License Response
Notice to notify PPI in writing that it has determined to enter into such
negotiations (a "BI Negotiation Notice"). If BI has not timely delivered a BI
Negotiation Notice, PPI shall be free to enter into an agreement with a Third
Party to license such PPI Compound on such terms and conditions as PPI shall
determine. If BI timely delivers a BI Negotiation Notice, then for a period of
sixty (60) days after PPI's receipt of such BI Negotiation Notice, PPI will
negotiate exclusively with BI with respect to the terms of such a license. If at
the end of such sixty (60) day period the parties have not entered into a
definitive license agreement with respect to such PPI Compound, then PPI shall
be free to enter into an agreement with a Third Party to license such PPI
Compound, provided that the terms of such license agreement shall not, taken as
a whole, be materially more favorable to such Third Party than the terms, if
any, last offered in writing by BI to PPI during the aforesaid sixty (60) day
period, unless PPI has first offered BI in writing the opportunity to enter into
the license agreement containing such more favorable terms and BI has not
executed and delivered such

                                       14
<PAGE>

license agreement within twenty (20) days after receipt of such written offer
from PPI.

                       ARTICLE 4. EXCHANGE OF INFORMATION

            4.1 Information to be Provided. During the Screening Term, each
party shall promptly provide the other party with information and results
generated from the Screening Program (the "Exchange Information"), and, without
limiting the generality of the foregoing, PPI shall promptly provide BI with SAR
Information to the extent reasonably necessary to facilitate BI's selection of a
BI Compound for Development; provided, however, that PPI shall not be required
to provide BI with any clinical data relating to any PPI Compound. However, PPI
agrees to provide BI with copies of its clinical plans and protocols relating to
clinical trials with respect to each PPI Compound, and PPI agrees, and BI shall
have the right for a sixty (60) day period after receipt of such clinical plans
or protocols, to negotiate in good faith the financial and other terms and
conditions upon which BI would gain access to such clinical data.

            4.2 Information Not Required to be Provided; Restriction on
Certain Research Activities. Notwithstanding Section 4.1 or any other
provision of this Agreement, (i) so long as the withholding of Exchange
Information does not materially adversely affect the Screening Program,
neither party shall be required to provide the other party with general,
enabling technology or with other general technical information or know-how
which is applicable outside the scope of the Screening Program and (ii)
neither party will analyze the chemical and/or physical properties of any
compound provided by such party to the other party hereunder or otherwise
undertake any analysis of such compound to derive or elucidate such
structural information; provided, that upon BI's selection of a BI Compound
for Development, or PPI's exercise of its license rights with respect to a BI
Compound (including a Licensed Diagnostic Compound) pursuant to Section
3.5.1, BI shall promptly disclose to PPI structural information with respect
to such BI Compound(s).

                                       15
<PAGE>

                     ARTICLE 5. INTELLECTUAL PROPERTY RIGHTS

            Except to the extent expressly set forth in this Agreement, (a) all
right, title and interest in PPI Patent Rights, other patent or intellectual
property rights of any kind relating to any PPI Compounds, all PPI Information
and any PPI Compounds shall be and remain vested solely and exclusively in PPI,
(b) all right, title and interest in all BI Patent Rights, BI Information and
BI Compounds shall be and remain vested solely and exclusively in BI and (c)
under no circumstances shall a party hereto, as a result of this Agreement,
obtain any ownership interest in or other right to any technology, know-how,
patents, pending patent applications, products or biological materials of the
other party, including items owned, controlled or developed by the other party,
or transferred by the other party to said party, at any time pursuant to this
Agreement.

                              ARTICLE 6. ROYALTIES

            6.1 Royalties on Net Sales.

                  6.1.1 Royalty Rate.

                  (a) In consideration of the rights granted to BI under
Section 3.1, with respect to any BI Product, BI shall pay PPI (i) a royalty in
the amount equal to ***% of annual Net Sales of such BI Product (the "***%
Royalty Rate") up to $***, and (ii) a royalty in the amount equal to ***% of
that portion of annual Net Sales of such BI Product (the "***% Royalty Rate")
greater than $***. Each of the ***% Royalty Rate and the ***% Royalty Rate are
referred to herein as the "Applicable Base Royalty Rate." The Applicable Base
Royalty Rate is subject to increase as provided in Section 6.1.1(b), and to
reduction as provided in Section 6.1.1(c) and Section 6.8.

                  (b) If, within three years after PPI's First Commercial Sale
of a PPI Product in a country, BI introduces a BI Product to the market in such
country, the Applicable Base Royalty Rate with respect to Net Sales of such BI
Product in such country for the first and second consecutive twelve-month
periods, respectively, commencing on the First Commercial Sale of such BI

                                       16
<PAGE>

Product in such country, shall be the Applicable Base Royalty Rate with respect
to such Net Sales, plus ***% and ***%, respectively; provided, however, that the
maximum amount of additional royalties (over and above the amount of royalties
payable pursuant to paragraph (a) above) which BI shall be obligated to pay PPI
pursuant to this paragraph (b) shall not exceed 50% of the Net Sales of such PPI
Product in such country during the consecutive twelve calendar months
immediately preceding the First Commercial Sale of such BI Product in such
country.

                  (c) If (i) in any calendar year commencing after the end of
the first full calendar year following the First Commercial Sale of a BI
Product in a country, Net Sales of such BI Product in the Territory are less
than $*** and (ii) in such country the number of units of a Third Party AD
Product sold in such country during such year exceeds ***%, ***%, ***%, ***% or
***%, respectively, of the number of units of such BI Product sold in such
country during such year, the Applicable Base Royalty Rate with respect to Net
Sales of such BI Product in such country during such year shall be reduced by
***%, ***%, ***%, ***% or ***%, respectively, provided that in no event shall
such Applicable Base Royalty Rate be reduced by more than ***% (including
pursuant to the operation of Section 6.1.1(c), alone or together with Section
6.8.) The percentage reduction(s) (if any) of the Applicable Base Royalty Rate
in any country in respect of any year pursuant to this Section 6.1.1(c) shall
be set forth in the quarterly royalty report of BI for the last quarter of such
year contemplated by Section 6.2. If any such reduction is applicable, then the
amount of any royalties previously paid by BI during such year in excess of the
amount which would have been payable based on the Applicable Base Royalty Rate,
as so reduced, shall be an offset against the amount of royal ties payable by BI
in respect of the last quarter of such year (calculated without giving effect to
any such reduction) and, as necessary, against the amount of royalties
otherwise payable thereafter; provided that BI shall not be entitled to offset
more than ***% of the amount of royalties which would otherwise be payable to
PPI in any fiscal quarter.

                  (d) With respect to any BI Compound or BI Product, promptly
after completion of Phase II and pro-

                                       17
<PAGE>

vided a PPI Change of Control Transaction has not occurred, BI shall provide
PPI with all information relating to the Development thereof, all data,
clinical results and protocols for the commencement of Phase III with respect
thereto, and, whether or not a PPI Change of Control Transaction has occurred, a
detailed budget which sets forth a fair and reasonable estimate of the costs
associated with such Phase III. Within ninety (90) days of receipt of such
information, PPI may elect by written notice to BI to reimburse BI on a
quarterly basis for ***%, ***% or ***% of the actual Phase III Development costs
paid by BI, and, from and after delivery of such notice by PI, the royalty rate
payable by BI with respect to Net Sales of a BI Product shall be the rate which
would otherwise be applicable pursuant to Sections 6.1(a), (b) and (c), plus
***%, ***% or ***%, respectively (such applicable additional percentage being
referred to as the "PPI Investment Percentage Royalty Rate Increase"), and PPI
shall be obligated to make such reimbursement payments within fifteen (15) days
after receiving an invoice therefor containing a reasonable itemization of
such costs. It is understood and agreed that BI shall have sole responsibility
with respect to any decision regarding the Phase III referred to in this
Section 6.1.1(d).

                  6.1.2 Third Party Patents; Combination BI Products; Bundled
Products.

                  (a) If BI, its Affiliates or sublicensees can demonstrate
that, in order to operate under or exploit any license granted under Section
3.1 in any country they must make payments (including without limitation
royalties, option fees or license fees) to one or more Third Parties to obtain a
license or similar right in the absence of which the BI Product could not be
legally manufactured or sold in such country, BI and PPI shall enter into good
faith negotiations with a view to agreeing on a reasonable amount that BI may
deduct from the royalties payable to PPI hereunder in respect of Net Sales of
such BI Product in such country in any given quarter.

                  (b) If a BI Product contains an active ingredient in addition
to a BI Compound, then BI and PPI shall enter into good faith negotiations with
a view to agreeing on an appropriate reduction in the Applicable

                                       18
<PAGE>

Base Royalty Rate with respect to Net Sales of such BI Product.

                  (c) If a Bundled Product (as defined in Section 1.20) is sold,
the parties will promptly negotiate mutually agreeable royalty terms with
respect to sales of such Bundled Product. If within sixty (60) days of the
commencement of such negotiations, such royalty terms have not been agreed to in
writing by the parties, such royalty terms shall be determined by binding
arbitration in accordance with Section 11.7 hereof.

                  6.1.3 Sublicense Royalties. If BI grants a sublicense
hereunder to any Third Party to make, have made, use, distribute for sale or
sell the BI Products in any country, BI shall pay to PPI royalties on Net Sales
of the BI Products sold by such Third Party in such country at the royalty rate
set forth in Section 6.1.1 that would be applicable had such sales been made by
BI.

            6.2 Royalty Reports; Exchange Rates. Following the First Commercial
Sale of any BI Product in any country, BI shall within thirty (30) days after
each calendar quarter furnish to PPI a written quarterly report showing: (i) the
gross sales of the BI Product sold by BI, its Affiliates and sublicensees,
including sales by BI to Recognized Agents during the reporting period and the
calculation of Net Sales from such gross sales; (ii) withholding taxes, if any,
required by law to be deducted in respect of such sales; and (iii) the exchange
rates used in determining the amount of United States dollars. All sales in
currencies other than United States dollars shall first be converted into German
marks and then into United States dollars using in both cases the average
monthly exchange rates as published regularly by Deutsche Bank in Frankfurt am
Main, Germany, and as customarily used by BI in its accounting system. If no
royalty is due for any royalty period hereunder, BI shall so report. BI shall
keep complete and accurate records in sufficient detail to properly reflect all
gross sales and Net Sales and to enable the royalties payable hereunder to be
determined.

            6.3 Audits. Upon the written request of PPI, BI shall permit an
independent public accountant selected by PPI and acceptable to BI, which
acceptance shall not be unreasonably withheld, to have access during normal

                                       19
<PAGE>

business hours to such records of BI as may be reasonably necessary to verify
the accuracy of the royalty reports described herein, in respect of any fiscal
year ending not more than thirty-six (36) months prior to the date of such
request. All such verifications shall be conducted at PPI's expense and not more
than once in each calendar year. In the event such PPI representative concludes
that additional royalties were owed to PPI during such period, the additional
royalty shall be paid by BI within thirty (30) days of the date PPI delivers to
BI such representative's written report so concluding. The fees charged by such
representative shall be paid by PPI unless the audit discloses that the
royalties payable by BI for the audited period are incorrect by more than five
percent (5%), in which case BI shall pay the reasonable fees and expenses
charged by such representative. BI shall include in each Third Party sublicense
granted by it pursuant to this Agreement a provision requiring the sublicensee
to make reports to BI, to keep and maintain records of sales made pursuant to
such sublicense and to grant access to such records by PPI's representatives to
the same extent required of BI under this Agreement. PPI agrees that all
information subject to review under this Section 6.3 or under any sublicense
agreement is confidential and that PPI shall cause its representatives to
retain all such information in confidence.

            6.4 Royalty Payment Terms. Royalties shown to have accrued by each
royalty report provided for under this Agreement shall be due thirty (30) days
after the end of each calendar quarter. Payment of royalties in whole or in part
may be made in advance of such due date. Royalties determined to be owing with
respect to any prior quarter shall be added, together with interest thereon
accruing under this Agreement from the date of the report for the quarter for
which such amounts are owing, to the next quarterly payment hereunder.

            6.5 Withholding Taxes. BI shall deduct any withholding taxes from
the payments agreed upon under this Agreement and pay them to the proper tax
authorities required by the laws of the Federal Republic of Germany applicable
at the date of payment. BI shall not deduct any other withholding or any other
governmental charges from the payments agreed upon under this Agreement,
including but not limited to any such taxes or charges incurred as a result of
an assignment or sublicense by BI

                                       20
<PAGE>

to any Affiliate or any Third Party, except as noted above. BI shall maintain
official receipts of payment of any withholding taxes and forward these receipts
to PPI.

The parties will exercise their best efforts to ensure that any withholding
taxes imposed are reduced as far as possible under the provisions of the current
or any future double taxation agreement between the United States and the
Federal Republic of Germany. According to existing German Law, this reduction
requires that the German Bundesamt fur Finanzen issue a Certificate of Tax
Exemption. In order to achieve such reduction, PPI shall provide BI with an
application for a certificate of tax exemption for royalties under the US-German
Double Taxation Treaty performed on the official German form (Application for
Tax Exemption) and signed by PPI. The Certification of Filing a Tax Return (IRS
Form 6166) must be enclosed with the Application For Tax Exemption. BI shall
provide PPI with the official German form. Once every three years after PPI
first provides BI with an Application For Tax Exemption, it will provide BI with
a new such Application unsolicited which complies with the above mentioned
prerequisites.

            6.6 Application for Tax Exemption. The payments are not due until
PPI provides BI with the Application for Tax Exemption fulfilling the
prerequisites set out in Section 6.5 of this Agreement. Payments arising after
expiration of any Certification of Tax Exemption are not due until the next
Application for Tax Exemption is filed with BI. Notwithstanding the preceding
provisions of this Section 6.6, in the event of any extended delay in approval
or effectiveness of the Application for Tax Exemption, PPI may require payment
of any amounts due pursuant to this Agreement after deduction of any applicable
withholding taxes. PPI shall be notified by BI of any changes regarding the
filing of Applications for Tax Exemption.

            6.7 Interest on Late Payments. Any payments by BI to PPI that are
not paid on or before the date such payments are due under this Agreement shall
bear interest, to the extent permitted by applicable law, at two (2) percentage
points above the Prime Rate of interest declared from time to time by The First
National Bank of Boston in Boston, Massachusetts, calculated on the number of
days payment is delinquent.

                                       21
<PAGE>

            6.8 Duration of Royalties; Step Down. If (a) the expiration date of
the last to expire of the PPI Patent Rights in any country (with respect to such
country, the "Patent Expiration Date") occurs prior to the date which is ten
(10) years after the First Commercial Sale of a BI Product in such country (with
respect to such country, the end of such tenth year being referred to herein as
the "Sale Date"), (i) the Applicable Base Royalty Rate with respect to Net Sales
of such BI Product in such country shall (A) decrease by ***% on such Patent
Expiration Date (unless, with respect to the year in which the Patent Expiration
Date occurs in such country and any subsequent year, the Applicable Base Royalty
Rate with respect to Net Sales of such BI Product in such country for such year
has already been reduced pursuant to Section 6.1.1(c)) and (B) decrease by an
additional ***% (or such lesser percentage such that, together with any
reduction of the Applicable Base Royalty Rate pursuant to Section 6.1.1(c), the
Applicable Base Royalty Rate with respect to Net Sales of such BI Product in
such country in the year in which the Sale Date occurs and any subsequent year
is decreased by ***%) on such Sale Date and (ii) any PPI Investment Percentage
Royalty Rate Increase in effect with respect to Net Sales of such BI Product in
such country shall decrease by ***% on such Sale Date, and (b) if the Sale Date
occurs prior to the Patent Expiration Date, (i) the Applicable Base Royalty Rate
with respect to Net Sales of such BI Product in such country shall decrease by
***% (or such lesser percentage such that, together with any reduction of the
Applicable Base Royalty Rate pursuant to Section 6.1.1(c), the Applicable Base
Royalty Rate with respect to Net Sales of such BI Product in such country in the
year in which the Sale Date occurs and any subsequent year is decreased by ***%)
on such Sale Date and (ii) any PPI Investment Percentage Royalty Rate Increase
in effect with respect to Net Sales of such BI Product in such country shall
decrease by ***% on such Sale Date; provided, that in no event shall the
Applicable Base Royalty Rate be decreased by more than ***% (including pursuant
to the operation of Section 6.1.1(c), alone or together with this Section 6.8),
and provided further that no royalties with respect to Net Sales of a BI Product
in a country shall be payable in accordance with this Article 6 after the date

                                       22
<PAGE>

which is fifteen (15) years after the First Commercial Sale of a BI Product in
such country.

ARTICLE 7. CONFIDENTIALITY

            7.1 Nondisclosure Obligations.

                  7.1.1 General. Except as otherwise provided in this Article 7,
both parties shall maintain in strict confidence and use only for purposes
specifically authorized under this Agreement (i) information and data received
from the other party resulting from or related to the Screening Program
(including without limitation SAR Information and PPI Information) or the
Development of any BI Product and (ii) all information and data not described in
clause (i) but supplied by the other party under this Agreement and marked
"Confidential." For purposes of this Article 7, information and data described
in clause (i) or (ii) shall be referred to as "Information."

                  7.1.2 Limitations. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, a party may disclose Information it is otherwise obligated under this
Section not to disclose to its Affiliates, sublicensees, consultants, outside
contractors and clinical investigators, on a need-to-know basis on condition
that such entities or persons agree to keep the Information confidential to the
same extent as such party is required to keep the Information confidential; and
a party or its sublicensees may disclose such Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or authorizations to conduct clinical trials of, and
to commercially market, the BI Products. The obligation not to disclose
Information shall not apply to any part of such Information that: (i) is or
becomes part of the public domain other than by unauthorized acts of the party
obligated not to disclose such Information or its Affiliates or sublicensees;
(ii) can be shown by written documents to have been disclosed to the receiving
party or its Affiliates or sublicensees by a Third Party, provided such
Information was not obtained by such Third Party directly or indirectly from the
other party under this Agreement pursuant to a confidentiality agreement; (iii)
prior to disclosure under this Agree-

                                       23
<PAGE>

ment, was already in the possession of the receiving party or its Affiliates or
sublicensees, provided such Information was not obtained directly or indirectly
from the other party under this Agreement pursuant to a confidentiality
agreement; (iv) can be shown by written documents to have been independently
developed by the receiving party or its Affiliates without breach of any of the
provisions of this Agreement; or (v) is disclosed by the receiving party
pursuant to interrogatories, requests for information or documents, subpoena,
civil investigative demand issued by a court or governmental agency or as
otherwise required by law; provided, that the receiving party notifies the other
party immediately upon receipt thereof (and provided that the disclosing party
furnishes only that portion of the Information which it is advised by counsel is
legally required).

            7.2 Terms of this Agreement. PPI and BI each agree not to disclose
any terms or conditions of this Agreement to any Third Party without the prior
written consent of the other party, except as required by applicable law,
including without limitation the rules and regulations of the SEC governing
disclosure to shareholders or potential investors. If PPI determines that it is
required to file with the SEC or other governmental agency this Agreement for
any reason, PPI shall request confidential treatment of such portions of this
Agreement as it and BI shall together determine. Notwithstanding the foregoing,
prior to execution of this Agreement, PPI and BI shall agree upon the substance
of information that can be used as a routine reference in the usual course of
business to describe the terms of this Agreement, and PPI and BI may disclose
such information, as modified by mutual agreement from time to time, without the
other party's consent.

            7.3 Publications.

                  7.3.1 Procedure. Each party recognizes the mutual interest in
avoiding premature publication of information and data with respect to the
results of the Screening Program ("Screening Data"). In the event that, either
party, its employees or consultants or any other Third Party under contract to
such party wishes to make a publication (including any oral disclosure made
without obligation of confidentiality) disclosing any Screening Data (the
"Publishing Party"), such party shall transmit

                                       24
<PAGE>

to the other party (the "Reviewing Party") a copy of the proposed written
publication at least forty-five (45) days prior to submission for publication,
or an abstract of such oral disclosure at least thirty (30) days prior to
submission of the abstract or the oral disclosure, whichever is earlier. The
Reviewing Party shall have the right (a) to propose modifications to the
publication for patent reasons, (b) to request a delay in publication or
presentation in order to protect patentable information, or (c) to request that
the information be maintained as a trade secret and, in such case, the
Publishing Party shall not make such publication.

                  7.3.2 Delay. If the Reviewing Party requests a delay as
described in subsection 7.3.1.(b), the Publishing Party shall delay submission
or presentation of the publication for a period of ninety (90) days to enable
patent applications protecting each party's rights in such information to be
filed.

                  7.3.3 Resolution. Upon the receipt of written approval of the
Reviewing Party, the Publishing Party may proceed with the written publication
or the oral presentation.

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

                    ARTICLE 8. REPRESENTATIONS AND WARRANTIES

            Each party represents and warrants to the other that it has the
legal right and power to enter into this Agreement, to extend the rights and
licenses granted to the other in this Agreement, and that the performance of
such obligations will not conflict with its charter documents or any agreements,
contracts or other arrangements to which it is a party. BI further represents
and warrants to, and covenants with, PPI that (a) BI is a

                                       25
<PAGE>

limited liability company duly organized, validly existing and in good standing
under applicable German law and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and (b) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of BI enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

                              ARTICLE 9. INDEMNITY

            9.1 BI Indemnity Obligations. BI agrees to defend, indemnify and
hold PPI, its Affiliates and their respective employees and agents harmless from
all claims, losses, damages or expenses arising as a result of: (a) actual or
asserted violations of any applicable law or regulation by BI, its Affiliates or
sublicensees in connection with the manufacture, distribution or sale or use of
any BI Compounds or BI Products; (b) claims for bodily injury, death or property
damage attributable to the manufacture, distribution, sale or use of BI Com
pounds or BI Products by BI, its Affiliates or sublicensees; or (c) a BI
Product recall ordered by a governmental agency or required by a confirmed BI
Product failure as reasonably determined by the parties hereto.

            9.2 PPI Indemnity Obligations. PPI, its Affiliates and their
respective employees and agents shall not be entitled to the indemnities set
forth in Section 9.1 to the extent the loss, damage or expense for which
indemnification is sought was caused by the negligence, willful misconduct or
material breach of this Agreement by PPI or its Affiliates or sublicensees.
Further, should BI be found responsible for claims, losses or expenses caused by
any such negligence, willful misconduct or breach by PPI or its Affiliates and
not attributable to other causes for which BI is responsible, BI shall be
entitled to an indemnity from PPI to the same extent as PPI would be so entitled
from BI under Section 9.1 above.

                                       26
<PAGE>

            9.3 Procedure. A party or any of its Affiliates or their respective
employees or agents (the "Indemnitee") that intends to claim indemnification
under this Article 9 shall promptly notify the other party (the "Indemnitor") of
any loss, claim, damage, liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel,
with the fees and expenses to be paid by the Indemnitor, if representation of
such Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other party represented by such counsel in such proceedings. The indemnity
agreement in this Article 9 shall not apply to amounts paid in settlement of any
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Indemnitor, which consent shall not be unreasonably
withheld. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action, if prejudicial to its ability
to defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 9, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 9. The Indemnitee under this
Article 9, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification. In the event that each party claims
indemnity from the other and one party is finally held liable to indemnify the
other, the Indemnitor shall additionally be liable to pay the reasonable legal
costs and attorneys' fees incurred by the Indemnitee in establishing its claim
for indemnity.

            9.4 Insurance. BI shall maintain appropriate product liability
insurance with respect to the Development, manufacture and sales of BI Products
by BI in such amount as BI customarily maintains with respect to sales of
similar products. BI shall maintain such insurance for so long as it continues
to manufacture or sell BI Products, and thereafter for so long as BI maintains
insurance for itself covering such manufacture or sales.

                                       27
<PAGE>

                             ARTICLE 10. TERMINATION

            10.1 Termination. This Agreement may be terminated in the following
circumstances:

                  10.1.1 Material Breach. By a party upon written notice to the
other party by reason of a material breach by such other party not described in
Section 10.1.2 or 10.1.3 that the breaching party fails to remedy within ninety
(90) days after written notice thereof by the non-breaching party;

                  10.1.2 Failure of BI to Pay. By PPI, if BI fails to make (i)
any payment to PPI required under Section 2.2 or 2.3 within fifteen (15) days
after such payment becomes payable or (ii) any royalty payment under Section 6.1
within thirty (30) days after such payment becomes payable, and, in either such
case, such failure is not remedied within thirty (30) days after notice thereof
from PPI;

                  10.1.3 Failure of BI to Use Diligent Efforts. By PPI, if BI
fails to use diligent efforts as required by Section 3.3, and BI fails to remedy
or take reasonable action to initiate a remedy of such default within ninety
(90) days after the notice thereof by PPI;

                  10.1.4 Bankruptcy. By either party upon bankruptcy,
insolvency, dissolution or winding up of the other; and

                  10.1.5 Change of Control. By BI if, prior to the end of the
Screening Term, a transaction with a Third Party is consummated involving (a)
the acquisition, merger or consolidation of PPI and (i) PPI is not the
acquiring, surviving or continuing corporation or (ii) PPI is the surviving or
continuing corporation, but, in connection with such transaction, the then out
standing shares of the capital stock of PPI were changed into or exchanged for
stock or other securities of such Third Party or cash or other property or the
then out standing shares of the capital stock of PPI represented less than fifty
percent (50%) of the outstanding shares and share equivalents of the surviving
or continuing corporation immediately after consummation of such transaction or
(b) the sale or other disposition of more than fifty percent (50%) of the voting
capital stock of PPI or

                                       28
<PAGE>

all or substantially all of the assets of PPI to a Third Party, and such Third
Party is a major pharmaceutical company that is in competition with BI.

            10.2 Effect of Termination Generally.

                  10.2.1 Existing Obligations. Termination pursuant to Section
10.1 of this Agreement for any reason shall not relieve the parties of any
obligation accruing prior to such termination.

                  10.2.2 Survival. Except as otherwise expressly provided below
in this Article 10, the provisions of Sections 2.2 and 2.3 (with respect only
to payments and expense reimbursement payments accrued at the time of
termination but not yet paid), Article 3, Articles 5 through 9, this Section
10.2, Section 10.3 (if this Agreement is terminated by PPI pursuant to Section
10.1), Section 10.4.1 (if this Agreement is terminated by BI pursuant to Section
10.1.1), Section 10.4.2 (if this Agreement is terminated pursuant to Section
10.1.5) and Article 11 (as applicable to such surviving provisions) shall
survive termination of this Agreement pursuant to Section 10.1.

            10.3 Effect of Termination by PPI.

                  10.3.1 Termination By PPI Prior to Commencement of Phase III.
In the event that this Agreement is terminated by PPI pursuant to Section 10.1
prior to the time that a BI Compound or BI Product enters Phase III (such time
being referred to as the "Phase III Initiation Date"), then (i) all licenses
and rights granted to BI hereunder shall terminate, except to the extent PPI
otherwise determines and advises BI in writing, and BI will immediately cease
Development of any BI Compound, (ii) BI shall, (a) to the extent legally
permissible, take all action reasonably necessary to assign all of its right,
title and interest in and transfer possession and control to PPI of the
regulatory filings prepared by BI, and regulatory approvals received by BI, to
the extent that such filings and approvals relate to a BI Compound and/or any BI
Product and (b) grant PPI, and take any other action necessary to provide PPI
with, a worldwide, perpetual, exclusive, fully-paid and royalty free right and
license, with the right to grant sublicenses, under any and all applicable BI
Patent Rights and BI know-how

                                       29
<PAGE>

to develop such BI Compound, and to develop, manufacture or have manufactured,
use and sell or have sold such BI Compound as incorporated into a BI Product and
(iii) PPI shall retain any and all remedies which may be available to it at law
or in equity.

                  10.3.2 Termination By PPI After Commencement of Phase III. In
the event that PPI is entitled to terminate this Agreement pursuant to Section
10.1 after the Phase III Initiation Date, then from and after the time such
right of termination first arises, (i) the Applicable Base Royalty Rate
applicable to Net Sales of any BI Product in any country shall be *** times such
Applicable Base Royalty Rate as would have otherwise applied and (ii) PPI shall
retain any and all remedies which may be available to it at law or in equity.

            10.4 Effect of Termination by BI.

                  10.4.1 Termination for PPI Breach. (a) In the event that BI is
entitled to terminate this Agreement pursuant to Section 10.1.1, BI may elect,
by notice to PPI (a "Section 10.4.1(a) Notice") not later than thirty (30) days
after such right first arises, to either (i) terminate this Agreement, in which
case all licenses and rights granted to BI shall terminate, except to the extent
the parties otherwise agree in writing, and BI will immediately cease
Development of any BI Compound and will cease to manufacture and sell any BI
Products except as provided in this Section 10.4.1(a) and except as the parties
otherwise agree in writing, and BI shall retain any and all remedies which may
be available to it at law or in equity or (ii) pursue the remedy set forth in
Section 10.4.1(b) below (it being understood and agreed that if BI fails to
deliver to PPI a Section 10.4.1(a) Notice within the required thirty (30) day
period, BI shall be deemed to have elected such remedy set forth in Section
10.4.1(b) below). If BI elects to terminate this Agreement pursuant to clause
(i) above, then (x) BI may dispose of its inventory of BI Products on hand as of
the effective date of termination, and may fill any orders for twelve (12)
months after the effective date of termination and (y) within thirty (30) days
after disposition of such inventory and fulfillment of such orders (and in any
event within seven (7) months after termination) BI will forward to PPI a final
report and, subject to Section 10.5, if applicable, pay all royalties due for
Net Sales in such period.

                                       30
<PAGE>

            (b) If BI elects, pursuant to Section 10.4.1, to pursue the remedy
set forth in this paragraph (b), then (i) BI shall have the right and option, if
it has obtained a final judgment or award of monetary damages and/or costs
against PPI based on such breach, (A) to offset the amount of such damages
and/or costs against any amounts would otherwise be payable to PPI under Article
2 or Article 6 and (B) if the breach which gave rise to BI's right to terminate
this Agreement was PPI's material breach of BI's right to exclusivity pursuant
to Section 2.5 or Section 3.1, (1) BI may cease paying royalties to PPI
hereunder (and in such event BI shall be deemed to have a paid-up and royalty
free license equivalent to that set forth in Section 3.1 hereof), (2) PPI's
rights pursuant to Section 3.5.1 shall automatically terminate, if such breach
occurs prior to the Phase III Initiation Date or equivalent development stage of
a Licensed Diagnostic Compound and (3) the parties acknowledge and agree that if
such breach occurs after the Phase III Initiation Date or equivalent development
stage of a Licensed Diagnostic Compound, the royalties which would otherwise be
payable by PPI to BI pursuant to the license agreement referred to in Section
3.5.1 (or which would be considered customary for purposes of the license
negotiation referred to in such Section) shall be multiplied by 3, and (ii) BI
shall retain any and all remedies (other than termination of this Agreement)
which may be available to it at law or in equity.

                  10.4.2 Termination for Change of Control. In the event that BI
is entitled to terminate this Agreement pursuant to Section 10.1.5, BI may
terminate this Agreement, in which case all licenses and rights granted to BI
shall terminate, except to the extent PPI otherwise determines and advises BI in
writing, and BI will immediately cease Development of any BI Compound.

                            ARTICLE 11. MISCELLANEOUS

            11.1 Force Majeure. Neither party shall be held liable or
responsible to the other party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or

                                       31
<PAGE>

not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party; provided, however, that the party so
affected shall use reasonable commercial effects to avoid or remove such causes
of non-performance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either party shall provide the other
party with prompt written notice of any delay or failure to perform that occurs
by reason of force majeure. The parties shall mutually seek a resolution of the
delay or the failure to perform as noted above. It is understood and agreed that
if this Section 11.1 is applicable to a party's failure or delay in performing
its obligations under the Work Plan, the other party will not be obligated
thereunder until the first party has so performed, and if such failure or delay
is by PPI, BI will not be obligated to pay PPI the payment required by Section
2.2(b) until such failure or delay is cured. It is further agreed that if such
failure or delay by either party continues for more than twelve consecutive
months, the other party shall have the right to terminate this Agreement with
the effect provided in Section 10.3.1. (if such failure or delay is by BI) or
Section 10.4.1 (if such failure or delay is by PPI).

            11.2 Assignment. This Agreement may not be assigned or otherwise
transferred by either party without the consent of the other party; provided,
however, that either PPI or BI may, without such consent, assign its rights and
obligations under this Agreement (i) in connection with a corporate
reorganization, to any Affiliate, all or substantially all of the equity
interest of which is owned and controlled by such party or its direct or
indirect parent corporation, or (ii) in connection with a merger, consolidation
or sale of substantially all of such party's assets to an unrelated third party;
provided, however, that such party's rights and obligations under this Agreement
shall be assumed (by operation of law or otherwise) by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. Any purported assignment in violation
of the preceding sentence shall be void. Any permitted assignee

                                       32
<PAGE>

shall assume all obligations of its assignor under this Agreement.

            11.3 Severability. Each party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions which valid
provisions in their economic effect are sufficiently similar to the invalid
provisions that it can be reasonably assumed that the parties would have entered
into this Agreement with such valid provisions. In case such valid provisions
cannot be agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole, unless the
invalid provisions are of such essential importance to this Agreement that it is
to be reasonably assumed that the parties would not have entered into this
Agreement without the invalid provisions.

            11.4 Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.

  If to PPI:            Pharmaceutical Peptides, Inc.
                        One Hampshire Street
                        Cambridge, Massachusetts  02139
                        Attention: President
                        Telephone: (617) 494-8400
                        Telecopy: (617) 494-8414

  with copy to:         Skadden, Arps, Slate, Meagher & Flom
                        One Beacon Street, 31st Floor
                        Boston, Massachusetts  02108
                        Attention: Kent A. Coit, Esq.
                        Telephone: (617) 573-4835
                        Telecopy: (617) 573-4822

                                       33
<PAGE>

  If to BI:             Boehringer Ingelheim International GmbH
                        Postbox 200
                        D-55216 Ingelheim, Rhein
                        Germany
                        Attention: Corporate Licensing
                        Telephone: 011 49 61 32 77 34 08
                        Telecopy: 011 49 61 32 77 35 83

  with a copy to:       Boehringer Ingelheim International GmbH
                        Postbox 200
                        D-55216 Ingelheim, Rhein
                        Germany
                        Attention:  Head of Legal Department
                        Telephone:  011 49 61 32 77 21 06
                        Telecopy:  011 49 61 32 77 35 83

            11.5 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of law provisions thereof.

            11.6 Dispute Resolution; Choice of Forum. Any disputes arising
between the parties relating to, arising out of or in any way connected with
this Agreement or any term or condition hereof, or the performance by either
party of its obligations hereunder, whether before or after the termination
pursuant to Section 10.1 of this Agreement, shall be promptly presented to the
Chief Executive Officer of PPI and the Member of the Corporate Board of BI
responsible for Pharmaceuticals for resolution and if they or their designees
cannot promptly resolve such disputes, then either party shall have the right to
bring an action to resolve such dispute before a court of competent
jurisdiction. The parties hereby submit to the exclusive jurisdiction of the
federal or state courts located within the State or City of New York for the
conduct of any suit, action or proceeding arising out of or relating to this
Agreement.

            11.7 Arbitration. If the parties are unable to enter into the
definitive license agreement referenced in Section 3.5.1 within the time period
specified in such Section, or are unable to reach agreement on royalty terms for
a Bundled Product as provided in Section 6.1.2(c) within the time period
specified in such Section, the terms of such license agreement or such royalty
terms, as applicable, shall be settled by arbitration. Such arbitra-

                                       34
<PAGE>

tion shall be conducted in the City of New York, in accordance with the
Commercial Arbitration rules then pertaining to the American Arbitration
Association with a panel of three (3) arbitrators. The arbitrators shall be
selected from the National Panel of Arbitrators of the American Arbitration
Association. The laws of the State of New York shall apply to the arbitration
proceedings. The decision of the arbitrators with respect to the terms of such
license agreement, or such royalty terms, as applicable, shall be final and
binding on the parties and their legal successors.

            11.8 Entire Agreement. This Agreement, together with the appendices
hereto contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes the Confidentiality Agreement dated August
8, 1995 between PPI and BI. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties
hereto.

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

            11.10 Independent Contractors. It is expressly agreed that PPI and
BI shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither PPI
nor BI shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other, without the prior consent of the other party to do so.

            11.11 Agreement Not to Solicit Employees. During the term of this
Agreement and for a period of two (2) years following the termination of this
Agreement, PPI and BI agree not to seek to persuade or induce any employee of
the other company who is or was involved in the collaboration provided for
herein to discontinue his or her employment with that company in order to
become employed by or associated with any business, enterprise or effort that is
associated with its own business.

                                       35
<PAGE>

            11.12 Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. PPI and BI agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any governmental regulations which may be applicable, including, but not limited
to, the Export Administration Act of 1979, as amended, its rules and
regulations, including, but not limited to, Part 779 of the United States Export
Control Regulations, published by the United States Department of Commerce, and
other applicable export control laws. PPI and BI agree to obtain similar
covenants from their licenses, sublicenses and contractors with respect to the
subject matter of this Section 11.12.

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

            11.14 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and together shall
constitute one and the same instrument.

                                       36
<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.

                                                PHARMACEUTICAL PEPTIDES, INC.

                                                By /s/ Joseph M. Limber
                                                  ------------------------------
                                                   Name: Joseph M. Limber
                                                   Title: President/COO

                                                BOEHRINGER INGELHEIM
                                                  INTERNATIONAL GmbH

                                                By /s/ Hohbach Muller
                                                  ------------------------------
                                                   Name: Hohbach Muller
                                                   Title: Authorized Signatories

                                       37
<PAGE>

                                   APPENDIX A

--------------------------------------------------------------------------------
    Patent Application            Claims Included            Claims Excluded
    ------------------            ---------------            ---------------
--------------------------------------------------------------------------------
U.S. Patent Appli-          Compositions of            Compositions of
cation Serial No.           Matter:                    Matter:
08/404,831
                            13-17 and 30-32            1-12 and 20-29

                            Methods:                   Methods:

                            18-19, 37-44, 50-52        33-36, 45-49 and
                            and 59-62                  53-58
--------------------------------------------------------------------------------
U.S. Continuation-          Compositions of            Compositions of
in-Part Patent              Matter:                    Matter:
Application
Serial No.                  14-18 and 32-34            1-13 and 21-31
08/475,579
                            Methods:                   Methods:

                            19-20 and 40-47            35-39
--------------------------------------------------------------------------------
<PAGE>

                                   APPENDIX B

                               WORK PLAN UNDER THE
                       COLLABORATION AND LICENSE AGREEMENT
                           DATED AS OF AUGUST 1, 1996
                                 BY AND BETWEEN
                          PHARMACEUTICAL PEPTIDES, INC.
                                       AND
                     BOEHRINGER INGELHEIM INTERNATIONAL GmbH

This is the Work Plan referred to in, and which forms a part of, the
Collaboration and License Agreement dated as of August 1, 1996 by and between
Pharmaceutical Peptides, Inc. and Boehringer Ingelheim International GmbH (the
"Collaboration Agreement"). Capitalized terms used but not defined herein have
the respective meanings ascribed thereto in the Collaboration Agreement.

I. Screening Program

During the Screening Term, PPI will employ exclusively assays A-D as described
below to screen for A(beta) peptide polymerization inhibition activity for
50,000 compounds selected and supplied by BI. *** Depending on activity levels
seen in Assay A, PPI may require additional material for Assays B-D and
subsequent in vivo assays. PPI will deliver to BI SAR data on existing PPI
Compounds within 6 weeks of the Effective Date. BI will deliver to PPI at least
13,000, 25,000, 37,500, and 50,000 compounds within 2.0, 5.0, 12.0, and 16.0
months respectively, of the Effective Date and PPI anticipates, barring any
unforeseen technical issues, screening 25,000 compounds in its Nucleation Assay
within 12 months and 50,000 compounds in its Nucleation Assay within 24 months
of the Effective Date. Compounds jointly designated will be further screened in
secondary assays described below.

Assay                    Functional Measurement          Manpower
-----                    ----------------------          --------
A. Nucleation Assay      ***                             *** FTE
B. Extension Assay       ***                             *** FTE
C. Neurotoxicity         ***                             *** FTE
D. Specificity           ***                             *** FTE
<PAGE>

PPI will make available *** FTE's to the Screening Program immediately following
the Effective Date. These FTE's will either be new hires or redeployments of
existing personnel. PPI anticipates that it will be evaluating BI compounds in
assays A-D within 6 weeks of first receiving compounds from BI. All Applicable
data will be supplied to BI in PC compatible form (e.g. ASCI II or Excel files).
All BI compounds will be handled or disposed of in accordance with BI's written
instructions.

A. Nucleation Assay: A rapid high-throughput primary screen

The nucleation assay *** Approximately 13 lines omitted ***

B. Extension Assay: ***

The extension assay *** Approximately 6 lines omitted ***

C. Neurotoxicity Assay: in vitro Cellular Efficacy

*** Approximately 10 lines omitted ***

D. ***: Amyloid Specificity Assays

*** Approximately 9 lines omitted ***

II. Development of Animal Model for A(beta)Peptide Polymerization Inhibitors

      Assay        Functional Measurement           Manpower
      -----        ----------------------           --------
   Animal Model    ***                              ***

                                       40
<PAGE>

PPI will dedicate *** to the development of an animal model immediately
following the Effective Date. *** will either be *** new hire or a redeployment
of *** The *** for assay 5 will be active in the identification, in-house
development, and validation of an efficacy model for testing A(beta) peptide
polymerization inhibitors.

*** Approximately 9 lines omitted ***

III. Capital Budget Items

Capital Budget items include dedicated equipment and assay specific supplies
purchased during the Screening Program. These will include but not be limited
to:

      Dedicated Equipment
      o     2 rotary shakers
      o     Plate-reader flourimeter
      o     Spectrophotometer (96-well Plate Reader)
      o     Spectrophotometer (Cuvette)
      o     Computers (data management, direct connection to flourimeter)
      o     Cryostat
      o     Stereotaxtic Apparatus

      Assay Specific Supplies
      o     Pipet tips
      o     Multi-pipettors
      o     Low-Bind 96 well plates
      o     Standard 96 well plates
      o     Reservoirs
      o     Computer Software
      o     Disposable Cuvettes
      o     Tissue Culture Media and Supplies
      o     Histochemical Supplies
      o     Animal Purchase Costs/Supplies/Housing
<PAGE>

      o     Osmotic Pumps

      *** Approximately 4 lines omitted ***<PAGE>

                                                                Exhibit 10.24

                                                                Warrant #96-6

NEITHER THIS WARRANT, NOR THE SHARES REPRESENTED BY THIS WARRANT, HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE, AND THEREFORE THEY MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED UNLESS REGISTERED UNDER THE APPLICABLE PROVISIONS OF
SUCH ACTS OR UNLESS THE CORPORATION HAS RECEIVED AN OPINION FROM LEGAL
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIREd.

                             WARRANT

         FOR PAYMENT OF THE SUM OF SIX THOUSAND U.S. DOLLARS (U.S. $6,000),
PHASECOM, INc., a Delaware corporation (the "Corporation"), hereby grants to
PHASECOM INVESTOR GROUP LIMITED PARTNERSHIP ("Holder"), the right to purchase
from the Corporation up to sixty thousand (60,000) shares of the Common Stock
of the Corporation (the "Warrant Shares"), subject to the following terms and
conditions:

         1. TERM. This Warrant may be exercised in whole at any time during
from the date of issuance of this Warrant through April 22, 2000 (the
"Exercise Period"). The number of shares subject to this Warrant shall only
be exerciseable up to the aggregate number of shares exercised pursuant to
the following warrants issued by the Corporation:

<TABLE>
<CAPTION>
            #        DATE ISSUED            NAME OF WARRANT HOLDER   EXERCISE PRICE     # SHARES
           --        -----------            ----------------------   --------------     --------
         <S>       <C>                     <C>                       <C>                <C>
         96-3        04/22/96               Lior Bregman                  $3.00         20,000
         96-4        04/22/96               Stanley Stern                 $3.00         20,000
         96-5        04/22/96               Avraham Fischer               $3.00         20,000
         TOTAL                                                                          60,000
</TABLE>

           2. PURCHASE PRICE. The purchase price for each share of the
Corporation's Common Stock purchasable hereunder shall be Three U.S. Dollars
(U.S. $3.00) (the "Warrant Exercise Price"), although this Warrant shall only
be exercisable pursuant to Section 3 (below).

         3. EXERCISE OF WARRANT. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole, but not in part, at any
time and from time to time before the end of the Exercise Period by the
surrender of this Warrant at the office of the Corporation, at its principal
office in Cupertino, California (or such other office or agency of the
Corporation as it may be designated by notice in writing to the Holder at the
address of the Holder appearing on the books of the Corporation), without the
payment in cash of any exercise price for that number of Warrant Shares equal
to the quotient obtained by dividing (x) the value of

<PAGE>

the Warrant Shares for which this Warrant is being exercised (the "Exercised
Shares") on the exercise date (determined by subtracting the aggregate
Warrant Exercise Price for the Exercised Shares on the exercise date from the
aggregate Fair Market Value (as hereinafter defined) of the Exercised Shares
on the exercise date) by (y) the Fair Market Value of one (1) share of Common
Stock on the exercise date.

         Fair Market Value of a share of Common Stock shall mean:

                  a. If the Corporation's Common Stock is listed on a
national securities exchange or is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation/ National Market System
(NASDAQ/NMS), then the closing or last sale price, respectively, reported for
the exercise date.

                  b. If the Corporation's Common Stock is not listed on a
national securities exchange or quoted on NASDAQ/NMS, but is traded in the
over-the-counter market, then the mean of the closing bid and asked prices is
reported for the exercise date.

                  c. Except as set forth in Section 3.d. (below), if the
Corporation's Common Stock is not publicly traded, then as determined by an
independent third party who shall be appointed by eighty percent (80%) of the
Corporation's Board of Directors.

                  d. If the exercise date is the date of closing of a public
offering of the Corporation's Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, then the
public offering price (before deduction of discounts, commissions or
expenses) in such offering.

                  Certificates for shares purchased hereunder shall be
delivered to the Holder within thirty (30) business days after the date on
which this Warrant shall have been exercised as aforesaid, but Holder shall
be deemed the record owner of such Warrant Shares as of and from the close of
business on the date on which this Warrant shall be surrendered.

                  The entire Warrant must be surrendered, and no new Warrant
shall be issued. In no event shall a cashless exercise entitle the Holder to
exercise more than the Warrant Shares.

         4. FRACTIONAL INTEREST. The Corporation shall not be required to
issue any fractional shares on the exercise of this Warrant.

                                       -2-

<PAGE>

         5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Corporation with regard to the Warrant
Shares prior to actual exercise resulting in the purchase of the Warrant
Shares.

         6. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant
Shares issuable upon the exercise of this Warrant have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or under the
California Corporate Securities Law of 1968. Holder acknowledges by
acceptance of the Warrant that (a) it has acquired this Warrant for
investment and not with a view toward distribution; (b) it has a pre-existing
personal or business relationship with the Corporation, or its executive
officers, or by reason of its business or financial experience it has the
capacity to protect its own interests in connection with the transaction; and
(c) it is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act. Holder agrees that any Warrant Shares
issuable upon exercise of this Warrant will be acquired for investment and
not with a view toward distribution; and acknowledges that to the extent such
Warrant Shares will not be registered under the Securities Act and applicable
state securities laws, that such Warrant Shares may have to be held
indefinitely unless they are subsequently registered or qualified under the
Securities Act and applicable state securities laws; or, based on an opinion
of counsel reasonably satisfactory to the Corporation, an exemption from such
registration and qualification is available. Holder, by acceptance hereof,
consents to the placement of the following restrictive legend, or similar
legend, on each certificate to be issued to Holder by the Corporation in
connection with the issuance of such Warrant Shares:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
         QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
         TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE IS AN
         EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING
         SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL
         FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION,
         STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
         EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
         SUCH ACT AND ANY FURTHER QUALIFICATION REQUIREMENTS UNDER APPLICABLE
         STATE LAW."

         7. STOCK FULLY PAID, RESERVATION OF SHARES. All Warrant Shares that
may be issued upon the exercise of the rights represented by this Warrant and
Common Stock will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The
Corporation agrees at all times during the Exercise Period to have authorized
and reserved, for the exclusive purpose of issuance and delivery upon
exercise of this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the rights represented hereby.

                                      -3-

<PAGE>

         8. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES. The
number and kind of securities purchasable under the exercise of the Warrant,
and the Warrant Price shall be subject to adjustment from time to time upon
the occurrence of certain events, as follows:

                  a. RECLASSIFICATION OR MERGER. In any case of any
reclassification, change or conversion of securities of the class issuable
upon exercise of this Warrant (other than a change in the par value, or from
par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination), or in case of any merger of the Corporation
with or into another corporation (other than a merger with another
corporation in which the Corporation is a continuing corporation, and which
does not result in any reclassification or change of outstanding securities
issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Corporation, the Corporation, or such
successor or purchasing corporation, as the case may be, shall execute a new
Warrant (in form and sub stance satisfactory to Holder), providing that
Holder shall have the right to exercise such new Warrant and, upon such
exercise, to receive, in lieu of each Share of Common Stock thereto fore
issuable upon exercise of this Warrant, the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of one (1) share of Common
Stock. Such new Warrant shall provide for adjustment that shall be as nearly
equivalent as may be practicable to the adjustment provided for in this
Section 8. The provisions of this subsection 8.a. shall similarly apply to
successive reclassifications, changes, mergers and transfers.

                  b. SUBDIVISIONS OR COMBINATIONS OF SHARES. If the
Corporation at any time while this Warrant remains outstanding and unexpired
shall subdivide or combine its Common Stock, the Warrant Exercise Price, and
the number of Shares issuable upon exercise hereof shall be proportionately
adjusted.

                  c. STOCK DIVIDENDS. If the Corporation at any time while
this Warrant is outstanding and unexpired shall pay a dividend payable in
shares of Common Stock (except as a distribution specifically provided for in
the foregoing subsections 8.a. and 8.b., then the Warrant Exercise Price
shall be adjusted, from and after the date of determination of share holders
entitled to receive such dividend or distribution, to that price determined
by multiplying the Warrant Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of Shares of Common Stock

                                      -4-

<PAGE>

outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of Shares of Common Stock
outstanding immediately after such dividend or distribution and the number of
Warrant Shares subject to this Warrant shall be proportionately adjusted.

                  d. NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, con solidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 8, and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of Holder against impairment.

                  e. NOTICE OF ADJUSTMENTS. Whenever the Warrant Exercise
Price shall be adjusted pursuant to the provisions hereof, the Corporation
shall within thirty (30) days after such adjustment deliver a certificate
signed by its Chief Financial Officer to Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Warrant Exercise
Price, after giving effect to such adjustment.

         9. PUBLIC OFFERING LOCK-UP. For a period of one hundred eighty (180)
days (the "Stand-off Period"), commencing on the date of an Initial Public
Offering ("IPO"), Holder shall not exercise its right to purchase any Warrant
Shares hereunder if requested by the Corporation at any time prior to an IPO,
or sell, pledge or otherwise transfer any Warrant Shares (or any other shares
exchanged therefor), if this Warrant has been exercised, to any person or
entity; provided, that the Stand-off Period shall in no event be longer than
the shortest comparable stand-off period agreed to in connection with such
IPO by any executive officer of the Corporation, or any person holding five
percent (5%) or more of the Common Stock of the Corporation (assuming the
conversion into Common Stock of all outstanding convertible securities). If
the Corporation has requested Holder not to exercise this Warrant, the
Exercise Period hereunder shall be extended for a period equal to the term of
the Stand-off Period. Holder shall execute any agreement as requested by the
Corporation with an under writer of the Corporation's stock, to reflect the
foregoing.

                                       -5-

<PAGE>

         10. ADDITIONAL RIGHTS. Unless the Corporation provides Holder with
advance notice of the terms and conditions of a proposed transaction as
described below, the Corporation will not (a) sell, lease, exchange, convey
or otherwise dispose of all or substantially all of its property or business;
or (b) merge into or consolidate with any other corporation (other than a
wholly-owned subsidiary of the Corporation, or effect any transaction
(including a merger or other reorganization) or series of related
transactions, in which more than fifty percent (50%) of the voting power of
the Corporation is disposed.

         11. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and
delivered on the basis of the following:

                  a. CORPORATE AUTHORIZATION. This Warrant has been duly
authorized and executed by the Corporation, and when delivered will be the
valid and binding obligation of the Corporation, enforceable in accordance
with the terms hereof.

                  b. WARRANT AUTHORIZATION. The Warrant Shares have been duly
authorized and reserved for issuance by the Corporation and, when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable.

                  c. ARTICLES OF INCORPORATION. The rights, preferences,
privileges and restrictions granted to or imposed upon the Shares of Common
Stock and Holder are as set forth in the Corporation's Articles of
Incorporation, as amended, a true and complete copy of which has been
delivered to the original Warrant Holder.

                  d. RESERVATION OF SHARES. The Shares of Common Stock
issuable have been duly authorized and reserved and, when issued in
accordance with the terms of the Corpora tion's Articles of Incorporation, as
amended, will be validly issued, fully paid and nonassessable.

                  e. DELIVERY. The execution and delivery of this Warrant are
not, and the issuance of the Shares upon exercise of this Warrant in
accordance with the terms hereof will not be, inconsistent with the
Corporation's Articles of Incorporation or Bylaws; do not and will not
contravene any law, governmental rule or regulation, judgment or order
applicable to the Corporation; and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument of which the Corporation is a party, or by which
it is bound or requires the consent or approval of, the giving of notice to,
the registration with or the taking of any action in respect of or by, any
federal, state or local

                                       -6-

<PAGE>

government authority or agency, or other person, other than qualification
with the California Department of Corporations.

         12. GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of California, applicable to
contracts between California residents entered into and to be performed
entirely within the State of California.

         13. DESCRIPTIVE HEADINGS. The headings used herein are descriptive
only and for the convenience of identifying provisions, and are not
determinative of the meaning or effect of any such provisions.

         AGREED BY UNDERSIGNED AND BINDING ON HOLDER THAT THIS WARRANT
         SUPERSEDES AND REPLACES ANY AND ALL EXISTING WARRANTS OF THE SAME
         NUMBER OF WARRANT SHARES.

Dated: April 23, 1996                         PHASECOM, INc.

                                              By: /s/ Shaul Berger, President
                                                 ------------------------------
                                                  Shaul Berger, President

                                      -7-

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