Document:

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                                                                  EXHIBIT 10.22

                                          *** TEXT OMITTED AND FILED SEPARATELY
                                               CONFIDENTIAL TREATMENT REQUESTED
                                          UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
                                                            200.83 AND 230.406.

                                LICENSE AGREEMENT

         THIS LICENSE AGREEMENT (the "Agreement") dated as of June 11, 1999
(the "Effective Date") is made by and between ELITRA PHARMACEUTICALS, INC., a
corporation organized under the laws of the State of California (the
"Company"), and SAN DIEGO STATE UNIVERSITY FOUNDATION, a California nonprofit
public benefit corporation (the "Foundation").

                                    RECITALS

         WHEREAS, the Foundation possesses chitobiase, a proprietary enzyme
useful for the discovery and development of chemical compounds;

         WHEREAS, the Company is engaged in the discovery, development and
commercialization of chemical compounds for therapeutic applications; and

         WHEREAS, the Foundation wishes to grant to the Company, and the
Company wishes to obtain from the Foundation, an exclusive license to such
enzyme, including patent rights and know-how related thereto, on the terms
and subject to the conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter set forth, the parties hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1  "AFFILIATE" means any corporation or other entity which
controls, is controlled by, or is under 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 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.

         1.2  "CONFIDENTIAL INFORMATION" means any confidential or
proprietary information of a party, including information relating to the
Licensed Technology and any information relating to any compound, research
project, work in process, future development, scientific, engineering,
manufacturing, marketing, business plan, financial or personnel matter
relating to such party, its present or future products, sales, suppliers,
customers, employees, investors or business, whether in oral, written,
graphic or electronic form. Notwithstanding the foregoing, Confidential
Information shall not include any information which the receiving party can
prove by competent written evidence:

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

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

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

                  (d) is independently developed by the receiving party
without the aid, application or use of information of the other party; or

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

         1.3  "CONTROL" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.

         1.4  "ENZYME" means the chitobiase enzyme expressed as a cytoplasmic
protein for use as a reporter to measure gene transcription.

         1.5  "FIRST COMMERCIAL SALE" means the first sale of the Enzyme for
use in research in a given country. Sale to an Affiliate or sublicensee shall
not constitute a First Commercial Sale unless the Affiliate or Sublicensee is
the end user of the Enzyme.

         1.6  "KNOW-HOW" means all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods, formulas,
protocols and information, whether or not patentable, under the Control of
the Foundation, which are not covered by the Patent Rights, but which are
necessary or appropriate for use of the Enzyme, and which are not generally
publicly known, including, without limitation, all chemical, biochemical,
toxicological and scientific research information.

         1.7  "LICENSED TECHNOLOGY" means the Patent Rights and the Know-How.

         1.8  "NET SALES" means the gross amounts invoiced for sales of the
Enzyme, or any analogue or derivative thereof, by the Company and its
Affiliates to a Third Party, less (a) discounts actually granted, (b) credits
or allowances actually granted upon claims, damaged goods, rejections or
returns of the Enzyme, including recalls, (c) freight, postage, shipping and
insurance charges actually allowed or paid for delivery of the Enzyme, to the
extent billed (with the understanding that the shipping costs are normally
paid by the buyer), and (d) taxes, duties or other governmental charges
(other than income taxes) levied on, absorbed or otherwise imposed on sales
of the Enzyme. In the event that a product sold by the Company or its
Affiliates is comprised in part of the Enzyme and in part of one or more
other components (E.G. a substrate), Net Sales shall equal the fair market
value of the Enzyme.

         1.9  "PATENT RIGHTS" means all rights under any patent or patent
application related to the Enzyme which is under the Control of the
Foundation and any and all patents issuing therefrom (including utility,
model and design patents and certificates of invention), together with any
and all substitutions, extensions (including supplemental protection
certificates),

                                      2.

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registrations, confirmations, reissues, divisionals, continuations,
continuations-in-part, re-examinations, renewals and foreign counterparts of
the aforementioned.

         1.10 "SUBLICENSEE" means any Third Party to whom the Company grants
a sublicense of its rights under Section 2.1.

         1.11 "TERM" shall have the meaning set forth in Section 7.1.

         1.12 "THIRD PARTY" means any person or entity other than the Company
or the Foundation or an Affiliate of the Company or the Foundation.

                                    ARTICLE 2
                                GRANT OF LICENSE

         2.1 LICENSE GRANT. Subject to the terms and conditions of this
Agreement, the Foundation hereby grants to the Company an exclusive,
worldwide license, including the right to grant sublicenses through multiple
tiers of sublicense, under the Licensed Technology to develop, make, have
made, use, offer for sale, sell and import the Enzyme or any product which is
identified, discovered or developed using the Enzyme.

         2.2 SUBLICENSES. The Company shall notify any Sublicensee hereunder
of all rights and obligations of the Company under this Agreement which are
sublicensed to such Sublicensee. The Company shall notify the Foundation of
any sublicense to the Licensed Technology granted hereunder.

         2.3 RESERVATION OF RIGHTS. Notwithstanding the license grant set
forth in Section 2.1, the United States government reserves all statutory
rights under 35 U.S.C. Sections 201-211, and the regulations promulgated
thereunder, with respect to Licensed Technology wholly or partially funded by
the United States government.

                                    ARTICLE 3
                        ROYALTY PAYMENTS; RECORDS; AUDITS

         3.1      ROYALTIES.

                  (a) The Company will pay to the Foundation a royalty equal
to [... *** ...]% of Net Sales.

                  (b) The Company will pay to the Foundation a royalty equal
to [... *** ...]% of amounts received by the Company from any Sublicensee for
sales by such Sublicensee of the Enzyme for use in research.

                  (c) Notwithstanding the foregoing, no royalty or other
payment shall be due to the Foundation (i) for sales of any product which is
identified, discovered or developed using the Enzyme, or (ii) for use of the
Enzyme by the Company or any of its Affiliates or any Third Party in
collaboration with the Company or any of its Affiliates for their own
research purposes, including, without limitation, use of the Enzyme for drug
discovery.

                                             *CONFIDENTIAL TREATMENT REQUESTED
                                      3.

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         3.2 PAYMENT; REPORTS. Royalty payments shall be calculated and
reported for each calendar quarter. All royalty payments due to the
Foundation under this Agreement shall be paid within 60 days of the end of
each calendar quarter, unless otherwise specifically provided herein. Each
payment of royalties shall be accompanied by a report in sufficient detail to
permit confirmation of the accuracy of the royalty payment made, including,
without limitation, Net Sales, the royalties payable in United States
dollars, the method used to calculate the royalty and the exchange rates used.

         3.3 EXCHANGE RATE; MANNER AND PLACE OF PAYMENT. All payments due
hereunder shall be payable in United States dollars. With respect to each
quarter, for countries other than the United States, whenever conversion of
payments from any foreign currency shall be required, such conversion shall
be made at the rate of exchange reported in THE WALL STREET JOURNAL on the
last business day of the applicable reporting period. All payments owed under
this Agreement shall be made by wire transfer, unless otherwise specified in
writing by the Foundation.

         3.4 RECORDS AND AUDITS. During the Term and for a period of five
years thereafter, the Company shall keep complete and accurate records in
sufficient detail to permit the Foundation to confirm the accuracy of all
payments due hereunder. The Foundation shall have the right to cause an
independent, certified public accountant reasonably acceptable to the Company
to audit such records to confirm royalty payments for the preceding year.
Such audits may be exercised during normal business hours no more than once
in any 12-month period upon at least 30 working days' prior written notice to
the Company. The Foundation shall bear the full cost of such audit unless
such audit discloses an underpayment by more than 5% of the amount due under
this Agreement. In such case, the Company shall bear the full cost of such
audit.

         3.5 TAXES. All taxes levied on account of the royalty payments
accruing to the Foundation under this Agreement shall be paid by the
Foundation for its own account, including taxes levied thereon as income to
the Foundation. If provision is made in law or regulation for withholding,
such tax shall be deducted from the royalty payments made by the Company to
the proper taxing authority and a receipt of payment of the tax secured and
promptly delivered to the Foundation. Each party agrees to assist the other
party in claiming exemption from such deductions or withholdings under any
double taxation or similar agreement or treaty from time to time in force.

         3.6 PROHIBITED PAYMENTS. Notwithstanding any other provision of this
Agreement, if the Company is prevented from paying any such royalty by virtue
of the statutes, laws, codes or governmental regulations of the country from
which the payment is to be made, then such royalty may be paid by depositing
funds in the currency in which accrued to the Foundation's account in a bank
acceptable to the Foundation in the country whose currency is involved.

                                    ARTICLE 4
                                 CONFIDENTIALITY

         During the Term and for a period of five years thereafter, each
party shall maintain all Confidential Information of the other party as
confidential and shall not disclose any Confidential Information of the other
party to any Third Party or use any Confidential Information of the other
party for any purpose, except (a) as expressly authorized by this

                                      4.

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Agreement, (b) to file and prosecute patent applications, (c) as required by
law, rule, regulation or court order (provided that the disclosing party
shall use commercially reasonable efforts to obtain confidential treatment of
any such Confidential Information required to be disclosed and shall promptly
notify the other party of any law, rule, regulation or court order requiring
disclosure of such Confidential Information as soon as it becomes known to
the disclosing party and shall refrain from objecting or opposing reasonable
and lawful efforts of the disclosing party to prevent disclosure), or (d) to
its Affiliates, sublicensees, employees, agents, consultants and other
representatives, as well as to potential collaborators or sublicensees, so
long as such persons are under an obligation of confidentiality no less
stringent than as set forth herein. Each party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement. Each party shall use at least the same standard of care as it uses
to protect its own Confidential Information to ensure that its Affiliates,
sublicensees, employees, agents, consultants and other representatives do not
disclose or make any unauthorized use of Confidential Information of the
other party. Each party shall promptly notify the other party upon discovery
of any unauthorized use or disclosure of Confidential Information of the
other party.

                                    ARTICLE 5
                          INTELLECTUAL PROPERTY RIGHTS

         5.1 APPLICATION, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS. From
and after the Effective Date, the Company shall, at its expense, be
responsible for filing, prosecuting and maintaining patents and/or patent
applications in the United States for those inventions covered by the Patent
Rights. The Company will keep the Foundation advised of the status of the
filing, prosecution and maintenance of the Patent Rights and will provide to
the Foundation copies of official actions, amendments and responses with
respect to such filing, prosecution and maintenance. In the event that the
Company desires to abandon any Patent Rights, or if the Company later
declines responsibility for any Patent Rights, the Company shall provide
reasonable prior written notice to the Foundation of such intention to
abandon or decline responsibility, and the Foundation shall have the right,
at its expense, to file, prosecute, and maintain such Patent Rights.

         5.2 INFRINGEMENT BY THIRD PARTIES. The Company and the Foundation
shall promptly notify the other in writing of any alleged or threatened
infringement of any patent or patent application covered by the Patent Rights
or misappropriation of Know-How, of which they become aware. Both parties
shall use their best efforts in cooperating with each other to terminate such
infringement or misappropriation without litigation. The Company shall have
the first right to bring and control any action or proceeding with respect to
such infringement or misappropriation, at its own expense and by counsel of
its own choice, and the Foundation shall have the right to participate in
such action, at its own expense and by counsel of its own choice, if there
are claims or defenses which are not shared with the Company, or if the
Company fails to prosecute or raise claims or defenses that are shared by the
Company and the Foundation. If the Company fails to bring an action or
proceeding within (a) 90 days following the notice of alleged infringement or
misappropriation, or (b) 10 days before the time limit, if any, set forth in
the appropriate laws and regulations for the filing of such actions,
whichever comes first, the Foundation shall have the right to bring and
control any such action, at its own expense and by counsel of its own choice,
and the Company shall have the right to be represented in any such

                                      5.

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action, at its own expense and by counsel of its own choice. In the event a
party brings an infringement action, the other party shall cooperate fully,
including if required to bring such action, the furnishing of a power of
attorney of reasonable scope. Neither party shall have the right to settle
any patent infringement litigation or misappropriation under this Section 5.2
in a manner that diminishes the rights or interests of the other party
without the prior written consent of the other party. Except as otherwise
agreed to by the parties as part of a cost sharing arrangement, any recovery
realized as a result of such litigation, after reimbursement of any
litigation expenses of the Company and the Foundation, shall belong to the
party who brought the action.

         5.3 INFRINGEMENT OF THIRD PARTY RIGHTS. The Company and the
Foundation shall promptly notify the other in writing of any allegation by a
Third Party that the exercise of the rights granted to the Company under this
Agreement infringes or may infringe the intellectual property rights of such
Third Party. The Company shall have the first right to control any defense of
such claim, at its own expense and by counsel of its own choice, and the
Foundation shall have the right to participate in such action, at its own
expense and by counsel of its own choice, if there are counterclaims or
defenses which are not shared with the Company, or if the Company fails to
prosecute or raise counterclaims or defenses that are shared by the Company
and the Foundation. If the Company fails to proceed in a timely fashion with
regard to such defense, the Foundation shall have the right to control any
such defense of such claim, at its own expense and by counsel of its own
choice, and the Company shall have the right to be represented in any such
action, at its own expense and by counsel of its own choice. Neither party
shall have the right to settle any patent infringement litigation under this
Section 5.3 in a manner that diminishes the rights or interests of the other
party or obligates the other party to make any payment or take any action
without the prior written consent of the other party. Except as otherwise
agreed to by the parties as part of a cost sharing arrangement, any recovery
realized as a result of such litigation, after reimbursement of any
litigation expenses of the Company and the Foundation, shall belong to the
party who brought the action.

                                    ARTICLE 6
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

         6.1 CORPORATE POWER. Each party hereby represents and warrants that
it is duly organized and validly existing under the laws of the state of its
incorporation and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof.

         6.2 DUE AUTHORIZATION. Each party hereby represents and warrants
that such party is duly authorized to execute and deliver this Agreement and
to perform its obligations hereunder.

         6.3 BINDING AGREEMENT. Each party hereby represents and warrants
that this Agreement is a legal and valid obligation binding upon it and is
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a
party or by which it may be bound, nor violate any law or regulation of any
court, governmental body or administrative or other agency having authority
over it.

                                      6.

<PAGE>

         6.4 OWNERSHIP OF PATENT RIGHTS. The Foundation represents and
warrants that (a) it is the sole owner of all right, title and interest in
and to the Patent Rights, (b) it has not granted any license under the Patent
Rights to any Third Party and is under no obligation to grant any such
license except to the Company, and (c) there are no outstanding liens,
encumbrances, agreements or understandings of any kind, either written, oral
or implied, regarding the Patent Rights which are inconsistent or in conflict
with this Agreement.

         6.5 PATENT PROCEEDINGS. The Foundation represents and warrants that,
to the best of its knowledge, no patent application within the Patent Rights
is the subject of any pending interference, opposition, cancellation or other
protest proceeding.

         6.6 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER
PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.

         6.7 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE ENTITLED TO RECOVER
FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR
tPUNITIVE DAMAGES IN CONNECTION WITH THE BREACH OF THIS AGREEMENT OR ANY CLAIM
ARISING OUT OF THE LICENSED TECHNOLOGY.

         6.8 INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to
indemnify, save, defend and hold harmless the Foundation and its trustees,
officers, employees, students and agents from and against any and all suits,
claims, actions demands, liabilities, expenses and losses, including
reasonable legal expense and attorneys' fees ("Losses"), arising directly or
indirectly out of the breach of any representation or warranty made by the
Company hereunder or out of the practice by the Company of the license
granted hereunder, except to the extent such Losses result from the gross
negligence or the willful misconduct of the Foundation. In the event the
Foundation seeks indemnification under this Section 6.7, the Foundation shall
inform the Company of a claim as soon as reasonably practicable after the
Foundation receives notice of the claim, shall permit the Company to assume
direction and control of the defense of the claim (including the right to
settle the claim solely for monetary consideration), and shall cooperate as
requested (at the expense of the Company) in the defense of the claim.

         6.9 INDEMNIFICATION BY THE FOUNDATION. The Foundation hereby agrees to
indemnify, save, defend and hold harmless the Company from and against any and
all Losses arising directly or indirectly out of the breach of any
representation or warranty made by the Foundation hereunder, except to the
extent such Losses result from the gross negligence or the willful misconduct of
the Company. In the event the Company seeks indemnification under this Section
6.8, the Company shall inform the Foundation of a claim as soon as reasonably
practicable after the Company receives notice of the claim, shall permit the
Foundation to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary consideration), and
shall cooperate as requested (at the expense of the Foundation) in the defense
of the claim.

                                      7.

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         6.10 DUE DILIGENCE. The Company agrees to use commercially
reasonable efforts to commercialize the Enzyme. If the Foundation believes
that the Company has not used commercially reasonable efforts to
commercialize the Enzyme, then the Foundation may seek resolution pursuant to
Article 8 of this Agreement. In the event the arbitrator determines that the
Company has not used commercially reasonable efforts to commercialize the
Enzyme, the license set forth in Section 2.1 shall become a non-exclusive
license for the Company, alone or in its drug discovery collaborations, to
use the Enzyme for drug identification, discovery and development, and the
Company shall have no further right to develop, make, have made, use, offer
for sale, sell or import the Enzyme.

                                    ARTICLE 7
                                TERM; TERMINATION

         7.1 TERM. This Agreement shall commence as of the Effective Date and
shall continue until the expiration of the last to expire patent under the
Patent Rights or, if no patent issues under the Patent Rights, 15 years after
the Effective Date, unless terminated earlier as provided herein (the
"Term"). Following the expiration of this Agreement, the Company shall have a
license on the same terms as set forth in Section 2.1, except that the
license shall be a non-exclusive, worldwide, fully-paid, irrevocable license.

         7.2 TERMINATION. Either party may terminate this Agreement prior to
the expiration of the Term upon the occurrence of any of the following:

                  (a) Upon or after the bankruptcy, insolvency, dissolution
or winding up of the other party (other than dissolution or winding up for
the purposes of reorganization or consolidation); or

                  (b) Upon or after the breach of any material provision of
this Agreement by the other party if the breaching party has not cured such
breach within 60 days after written notice thereof by the other party.

         7.3 EFFECT OF TERMINATION.

                  (a) Upon termination of this Agreement by the Foundation,
all rights to the Licensed Technology will revert to the Foundation.

                  (b) Within 30 days following termination of this Agreement,
each party shall return to the other party, or destroy, upon the written
request of the other party, any and all Confidential Information of the other
party in its possession.

                  (c) Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such expiration or
termination, including, without limitation, payment of accrued royalties. The
provisions of Sections 3.4, 4.1, 6.6, 6.7, 6.8, 6.9 and 7.3 and Articles 1, 8
and 9 shall survive termination or expiration of this Agreement.

                  (d) Upon termination of this Agreement, any sublicenses
granted hereunder by the Company shall remain in full force and effect, but
shall be assigned to the Foundation.

                                      8.

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                                    ARTICLE 8
                               DISPUTE RESOLUTION

         If any dispute arises between the parties relating to the
interpretation, breach or performance of this Agreement or the grounds for
the termination thereof, and the parties cannot resolve the dispute within 30
days of a written request by either party to the other party, the parties
agree to hold a meeting, attended by individuals with decision-making
authority regarding the dispute, to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies. If,
within 60 days after such meeting, the parties have not succeeded in
negotiating a resolution of the dispute, such dispute shall be submitted to
final and binding arbitration under the then current commercial rules and
regulations of the American Arbitration Association (the "AAA") relating to
voluntary arbitrations. The arbitration shall be held in San Diego,
California. The arbitration shall be conducted by one arbitrator, who is
knowledgeable in the subject matter at issue in the dispute and who will be
selected by mutual agreement of the parties or, failing such agreement, shall
be selected in accordance with AAA rules. Each party shall initially bear its
own costs and legal fees associated with such arbitration. The prevailing
party in any such arbitration shall be entitled to recover from the other
party actual attorneys' fees, costs and expenses incurred by the prevailing
party in connection with such arbitration. The decision of the arbitrator
shall be final and binding on the parties. The arbitrator shall prepare and
deliver to the parties a written, reasoned opinion conferring its decision.
Judgment on the award so rendered may be entered in any court having
competent jurisdiction thereof.

                                    ARTICLE 9
                                  MISCELLANEOUS

         9.1 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, without
limitation, fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts
or other labor disturbances, acts of God or acts, omissions or delays in
acting by any governmental authority or the other party.

         9.2 ASSIGNMENT. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or
otherwise transferred by either party without the prior written consent of
the other party (which consent shall not be unreasonably withheld); PROVIDED,
HOWEVER, that either party may assign this Agreement and its rights and
obligations hereunder without the other party's consent (a) in connection
with the transfer or sale of all or substantially all of the business of such
party to which this Agreement relates to a Third Party, whether by merger,
sale of stock, sale of assets or otherwise, or (b) to any Affiliate.
Notwithstanding the foregoing, any such assignment to an Affiliate shall not
relieve the assigning party of its responsibilities for performance of its
obligations under this Agreement. The rights and obligations of the parties
under this Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties. Any assignment not in
accordance with this Agreement shall be void.

                                      9.

<PAGE>

         9.3 GOVERNMENTAL INTEREST. The parties acknowledge that the
Foundation has received, and expects to continue to receive, funding from the
United States government in support of the research conducted at the
Foundation. The Company and the Foundation acknowledge and agree that their
respective rights and obligations pursuant to this Agreement with respect to
any Licensed Technology shall be subject to the Foundation's obligations to,
and the rights of, the United States government, if any, which arise out of
or result from the Foundation's receipt of research funding from the United
States government.

         9.4 GOVERNING LAW; VENUE. This Agreement shall be governed by the
laws of the State of California, as those laws are applied to contracts
entered into and to be performed entirely in California by California
residents. Any claim or controversy arising out of or related to this
Agreement or any breach hereof shall be submitted to a court of applicable
jurisdiction in San Diego County, California, and each party hereby consents
to the jurisdiction and venue of such court.

         9.5 NOTICES. Any notices or communications provided for in this
Agreement to be made by either of the parties to the other shall be in
writing and delivered personally or sent by United States mail, registered or
certified, postage paid, by overnight delivery service such as FedEx or UPS
or by facsimile, with confirmation of receipt, addressed as follows:

         IF TO THE COMPANY:         ELITRA PHARMACEUTICALS, INC.
                                    3510 Dunhill
                                    San Diego, CA  92121
                                    Attn: Chief Financial Officer
                                    Phone No. (619) 410-3000
                                    Fax No. (619) 410-3810

         IF TO THE FOUNDATION:      SAN DIEGO STATE UNIVERSITY FOUNDATION
                                    5250 Campanile Drive
                                    San Diego, CA  92182-1934
                                    Attn: Stuart G. Gordon, Ph.D.
                                    Director, Technology Transfer Office
                                    Phone No. (619) 594-0516
                                    Fax No. (619) 594-0354

         Either party may by like notice specify or change an address to
which notices and communications shall thereafter be sent. Notices sent by
facsimile shall be effective upon confirmation of receipt, notices sent by
mail or overnight delivery service shall be effective upon receipt, and
notices given personally shall be effective when delivered.

         9.6 WAIVER. Except as specifically provided for herein, the waiver
from time to time by either of the parties of any of their rights or their
failure to exercise any remedy shall not operate or be construed as a
continuing waiver of the same rights or remedies or of any other of such
party's rights or remedies provided in this Agreement.

                                      10.

<PAGE>

         9.7 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

         9.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth all of
the agreements and understandings between the parties hereto with respect to
the subject matter hereof, and supersedes and terminates all prior agreements
and understandings between the parties with respect to the subject matter
hereof. There are no agreements or understandings with respect to the subject
matter hereof, either oral or written, between the parties other than as set
forth herein. No subsequent amendment, modification or addition to this
Agreement shall be binding upon the parties hereto unless reduced to writing
and signed by the respective authorized officers of the parties.

         9.9 PUBLICITY. The parties agree that neither party will originate
any press release or other public announcement, written or oral, or otherwise
make any disclosure relating to the existence or terms of or performance
under this Agreement without the prior written consent of the other party,
except as may otherwise be required by law.

         9.10 INDEPENDENT CONTRACTORS. It is expressly agreed that the
Foundation and the Company shall be independent contractors and that the
relationship between the two parties shall not constitute a partnership,
joint venture or agency of any kind. Neither party 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 party, without the prior
written consent of the other party.

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

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

                                      11.

<PAGE>

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

ELITRA PHARMACEUTICALS, INC.

/s/ Alana Wheeler
----------------------------------------------
Alana B. Wheeler
Chief Financial Officer and
Vice President, Business Development

SAN DIEGO STATE UNIVERSITY FOUNDATION

By: /s/ Stuart G. Gordon
----------------------------------------------

Name:  Stuart G. Gordon, PhD.
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Title:  Director, Technology Transfer Office
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By: /s/ Steven A. Bloom
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    Steve Bloom
    Associate General Manager, SDSU Foundation

                             LICENSE AGREEMENT<PAGE>

                                                                  EXHIBIT 10.23

                                          *** TEXT OMITTED AND FILED SEPARATELY
                                               CONFIDENTIAL TREATMENT REQUESTED
                                          UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
                                                            200.83 AND 230.406.

                       COLLABORATIVE RESEARCH, DEVELOPMENT
                              AND LICENSE AGREEMENT

THIS COLLABORATIVE RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT (the
"Agreement") is entered into as of May 10, 2000 (the "Effective Date") by and
between ELITRA PHARMACEUTICALS INC., a Delaware corporation having an address
of 3510 Dunhill Street, San Diego, CA 92121, U.S.A. ("Elitra"), and LG
CHEMICAL LTD., a corporation organized under the laws of Korea having an
address of LG Twin Tower, 20, Yoido-dong, Youngdungpo-gu, Seoul 150-721,
Korea ("LG Chem").

                                    RECITALS

WHEREAS, Elitra has developed expertise and acquired proprietary rights
related to the identification of essential genes in bacterial and fungal
pathogens and the discovery and development of novel antimicrobial drugs;

WHEREAS, LG Chem is engaged in the research, development, marketing,
manufacture and distribution of pharmaceutical compounds useful in treating
or preventing human diseases and conditions;

WHEREAS, Elitra and LG Chem desire to enter into a collaborative relationship
to discover, develop and commercialize Products in the Field (as such terms
are tdefined below); and

WHEREAS, concurrently herewith LG Chem and Elitra are entering into a stock
purchase agreement under which LG Chem will purchase shares of Elitra's
tSeries C Preferred Stock on the terms and subject to the conditions set forth
therein.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

1.    DEFINITIONS

      1.1   "ACTIVE COMPOUND" shall mean any small molecule compound within
the Elitra Compound Libraries or the LG Chem Compound Libraries, or otherwise
invented solely by Elitra or LG Chem or jointly by the parties, or obtained
from a Third Party for screening and screened as part of the Collaboration,
which compound meets the Hit Criteria with respect to one or more Targets in
the Elitra Assays.

      1.2   "ADDITIONAL WORK PERIOD" shall have the meaning ascribed in
Section 4.3(b).

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

                                      1.

<PAGE>

      1.4   "ALLOCABLE OVERHEAD" shall mean (for any particular cost item) a
party's internal allocation, based on direct project headcount or other
generally accepted activity-based accounting methods, of indirect overhead
costs incurred by a party or any of its operating units to support and carry
out Development activities with respect to a Program Compound or Product,
which indirect costs may include but are not limited to: indirect labor
costs; occupancy costs; repair and maintenance costs; office supplies and
service costs; equipment costs; insurance costs; and outside professional and
other service costs. Such overhead shall exclude any indirect costs
associated with large start-up expenses or any excess or unused capacity not
directly related to a Program Compound or Product. Furthermore, overhead
costs of a party or operating units that are not engaged in the Development
of a Program Compound or Product shall not be recoverable as Allocable
Overhead or otherwise.

      1.5   "COLLABORATION" shall mean the programs of collaborative Research
and Development, as described in Articles 2, 3, 4 and 5.

      1.6   "COMMERCIALIZATION" shall mean all activities undertaken relating
to the manufacture, marketing and sale of a Product, including Pre-Marketing,
advertising, promotion, education, planning, marketing, market research,
distribution, branding, selling, pricing, regulatory support (including
pharmacovigilance) and the like.

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

      1.8   "CONTROL" shall mean possession of the ability to grant a license
or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.

      1.9   "COST OF GOODS" shall mean the cost of Products shipped either in
bulk or final therapeutic form, as applicable. As used herein, the cost of
Products means (a) in the case of products and services acquired from Third
Parties, payments made to such Third Parties, and (b) in the case of
manufacturing services performed by LG Chem, the actual unit costs of
manufacture in bulk form or final manufacturing, as the case may be, plus the
variances and other costs specifically provided for herein. Actual unit costs
shall consist of direct material and direct labor costs plus manufacturing
overhead directly attributable to the Products at standard, all calculated in
accordance with reasonable cost accounting methods, consistently applied, of
LG Chem.

Direct material costs shall include the costs incurred in purchasing
materials, including sales and excise taxes imposed thereon and customs duty
and charges levied by government authorities, and all costs of packaging
components.

Direct labor shall include the cost of employees engaged in direct
manufacturing activities and direct and indirect quality control and quality
assurance activities who are directly employed in Product manufacturing and
packaging.

                                      2.

<PAGE>

Overhead attributable to the Products shall include a reasonable allocation
of indirect labor (not previously included in direct labor), a reasonable
allocation of administrative costs, and a reasonable allocation of facilities
costs. Such allocations shall be in accordance with U.S. generally accepted
accounting principles, consistently applied, using reasonable cost accounting
methods, consistently applied, of LG Chem.

      1.10  "DERIVATIVE COMPOUND" shall mean a small molecule compound that
is an analog, homolog or isomer of an Active Compound made under an analoging
program or a chemical synthesis program based on structure-function
relationships, which compound meets the Hit Criteria with respect to one or
more Targets in the Elitra Assays.

      1.11  "DEVELOPMENT" shall mean, with respect to any Program Compound or
Product, all activities conducted after selection of such Program Compound
beginning with formal toxicology studies with GLP materials that relate to
obtaining Regulatory Approval of a Product in the Field and all activities
relating to developing the ability to manufacture the same. Without limiting,
the foregoing, such activities include (a) formal toxicology with GLP
materials for IND filing, clinical trials (including Phase IIIB Clinical
Trials and Phase IV Clinical Trials), regulatory affairs and outside counsel
regulatory legal services and (b) manufacturing process development and
initiation of GMP synthesis, bulk production, fill/finish, manufacturing and
quality assurance technical support activities. For purposes of
clarification, Development shall not include any activities conducted prior
to selection of the applicable Program Compound and initiation of formal
toxicology studies with GLP materials, including, without limitation, animal
model evaluation, microbiology analysis, chemical optimization, formulation
and stability/compatibility studies or other such preclinical testing.

      1.12  "DEVELOPMENT EXPENSES" shall mean the expenses incurred by a
party or for its account that are attributable to the Development of a
Program Compound or Product, calculated on a fully-burdened basis (I.E.,
including Allocable Overhead specifically attributable thereto). Without
limiting the generality of the foregoing, "Development Expenses" shall mean
amounts paid by a party to Third Parties involved in the Development of a
Program Compound or Product, and all internal costs (calculated on a
full-time equivalent basis) incurred by a party in connection with the
Development of a Program Compound or Product. Development Expenses shall
include, but are not limited to, the following costs incurred for the
Development of a Program Compound or Product: (a) the cost of studies on the
toxicological, pharmacokinetic, metabolic or clinical aspects of a Program
Compound or Product or research activities with respect to such Program
Compound or Product, which studies or research activities (i) occur after
selection of such Program Compound beginning with formal toxicology studies
with GLP materials that are necessary for IND filing, (ii) are conducted
internally or by individual investigators or consultants and (iii) are
necessary or desirable for the purpose of obtaining and/or maintaining
Regulatory Approval of a Product in a regulatory jurisdiction; (b) costs (and
related fees) for preparing, submitting, reviewing or developing data or
information for the purpose of submission to a governmental authority to
obtain and/or maintain Regulatory Approval of a Product in a regulatory
jurisdiction; and (c) manufacturing process development and scale-up for a
Product in bulk and finished form for purposes of conducting clinical trials
necessary to obtain and/or maintain Regulatory Approval of Products in a
regulatory jurisdiction. In addition, Development Expenses shall include, but
are not limited to, the following Development costs incurred by the parties
in support of or for extension of the applicable

                                      3.

<PAGE>

Product in a regulatory jurisdiction after the First Commercial Sale:
(i) Phase IV Clinical Trials; (ii) bridging studies necessary to obtain
Regulatory Approval of a Product in additional regulatory jurisdictions after
Regulatory Approval of such Product in the first regulatory jurisdiction;
(iii) ongoing product development (E.G., new formulations and routes of
administration); (iv) ongoing product support; (v) ongoing medical affairs;
and (vi) fees and expenses of outside consultants and counsel in respect of
regulatory affairs. For purposes of clarification, Development Expenses shall
exclude all expenses incurred by a party or for its account with respect to
activities conducted prior to selection of the applicable Program Compound
and initiation of formal toxicology studies with GLP materials, including,
without limitation, any animal model evaluation, microbiology analysis,
chemical optimization, formulation and stability/compatibility studies or
other such preclinical testing.

      1.13  "DEVELOPMENT PLAN" shall mean the plan for conducting Development
activities under the Collaboration with respect to Program Compounds and
Products, as amended from time to time by the JDC.

      1.14  "ELITRA ASSAYS" shall have the meaning ascribed in Section 4.4.

      1.15  "ELITRA COMPOUND LIBRARIES" shall mean all compounds or sets of
compounds Controlled by Elitra as of the Effective Date or during the
Research Term or any Additional Work Period to the extent Elitra is entitled
to utilize such compounds or sets of compounds in the Collaboration and
reasonably able to provide such compounds or sets of compounds to LG Chem for
use in connection with the Collaboration.

      1.16  "ELITRA DATABASE" shall have the meaning ascribed in Section 4.1.

      1.17  "ELITRA INVENTION" shall have the meaning ascribed in Section 9.1.

      1.18  "ELITRA KNOW-HOW" shall mean, to the extent useful for purposes
of the Collaboration, Information (including, without limitation, the Elitra
Assays and the Elitra Database) that (a) Elitra or any of its Affiliates
Controls on the Effective Date or (b) is conceived or developed by Elitra or
any of its Affiliates in the course of the Collaboration during the Research
Term or any Additional Work Period, and, in each case, any replication or any
part of such information or material.

      1.19  "ELITRA PATENTS" shall mean, to the extent useful for purposes of
the Collaboration, all Patents issued or existing as of the Effective Date or
covering Elitra Inventions made in the course of the Collaboration during the
Research Term or any Additional Work Period which, in each case, Elitra or
any of its Affiliates Control. At the request of LG Chem, Elitra shall from
time to time provide LG Chem a list of the Elitra Patents.

      1.20  "ELITRA TECHNOLOGY" shall mean the Elitra Patents and the Elitra
Know-How.

      1.21  "ELITRA TERRITORY" shall mean the United States of America
(including its territories and possessions), Canada and Mexico.

      1.22  "FDA" shall mean the United States Food and Drug Administration.

                                      4.

<PAGE>

      1.23  "FIELD" shall mean the treatment or prevention of human bacterial
and/or fungal infections.

      1.24  "FIRST COMMERCIAL SALE" of a Product shall mean the first sale
for use or consumption of such Product in a country after Regulatory Approval
has been granted by the governing health regulatory authority of such
country. Sale to an Affiliate or sublicensee shall not constitute a First
Commercial Sale unless the Affiliate or sublicensee is the end user of the
Product.

      1.25  "FTE" shall mean the equivalent of a full-time twelve (12)
months' (including normal vacations, sick days and holidays) work of a
person, carried out by one or more employees or consultants of a party, who
devotes a portion of his or her time to the Collaboration; PROVIDED, HOWEVER,
that each party understands and agrees that the other party retains complete
discretion to change the identity, the frequency and the time which any
individual employee or consultant devotes to the Collaboration.

      1.26  "GENE TARGET" shall mean any nucleotide sequence, gene or protein
encoded therefrom.

      1.27  "GROSS PROFIT" shall mean, on a Product-by-Product basis, (a) Net
Sales of the Product by a party or its Affiliates or sublicensees, less
(b) Cost of Goods for such Product.

      1.28  "HIT CRITERIA" shall mean, with respect to an Active Compound or
Derivative Compound, those criteria for minimum and reproducible activity in
an Elitra Assay and properties judged suitable for chemical elaboration or
development by the JRC.

      1.29  "IND" shall mean an Investigational New Drug Application filed
with the FDA, or the equivalent application or filing necessary to commence
human clinical trials in another country, as applicable.

      1.30  "INFORMATION" shall mean all tangible and intangible
(a) techniques, technology, practices, trade secrets, inventions (whether or
not patentable), methods, knowledge, know-how, skill, experience, test data
and results (including pharmacological, toxicological and clinical test data
and results), analytical and quality control data, results or descriptions
and software and (b) compounds, compositions of matter, cells, cell lines,
assays, and physical, biological or chemical material.

      1.31  "INVENTIONS" shall have the meaning set forth in Section 9.1.

      1.32  "JOINT COMMERCIALIZATION AGREEMENT" shall have the meaning set forth
in Section 5.4.

      1.33  "JOINT DEVELOPMENT COMMITTEE" or "JDC" shall mean the committee
formed pursuant to Section 2.4.

      1.34  "JOINT INVENTION" shall have the meaning ascribed in Section 9.1.

      1.35  "JOINT PATENTS" shall mean all Patents claiming a Joint Invention.

                                      5.

<PAGE>

      1.36  "JOINT RESEARCH COMMITTEE" or "JRC" shall mean the committee
formed pursuant to Section 2.2.

      1.37  "LG CHEM COMPOUND LIBRARIES" shall mean all compounds or sets of
compounds Controlled by LG Chem as of the Effective Date or during the
Research Term or any Additional Work Period to the extent LG Chem is entitled
to utilize such compounds or sets of compounds in the Collaboration and
reasonably able to provide such compounds or sets of compounds to Elitra for
use in connection with the Collaboration.

      1.38  "LG CHEM INVENTION" shall have the meaning ascribed in Section 9.1.

      1.39  "LG CHEM KNOW-HOW" shall mean, to the extent useful for purposes
of the Collaboration, Information that (a) LG Chem or any of its Affiliates
Controls on the Effective Date or (b) is conceived or developed by LG Chem or
any of its Affiliates in the course of the Collaboration during the Research
Term or any Additional Work Period, and, in each case, any replication or any
part of such information or material.

      1.40  "LG CHEM PATENTS" shall mean, to the extent useful for purposes
of the Collaboration, all Patents issued or existing as of the Effective Date
or covering LG Chem Inventions made in the course of the Collaboration during
the Research Term or any Additional Work Period which, in each case, LG Chem
or any of its Affiliates Control. At the request of Elitra, LG Chem shall
from time to time provide Elitra a list of the LG Chem Patents.

      1.41  "LG CHEM TECHNOLOGY" shall mean the LG Chem Patents and LG Chem
Know-How.

      1.42  "LG CHEM TERRITORY" shall mean the entire world, excluding the
Elitra Territory and Western Europe.

      1.43  "MAJOR NON-U.S. MARKET" shall mean [...***...]

      1.44  "NDA" shall mean a New Drug Application and all amendments and
supplements thereto filed with the FDA (as more fully defined in 21 C.F.R.
314.5 et seq.), or the equivalent application filed with any equivalent
agency or governmental authority outside the United States (including any
supra-national agency such as in the European Union) requiring such filing,
including all documents, data, and other information concerning a
pharmaceutical product which are necessary for gaining Regulatory Approval to
market and sell such pharmaceutical product.

      1.45  "NET SALES" shall mean the amount billed by a party or its
Affiliate or sublicensee to a Third Party which is not an Affiliate or
sublicensee of the selling party (unless such Affiliate or sublicensee is the
end user of such product, in which case the amount billed therefor shall be
deemed to be the amount that would be billed to a Third Party in an arm's
length transaction) for sales of such Product to Third Parties less the
following items, as allocable to such Product: (i) trade discounts, credits
or allowances, (ii) credits or allowances additionally granted upon returns,
rejections or recalls (except where any such recall arises out of a party's
or its Affiliate's or sublicensee's gross negligence, willful misconduct or
fraud), (iii) freight, shipping and

                                             *CONFIDENTIAL TREATMENT REQUESTED
                                      6.

<PAGE>

insurance charges, (iv) taxes, duties or other governmental tariffs (other
than income taxes) and (v) government mandated rebates.

      1.46  "PATENT" shall mean (a) valid and enforceable United States
patents, re-examinations, reissues, renewals, extensions and term
restorations, and foreign counterparts thereof, and (b) pending applications
for United States patents, including, without limitation, continuations,
continuations-in-part, divisional and substitute applications, including,
without limitation, inventors' certificates, and foreign counterparts thereof.

      1.47  "PHASE I CLINICAL TRIALS" shall mean those trials on sufficient
numbers of normal volunteers and patients that are designed to establish that a
drug is safe for its intended use, and to support its continued testing in Phase
II Clinical Trials.

      1.48  "PHASE II CLINICAL TRIALS" shall mean those trials on sufficient
numbers of patients that are designed to establish the safety and biological
activity of a drug for its intended use, and to define warnings, precautions
and adverse reactions that are associated with the drug in the dosage range
to be prescribed.

      1.49  "PHASE III CLINICAL TRIALS" shall mean those trials on sufficient
numbers of patients that are designed to establish that a drug is safe and
efficacious for its intended use, and to define warnings, precautions and
adverse reactions that are associated with the drug in the dosage range to be
prescribed, and supporting Regulatory Approval of such drug or label
expansion of such drug.

      1.50  "PHASE IIIB CLINICAL TRIALS" shall mean product support clinical
trials of a Product (I.E., a clinical trial that is not required for receipt of
Regulatory Approval but that may be useful in providing additional drug profile
data) commenced before receipt of Regulatory Approval in the country where such
trial is being conducted.

      1.51  "PHASE IV CLINICAL TRIALS" shall mean product support clinical
trials of a Product commenced after receipt of Regulatory Approval in the
country where such trials is being conducted.

      1.52  "PRE-MARKETING" shall mean all Commercialization activities
undertaken prior to and in preparation for the launch of a Product in the
Territory, including, without limitation, advertising, education, sales force
training and Phase IIIB Clinical Trials.

      1.53  "PRODUCT" shall mean a pharmaceutical product containing a
Program Compound or any derivative, analog or isomer thereof, which product
has received Regulatory Approval for commercial marketing and sale for use in
the Field, and including all formulations, line extensions and modes of
administration thereof.

      1.54  "PROGRAM COMPOUND" shall mean an Active Compound or Derivative
Compound (or any derivative, analog or isomer of either of the foregoing)
which has demonstrated activity in applicable animal models and has met basic
acute toxicology, pharmacokinetics, chemistry and pharmacology requirements
typically used to support a decision to move into preclinical IND-enabling
studies and formally approved as such by the JRC.

                                      7.

<PAGE>

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

      1.56  "RESEARCH" shall mean activities undertaken pursuant to this
Agreement for the identification of Program Compounds, as described in the
Research Plan, but excluding Development activities.

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

      1.58  "RESEARCH TERM" shall mean the five (5) years following the
Effective Date, subject to earlier termination in accordance with Section 3.4
or Article 12.

      1.59  "ROYALTY TERM" shall mean, in the case of any Product, in any
country, the period of time commencing on the First Commercial Sale and
ending upon the later of (a) ten (10) years from the date of First Commercial
Sale in such country, or (b) the expiration of the last to expire of the LG
Chem Patents, Elitra Patents or Joint Patents claiming the manufacture, use
or sale of such Product in such country.

      1.60  "STOCK PURCHASE AGREEMENT" shall have the meaning ascribed in
Section 7.2.

      1.61  "TARGET" shall mean a Proposed Target, Accepted Target, Screening
Target, Reserved Target or Collaboration Target, each as defined below:

            (a)   "PROPOSED TARGET" shall mean a Gene Target selected by
Elitra from the Elitra Database and proposed to LG Chem as a potential
Accepted Target pursuant to Section 4.1;

            (b)   "ACCEPTED TARGET" shall mean a Proposed Target accepted by
LG Chem pursuant to Section 4.2;

            (c)   "SCREENING TARGET" shall mean an Accepted Target selected
by LG Chem pursuant to Section 4.3;

            (d)   "RESERVED TARGET" shall mean a Screening Target with
respect to which one or more Active Compounds have been identified hereunder,
as more fully described in Section 4.4; and

            (e)   "COLLABORATION TARGET" shall mean a Reserved Target with
respect to which the JRC has designated a Program Compound, as more fully
described in Section 4.5.

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

                                      8.

<PAGE>

      1.63  "THIRD PARTY" shall mean any entity other than LG Chem or Elitra
or an Affiliate of LG Chem or Elitra.

      1.64  "WESTERN EUROPE" shall mean Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United
Kingdom.

      1.65  "WESTERN EUROPE AGREEMENT" shall have the meaning ascribed in
Section 5.3.

      1.66  "WESTERN EUROPE PARTNER" shall have the meaning ascribed in
Section 5.3.

2.    COLLABORATION GOVERNANCE

      2.1   JOINT RESEARCH COMMITTEE. Promptly after the Effective Date, the
parties will form a Joint Research Committee ("JRC") comprised of three
(3) representatives of each of Elitra and LG Chem. Two (2) members of the
JRC, one (1) of whom is a representative of Elitra and one (1) of whom is a
representative of LG Chem, shall be selected to act as co-chairpersons. The
JRC shall manage and monitor the progress and results of, the ongoing
Research conducted under the Collaboration, shall determine future Research
activities to be conducted under the Collaboration and shall allocate
resources (including, without limitation, FTEs) among the various Research
activities. All decisions of the JRC shall be unanimous, with the
representatives of each party collectively having one vote. The JRC shall
meet at least three (3) times per year during the Research Term or at such
greater frequency as the JRC agrees. Such meetings shall alternate between
the principal offices of each party, and the parties shall agree upon the
time of meetings. In addition, the JRC may hold such additional meetings by
teleconference or videoconference as deemed appropriate by the JRC. Within
thirty (30) days after each meeting, one of the JRC co-chairpersons
(alternating between the Elitra co-chairperson and the LG Chem
co-chairperson) will provide the parties with a written report describing, in
reasonable detail, the status of the Collaboration, a summary of the results
and progress to date, the issues requiring resolution, and the agreed
resolution of previously reported issues. A reasonable number of additional
representatives of a party may attend meetings of the JRC in a non-voting
capacity.

      2.2   JOINT RESEARCH COMMITTEE FUNCTIONS AND POWERS. The JRC shall
encourage and facilitate ongoing cooperation between the parties, establish,
update, review and approve the Research Plan and other plans for
accomplishing the Research goals of the Collaboration, allocate tasks and
coordinate activities required to perform the Research, monitor progress of
the Research and the parties' diligence in carrying out their
responsibilities thereunder, oversee the conduct of all patent matters, and
carry out the other duties and responsibilities described for it in this
Agreement. The JRC shall also be responsible for developing and approving an
annual Research budget for activities to be performed by the parties pursuant
to the Research Plan for each year of the Research Term (including any
renewal or extension thereof) and any Additional Work Period. In addition,
the JRC shall maintain and, on a regular basis, update and provide to the
parties a list or lists of the following: Proposed Targets, Accepted Targets,
Screening Targets, Reserved Targets (including the dates upon which each
became a Reserved Target), Collaboration Targets, Active Compounds,
Derivative Compounds and Program Compounds.

                                      9.

<PAGE>

      2.3   JOINT DEVELOPMENT COMMITTEE. Promptly after the selection of the
first Program Compound hereunder, the parties will form a Joint Development
Committee ("JDC") comprised of three (3) representatives of each of Elitra
and LG Chem. Two (2) members of the JDC, one (1) of whom is a representative
of Elitra and one (1) of whom is a representative of LG Chem, shall be
selected to act as co-chairpersons. The JDC shall coordinate and manage, and
monitor the progress and results of, the worldwide Development of Program
Compounds and Products resulting from the Collaboration. The parties intend
that decisions of the JDC will be made by consensus. The parties agree that
the representatives of Elitra and the representatives of LG Chem on the JDC
shall consult in good faith in implementing the Development Plan. The JDC
shall meet at least three (3) times per year following its formation during
the Term of the Agreement or at such greater frequency as the JDC agrees.
Such meetings shall alternate between the principal offices of each party,
and the parties shall agree upon the time of meetings. In addition, the JDC
may hold such additional meetings by teleconference or videoconference as
deemed appropriate by the JDC. Within thirty (30) days after each meeting,
one of the JDC co-chairpersons (alternating between the Elitra co-chairperson
and the LG Chem co-chairperson) will provide the parties with a written
report describing, in reasonable detail, the status of Development activities
under the Collaboration, a summary of the results and progress to date, the
issues requiring resolution, and the resolution of previously reported
issues. A reasonable number of additional representatives of a party may
attend meetings of the JDC in a non-voting capacity.

      2.4   JOINT DEVELOPMENT COMMITTEE FUNCTIONS AND POWERS. The JDC shall
encourage and facilitate ongoing cooperation between the parties, establish,
update, review and approve the Development Plan and other plans for
accomplishing the Development goals of the Collaboration, allocate tasks and
coordinate activities required to perform the Development Plan, monitor
progress of Development activities hereunder and the parties' diligence in
carrying out their responsibilities under the Development Plan, oversee the
conduct of all patent matters (to the extent the JRC is no longer performing
such function) and carry out the other duties and responsibilities described
for it in this Agreement. The JDC shall also be responsible for developing
and approving an annual Development budget for activities to be performed by
the parties pursuant to the Development Plan.

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

      2.6   JRC DISPUTE RESOLUTION. The members of the JRC will attempt to
decide or resolve all applicable issues within the JRC. If the JRC is unable
to decide or resolve an issue unanimously, the issue shall be referred to the
heads of research and development of each of Elitra and LG Chem. Such
officers of the parties will meet promptly thereafter and shall negotiate in
good faith to resolve such issue. If they cannot resolve the issue within
thirty (30) days of commencing such negotiations, the issue shall be
submitted to a scientific panel composed of three (3) members with experience
in research and development of pharmaceutical products. as provided in
Article 14. Within ten (10) days after the end of such thirty (30)-day
period, each party will appoint one (1) person to such scientific panel, and
the two (2) persons so appointed will select a third person for appointment
to the scientific panel within ten (10) days

                                      10.

<PAGE>

after their appointment. The parties will provide the scientific panel with
all information relevant to the issue in dispute. The scientific panel will
resolve the issue in dispute and prepare and deliver to the parties a written
statement setting forth the resolution as promptly as practicable and in any
event within ninety (90) days after appointment of the last person to the
scientific panel. The decision of the scientific panel shall be final and
binding on the parties. Each party shall bear its own costs associated with
this process and shall share equally the fees of the scientific panel.

3.    CONDUCT OF THE COLLABORATION

      3.1   OBJECTIVES. The parties hereby agree to establish and conduct the
Collaboration in accordance with the Research Plan or the Development Plan,
as applicable, and with the terms of this Agreement. The initial Research
Plan for conducting the Research is attached hereto as Exhibit A.

      3.2   TECHNOLOGY TRANSFER. Commencing promptly after the Effective Date
and from time to time thereafter, Elitra will disclose to LG Chem such of the
Elitra Patents and Elitra Know-How as is reasonably necessary to enable LG
Chem to perform its Collaboration activities hereunder in accordance with the
Research Plan or Development Plan and otherwise to exercise fully the
licenses granted to LG Chem hereunder. Commencing promptly after the
Effective Date and from time to time thereafter, LG Chem shall disclose to
Elitra such of the LG Chem Patents and LG Chem Know-How as is reasonably
necessary to enable Elitra to perform its Collaboration activities hereunder
in accordance with the Research Plan or Development Plan and otherwise to
exercise fully the licenses granted to Elitra hereunder. During the
Collaboration, each party will provide the other party with reasonable
technical assistance relating to the use of such party's technology, solely
to the extent permitted under the license granted to the other party herein.

      3.3   PERFORMANCE STANDARDS. Each party shall conduct its activities
under the Collaboration in good scientific manner, and in compliance in all
material respects with the requirements of applicable laws and regulations
and with applicable good laboratory practices and good manufacturing
practices, to attempt to achieve its objectives efficiently and
expeditiously. Each party shall maintain laboratories, offices and all other
facilities reasonably necessary to carry out the activities to be performed
by such party pursuant to the Research Plan or the Development Plan, as
applicable. In conformity with standard pharmaceutical and biotechnology
industry practices and the terms and conditions of this Agreement, each party
shall prepare and maintain, or shall cause to be prepared and maintained,
complete and accurate written records, accounts, notes, reports and data with
respect to activities conducted pursuant to the Research Plan or the
Development Plan, as applicable, and, upon the other party's written request,
shall send legible copies of the aforesaid to the other party. Upon
reasonable advance notice, each party agrees to make its employees and
non-employee consultants reasonably available at their respective places of
employment to consult with the other party on issues arising during the Term
of the Agreement and in connection with any request from any regulatory
agency, including, without limitation, regulatory, scientific, technical and
clinical testing issues.

                                      11.

<PAGE>

      3.4   EARLY TERMINATION OF RESEARCH TERM. LG Chem shall have the
option, in its sole discretion, to terminate the Research Term at any time on
or after the third (3rd) anniversary of the Effective Date. Elitra shall have
the option, in its sole discretion, to terminate the Research Term at any
time on or after the third (3rd) anniversary of the Effective Date in the
event that LG Chem has breached the provisions of Section 3.5(b). A party
shall exercise such option, if at all, by giving the other party written
notice not less than one hundred eighty (180) days prior to the proposed date
of termination (which notice may be provided at any time on or after the date
that is two (2) years and six (6) months after the Effective Date).

      3.5   RESEARCH COMMITMENT. During the Research Term and, if applicable,
the Additional Work Period, the parties shall diligently conduct the
Collaboration in accordance with the Research Plan, as revised from time to
time by the JRC. Without limiting the generality of the foregoing:

            (a)   Elitra shall devote to the Collaboration an average of
[...***...] FTEs during each year of the Research Term, subject to LG Chem's
funding obligations under Section 7.1 hereof. To the extent that the Research
Plan, as approved by the JRC, requires Elitra to devote additional FTEs to
the Collaboration (including FTEs contemplated by Section 3.5(b) but not
including any FTEs necessary to perform work during the Additional Work
Period contemplated by Section 4.3), LG Chem shall provide funding for such
additional FTEs at an initial rate of $[...***...] per year, which amount
shall be adjusted on an annual basis by a factor which reflects changes in
the Consumer Price Index for San Diego, California as reported as of the date
that is thirty (30) days prior to the anniversary of the Effective Date in
each applicable year when compared to the comparable statistic for the date
that is thirty (30) days prior to the anniversary of the Effective Date in
the preceding year.

            (b)   LG Chem shall devote to any activity for which it is
responsible under the Research Plan approximately that number of FTEs as set
forth in the Research Plan or such other number of FTEs as is generally
accepted practice for similar activities in the pharmaceutical industry, with
the expectation that LG Chem shall devote to the Collaboration a maximum of
[...***...] FTES during each year of the Research Term. If LG Chem is unable
to devote such FTEs to Research activities for which it is responsible and
the JRC or JDC, as applicable, agrees that Elitra should perform such
activities, then either (i) LG Chem shall provide funding in accordance with
subsection (a) above for the number of additional Elitra FTEs necessary to
perform the applicable Research activities, or (ii) if the Research Term is
still in effect, the JRC may reallocate those Elitra FTEs already funded by
LG Chem pursuant to Section 7.1 as the JRC deems appropriate.

            (c)   If, during the Research Term, the number of FTEs devoted to
the Collaboration under Section 3.5(a) and (b) is insufficient to perform the
activities described in Section 4.5 with respect to all Active Compounds
identified under this Agreement, the JRC may, as it deems appropriate, decide to
(i) reallocate existing FTEs under Section 3.5(a) and (b) to such activities or
(ii) cause an agreed upon number of additional FTEs to perform such activities,
with the cost of such additional FTEs to be shared equally by the parties.

                                              * CONFIDENTIAL TREATMENT REQUESTED

                                      12.

<PAGE>

      3.6   RESEARCH AND DEVELOPMENT REPORTS. Each party each shall keep the
other party fully informed as to all discoveries and technical developments
(including, without limitation, any Inventions) made in the course of
performing activities hereunder or under the Research Plan or Development
Plan. In particular, Elitra and LG Chem each shall prepare, and distribute to
all members of the JRC or JDC, as applicable, no later than ten (10) days
prior to the next JRC or JDC meeting, a written summary report, in such form
and format and setting forth such information regarding the results and
progress of performance of the Research Plan or Development Plan as
determined from time to time by the JRC or JDC. Nothing herein shall require
either party to disclose information received from a Third Party which
remains subject to BONA FIDE confidentiality obligations to such Third Party.

      3.7   SUBCONTRACTS. LG Chem and Elitra may perform some of their
obligations under the Research Plan and/or the Development Plan through one
or more subcontractors, provided that (i) none of the rights of either party
hereunder are diminished or otherwise adversely affected as a result of such
subcontracting, and (ii) the subcontractor undertakes in writing obligations
of confidentiality and non-use regarding Confidential Information which are
substantially the same as those undertaken by the parties pursuant to Article
11 hereof. In the event either party performs one or more of its obligations
under the Research Plan or Development Plan through a subcontractor, then
such party will at all times be responsible for the performance and payment
of such subcontractor, subject to sharing of Development Expenses in
accordance with this Agreement.

      3.8   MATERIALS TRANSFER. In order to facilitate the Collaboration,
either party may provide to the other party certain biological materials or
chemical compounds including, but not limited to, compounds within the Elitra
Compound Libraries or the LG Chem Compound Libraries, Gene Targets, Elitra
Assays or other screens, target proteins and reagents (collectively,
"Materials") Controlled by the supplying party (other than under this
Agreement) for use by the other party in furtherance of the Collaboration.
Except as otherwise provided under this Agreement, all such Materials
delivered to the other party will remain the sole property of the supplying
party, will be used only in furtherance of the Collaboration and solely under
the control of the other party, will not be used or delivered to or for the
benefit of any Third Party without the prior written consent of the supplying
party, and will not be used in research or testing involving human subjects
except as expressly permitted by the Development Plan. The Materials supplied
under this Section 3.8 must be used with prudence and appropriate caution in
any experimental work, because not all of their characteristics may be known.
THE MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY
WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY
PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

      3.9   EXTRAORDINARY EXPENSES. In the event that the JRC approves any
extraordinary expense to be incurred in connection with activities for which
Elitra is responsible under the Research Plan which expense was not
contemplated by the initial Research Plan, LG Chem shall bear such
extraordinary expense. In the event that the JRC approves any extraordinary
expense to be incurred in connection with activities for which LG Chem is
responsible under the

                                      13.

<PAGE>

Research Plan which expense was not contemplated by the initial Research
Plan, Elitra and LG Chem shall share equally such extraordinary expense.

4.    TARGET IDENTIFICATION AND COMPOUND SCREENING

      4.1   DEVELOPMENT OF ELITRA DATABASE; SELECTION OF PROPOSED TARGETS.
During the Research Term, Elitra shall use its commercially reasonable
efforts to identify essential Gene Targets in each of the major human
pathogens for incorporation into Elitra's proprietary relational database of
validated bacterial and fungal targets (the "Elitra Database"), as more fully
described in the Research Plan. During each year of the Research Term, Elitra
shall select and propose to LG Chem [...***...] Gene Targets from the Elitra
Database as potential Accepted Targets. As more fully described in the
Research Plan, each such Proposed Target must:

            (a)   not be any historically known Gene Target;

            (b)   be essential in at least [...***...]

            (c)   demonstrate, through bioinformatics analysis, a significant
degree of conservation in certain other bacterial pathogens, including
[...***...] and [...***...];

            (d)   demonstrate minimum homology to eucaryotic genes, as more
fully described in the Research Plan;

            (e)   have a known biochemical function, as shown by
bioinformatics analysis using sequence similarity and motif analysis;

            (f)   be a suitable candidate for development of biochemical
assays; and

            (g)   meet such other criteria as set forth in the Research Plan
or otherwise established by the JRC from time to time.

The JRC shall have the right to modify the criteria that must be met by
Proposed Targets by written amendment to the Research Plan. For any year of
the Research Term, in the event that there would be more than [...***...]
Proposed Targets that meet the then applicable criteria for Proposed Targets,
Elitra will suggest additional criteria for Proposed Targets in order to
narrow the number of Proposed Targets to [...***...] and will provide such
list of additional criteria to LG Chem prior to selection of the Proposed
Targets. Elitra shall provide the initial [...***...] Proposed Targets to LG
Chem for the first year of the Research Term using its best efforts to
provide such Proposed Targets within sixty (60) days after the Effective Date
and in no event later than ninety (90) days after the Effective Date. In each
subsequent year of the Research Term, Elitra shall provide the initial
[...***...] Proposed Targets to LG Chem within thirty (30) days of the
anniversary of the Effective Date that marks the commencement of such year.
LG Chem shall have the right to reject, in good faith, up to [...***...] Gene
Targets proposed by Elitra as Proposed Targets per year, and Elitra shall
propose a replacement Proposed Target for any such rejected Proposed Target.

      4.2   SELECTION OF ACCEPTED TARGETS. LG Chem shall have the right to
select, by written notice to the JRC and Elitra, up to [...***...] Proposed
Targets per year during the

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      14.

<PAGE>

Research Term as Accepted Targets. From the time that LG Chem provides the
JRC and Elitra with written notice of acceptance of a Proposed Target (at
which time such Proposed Target shall be deemed an "Accepted Target"
hereunder) until the date that is not more than [...***...] from the date of
such notice (the "Accepted Target Exclusivity Period"), such Accepted Target
shall be reserved exclusively for the Collaboration in accordance with
Section 4.6 so that Elitra may perform the Research described in Section
4.3(a). Upon LG Chem's rejection of any Proposed Target, such Proposed Target
shall be returned to the Elitra Database and Elitra shall be free to use such
rejected Proposed Target outside the Collaboration, whether by itself or in
collaboration with a Third Party. For purposes of this Section 4.2, LG Chem's
failure to select a Proposed Target as an Accepted Target using its best
efforts to make such selection within thirty (30) days following Elitra's
proposal of such Proposed Target to LG Chem and in any event within sixty
(60) days following Elitra's proposal of such Proposed Target to LG Chem
shall be deemed to constitute rejection of such Proposed Target.

      4.3   SELECTION OF SCREENING TARGETS.

            (a)   Following selection of any Accepted Target, Elitra shall
perform Research in accordance with the Research Plan to identify Accepted
Targets meeting the criteria specified in the Research Plan for selection by
LG Chem as Screening Targets, and shall report the results of such Research
to the JRC. As more fully described in the Research Plan each such Screening
Target must:

                  (i)   have a demonstrated antisense mechanism;

                  (ii)  be essential in [...***...] pathogenic organisms;

                  (iii) be essential in drug resistant strains when possible;

                  (iv)  be a suitable candidate for the development of
biochemical assays for high throughput screening;

                  (v)   not be covered by a valid claim of any issued patent
Controlled by a Third Party that would be infringed by the Research,
Development and Commercialization activities proposed to be conducted
hereunder with respect to such Target; and

                  (vi)  Elitra will have measured targeted gene protein
levels in infectious models with respect to such Target.

The JRC shall have the right to modify the criteria that must be met by
Screening Targets by written amendment to the Research Plan.

            (b)   LG Chem shall be responsible for selecting Screening
Targets and, except as otherwise set forth in this Section 4.3, may select up
to [...***...] Screening Targets per year during the Research Term; PROVIDED,
HOWEver, that if Elitra is unable to provide LG Chem with [...***...]
Screening Targets meeting applicable criteria in any year during the Research
Term (other than the [...***...]), then the number of Screening Targets not
so selected shall be added to the number of Screening Targets that LG Chem is
entitled to select during the subsequent year. If there are Screening Targets
that LG Chem is entitled to select after the end

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      15.

<PAGE>

of the Research Term in accordance with the preceding sentence, Elitra will
continue to do the work necessary to provide LG Chem with such Screening
Targets in accordance with the Research Plan, [...***...], during the period
after the end of the Research Term until the time that such Screening Targets
are provided to LG Chem and the screening campaign using such Screening
Targets has been completed (the "Additional Work Period"). If the JRC decides
to allocate the appropriate Elitra FTEs to such activities, the JRC may
increase the number of Screening Targets that Elitra is to provide LG Chem in
any year during the Research Term; PROVIDED, HOWEVER, that the total number
of such Screening Targets to be provided during the Research Term will not
exceed a maximum of [...***...] ([...***...] if the Research Term is
terminated early in accordance with Section 3.4). The JRC shall develop and
apply mutually agreeable criteria for the prioritization of such Screening
Targets using Elitra's bioinformatics capabilities. From the time that LG
Chem selects an Accepted Target as a Screening Target (at which time such
Accepted Target shall be deemed a "Screening Target" hereunder) until the
screening campaign with respect to such Screening Target under Section 4.4
has been completed (the "Screening Target Exclusivity Period"), such
Screening Target shall be reserved exclusively for the Collaboration in
accordance with Section 4.6.

            (c)   Upon LG Chem's decision not to select any Accepted Target
as a Screening Target, or upon the selection of the last Screening Target
that LG Chem is permitted to select in accordance with Section 4.3(b) in a
given year during the Research Term, any Accepted Target not selected as a
Screening Target shall be returned to the Elitra Database and Elitra shall be
free to use such Accepted Target outside the Collaboration, whether by itself
or in collaboration with a Third Party; PROVIDED, HOWEVER, that, with respect
to Accepted Targets that would otherwise be returned to the Elitra Database
pursuant to this sentence:

                  (i)   LG Chem may, by written notice to the JRC and Elitra,
select any such Accepted Target as an additional Screening Target
(notwithstanding LG Chem's previous selection of the maximum number of
Screening Targets that LG Chem was permitted to select during such year). LG
Chem shall provide Elitra with funding at the rate specified in Section
3.5(a) for [...***...] Elitra FTEs per additional Screening Target so
selected per year (which funding shall be in addition to amounts payable
under Section 7.1); or

                  (ii)  Each year during the Research Term, LG Chem shall
have the right to reserve for [...***...] up to [...***...] additional
Accepted Targets for potential future selection as additional Screening
Targets by providing Elitra with written notice thereof and by paying Elitra
[...***...] per Accepted Target so reserved. If LG Chem desires to continue
to reserve any Accepted Target after such initial [...***...] year
reservation period, LG Chem shall provide Elitra with written notice thereof
prior to the expiration of such initial [...***...] reservation period and
shall pay to Elitra [...***...] per Accepted Target per additional [...***...]
 during which LG Chem desires to reserve such Accepted Target. Any such
payments shall be made annually in advance and shall not be refundable or
creditable against any other payment obligation of LG Chem hereunder. Subject
to LG Chem's compliance with its payment obligations under this subsection
(2), Elitra agrees that it shall not return any Accepted Target so reserved
to the Elitra Database nor use such Accepted Target outside of the
Collaboration for so long as such Accepted Target is reserved hereunder.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      16.

<PAGE>

      4.4   ASSAY DEVELOPMENT AND SCREENING TO IDENTIFY ACTIVE COMPOUNDS.
Upon selection of any Screening Target in accordance with Section 4.3, Elitra
shall use reasonable efforts in accordance with the Research Plan to develop
one or more assays for such Screening Target (each, an "Elitra Assay" and
collectively, the "Elitra Assays"). During the Research Term, Elitra and LG
Chem shall make the Elitra Compound Libraries and the LG Chem Compound
Libraries, respectively, available for high throughput screening in the
Elitra Assays, as directed by the JRC consistent with the Research Plan.
Elitra shall use reasonable efforts to conduct such screening of the Elitra
Compound Libraries and the LG Chem Compound Libraries in the appropriate
Elitra Assays, in accordance with the Research Plan. After completing the
screening campaign under this Section 4.4 with respect to an Elitra Assay,
Elitra will provide to the JRC the results of such screening. The JRC shall
review such screening results promptly after receipt, shall determine which
of the screened compounds meet the requirements established by the JRC for
identification as Active Compounds, and shall add any such Active Compounds
to the list maintained by the JRC pursuant to Section 2.3. Following
identification of any Active Compound hereunder, the parties shall further
characterize such Active Compounds in accordance with the Research Plan and
otherwise as directed by the JRC. From the time that the first Active
Compound is identified with respect to a Screening Target (at which time such
Screening Target shall be deemed a "Reserved Target" hereunder) until the
date that is [...***...] from the identification of such first Active
Compound (the "Reserved Target Exclusivity Period"), such Reserved Target
shall be reserved exclusively for the Collaboration in accordance with
Section 4.6 in order to allow for the performance of lead optimization and
initial animal studies pursuant to the Research Plan; provided that, with
respect to any Reserved Target, the JRC may, in its discretion, extend the
Reserved Target Exclusivity Period for an agreed upon duration if JRC
determines that the parties are making progress in the research and
development of any Active Compound identified with respect to such Reserved
Target and it would be mutually beneficial to the parties to approve such an
extension. With regard to any Screening Target with respect to which no
Active Compound is identified during the Screening Target Exclusivity Period,
Elitra and LG Chem will discuss in good faith the opportunity for LG Chem to
reserve such Screening Target exclusively for an additional period or to
obtain an exclusive license to such Screening Target on terms to be
negotiated by the parties.

      4.5   DESIGNATION OF PROGRAM COMPOUNDS. The parties shall perform such
combinatorial chemistry, medicinal chemistry, secondary screening evaluation
and toxicology, pharmacokinetics and pharmacology studies with respect to
Active Compounds as set forth in the Research Plan or directed by the JRC.
With respect to each Reserved Target, LG Chem shall devote such number of
FTEs as is generally accepted practice for similar activities in the
pharmaceutical industry and consistent with Section 3.5(b) to the
optimization and analysis of Active Compounds hereunder. After completing any
such activities, each party will provide to the JRC the results thereof,
including, without limitation, the identity of any Derivative Compounds
generated. The JRC shall review such results after receipt, shall determine
which of the Active Compounds and/or Derivative Compounds meet the
requirements established by the JRC for identification as Program Compounds,
and shall add any such Program Compounds to the list maintained by the JRC
pursuant to Section 2.3. Commencing as of the time that the first Program
Compound is selected with respect to a Reserved Target (at which time such
Reserved Target shall be deemed a "Collaboration Target" hereunder) and
thereafter during the Term of the Agreement so long as any Program Compound
or Product that is active against such

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      17.

<PAGE>

Collaboration Target continues in active Development or continues to be
Commercialized (the "Collaboration Target Exclusivity Period"), such
Collaboration Target shall be reserved exclusively for the Collaboration in
accordance with Section 4.6.

      4.6   RESTRICTED ACTIVITIES.

            (a)   During the Accepted Target Exclusivity Period for a given
Accepted Target, neither party shall grant any license or other rights to use
such party's technology in connection with or otherwise with respect to such
Accepted Target, nor shall either party conduct any research, development or
commercialization activities relating to such Accepted Target other than
pursuant to the Collaboration.

            (b)   During the Screening Target Exclusivity Period for a given
Screening Target, neither party shall grant any license or other rights to
use such party's technology in connection with or otherwise with respect to
such Screening Target, nor shall either party conduct any research,
development or commercialization activities relating to such Screening Target
other than pursuant to the Collaboration.

            (c)   During the Reserved Target Exclusivity Period for a given
Reserved Target, neither party shall grant any license or other rights to use
such party's technology in connection with or otherwise with respect to such
Reserved Target, nor shall either party conduct any research, development or
commercialization activities relating to such Reserved Target other than
pursuant to the Collaboration.

            (d)   During the Collaboration Target Exclusivity Period for a
given Collaboration Target, neither party shall grant any license or other
rights to use such party's technology in connection with or otherwise with
respect to any Collaboration Target, nor shall either party conduct any
research, development or commercialization activities relating to such
Reserved Target other than pursuant to the Collaboration.

            (e)   During the Research Term and for [...***...] thereafter,
neither party shall grant any license or other rights to use such party's
technology in connection with or otherwise with respect to any Active
Compound or Derivative Compound not designated as a Program Compound
hereunder, nor shall either party conduct any research, development or
commercialization activities relating to any such Active Compound or
Derivative Compound not designated as a Program Compound hereunder other than
pursuant to the Collaboration.

5.    DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS

      5.1   DEVELOPMENT PLAN. Promptly following establishment of the JDC,
the JDC shall approve the initial Development Plan, which shall be attached
to this Agreement as Exhibit B. Any amendments or revisions to the
Development Plan shall be in writing and shall require unanimous approval of
the JDC.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      18.

<PAGE>

5.2   DEVELOPMENT EXPENSES.

      (a)   SHARING OF DEVELOPMENT EXPENSES. All Development Expenses shall
be shared equally by the parties in accordance with this Section 5.2,
provided that such Development Expenses are in accordance with the
then-current Development Plan.

      (b)   CALCULATION OF DEVELOPMENT EXPENSES. In determining Development
Expenses, any party providing project-specific Development support activities
(E.G., manufacturing, QA/QC, clinical development, regulatory affairs or
clinical data management) may calculate the fully-burdened cost and expense
of providing such support activity, including both project-specific variable
costs and expenses and Allocable Overhead, using standard activity-based
project costing methods and otherwise in accordance with this Agreement. All
calculations hereunder shall be made using, and all defined and undefined
terms shall be construed in accordance with, U.S. generally accepted
accounting principles, consistently applied, and consistent with generally
accepted methods for activity-based project costing for similar products in
similar industries. Without limiting the foregoing, no cost item subject to
sharing by the parties under this Section 5.2 shall be included more than
once in calculating Development Expenses. The parties anticipate that neither
party shall incur expenses that are included in the Development Expense
calculation unless the JDC has agreed that such party shall incur such
expenses.

      (c)   RECORDS; REPORTING. Each party shall calculate and maintain
detailed records of its Development Expenses. To the extent that, consistent
with the Development Plan, a party incurs Development Expenses, such party
shall promptly provide the JDC with a reasonably detailed written invoice for
such Development Expenses, and such Development Expenses shall be accounted
for in the month and calendar quarter in which such invoice is received by
the JDC. The JDC shall be responsible for the preparation of reports,
calculation of the Development Expenses to be shared and determination of the
cash settlement between the parties. The JDC shall provide to the parties, by
the submission dates shown below, a statement showing Development Expenses
for the preceding month or calendar quarter, as applicable, in such form as
the JDC shall approve. Such statements shall set forth a comparison of actual
Development Expenses to expense budgets included in the applicable
Development Plan and, with respect to quarterly statements only, shall set
forth the cash settlement required between the parties:

<TABLE>
<CAPTION>

      FREQUENCY            TIMING OF SUBMISSION OF STATEMENT
      -------------------  ----------------------------------------
      <S>                  <C>
      Monthly              30 days following the end of each month
      Quarterly            45 days following the end of each calendar quarter

</TABLE>

Each party agrees to make any required cash settlements with the other party
within thirty (30) days following receipt of the invoice issued by the other
party based on the JDC's quarterly report describing such required cash
settlement. Except as otherwise expressly set forth in this Section 5.2, all
such payments between the parties shall be governed by the provisions of
Article 8.

                                      19.

<PAGE>

      5.3   DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS IN WESTERN EUROPE.
At such time as the parties deem appropriate, the parties shall mutually
agree whether to retain co-exclusive development and commercialization rights
for Products in Western Europe or to jointly license such rights to one or
more Third Party (each, a "Western Europe Partner"), it being understood that
the parties' preference is to retain co-exclusive development and
commercialization rights for Products in Western Europe. Any agreement with a
Western Europe Partner with regard to the Development and Commercialization
of Products in Western Europe (a "Western Europe Agreement") shall be on
terms mutually agreed upon by each of the parties. Without limiting the
generality of the foregoing, any Western Europe Agreement shall provide that
such Western Europe Partner's share of Development costs and expenses will be
used to offset Development Expenses incurred by Elitra and LG Chem equally.

      5.4   JOINT COMMERCIALIZATION AGREEMENT. Following the First Commercial
Sale in any country of the second (2nd) Product to be commercially sold
hereunder, in the event that Phase III Clinical Trials are initiated for a
Program Compound to be contained in a third (3rd) Product, the parties shall
promptly (and in any event within [...***...] of such initiation) and in good
faith negotiate and enter into an agreement for the joint worldwide
Development and Commercialization of such third (3rd) Product and all
subsequent Products hereunder, which agreement shall provide for the sharing
of expenses and profits of the Development and Commercialization of such
Products worldwide (the "Joint Commercialization Agreement"). Any such Joint
Commercialization Agreement shall specify the parties' relative rights and
responsibilities with respect to continued pre-clinical development, clinical
development, and marketing and promotion rights, and shall include all
appropriate licenses. For purposes of clarification, the provisions of this
Agreement that apply to the first (1st) and second (2nd) Products shall not
apply to the third (3rd) Product and any subsequent Products hereunder.

      5.5   REGULATORY APPROVALS. The JDC shall, as part of the Development
Plan, develop a worldwide plan to coordinate clinical trials and regulatory
filings in all countries for which marketing approval is to be sought with
the goal of expediting Regulatory Approval and Commercialization of each
Product on a worldwide basis. Neither party shall take any action that will
or could reasonably be expected to unnecessarily impair the other party's
efforts to achieve Regulatory Approvals for which the party is responsible.

      5.6   PRODUCT BRAND NAMES. Subject to the Development Plan and to the
extent such strategy is beneficial in a given territory, the parties shall
endeavor to establish a common brand name under which each Product would be
marketed worldwide in order to maximize brand equity and the corresponding
return on Development and marketing expenditures.

      5.7   SUPPLY OF BULK DRUG SUBSTANCE AND DRUG PRODUCT. If, at the time
the parties desire to enter into a manufacturing and supply arrangement for
bulk drug substance and/or finished drug product for clinical development and
commercialization of Products, LG Chem can reasonably demonstrate that it has
the capacity and is otherwise able to meet the parties' supply requirements
hereunder at a price competitive with bids submitted to the parties by
reputable contract manufacturers of pharmaceutical products, then Elitra
agrees that LG Chem shall have the right to supply such bulk drug substance
and/or finished drug product at [...***...] with respect thereto for so long
as LG Chem remains able to meet the parties' supply requirements hereunder on
competitive terms. If the parties do not agree that LG Chem will be

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      20.

<PAGE>

manufacturer, the parties shall cooperate to identify a single manufacturing
source for the worldwide supply of bulk drug substance and finished drug
product for clinical development and commercialization of Products.

6.    LICENSE GRANTS

      6.1   LICENSE GRANTS.

            (a)   GRANT BY ELITRA. Subject to the terms and conditions of
this Agreement, Elitra hereby grants to LG Chem:

                  (i)   during the Research Term and, if applicable, any
Additional Work Period, an exclusive (except as to Elitra), worldwide,
royalty-free license, without the right to sublicense, under the Elitra
Technology and Elitra's interest in the Joint Patents solely to perform its
obligations under the Research Plan;

                  (ii)  effective as of the selection of a Program Compound
hereunder, an exclusive (even as to Elitra), royalty-bearing license, with
the right to sublicense, under the Elitra Technology and Elitra's interest in
the Joint Patents, (A) to conduct Development of such Program Compound and
any Product containing such Program Compound in the Field in the LG Chem
Territory and (B) to make, have made, use, sell, offer for sale, have sold
and import any Product containing such Program Compound in the Field in the
LG Chem Territory; and

                  (iii) effective as of the selection of a Program Compound
hereunder, a co-exclusive (with Elitra), royalty-bearing license, with the
right to sublicense, under the Elitra Technology and Elitra's interest in the
Joint Patents, (A) to conduct Development of such Program Compound and any
Product containing such Program Compound in the Field in Western Europe and
(B) to make, have made, use, sell, offer for sale, have sold and import any
Product containing such Program Compound in the Field in Western Europe.

            (b)   GRANT BY LG CHEM. Subject to the terms and conditions of
this Agreement, LG Chem hereby grants to Elitra:

                  (i)   during the Research Term and, if applicable, any
Additional Work Period, an exclusive (except as to LG Chem), worldwide,
royalty-free license, without the right to sublicense, under the LG Chem
Technology and LG Chem's interest in the Joint Patents solely to perform its
obligations under the Research Plan;

                  (ii)  effective as of the selection of a Program Compound
hereunder, an exclusive (even as to LG Chem), royalty-bearing license, with
the right to sublicense, under the LG Chem Technology and LG Chem's interest
in the Joint Patents, (A) to conduct Development of such Program Compound and
any Product containing such Program Compound in the Field in the Elitra
Territory and (B) to make, have made, use, sell, offer for sale, have sold
and import any Product containing such Program Compound in the Field in the
Elitra Territory; and

                  (iii) effective as of the selection of a Program Compound
hereunder, a co-exclusive (with LG Chem), royalty-bearing license, with the
right to sublicense, under the LG Chem Technology and LG Chem's interest in
the Joint Patents, (A) to conduct Development of

                                     21.

<PAGE>

such Program Compound containing such Program Compound and any Product
containing such Program Compound in the Field in Western Europe and (B) to
make, have made, use, sell, offer for sale, have sold and import any Product
containing such Program Compound in the Field in Western Europe.

6.2   REVERSION OF RIGHTS.

      (a)   TO ELITRA. In the event that LG Chem:

            (i)   ceases to conduct Development or Commercialization with
respect to a particular Program Compound or Product in any country within the
LG Chem Territory; or

            (ii)  notifies Elitra that it intends to cease conducting
Development or Commercialization with respect to a particular Program
Compound or Product in any country within the LG Chem Territory;

then the license to LG Chem under Section 6.1(a)(ii) with respect to such
Program Compound and/or Product, as applicable, shall terminate, and,
effective upon the occurrence of the event set forth in either clause (i) or
clause (ii) above, LG Chem hereby grants Elitra an exclusive (even as to LG
Chem), worldwide, irrevocable, perpetual, royalty-bearing license (with the
right to sublicense) under the LG Chem Technology and LG Chem's interest in
the Joint Patents (A) to conduct Development of such Program Compound and any
Product containing such Program Compound in the Field in such country of the
LG Chem Territory and (B) to make, have made, use, sell, offer for sale, have
sold and import any Product containing such Program Compound in the Field in
such country of the LG Chem Territory. Upon the occurrence of any event
specified in the foregoing clauses (i) or (ii) of this Section 6.2(a), LG
Chem shall provide prompt (but in any event not more than thirty (30) days')
written notice to Elitra thereof, and LG Chem shall transfer to Elitra as
soon as reasonably practicable following the occurrence of such event all
information and data relating to such Program Compound and/or Product as may
be necessary to enable Elitra to pursue Development and Commercialization of
such Program Compound and/or Product, as applicable, including, without
limitation, rights to all foreign-equivalent INDs and NDAs filed with respect
to such Program Compound or Product in such country and all drug dossiers and
master files with respect thereto. In consideration of any license granted
under this Section 6.2(a), Elitra shall pay to LG Chem a royalty equal to
[...***...] of Net Sales of such Product in such country for a period equal
to the Royalty Term in such country and otherwise in accordance with the
applicable provisions of Article 7.

      (b)   TO LG CHEM. In the event that Elitra:

            (i)   ceases to conduct Development or Commercialization with
respect to a particular Program Compound or Product in any country within the
Elitra Territory; or

            (ii)  notifies LG Chem that it intends to cease conducting
Development or Commercialization with respect to a particular Program
Compound or Product in any country within the Elitra Territory;

then the license to Elitra under Section 6.1(b)(ii) with respect to such
Program Compound and/or Product, as applicable, shall terminate, and,
effective upon the occurrence of the event set forth

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      22.

<PAGE>

in either clause (i) or clause (ii) above, Elitra hereby grants LG Chem an
exclusive (even as to Elitra), worldwide, irrevocable, perpetual,
royalty-bearing license (with the right to sublicense) under the Elitra
Technology and Elitra's interest in the Joint Patents (A) to conduct
Development of such Program Compound and any Product containing such Program
Compound in the Field in such country of the Elitra Territory and (B) to
make, have made, use, sell, offer for sale, have sold and import any Product
containing such Program Compound in the Field in such country of the Elitra
Territory. Upon the occurrence of any event specified in the foregoing
clauses (i) or (ii) of this Section 6.2(b), Elitra shall provide prompt (but
in any event not more than thirty (30) days') written notice to LG Chem
thereof, and Elitra shall transfer to LG Chem as soon as reasonably
practicable following the occurrence of such event all information and data
relating to such Program Compound and/or Product as may be necessary to
enable LG Chem to pursue Development and Commercialization of such Program
Compound and/or Product, as applicable, including, without limitation, rights
to all INDs and NDAs (or foreign equivalents thereof) filed with respect to
such Program Compound or Product in such country and all drug dossiers and
master files with respect thereto. In consideration of any license granted
under this Section 6.2(b), LG Chem shall pay to Elitra a royalty equal to
[...***...] of Net Sales of such Product in such country for a period equal
to the Royalty Term in such country and otherwise in accordance with the
applicable provisions of Article 7.

7.    FEES AND PAYMENTS

      7.1   RESEARCH FUNDING. LG Chem shall make research funding payments to
Elitra, in advance for each six (6) month period, at the rate of $2,300,000
per year during the Research Term, which amount shall be adjusted on an
annual basis by a factor which reflects changes in the Consumer Price Index
for San Diego, California as reported as of the date that is thirty (30) days
prior to the anniversary of the Effective Date in each applicable year during
the Research Term when compared to the comparable statistic for the date that
is thirty (30) days prior to the anniversary of the Effective Date in the
preceding year. The first such payment shall be made on the Effective Date
and each subsequent payment shall be made on the first day of each six (6)
month period during the Research Term.

      7.2   EQUITY INVESTMENT. On the terms and subject to the conditions set
forth in the Stock Purchase Agreement entered into as of the date hereof
between the parties (the "Stock Purchase Agreement"), upon the execution of
this Agreement, LG Chem shall purchase One Million Forty-One Thousand Six
Hundred Sixty-Seven (1,041,667) shares of Elitra's Series C Preferred Stock
at a purchase price per share of Four Dollars and Eighty Cents (US$4.80).

      7.3   MILESTONE PAYMENTS.

            (a)   PRECLINICAL MILESTONES. Within forty-five (45) days after
achievement of each of the milestones set forth below, LG Chem shall pay to
Elitra the milestone payment set forth below:

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      23.

<PAGE>

<TABLE>
<CAPTION>
      ---------------------------------- ---------------------------
      MILESTONE EVENT                        MILESTONE PAYMENT
      ---------------------------------- ---------------------------
<S>                                      <C>
      [...***...]                                        $[...***...]
      ---------------------------------- ---------------------------
      [...***...]                                        $[...***...]
      ---------------------------------- ---------------------------
</TABLE>

Each of the foregoing milestone payments shall be payable only for the first
Active Compound, Derivative Compound or Program Compound that is active
against a given Target and achieves the milestone event described above.

            (b) CLINICAL MILESTONES. Within forty-five (45) days following
the first occurrence of each of the events set forth below with respect to
each Product, as applicable, LG Chem shall pay to Elitra the milestone
payment set forth below:

<TABLE>
<CAPTION>
  ------------------------------------------------ ---------------------------
  MILESTONE EVENT                                      MILESTONE PAYMENT
  ------------------------------------------------ ---------------------------
<S>                                                <C>
  [...***...] of Product                                  $[...***...]
  ------------------------------------------------ ---------------------------
  [...***...] of Product                                  $[...***...]
  ------------------------------------------------ ---------------------------
  [...***...]of Product                                   $[...***...]
  ------------------------------------------------ ---------------------------
  [...***...] for Product in [...***...]                  $[...***...]
  ------------------------------------------------ ---------------------------
  [...***...] of Product in [...***...]                   $[...***...]
  ------------------------------------------------ ---------------------------
</TABLE>

Each of the foregoing milestone payments shall be payable on a Program
Compound-by-Program Compound basis; PROVIDED, HOWEVER, that if (i) a Product
is abandoned during development after one or more of the milestone payments
under this Section 7.3(b) has been made and (ii) a Product comprising or
containing another Program Compound previously designated by the JDC as a
back-up compound for such abandoned Product is developed for the same
indication as the abandoned Product to replace such abandoned Product, then
only those milestone payments under this Section 7.3(b) that were not
previously made with respect to such abandoned Product shall be payable with
respect to the Product comprising or containing such back-up Program
Compound. All payments made to Elitra pursuant to this Section 7.3 are
non-refundable and may not be credited against any other payments payable by
LG Chem to Elitra under this Agreement.

      7.4   ROYALTIES.

            (a)   ELITRA ROYALTY PAYMENTS TO LG CHEM. Elitra shall pay to LG
Chem a royalty equal to [...***...] of Gross Profit in the Elitra Territory

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      24.

<PAGE>

            (b)   LG CHEM ROYALTY PAYMENTS TO ELITRA. LG Chem shall pay to
Elitra a royalty equal to [...***...] of Gross Profit in the LG Chem
Territory.

            (c)   ROYALTY TERM. Royalties for sales of any Product in a given
country shall be paid for a period equal to the Royalty Term for such Product
in such country. After the end of the Royalty Term for any Product in a given
country, Elitra and LG Chem will discuss plans to Commercialize such Product
on a worldwide basis with the parties sharing equally (50%/50%) in the
profits and losses from Commercialization of such Product.

      7.5   PROFIT-SHARING IN WESTERN EUROPE. To the extent that the parties
determine not to enter into a Western Europe Agreement with respect to any
Product for all or any portion of Western Europe but to Commercialize such
Product through Elitra and/or LG Chem in Western Europe or the applicable
portion thereof, the parties shall share equally (50%/50%) in the profits and
losses from Commercialization of such Product in Western Europe or any
applicable portion thereof. Promptly following such determination, the
parties shall negotiate in good faith regarding the specific terms and
conditions of such profit-sharing arrangement, which terms shall in any event
be consistent with generally accepted accounting methods for activity-based
project costing for similar products in similar industries and with U.S.
generally accepted accounting principles, consistently applied. Royalties and
license fees payable by either party to Third Parties with respect to such
Products in Western Europe shall be treated as an expense.

      7.6   ADJUSTMENT. In the event that [...***...] obtained by LG Chem and
provided to Elitra shows that [...***...] as between [...***...] and
[...***...], then the parties will negotiate in good faith to make the
appropriate adjustments to the applicable provisions of this Agreement so
that each party is entitled to [...***...].

8.    PAYMENT; RECORDS; AUDITS

      8.1   PAYMENT; REPORTS. Royalty payments and reports for the sale of
Products shall be calculated and reported for each calendar quarter. All
royalty payments due to a party under this Agreement shall be paid within
sixty (60) days of the end of each calendar quarter, unless otherwise
specifically provided herein. Each payment of royalties shall be accompanied
by a report of Net Sales of Products in sufficient detail to permit
confirmation of the accuracy of the royalty payment made, including, without
limitation and on a country-by-country basis, the number of Products sold,
the gross sales and Net Sales of Products, the royalties, in U.S. dollars,
payable, the method used to calculate the royalty and the exchange rates used.

      8.2   EXCHANGE RATE; MANNER AND PLACE OF PAYMENT. All payments
hereunder shall be payable in U.S. dollars. With respect to each quarter, for
countries other than the United States, whenever conversion of payments from
any foreign currency shall be required, such conversion shall be made at the
rate of exchange equal to the weighted average of the daily exchange rates
for such currency reported in THE WALL STREET JOURNAL, WESTERN EDITION,
during the applicable quarter. All payments owed under this Agreement shall
be made by wire transfer to a bank and account designated in writing by the
party entitled to receive such payment, unless otherwise specified in writing
by such party.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                      25.

<PAGE>

      8.3   LATE PAYMENTS. In the event that any payment, including royalty,
milestone and research payments and payments under Section 5.2, due hereunder
is not made when due, the payment shall accrue interest from the date due at
the rate of one and one-half percent (1.5%) per month; PROVIDED, HOWEVER,
that in no event shall such rate exceed the maximum legal annual interest
rate. The payment of such interest shall not limit a party from exercising
any other rights it may have as a consequence of the lateness of any payment.

      8.4   WITHHOLDING OF TAXES. The party receiving royalties and other
payments under this Agreement will pay any and all taxes levied on account of
such payment. If any taxes are required to be withheld by the paying party,
it will (a) deduct such taxes from the remitting payment, (b) timely pay the
taxes to the proper taxing authority, and (c) send proof of payment to the
other party and certify its receipt by the taxing authority within sixty (60)
days following such payment.

      8.5   RECORDS AND AUDITS. During the Term of the Agreement and for a
period of six (6) years thereafter, each party shall keep complete and
accurate records pertaining to the Development of Program Compounds and
Products and the sale or other disposition of Products in sufficient detail
to permit the other party to confirm the accuracy of all payments due
hereunder (including, without limitation, under Section 5.2). A party shall
have the right to cause an independent, certified public accountant
reasonably acceptable to the other party to audit such records to confirm
Development Expenses, Net Sales and royalty and other payments for a period
covering not more than the preceding three (3) years. Such audits may be
exercised no more than once in each calendar year during normal business
hours upon reasonable prior written notice to the audited party. Prompt
adjustments shall be made by the parties to reflect the results of such
audit. The party causing such audit shall bear the full cost of such audit
unless such audit discloses a variance of more than five percent (5%) from
the amount of the Development Expenses, Net Sales or royalties or other
payments due under this Agreement. In such case, the audited party shall bear
the full cost of such audit and shall promptly remit to the other party the
amount of any underpayment, together with interest from the date originally
due.

      8.6   PROHIBITED PAYMENTS. Notwithstanding any other provision of this
Agreement, if a party is prevented from paying any such royalty by virtue of
the statutes, laws, codes or governmental regulations of the country from
which the payment is to be made, then such royalty may be paid by depositing
funds in the currency in which accrued to the other party account in a bank
acceptable to such other party in the country whose currency is involved.

9.    INTELLECTUAL PROPERTY

      9.1   OWNERSHIP OF INVENTIONS. Ownership of inventions conceived of or
reduced to practice in the course of the Collaboration ("Inventions") shall
be determined in accordance with the rules of inventorship under United
States patent laws. Elitra shall own all Inventions conceived of and reduced
to practice in the course of the Collaboration solely by its employees and
agents ("Elitra Inventions"), and all patent applications and patents
claiming Elitra Inventions. LG Chem shall own all Inventions conceived of and
reduced to practice in the course of the Collaboration solely by its
employees and agents ("LG Chem Inventions"), and all patent applications and
patents claiming LG Chem Inventions. All Inventions conceived of and

                                      26.

<PAGE>

reduced to practice jointly by employees or agents of Elitra and employees or
agents of LG Chem ("Joint Inventions"), and all Joint Patents, shall be owned
jointly by Elitra and LG Chem.

      9.2   PATENT PROSECUTION AND MAINTENANCE.

            (a)   It is the intention of the parties to secure broad patent
protection for discoveries and inventions made in connection with the
Collaboration and to coordinate the filing and prosecution of patent
applications claiming such discoveries and inventions on a worldwide basis.
Elitra shall be responsible for the filing, prosecution and maintenance of
all Elitra Patents and all patent applications and patents covering any
Elitra Inventions at Elitra's sole expense. LG Chem shall be responsible for
the filing, prosecution and maintenance of all LG Chem Patents and all patent
applications and patents covering any LG Chem Inventions at LG Chem's sole
expense. Each party shall consider in good faith the requests and suggestions
of the other party with respect to strategies for filing and prosecuting such
patent applications. The inventing party shall keep the other party informed
of progress with regard to the filing, prosecution, maintenance, enforcement
and defense of patents applications and patents subject to this Section
9.2(a).

            (b)   Elitra shall be responsible for, and shall initially bear
the expense of, the preparation, filing, prosecution, and maintenance of the
Joint Patents, provided that Elitra shall be entitled to reimbursement by LG
Chem of fifty percent (50%) of such expenses. Elitra shall consult with LG
Chem as to the preparation, filing, prosecution, and maintenance of such
Joint Patents reasonably prior to any deadline or action with the U.S. Patent
& Trademark Office or any foreign patent office, and shall furnish to LG Chem
copies of all relevant documents reasonably in advance of such consultation.
In the event that Elitra desires to abandon any such Collaboration Patent, or
if Elitra later declines responsibility for any such Collaboration Patent,
Elitra shall provide reasonable prior written notice to LG Chem of such
intention to abandon or decline responsibility, and LG Chem shall have the
right, at its expense, to prepare, file, prosecute, and maintain such
Collaboration Patent.

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

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

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

      9.4   INFRINGEMENT BY THIRD PARTIES.

            (a)   Elitra and LG Chem shall promptly notify the other in
writing of any alleged or threatened infringement of any patent included in
the Elitra Patents, LG Chem Patents or Joint Patents of which they become
aware. Both parties shall use their best efforts in cooperating with each
other to terminate such infringement without litigation.

                                      27.

<PAGE>

            (b)   Elitra shall have the right to bring and control any action
or proceeding with respect to infringement of any patent included in the
Elitra Patents at its own expense and by counsel of its own choice. In the
event such alleged infringement takes place, in whole or in part, in the LG
Chem Territory, LG Chem shall have the right to participate in such action,
at its own expense. With respect to infringement of any patent included in
the Elitra Patents that is likely to have a material adverse effect on any
Product in Development or Commercialization by LG Chem pursuant to a license
granted hereunder, if Elitra fails to bring an action or proceeding within
(a) sixty (60) days following the notice of alleged infringement or (b) ten
(10) days before the time limit, if any, set forth in the appropriate laws
and regulations for the filing of such actions, whichever comes first, LG
Chem shall have the right to bring and control any such action at its own
expense and by counsel of its own choice, and Elitra shall have the right, at
its own expense, to be represented in any such action by counsel of its own
choice.

            (c)   LG Chem shall have the right to bring and control any
action or proceeding with respect to infringement of any patent included in
the LG Chem Patents at its own expense and by counsel of its own choice. In
the event such alleged infringement takes place, in whole or in part, in the
Elitra Territory, Elitra shall have the right to participate in such action,
at its own expense. With respect to infringement of any patent included in
the LG Chem Patents that is likely to have a material adverse effect on any
product in Development or Commercialization by Elitra pursuant to a license
granted hereunder, if LG Chem fails to bring an action or proceeding within
(a) sixty (60) days following the notice of alleged infringement or (b) ten
(10) days before the time limit, if any, set forth in the appropriate laws
and regulations for the filing of such actions, whichever comes first, Elitra
shall have the right to bring and control any such action at its own expense
and by counsel of its own choice, and LG Chem shall have the right, at its
own expense, to be represented in any such action by counsel of its own
choice.

            (d)   In the event any patent included in the Joint Patents is
infringed by a Third Party, Elitra shall have the right to bring and control
any action or proceeding with respect to such patent, and the parties shall
share equally in the expenses thereof. In the event such alleged infringement
takes place, in whole or in part, in the LG Chem Territory, LG Chem shall
have the right to participate in such action. With respect to infringement of
any patent included in the Joint Patents, if Elitra fails to bring an action
or proceeding within (a) sixty (60) days following the notice of alleged
infringement or (b) ten (10) days before the time limit, if any, set forth in
the appropriate laws and regulations for the filing of such actions,
whichever comes first, LG Chem shall have the right to bring and control any
such action at its own expense and by counsel of its own choice, and Elitra
shall have the right, at its own expense, to be represented in any such
action by counsel of its own choice.

            (e)   In the event a party brings an infringement action, the
other party shall cooperate fully, including if required to bring such
action, the furnishing of a power of attorney. Neither party shall have the
right to settle any patent infringement litigation under this Section 9.4 in
a manner that diminishes the rights or interests of the other party without
the prior written consent of such other party. Except as otherwise agreed to
by the parties as part of a cost-sharing arrangement, any recovery realized
as a result of such infringement action, after reimbursement of any expenses
of Elitra and LG Chem incurred in connection with such action or proceeding,
shall be paid to the party that brought the action; provided that, if both
parties participate in such action or proceeding, then (i) any recovery
representing lost sales in the Elitra Territory shall be paid to Elitra, and
any

                                      28.

<PAGE>

recovery representing lost sales in the LG Chem Territory shall be paid to LG
Chem, and (ii) any remaining amount of the recovery shall be shared equally
by the parties (subject to the provisions of any Western Europe Agreement
with respect to Western Europe). Any recovery received by a party
representing lost sales in the Elitra Territory or the LG Territory, as
applicable, shall be treated as Net Sales of Products.

      9.5   INFRINGEMENT OF THIRD PARTY RIGHTS. Each party shall promptly
notify the other in writing of any allegation by a Third Party that the
activity of either of the parties pursuant to this Agreement infringes or may
infringe the intellectual property rights of such Third Party. Elitra shall
have the first right to control any defense of any such claim involving
alleged infringement of Third Party rights by Elitra's activities at its own
expense and by counsel of its own choice, and LG Chem shall have the right,
at its own expense, to be represented in any such action by counsel of its
own choice. If Elitra fails to proceed in a timely fashion with regard to
such defense, LG Chem shall have the right to control any such defense of
such claim at its own expense and by counsel of its own choice, and Elitra
shall have the right, at its own expense, to be represented in any such
action by counsel of its own choice. LG Chem shall have the first right to
control any defense of any such claim involving alleged infringement of Third
Party rights by LG Chem's activities at its own expense and by counsel of its
own choice, and Elitra shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. If LG Chem fails
to proceed in a timely fashion with regard to such defense, Elitra shall have
the right to control any such defense of such claim at its own expense and by
counsel of its own choice, and LG Chem shall have the right, at its own
expense, to be represented in any such action by counsel of its own choice.
Neither party shall have the right to settle any patent infringement
litigation under this Section 9.5 in a manner that diminishes the rights or
interests of the other party without the consent of such other party.

      9.6   TRADEMARKS. Subject to the provisions of Section 5.5, each party
shall obtain, own and enforce its own trademarks with respect to its own
activities, in the case of Elitra, in the Elitra Territory, and, in the case
of LG Chem, in the LG Chem Territory. The parties shall own jointly any
trademarks obtained with respect to Products in Western Europe, and the
parties shall determine by mutual agreement which party shall be responsible
for obtaining, maintaining and enforcing any such trademarks.

10.   REPRESENTATIONS AND WARRANTIES

      10.1  MUTUAL REPRESENTATIONS AND WARRANTIES. Each party represents to
the other that:

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

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

                                      29.

<PAGE>

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

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

      10.2  DISCLAIMER CONCERNING TECHNOLOGY. THE TECHNOLOGY AND INTELLECTUAL
PROPERTY RIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED "AS IS" AND EACH
PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE
PRACTICES, IN ALL CASES WITH RESPECT THERETO. Without limiting the generality of
the foregoing, each party expressly does not warrant (i) the success of any
study or test commenced under the Collaboration or (ii) the safety or usefulness
for any purpose of the technology it provides hereunder.

      10.3  LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE ENTITLED TO RECOVER
FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER.

11.   CONFIDENTIALITY; PUBLICATION

      11.1  CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the parties, the parties agree that,
during the Term of the Agreement and for five (5) years thereafter, the
receiving party shall keep confidential and shall not publish or otherwise
disclose and shall not use for any purpose other than as expressly provided for
in this Agreement any Confidential Information furnished to it by the other
party pursuant to this Agreement. Each party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement. Each party will use at least the same standard of care as it uses to
protect proprietary or confidential information of its own to ensure that its
employees, agents, consultants and other representatives do not disclose or make
any unauthorized use of the Confidential Information. Each party will promptly
notify the other upon discovery of any unauthorized use or disclosure of the
Confidential Information.

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

                                       30.
<PAGE>

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

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

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

            (d)   is independently discovered or developed by the receiving
party without the use of Confidential Information belonging to the disclosing
party; or

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

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

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

            (b)   regulatory filings;

            (c)   prosecuting or defending litigation;

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

            (e)   conducting Research and Development of Active Compounds,
Derivative Compounds, Program Compounds or Products; and

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

Notwithstanding the foregoing, in the event a party is required to make a
disclosure of the other party's Confidential Information pursuant to this
Section 11.3, it will, except where impracticable, give reasonable advance
notice to the other party of such disclosure and use efforts to secure
confidential treatment of such information at least as diligent as such party
would use to protect its own confidential information, but in no event less than
reasonable efforts. In any event, the parties agree to take all reasonable
action to avoid disclosure of Confidential Information hereunder. The parties
will consult with each other on the provisions of this Agreement to be redacted
in any filings made by the parties with the Securities and Exchange Commission
or as otherwise required by law.

      11.4  PUBLICATIONS. Each party to this Agreement recognizes that the
publication of papers regarding results of and other information regarding the
Collaboration, including oral presentations and abstracts, may be beneficial to
both parties provided such publications are

                                       31.
<PAGE>

subject to reasonable controls to protect Confidential Information. In
particular, it is the intent of the parties to maintain the confidentiality
of any Confidential Information included in any foreign patent application
until such foreign patent application has been published. Accordingly, a
party shall have the right to review and approve any paper proposed for
publication by the other party, including oral presentations and abstracts,
which utilizes data generated from the Collaboration and/or includes
Confidential Information of the other party. Before any such paper is
submitted for publication, the party proposing publication shall deliver a
complete copy to the other party at least forty-five (45) days prior to
submitting the paper to a publisher. Such other party shall review any such
paper and give its comments to the publishing party within thirty (30) days
of the delivery of such paper to such other party. With respect to oral
presentation materials and abstracts, such other party shall make reasonable
efforts to expedite review of such materials and abstracts, and shall return
such items as soon as practicable to the publishing party with appropriate
comments, if any, but in no event later than thirty (30) days from the date
of delivery to the non-publishing party. The publishing party shall comply
with the other party's request to delete references to the other party's
Confidential Information in any such paper and agrees to withhold publication
of same for an additional ninety (90) days in order to permit the parties to
obtain patent protection, if either of the parties deems it necessary, in
accordance with the terms of this Agreement.

      11.5  PUBLICITY. It is understood that the parties intend to issue a joint
press release announcing the execution of this Agreement and agree that each
party may desire or be required to issue subsequent press releases relating to
the Agreement or activities thereunder. The parties agree to consult with each
other reasonably and in good faith with respect to the text and timing of such
press releases prior to the issuance thereof, provided that a party may not
unreasonably withhold consent to such releases, and that either party may issue
such press releases as it determines, based on advice of counsel, are reasonably
necessary to comply with laws or regulations or for appropriate market
disclosure. In addition, following the initial joint press release announcing
this Agreement, either party shall be free to disclose, without the other
party's prior written consent, the existence of this Agreement, the identity of
the other party and those terms of the Agreement which have already been
publicly disclosed in accordance herewith.

12.   TERM AND TERMINATION

      12.1  TERM OF THE AGREEMENT. The term of the collaborative Research
activities of the parties shall commence on the Effective Date and continue
until expiration of the Research Term (and, if applicable, the Additional Work
Period), unless earlier terminated pursuant to Section 3.4, 12.2 or 15.9 or
extended by mutual agreement of the parties. The term of this Agreement ("Term
of the Agreement") shall commence on the Effective Date and continue until six
(6) months after the expiration of the last Royalty Term for any Product, unless
earlier terminated pursuant to Section 12.2 or 15.9 or extended upon terms
mutually agreeable to both parties.

      12.2  TERMINATION FOR CAUSE. Each party shall have the right to terminate
this Agreement upon sixty (60) days' prior written notice to the other upon the
occurrence of any of the following:

                                       32.
<PAGE>

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

            (b)   Upon or after the breach of any material provision of this
Agreement by the other party if the breaching party has not cured such breach
within the sixty (60) day period following written notice of termination by the
non-breaching party.

      12.3  EFFECT OF TERMINATION; SURVIVING OBLIGATIONS.

            (a)   Upon termination of this Agreement by Elitra pursuant to
Section 12.2: (i) all rights under the licenses granted by Elitra to LG Chem
hereunder shall automatically terminate and revert to Elitra; (ii) any permitted
sublicenses granted hereunder by LG Chem shall remain in effect, but shall be
assigned to Elitra; (iii) the licenses granted by LG Chem to Elitra hereunder
shall remain in effect in accordance with their terms (except as otherwise set
forth in this subsection (a)), subject to compliance by Elitra with all
applicable provisions of this Agreement (including, without limitation, the
payment obligations set forth in Article 7); (iv) LG Chem shall, and it hereby
does, grant to Elitra an exclusive (even as to LG Chem), irrevocable, perpetual,
fully-paid license (with the right to sublicense) under the LG Chem Technology
and LG Chem's interest in the Joint Patents (A) to conduct Development of
Program Compounds and Products in the Field in the LG Chem Territory and Western
Europe and (B) to make, have made, use, sell, offer for sale, have sold and
import Products in the Field in the LG Chem Territory and Western Europe; and
(v) LG Chem shall promptly transfer to Elitra all information and data as may be
necessary to enable Elitra to pursue Development and Commercialization of
Program Compounds and Products in the LG Chem Territory and Western Europe,
including, without limitation, rights to all foreign-equivalent INDs and NDAs
filed with respect to Program Compounds or Products and all drug dossiers and
master files with respect thereto.

            (b)   Upon termination of this Agreement by LG Chem pursuant to
Section 12.2: (i) all rights under the licenses granted by LG Chem to Elitra
hereunder shall automatically terminate and revert to LG Chem; (ii) any
sublicenses granted hereunder by Elitra shall remain in effect, but shall be
assigned to LG Chem; (iii) the licenses granted by Elitra to LG Chem hereunder
shall remain in effect in accordance with their terms (except as otherwise set
forth in this subsection (b)), subject to compliance by LG Chem with all
applicable provisions of this Agreement (including, without limitation, the
payment obligations set forth in Article 7); (iv) Elitra shall, and it hereby
does, grant to LG Chem an exclusive (even as to Elitra), irrevocable, perpetual,
fully-paid license (with the right to sublicense) under the Elitra Technology
and Elitra's interest in the Joint Patents (A) to conduct Development of Program
Compounds and Products in the Field in the Elitra Territory and Western Europe
and (B) to make, have made, use, sell, offer for sale, have sold and import
Products in the Field in the Elitra Territory and Western Europe; and (v) Elitra
shall promptly transfer to LG Chem all information and data as may be necessary
to enable LG Chem to pursue Development and Commercialization of Program
Compounds and Products in the Elitra Territory and Western Europe, including,
without limitation, rights to all INDs and NDAs (and foreign equivalents
thereof) filed with respect to Program Compounds or Products and all drug
dossiers and master files with respect thereto.

                                       33.
<PAGE>

            (c)   Expiration or termination of this Agreement shall not relieve
the parties of any obligation accruing prior to such expiration or termination.
Except as set forth below or elsewhere in this Agreement, the obligations and
rights of the Parties under Sections 8.5, 9.1, 10.5, 11.1, 11.2, 11.3, 11.4,
12.2, 12.3 (including the provisions therein that are contemplated to continue
following termination), 12.4 and 12.5 and Articles 13, 14 and 15 shall survive
expiration or termination of this Agreement.

            (d)   Within thirty (30) days following the expiration or
termination of this Agreement, except to the extent and for so long as a party
retains license rights under Sections 12.3(a) or (b), each party shall deliver
to the other party any and all Confidential Information of the other party in
its possession.

      12.4  EXERCISE OF RIGHT TO TERMINATE. The use by either party hereto of a
termination right provided for under this Agreement shall not give rise to the
payment of damages or any other form of compensation or relief to the other
party with respect thereto.

      12.5  DAMAGES; RELIEF. Subject to Section 12.4 above, termination of this
Agreement shall not preclude either party from claiming any other damages,
compensation or relief that it may be entitled to upon such termination.

13.   INDEMNIFICATION

      13.1  INDEMNIFICATION.

            (a)   LG Chem hereby agrees to save, defend, indemnify and hold
harmless Elitra and its officers, directors, employees, consultants and agents
from and against any and all losses, damages, liabilities, expenses and costs,
including reasonable legal expense and attorneys' fees ("Losses"), to which
Elitra may become subject as a result of any claim, demand, action or other
proceeding by any Third Party to the extent such Losses arise directly or
indirectly out of (a) the practice by LG Chem of any license granted hereunder,
or (b) the development, manufacture, use, handling, storage, sale or other
disposition of any Product by LG Chem, its Affiliates or sublicensees, except to
the extent such Losses result from the gross negligence or willful misconduct of
Elitra.

            (b)   Elitra hereby agrees to save, defend, indemnify and hold
harmless LG Chem and its officers, directors, employees, consultants and agents
from and against any and all Losses to which LG Chem may become subject as a
result of any claim, demand, action or other proceeding by any Third Party to
the extent such Losses arise directly or indirectly out of (a) the practice by
Elitra of any license granted hereunder, or (b) the development, manufacture,
use, handling, storage, sale or other disposition of any product by Elitra, its
Affiliates or sublicensees, except to the extent such Losses result from the
gross negligence or willful misconduct of LG Chem.

      13.2  CONTROL OF DEFENSE. In the event a Party seeks indemnification under
Section 13.1, it shall inform the other Party (the "Indemnifying Party") of a
claim as soon as reasonably practicable after it receives notice of the claim,
shall permit the Indemnifying Party to assume direction and control of the
defense of the claim (including the right to settle the claim

                                       34.
<PAGE>

solely for monetary consideration), and shall cooperate as requested (at the
expense of the Indemnifying Party) in the defense of the claim.

      13.3  INSURANCE.

            (a)   Elitra, at its own expense, shall maintain product liability
insurance in amount consistent with industry standards during the Term of the
Agreement and shall name LG Chem as an additional insured with respect to this
policy. Elitra shall provide a certificate of insurance evidencing such
coverage.

            (b)   LG Chem, at its own expense, shall maintain product liability
insurance (or self-insure) in amount consistent with industry standards during
the Term of the Agreement and shall name Elitra as an additional insured with
respect to such insurance. LG Chem shall provide a certificate of insurance (or
evidence of self-insurance) evidencing such coverage.

14.   DISPUTE RESOLUTION

      14.1  DISPUTES. The parties recognize that disputes as to certain matters
may from time to time arise which relate to either party's rights and/or
obligations hereunder. It is the objective of the parties to establish
procedures to facilitate the resolution of such disputes in an expedient manner
by mutual cooperation and without resort to litigation. To accomplish this
objective, the parties agree to follow the procedures set forth in Section 14.2
if and when such a dispute arises between the parties.

      14.2  PROCEDURES. If any dispute arises between the parties relating to
the interpretation, breach or performance of this Agreement or the grounds for
the termination thereof, and the parties cannot resolve the dispute within
thirty (30) days of a written request by either party to the other party, the
parties agree to hold a meeting, attended by the Chief Executive Officer of each
of Elitra and LG Chem, to attempt in good faith to negotiate a resolution of the
dispute prior to pursuing other available remedies. If, within sixty (60) days
after such written request, the parties have not succeeded in negotiating a
resolution of the dispute, such dispute shall be submitted to final and binding
arbitration under the then current commercial rules and regulations of the
American Arbitration Association ("AAA") relating to voluntary arbitrations. The
arbitration proceedings shall be held in London, England. The arbitration shall
be conducted by one arbitrator, who is knowledgeable in the subject matter at
issue in the dispute and who shall be selected by mutual agreement of the
parties or, failing such agreement, shall be selected in accordance with the AAA
rules. Each party shall initially bear its own costs and legal fees associated
with such arbitration. The prevailing party in any such arbitration shall be
entitled to recover from the other party the reasonable attorneys' fees, costs
and expenses incurred by such prevailing party in connection with such
arbitration. The decision of the arbitrator shall be final and binding on the
parties. The arbitrator shall prepare and deliver to the parties a written,
reasoned opinion conferring its decision. Judgment on the award so rendered may
be entered in any court having competent jurisdiction thereof.

15.   GENERAL PROVISIONS

      15.1  GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, as such laws
are applied to

                                       35.
<PAGE>

contracts entered into and to be performed entirely within the State of New
York by New York residents.

      15.2  ENTIRE AGREEMENT; MODIFICATION. This Agreement is both a final
expression of the parties' agreement and a complete and exclusive statement with
respect to all of its terms. The Exhibits referred to in this Agreement are
incorporated herein and made a part of this Agreement by this reference. This
Agreement supersedes all prior and contemporaneous agreements and
communications, whether oral, written or otherwise, concerning any and all
matters contained herein. No rights or licenses with respect to any intellectual
property of either party are granted or deemed granted hereunder or in
connection herewith, other than those rights expressly granted in this
Agreement. No trade customs, courses of dealing or courses of performance by the
parties shall be relevant to modify, supplement or explain any term(s) used in
this Agreement. This Agreement may not be modified or supplemented by any
purchase order, change order, acknowledgment, order acceptance, standard terms
of sale, invoice or the like. This Agreement may only be modified or
supplemented in a writing expressly stated for such purpose and signed by the
parties to this Agreement.

      15.3  RELATIONSHIP BETWEEN THE PARTIES. The parties' relationship, as
established by this Agreement, is solely that of independent contractors. This
Agreement does not create any partnership, joint venture or similar business
relationship between the parties. Neither party is a legal representative of the
other party, and neither party can assume or create any obligation,
representation, warranty or guarantee, express or implied, on behalf of the
other party for any purpose whatsoever.

      15.4  NON-WAIVER. The failure of a party to insist upon strict performance
of any provision of this Agreement or to exercise any right arising out of this
Agreement shall neither impair that provision or right nor constitute a waiver
of that provision or right, in whole or in part, in that instance or in any
other instance. Any waiver by a party of a particular provision or right shall
be in writing, shall be as to a particular matter and, if applicable, for a
particular period of time and shall be signed by such party.

      15.5  ASSIGNMENT. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by either party without the prior written consent of the other party
(which consent shall not be unreasonably withheld); PROVIDED, HOWEVER, that
either party may assign this Agreement and its rights and obligations hereunder
without the other party's consent in connection with the transfer or sale of all
or substantially all of the business of such party to which this Agreement
relates to a Third Party, whether by merger, sale of stock, sale of assets or
otherwise. In the event of such transaction, however, intellectual property
rights of a party to such transaction other than one of the parties to this
Agreement shall not be included in the technology licensed hereunder. The rights
and obligations of the parties under this Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties. Any
assignment not in accordance with this Agreement shall be void.

      15.6  NO THIRD PARTY BENEFICIARIES. This Agreement is neither expressly
nor impliedly made for the benefit of any party other than those executing it.

                                       36.
<PAGE>

      15.7  SEVERABILITY. If, for any reason, any part of this Agreement is
adjudicated invalid, unenforceable or illegal by a court of competent
jurisdiction, such adjudication shall not affect or impair, in whole or in part,
the validity, enforceability or legality of any remaining portions of this
Agreement. All remaining portions shall remain in full force and effect as if
the original Agreement had been executed without the invalidated, unenforceable
or illegal part.

      15.8  NOTICES. Any notice to be given under this Agreement must be in
writing and delivered either in person, by any method of mail (postage prepaid)
requiring return receipt, or by overnight courier or facsimile confirmed
thereafter by any of the foregoing, to the party to be notified at its
address(es) given below, or at any address such party has previously designated
by prior written notice to the other. Notice shall be deemed sufficiently given
for all purposes upon the earlier of: (a) the date of actual receipt; (b) if
mailed, three calendar days after the date of postmark; or (c) if delivered by
overnight courier, the next business day the overnight courier regularly makes
deliveries.

If to the Elitra, notices must be addressed to:

                           Elitra Pharmaceuticals, Inc.
                           3510 Dunhill Street
                           San Diego, CA  92121
                           Attention: Vice President, Business Development
                           Telephone: 858-410-3030
                           Facsimile: 858-410-3810

                  with a copy to:

                                    Cooley Godward LLP
                                    4365 Executive Drive, Suite 1100
                                    San Diego, CA  92121
                           Attention: L. Kay Chandler, Esq.
                           Telephone: 858-550-6000
                           Facsimile: 858-453-3555

If to LG Chem, notices must be addressed to:

                                    LG Chemical Ltd.
                                    16th Floor East Tower
                                    LG Twin Tower
                                    20, Yoido-dong, Youngdungpo-gu
                                    Seoul 150-721, Korea
                           Attention: Vice President of Product Planning
                             & Global Business Development, Life Science
                           Telephone: 82-2-3773-7803
                           Facsimile: 82-2-3773-3185

                                       37.
<PAGE>

                  with a copy to:

                           LG Chemical Ltd.
                           Research Park
                           104-1, Moonji-dong, Yusong-gu
                           Taejon 305-380, Korea
                           Attention: Senior Vice President of Drug Evaluation
                             and Development, Biotech Research Institute
                           Telephone: 82-42-866-2016
                           Facsimile: 82-42-862-0332

      15.9  FORCE MAJEURE. Except for the obligation to make payment when due,
each party shall be excused from liability for the failure or delay in
performance of any obligation under this Agreement by reason of any event beyond
such party's reasonable control including but not limited to Acts of God, fire,
flood, explosion, earthquake, or other natural forces, war, civil unrest,
accident, destruction or other casualty, any lack or failure of transportation
facilities, any lack or failure of supply of raw materials, any strike or labor
disturbance, or any other event similar to those enumerated above. Such excuse
from liability shall be effective only to the extent and duration of the
event(s) causing the failure or delay in performance and provided that the party
has not caused such event(s) to occur. Notice of a party's failure or delay in
performance due to force majeure must be given to the other party within ten
(10) calendar days after its occurrence. All delivery dates under this Agreement
that have been affected by force majeure shall be tolled for the duration of
such force majeure. In no event shall any party be required to prevent or settle
any labor disturbance or dispute. Notwithstanding the foregoing, should the
event(s) of force majeure suffered by a party extend beyond a three (3) month
period, the other party may then terminate this Agreement by written notice to
the non-performing party, with the consequences of such termination as set forth
in Sections 12.2, 12.3 and 12.4.

      15.10 INTERPRETATION.

            (a)   CAPTIONS & HEADINGS. The captions and headings of clauses
contained in this Agreement preceding the text of the articles, sections,
subsections and paragraphs hereof are inserted solely for convenience and ease
of reference only and shall not constitute any part of this Agreement, or have
any effect on its interpretation or construction.

            (b)   SINGULAR & PLURAL. All references in this Agreement to the
singular shall include the plural where applicable, and all references to gender
shall include both genders and the neuter.

            (c)   ARTICLES, SECTIONS & SUBSECTIONS. Unless otherwise specified,
references in this Agreement to any article shall include all sections,
subsections, and paragraphs in such article; references in this Agreement to any
section shall include all subsections and paragraphs in such sections; and
references in this Agreement to any subsection shall include all paragraphs in
such subsection.

            (d)   DAYS. All references to days in this Agreement shall mean
calendar days, unless otherwise specified.

                                       38.
<PAGE>

            (e)   AMBIGUITIES. Ambiguities and uncertainties in this Agreement,
if any, shall not be interpreted against either party, irrespective of which
party may be deemed to have caused the ambiguity or uncertainty to exist.

      15.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original document, and all of
which, together with this writing, shall be deemed one instrument.

                                       39.
<PAGE>

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

ELITRA PHARMACEUTICALS INC.                LG CHEMICAL LTD.

By:  /s/ Harry F. Hixson, Jr.            By:  /s/ Harry Yang
     --------------------------------         ---------------------------------

Name:  Harry F. Hixson, Jr.              Name:  H.J. Yang
       -----------------------------            -------------------------------

Title:  Chief Executive Officer          Title:  President, LG Life Science
        ----------------------------             ------------------------------

                                       40.
<PAGE>

                                    EXHIBIT A
                                Research Plan(1)

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

----------------- -------------------------- -------------- ------------
                  [...***...]
----------------- -------------------------- -------------- ------------

                                    *CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                               EXHIBIT A (cont'd)
                                  Research Plan

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

----------------- -------------------------- -------------- ------------
                  [...***...]
----------------- -------------------------- -------------- ------------

                                     *CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                                    EXHIBIT B

                                 DEVELOPMENT PLAN

To be attached upon approval by the JDC.

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