Document:

<PAGE>   1
                                                                   EXHIBIT 10.54
                                                     CONFIDENTIAL EXECUTION COPY

               INSTRUMENT, ASSAY DEVELOPMENT AND LICENSE AGREEMENT

                                     BETWEEN

                                  WYETH-AYERST

                                       AND

                         AURORA BIOSCIENCES CORPORATION

WYETH-AYERST - AURORA AGREEMENT

<PAGE>   2

This Agreement is made by and between AMERICAN HOME PRODUCTS, acting through its
WYETH-AYERST LABORATORIES DIVISION ("Wyeth"), a Delaware corporation with
principal offices at P.O. Box 8299, Philadelphia, PA 19101 and AURORA
BIOSCIENCES CORPORATION ("Aurora"), a Delaware corporation with principal
offices at 11010 Torreyana Road, San Diego, California 92121.

                                    RECITALS

WHEREAS, Wyeth and Aurora wish to enter into an agreement involving the purchase
*** Voltage-Ion Probe Reader (VIPR) from Aurora, collaborative research to
develop *** assays, and licenses of rights from Aurora to Wyeth to use the VIPR
as well as Aurora's Voltage Sensor Probes (VSPs) and the *** assays to practice
the technologies and the assays as set forth herein.

Now, therefore, in consideration of the foregoing and the covenants and premises
contained herein the parties agree as follows:

1.      DEFINITIONS

        1.1 "Aurora Patents" means U.S. patent *** and patent applications ***
        and *** set forth in Exhibit A and *** and ***, *** with respect thereto
        and *** patents issuing therefrom.

        1.2 "Aurora Technology" means *** owned or Controlled by Aurora on or
        before the Effective Date and necessary for the Collaborative Research
        Program.

        1.3 "Collaborative Research Program" means the collaboration between
        Aurora and Wyeth as set forth in Exhibit B for the development of ***
        which may be amended from time to time, by written agreement of the
        parties.

        1.4 "Confidential Information" means all information, data, and
        documentation received by either party from the other party pursuant to
        this Agreement and if in writing, designated as confidential at the time
        of disclosure, subject to the exceptions set forth in Section 9.1.

        1.5 "Control" or "Controlled" means, in the context of intellectual
        property, possession by a party of the ability to grant a license or
        sublicense in accordance with the terms of this Agreement, and without
        violating the terms of any agreement by such party with any Third Party.

        1.6 "Effective Date" means the latest date on which the Agreement is
        executed by a party hereto.

        1.7 "Invention" means any new and useful process, machine, manufacture,
        or composition of matter, or improvement thereto, whether or not
        patentable.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      2/25
<PAGE>   3

        1.8 "Know-How" means information and data owned or Controlled by a party
        hereto, which is existing as of the Effective Date or which a party
        develops or acquires as part of the Collaborative Research Program which
        is not generally known to the public, comprising: designs, concepts,
        algorithms, formulae, techniques, practices, processes, methods,
        knowledge, skill, experience, expertise and technical information.

        1.9 "Materials" means any reagents, cell lines, promoters, enhancers,
        vectors, plasmids, genes, proteins and fragments thereof, peptides,
        antigens, antibodies, agonists, antagonists, inhibitors and chemicals.

        1.10 "Tracking Record" means tracking records referred to in Section 5
        (e).

        1.11 "Patent Rights" means all U.S. or foreign (including regional
        authorities such as the European Patent Office) regular or provisional
        patent applications, including any continuation, continuation-in-part,
        or division thereof or any substitute application therefor or equivalent
        thereof, and any patent issuing thereon, including any reissue,
        reexamination or extension thereof and any confirmation patent or
        registration patent or patent of additions based on any such patent,
        containing one or more claims to an Invention (and in the case of an
        issued patent, containing one or more claims), and for which a party
        hereto owns or Controls, individually or jointly, any title thereto or
        rights thereunder.

        1.12   "Reagent Agreement" means ***.

        1.12   "Technology" means Materials and Know-How.

        1.13   "Third Party" means any person or entity other than Aurora and
               Wyeth.

        1.14   "VIPR" means Aurora's voltage-ion probe reader for use with VSP's
               and purchased by Wyeth ***.

        1.15   "Voltage Sensor Probes or VSPs" means *** Aurora Patents.

        1.16   "Wyeth Materials" means *** Collaborative Research Program.

2.      EQUIPMENT PURCHASE

Aurora *** VIPR *** pursuant to this Agreement. Subject to Wyeth's payments in
Section 5, Aurora will provide the following:

        -   Ship *** VIPR *** or within *** of the Effective Date, ***.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      3/25
<PAGE>   4

        -   *** VIPR at Wyeth's facility *** days of shipment, *** expense.

        -   Comprehensive *** VIPR for up to *** San Diego site to be scheduled
            approximately one week before the ***, with *** to be ***.

        -   Warranty of the VIPR for *** after the Effective *** Section 5 (a).

3.      COLLABORATIVE RESEARCH

Aurora will develop, in collaboration with Wyeth, ***, and *** for the *** (as
defined in the the "Collaborative Research Program"), and will additionally ***
of representative *** and other Technology to Wyeth as described herein.

Wyeth will provide pursuant to this Agreement the following Wyeth Materials and
Confidential Information to Aurora within *** days of the Effective Date:

        -   *** which ***.

        -   *** data documenting ***.

        -   *** for the *** for *** into Aurora- ***, if the Wyeth *** responses
            *** (see Section 5.b).

        -   Up to ***.

        -   Up to *** determine *** in a *** format.

Aurora will perform pursuant to this Agreement the following:

        -   *** development of the *** incorporating *** format on the ***
            within ***.

        -   *** development of the *** so that it can be used to *** respect
            ***.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      4/25
<PAGE>   5

        -   ***, if necessary, to *** for *** development.

        -   *** determine *** provided by Wyeth.

        -   *** assays ***.

        -   Make available *** with these assays *** for each *** for the first
            year, *** to be contracted for *** Wyeth and Aurora).

The Collaborative Research Program shall be managed by a joint steering
committee of a size and composition ***, with *** from both Wyeth and Aurora,
minimally to include key representatives of Wyeth's ***. Each party shall have
*** vote in the joint steering committee. The Joint Steering Committee shall be
chaired by a *** representative. The term of the Collaborative Research Program
is *** year from the Effective Date, except for *** as provided in Section 10
below.

4.      LICENSES

As of the Effective Date this Agreement, Aurora will grant to Wyeth licenses and
rights as follows:

        a) A non-exclusive, royalty-free, single instrument license under the
        Aurora Patents and Aurora Technology to use the purchased VIPR for
        Wyeth's ***, except *** Aurora *** b) and c) below. Such license grant
        is effective until the date of the ***. The license, ***.

        b) A non-exclusive license under the Aurora Patents and Aurora
        Technology to *** developed by Aurora during the Research Collaboration
        for drug discovery, with the Aurora VSPs. Such license grant is ***. The
        license, ***.

        c) A non-exclusive license under the Aurora Patents and Aurora
        Technology to use the Aurora VSPs on the purchased VIPR to *** developed
        by Aurora or *** or ***, and *** research, ***, the *** is for *** only.
        The *** may not *** on ***. The payments

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      5/25
<PAGE>   6

        for this license are set forth in Section 5. Such license grant is
        effective until the date of the fifth (5th) anniversary of the Effective
        Date. The license at that point may be extended through good faith
        negotiations by the parties hereto.

        d) If the license in Section 4 (c) *** the license grant of Section 4
        (c) will *** as indicated in Section 5 (d) below. Aurora agrees that it
        *** including *** and/or *** for any purpose other than to fulfill its
        obligations under this Agreement, and will not *** to any Third Party
        without ***.

        4.1 Aurora is *** and *** Wyeth that directly arise from the *** for as
        long as Wyeth ***.

        4.2 Retained Rights and Limitations. The licenses under this Section 4
        are subject to Wyeth's obligations described herein including payments
        by Wyeth as set forth in Section 5. For clarity, the license rights
        granted to Wyeth in this Section 4 specifically exclude the right *** or
        ***; or 3) to *** or *** without the use of Wyeth Confidential
        Information or Wyeth Materials. As consideration for the rights received
        in Section 4, Wyeth *** Wyeth ***. ***.

5.      PAYMENTS

        a) Equipment purchase. Wyeth *** Dollars ($***) for purchase ***.
        Shipping will be prepaid and added FOB San Diego to the invoice. The
        VIPR is provided ***, entitling Wyeth to *** of ***, prepaid and added
        ***. No one other than an Aurora factory certified engineer is
        authorized to service the VIPR, and any tampering with or modification
        of the instrument by any other party will nullify the warranty *** cause
        the license *** to terminate. *** approved by Aurora, in writing, which
        may include such repairs described in training ("Authorized
        Maintenance"). ***.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      6/25
<PAGE>   7

        b) Collaborative research. Wyeth will pay Aurora a *** fee of ***
        Dollars ($***) for the development of the ***. This amount is payable in
        *** of *** Dollars ($***) ***, the *** and the *** upon *** to Wyeth. In
        the event that the Wyeth *** and ***, as reasonably determined by
        Aurora, Aurora will notify the Joint Steering Committee. If the Joint
        Steering Committee agrees by *** as determined by Joint Steering
        Committee, as soon as possible and prior to the date of *** from the
        Effective date. In the event, Wyeth is *** Aurora with *** from the
        Effective Date, (I) *** within *** of such ***; and (ii) Aurora shall
        ***. Aurora will provide reasonable telephone support for these assays
        as long as the license to them is maintained.

        c) License fees. Wyeth *** license fee of *** Dollars ($***), *** on the
        anniversary of the Effective Date for *** years. After the initial ***
        term, Wyeth may extend this license, ***, *** or *** for terms to be
        negotiated, in good faith, by the parties.

        d) Milestone fees. Upon designation by Wyeth *** on information *** with
        the *** or *** above by virtue of such *** properties, Wyeth will pay
        Aurora ***. On the *** for each *** will pay *** of ***. On *** for each
        *** will pay *** Dollars ($***). ***. *** shall be due on *** by Wyeth
        as *** if they and their *** in a scientifically acceptable manner ***
        Wyeth, even if these *** subsequently *** VIPR or *** assays. *** the
        assays *** in either *** or *** will be due.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      7/25
<PAGE>   8

        e) Payment and Tracking Milestones *** shall be paid within *** days
        after the end of each calendar quarter period in which *** are earned.
        The compounds, screens and targets tested using a screen developed under
        this Agreement will be recorded and stored by Wyeth using its customary
        means and in a computer searchable database on a storage device. The
        information stored *** upon in writing by the parties. Records of any
        *** subject to *** or *** by Wyeth in a *** or *** that may or may not
        *** related to the ***, or ***. Wyeth shall keep appropriate records of
        *** assays and *** including the VSPs ***. All the records described in
        this Section are collectively referred to as tracking records (the
        "Tracking Records"). Wyeth will *** Aurora and agreed to by Wyeth, and
        ***, to *** Tracking Records *** year upon reasonable prior *** Aurora
        for the *** the attainment of a milestone under this Section 5. The
        Tracking Records shall be securely retained according to Wyeth's ***
        than *** from the *** VSPs. When a *** such as a *** or *** is ***
        safety or ***, Wyeth will *** Aurora under ***. On an annual basis, ***
        Aurora with a *** products that ***.

        f) Technolgy Fee and Milestones. The parties acknowledge that the
        principal value contributed by Aurora under this Agreement is the ***,
        which the parties reasonably believe will lessen the time required to
        develop new products and to increase the efficiency of drug/target
        discovery and development processes and technologies. Wyeth acknowledges
        and agrees that the value it receives hereunder is in the access and use
        of ***; accordingly, Wyeth *** set forth herein. Additionally, the
        parties acknowledge that Aurora may not own or Control patent
        applications or patents covering the manufacture, sale, use or
        importation of a particular pharmaceutical product; provided, however,
        Wyeth *** pharmaceutical product or compound is *** Aurora Patents.

6.      OPTIONS

        a) License extension for Aurora VSPs. As described in Section 4 (c), the
        *** fee

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      8/25
<PAGE>   9

        *** Dollars ($***) plus milestones ***. The license *** period, the
        license *** basis or for a *** negotiated in good faith by the parties.

        b) Extended warranty for the VIPR. Aurora will provide an extended
        warranty package *** to Wyeth that includes *** and ***, prepaid and
        added to the service invoice ***. The price for *** Dollars ($***)***,
        increased annually by the Consumer Price Index (CPI), *** warranty
        within *** of the Effective Date; ***.

        c) Scientific Support Services. Aurora will provide Wyeth the
        opportunity to utilize a full range of scientific support services on
        licensed assays post transfer as mutually agreed in writing by the
        parties. A customized program can be designed for additional long-term
        support at commercially available rates beyond the scope of this project
        should Wyeth desire the same.

        d) Training. Aurora will provide on-site training of Wyeth personnel in
        the use of the VIPR. Training will be for a maximum of *** people in a
        *** training program. Documentation and workbooks will be provided. ***.
        The price for this training program is *** Dollars ($***)*** conducted
        in the continental US if requested *** of the Effective Date.

7.      INTELLECTUAL PROPERTY OWNERSHIP

Pre-existing Intellectual Property. This agreement does not affect the ownership
of Inventions, Technology and Patent Rights of either party which existed prior
to the Effective Date.

Intellectual Property created under the Collaborative Research Program. The ***
developed by *** during the Collaborative Research Program will be owned by ***,
with *** as ***. ***, at its sole discretion, shall be responsible for the
filing and prosecution of all applicable patents and the expenses thereof. ***.

Intellectual Property ***. Any Inventions, Technology and Patent Rights relating
to the activities or properties of *** or other ***, *** of the licenses granted
by Aurora under Section 4. *** will be responsible for the filing and
prosecution of all applicable patents and for the expenses thereof. Any
improvements, Know-How, Inventions, Technology and Patent Rights

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                      9/25
<PAGE>   10

developed *** VIPR or VSPs or their use will be *** to Sections ***. Aurora will
be solely responsible for paying any fees related to the filing and prosecution.

Transfer of Rights. All rights not expressly licensed or assigned by Aurora are
retained by Aurora and no implied licenses are conveyed herein or were conveyed
before the Effective Date. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement is intended to convey or transfer ownership
by one party to the other of any rights, title or interest in any Confidential
Information, Technology, copyrights or Patent Rights owned or Controlled by a
party. Except as expressly provided for in this Agreement, nothing in this
Agreement shall be construed as a license or sublicense by one party to the
other of any rights in any Technology, copyrights, or Patent Rights owned or
Controlled by a party.

Inventorship and Assignment. Inventorship of patentable inventions shall be
determined by U.S. patent law. Wyeth and Aurora ***.

Copyrights. The parties agree to treat and handle, to the maximum extent
practical, any copyrights owned or Controlled by a party in the same manner as
Patent Rights owned or Controlled by such party.

8.      PRODUCT DEVELOPMENT, COMMERCIALIZATION AND DILIGENCE

Wyeth will *** and such development and commercialization of ***.

*** the Effective Date, and will *** Wyeth within ***of the Effective Date. The
*** will be made available to Wyeth in accordance with the *** between Wyeth and
Aurora as indicated in Section 3.

9.      CONFIDENTIALITY

        9.1 Confidential Information. Except as expressly provided herein, the
        parties agree that, for the term of this Agreement and five (5) years
        thereafter, the receiving party shall keep completely confidential and
        shall not publish or otherwise disclose to another party and shall not
        use for any purpose other than to perform the purposes contemplated by
        this Agreement any Confidential Information furnished to it by the
        disclosing party hereto pursuant to this Agreement, except that to the
        extent that it can be established by the receiving party by competent
        proof that such Confidential Information:

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     10/25
<PAGE>   11

                      was already known to the receiving party, other than under
                      an obligation of confidentiality, at the time of
                      disclosure; was generally available to the public or
                      otherwise part of the public domain at the time of its
                      disclosure to the receiving party; became generally
                      available to the public or otherwise part of the public
                      domain after its disclosure and other than through any act
                      or omission of the receiving party in breach of this
                      Agreement; was lawfully disclosed to the receiving party
                      by a person other than a party hereto, or was
                      independently developed by the receiving party without the
                      use of Confidential Information.

        9.2. Permitted Use and Disclosures. Each party hereto may use or
        disclose Confidential Information disclosed to it by the other party to
        the extent such use or disclosure is (i) reasonably necessary in filing
        or prosecuting patent applications, prosecuting or defending litigation,
        (ii) complying with applicable law, governmental regulation or court
        order, (iii) submitting information to tax or other governmental
        authorities, (iv) making a permitted sublicense or (v) otherwise
        exercising its rights hereunder, provided that if a party is required to
        make any such disclosure of another party's Confidential Information,
        other than pursuant to subsection (ii) hereof, it will give reasonable
        advance notice to the latter party of such disclosure and, shall obtain
        the prior written approval of said latter party, which approval shall
        not be unreasonably withheld.

        9.3 Confidential Terms. Except as expressly provided herein, each party
        agrees not to disclose any material or financial terms of this Agreement
        to another party without the consent of the other party, not to be
        unreasonably withheld; provided, however, each party reserves the right
        to make reasonable disclosures (including the redaction of material or
        financial terms) as required by securities or other applicable laws, or
        to actual or prospective investors or corporate partners (including
        licensees and acquirers), or to accountants, attorneys and other
        professional advisors on a need-to-know basis under circumstances that
        reasonably ensure the confidentiality thereof, or to the extent required
        by law. If such Confidential Information is to become public information
        by such disclosure the disclosing party must obtain the written consent
        of the non-disclosing party in order to obtain protection of the
        Confidential Information if necessary.

        9.4 Press Release. Notwithstanding the foregoing, the parties agree that
        Aurora will make a press release to announce the execution of this
        Agreement which shall be subject to prior written approval of Wyeth,
        such approval not to be unreasonably withheld. Thereafter, Wyeth and
        Aurora may each disclose to Third Parties the information contained in
        the mutually agreed upon press release without the need for further
        approval by the other.

10.     TERM AND TERMINATION OF THE RESEARCH COLLABORATION

        a) Term. The Collaborative Research Program will terminate on *** Wyeth,
        or after ***, unless extended by mutual written agreement of both
        parties through the Joint

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     11/25
<PAGE>   12

        Steering Committee. If the Collaborative Research Program *** Wyeth's
        ***, Wyeth will *** payment of *** Dollars ($***) described in Section
        *** above. In this case, the license described under Section *** and the
        *** would *** Wyeth would be *** for *** and to *** these assays under
        the terms of *** and pursuant to this Agreement, with *** or *** to
        Aurora, *** the VSPs, in which case it *** and the milestone payments
        under Section 5(d).

        b) Termination. Either party shall have the right to terminate this
        Agreement at any time during the term for a material breach of this
        Agreement by the other party, provided that the non-breaching party
        shall have first given *** days prior written notice (*** days in the
        event of non-payment of any amounts due under this Agreement) to the
        breaching party describing such breach and stating the non-breaching
        party's intention to terminate this Agreement if such breach remains
        uncured, and the breaching party thereafter fails to cure same within
        such *** day (***) period (*** day period in the event of non-payment of
        any amounts due under this Agreement).

        c) Effect of Expiration or Termination. Except as otherwise expressly
        provided in this Agreement, the rights and obligations of the parties
        hereof shall terminate and be of no further force or effect whatsoever
        upon any termination of this Agreement under Section 10 hereof. Sections
        *** shall survive termination or expiration of this Agreement. Upon
        expiration or other termination of the Agreement all licenses granted
        will thereby terminate and Materials will be destroyed or returned at
        the direction of the parties within *** days.

11.     MISCELLANEOUS

        11.1. Binding Effect; Assignment. This Agreement shall be binding upon
        the parties' permitted successors and permitted assigns. Wyeth may not
        assign or otherwise transfer this Agreement or any of its rights or
        obligations hereunder without the prior written consent of Aurora ***
        such attempted assignment or transfer shall be void. Aurora may assign
        or otherwise transfer this Agreement without the consent of Wyeth.

        11.2. Effect of Waiver. No waiver of any default, condition, provisions
        or breach of this Agreement shall be deemed to imply or constitute a
        waiver of any other like default, condition, provision or breach of this
        Agreement.

        11.3. Representations and Warranties of Aurora and Wyeth. Each Party
        hereby represents and warrants: Such party is duly organized and validly
        existing and in good standing under the laws of the state of its
        incorporation and has all requisite corporate power and authority to
        enter into this Agreement and to carry out the provisions hereof. Such
        party is duly authorized to execute and deliver this Agreement and to
        perform its obligations hereunder.

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     12/25
<PAGE>   13

        This Agreement is a legal and valid obligation binding upon it and
        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
        jurisdiction over it.

        11.3.1 Aurora hereby represents and warrants to Wyeth that, to the best
        of its knowledge:

               (a) ***

               (b) as of the Effective Date, it has the full right, power and
               authority to grant the licenses granted to Wyeth hereunder;

               (c) ***;

               (d) it is the exclusive licensee of the Aurora Patents and Aurora
               Technology existing as of the Effective Date, ***.

               (e) ***

        11.4. *** Indemnification for products or services arising from license
        granted herein. With respect to rights licensed to *** by the *** or by
        ***, *** agrees to indemnify, defend and hold harmless *** or ***, as
        appropriate, and their respective officers, directors, employees,
        sponsors and agents from and against all damages or other amounts
        payable to a Third Party (including product liability) resulting or
        arising from *** use of the rights granted herein to the extent that
        such indemnification by *** is required by *** pursuant to agreements
        between *** or between ***.

        11.4.1.Limitation of Liability and Warranty. NEITHER PARTY SHALL BE
               LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTIAL,
               OR INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER
               CAUSED, UNDER ANY THEORY OF LIABILITY. Except as expressly set
               forth in this Agreement, *** MAKES NO REPRESENTATIONS AND EXTENDS
               NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE
               NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
               FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED
               PRODUCTS OR SERVICES WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
               TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR IMPLIED
               WARRANTIES.

        11.4.2. *** Indemnification. *** shall indemnify, hold harmless and
        defend ***, its officers, employees, and agents against any and all
        claims, suits, losses, liabilities, damages, costs, fees, and expenses
        resulting from or arising out of products resulting

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     13/25
<PAGE>   14

        from rights granted herein, except in the case of negligence or willful
        misconduct by ***. This indemnification includes, but is not limited to,
        any product liability.

        11.4.3. Aurora Indemnification. Aurora agrees to indemnify, defend and
        hold harmless Wyeth, its officers, employees and agents from and against
        any and all claims, liabilities, demands, damages, judgements, awards,
        settlements, expenses or losses (including reasonable attorney fees)
        arising out of Aurora's negligence or willful misconduct or any damages
        to property or injuries (including death) to any persons directly caused
        by Aurora, its employees, agents or permitted subcontractors.

11.5. Force Majeure. Neither party shall lose any rights hereunder or be liable
to the other party for damages or losses (except for payment obligations) on
account of failure of performance by the defaulting party if the failure is
occasioned by war, strike, fire, act of God(s), earthquake, flood (including El
Nino and La Nina), lockout, embargo and governmental acts or orders or
restrictions.

11.6. Amendment. No modification, supplement to or waiver of this Agreement or
any Addendum hereto or any of their provisions shall be binding upon a party
hereto unless made in writing and duly signed by an authorized representative of
both Wyeth and Aurora. In no event may the terms of this Agreement be changed,
deleted, supplemented or waived by any notice, purchase order, receipt,
acceptance, bill of lading or other similar form of document. A failure of
either party to exercise any right or remedy hereunder, in whole or in part, or
on one or more occasions, shall not be deemed either a waiver of such right or
remedy to the extent not exercised, or of any other right or remedy, on such
occasion, or a waiver of any right or remedy on any succeeding occasion.

11.7. Entire Agreement. This Agreement and each supplemental written agreement
contemplated hereunder, sets forth the entire understanding and agreement of the
parties as to the subject matter thereof, and there are no other understandings,
representations or promises, written or verbal, not set forth herein or on which
either party has relied. If any provisions of any such Addendum or supplemental
written agreement conflict with any provisions set forth in this Agreement, the
provisions of this Agreement shall take precedence, unless such Addendum or
supplemental written agreement expressly refers to the specific provision(s) of
this Agreement that it is intended to replace or modify (and which shall be
limited in force and effect to such Addendum or supplemental written agreement
only).

11.8. Notices. All Notices under this Agreement shall be given in writing and
shall be addressed to the parties at the following addresses:

                      For Wyeth:

                             Wyeth-Ayerst Laboratories
                             P.O. Box 8299
                             Philadelphia, PA 19101
                      Attn: SVP, Global Business Development

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     14/25
<PAGE>   15

                      Copy to: American Home Products Corporation
                             5 Giralda Farms
                             Madison, NJ 07940
                             Attn: SVP and General Counsel

                      For Aurora:
                             Timothy J. Rink, M.D., D.Sc.
                             CEO and Chairman
                             Aurora Biosciences Corporation
                             11010 Torreyana Road
                             San Diego, CA.  92121

                             Copies to:
                             John D. Mendlein, Ph.D., J.D.
                             Senior Vice President, Intellectual Property
                             and Chief Knowledge Officer
                             Aurora Biosciences Corporation
                             11010 Torreyana Road
                             San Diego, CA.  92121

Notices shall be in writing and shall be deemed delivered when received, if
delivered by a courier, or on the second business day following mailing, if sent
by first-class certified or registered mail, postage prepaid.

11.9. Resolution. The parties recognize that disputes as to certain matters may
from time to time arise during the term of this Agreement 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 disputes arising under
this Agreement in an expedient manner by mutual cooperation and without resort
to resolution by other means. The parties agree that prior to any resolution
concerning this Agreement, *** will meet in person or by video-conferencing in a
good faith effort to resolve any disputes concerning this Agreement. Within ***
days of a formal request by either party to the other, any party may, by written
notice to the other, have such dispute referred to their respective officers
designated or their successors, for attempted resolution by good faith
negotiations, such good faith negotiations to begin within *** after such notice
is ***.

11.10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard or giving
effect to its principles of conflict of laws.

11.11. Third Party Beneficiaries. This Agreement and the rights and obligations
created hereunder are for the sole benefit of the parties hereto and their
respective successors or assigns as may be permitted under the terms of this
Agreement. By entering into this Agreement, the parties agree that they are not
creating and do not intend to create implied or

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     15/25
<PAGE>   16

incidental rights inuring to the benefit of Third Parties.

11.12. Severability. This Agreement is intended to be severable. If any
provision(s) of this Agreement are or become invalid, are ruled illegal by a
court of competent jurisdiction or are deemed unenforceable under the current
applicable law from time to time in effect during the term hereof, it is the
intention of the parties that the remainder of the Agreement shall not be
affected thereby and shall continue to be construed to the maximum extent
permitted by law at such time. It is further the intention of the parties that
in lieu of each such provision which is invalid, illegal, or unenforceable,
there shall be substituted or added as part of this Agreement by such court of
competent jurisdiction a provision which shall be as similar as possible, in
economic and business objectives as intended by the parties to such invalid,
illegal or unenforceable provision, but shall be valid, legal and enforceable.

11.13. Headings. Captions and paragraph headings are for convenience only and
shall not form an interpretative part of this Agreement. Unless otherwise
specifically provided, all references to a Section incorporate all Sections or
subsections thereunder. This Agreement shall not be strictly construed against
either party hereto and maybe executed in two (2) or more counterparts, each of
which will be deemed an original and the same instrument. Counterparts may be
signed and delivered by facsimile, each of which shall be binding when sent, and
in each case an original shall be sent via overnight courier. This Agreement
will not be enforceable and shall have no effect if this Agreement is not
executed by Wyeth and Aurora ***.

IN WITNESS WHEREOF, the parties have executed, by duly authorized
representatives, this Agreement:

By:   /s/  Egon E. Berg                 By:    /s/  Michael J. Dunn
   --------------------------------        -------------------------------------

Date:   12/16/99                        Date:  November 18, 1999
     ------------------------------          -----------------------------------

Name:  Egon E. Berg                     Name: Michael J. Dunn
     ------------------------------          -----------------------------------

Title:    Vice President                Title:  VP, Business Development
      ------------------------------    For Aurora Biosciences Corporation
For American Home Products
Acting through its Wyeth-Ayerst
Laboratories Division

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     16/25
<PAGE>   17

                                    EXHIBIT A
                                 AURORA PATENTS

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     17/25
<PAGE>   18

                                    EXHIBIT B
                  DESCRIPTION OF COLLABORATIVE RESEARCH PROGRAM

                                     [LOGO]

                                      ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     18/25
<PAGE>   19

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     19/25
<PAGE>   20

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     20/25
<PAGE>   21

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     21/25
<PAGE>   22

                                    EXHIBIT C

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     22/25
<PAGE>   23

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     23/25
<PAGE>   24

                                   EXHIBIT 1.1

                                       ***

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED

                                     24/25
<PAGE>   25

                                   EXHIBIT 1.2

                                       ***

                                     25/25

WYETH-AYERST - AURORA AGREEMENT
*** CONFIDENTIAL TREATMENT REQUESTED<PAGE>   1
                                                                   EXHIBIT 10.55
                                                     CONFIDENTIAL EXECUTION COPY

                                LICENSE AGREEMENT

                                     BETWEEN

                               ZYMOGENETICS, INC.

                                       AND

                         AURORA BIOSCIENCES CORPORATION

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       1

<PAGE>   2

                                LICENSE AGREEMENT

This License Agreement (the "Agreement") is made this 17th day of December 1999
(the "Effective Date"), by and between ZYMOGENETICS, INC. ("ZymoGenetics"), a
Washington corporation with principal offices at 1201 Eastlake Avenue East,
Seattle, WA 98102 and AURORA BIOSCIENCES CORPORATION ("Aurora"), a Delaware
corporation with principal offices at 11010 Torreyana Road, San Diego,
California 92121 to license certain technology.

                                    RECITALS

WHEREAS, Aurora has the right to sublicense the Aurora Patents and Stanford
Patents (both defined herein) relating to fluorescent proteins further described
herein, and desires to license the same to ZymoGenetics;

WHEREAS, ZymoGenetics seeks to obtain certain Materials, license rights under
the Aurora Patents and Stanford Patents *** according to the terms contained
herein (the "Agreement");

Now, therefore, in consideration of the foregoing and the covenants and premises
contained herein the parties agree as follows:

1. DEFINITIONS

As used herein, the following terms shall have the following meanings:

1.1     "Aurora Mutant GFP" means ***.

1.2     "Aurora Patents" means U.S. Patent Nos. 5,625,048, 5,777,079 and the
        patent applications listed on Exhibit A and *** U.S. patents issuing
        therefrom.

1.3     "Aurora Technology" means the *** listed in Exhibit C and Aurora's
        proprietary technical manual for the same.

1.4     "Confidential Information" means all information, data, and
        documentation received by either party from the other party pursuant to
        this Agreement, subject to the exceptions set forth in Section 8.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       2
<PAGE>   3

1.5     "Control" or "Controlled" means, in the context of intellectual
        property, right of a party to grant a license or sublicense in
        accordance with the terms of this Agreement, and without violating the
        terms of any agreement by such party with any Third Party.

1.6     "Excluded Fields" means any activities outside the Field, including, but
        not limited to: (i) services to Third Parties; (ii) Fluorescent
        Resonance Energy Transfer (FRET); (iii) diagnostics; (iv) testing small
        molecule compounds (i.e. non-protein, non-peptide, or non-nucleotide
        substances) in an effort to identify therapeutic entities; (v) quality
        control, quality assurance or manufacture of products (e.g. cell lines
        or antibodies) for sale or clinical use; (vi) use of polynucleotides in
        gene trap, enhancer trap and promoter trap vectors for integration into
        a genome (e.g. random integration) (vii) use in plants or plant cells;
        (viii) no right to sublicense; and (ix) the subject matter of the
        Stanford Patents may not be practiced in the field of anti-infectives.

1.7     "Field" means:

               (1) use of Aurora Mutant GFP for *** solely for pharmaceutical
               research;

               (2) use of Aurora Mutant GFP for the *** and *** solely for
               pharmaceutical research, and use of Aurora Mutant GFP for *** as
               described in Section 1.7(1);

               (3) use of Aurora Mutant GFP for *** applications solely for
               pharmaceutical research, such applications including but not
               limited to: the *** and *** and in the *** described in Section
               1.7(2); the evaluation of *** and *** of Targets ***;

               (4) use of Aurora Mutant GFP for in vitro Screening; and

               (5) use of Aurora Mutant GFP as a *** assays. Such use as a ***
               is limited to Screening of *** including *** Target ***.

               Items (1)-(5) are limited to activities that occur at
               ZymoGenetics.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       3
<PAGE>   4

1.8     "Materials" means any reagents, promoters, enhancers, vectors, plasmids,
        genes, polynucleotides, cells, proteins and fragments thereof, peptides,
        antigens, antibodies, antagonists, agonists, inhibitors and chemicals.

1.9     ***.

1.10    "Screening" means ***.

1.11    "Stanford Agreement" means that certain exclusive license agreement
        between Aurora and The Board of Trustees of the Leland Stanford Junior
        University ("Stanford"), dated as ***.

1.12    "Stanford Licensed Product(s)" means any product or process, or part
        thereof, in the Field, the manufacture, use or sale of which is covered
        by a valid claim of an issued, unexpired Stanford Patent and shall be
        presumed to be valid unless and until it has been held to be invalid by
        a final judgment of a court of competent jurisdiction from which no
        appeal can be or is taken.

1.13    "Stanford Patents" means U.S. Patent No. 5,807,387, 5,968,738 and the
        patent applications listed on Exhibit B and *** U.S. patents issuing
        therefrom.

1.14    "Target" means ***.

1.15    "Territory" means the United States.

1.16    "Third Party" means any entity other than (i) Aurora and (ii)
        ZymoGenetics.

1.17    "Term" has the meaning set forth in Section 9.1.

1.18    "ZymoGenetics Product" means ***.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       4
<PAGE>   5

2.      LICENSES AND SUPPLY

2.1     Grant Under the Aurora Patents, Stanford Patents and Aurora Technology

        2.1.1  Non-exclusive License to Aurora Patents. Aurora hereby grants to
               ZymoGenetics, subject to ZymoGenetics' obligations described in
               Sections 3, 4 and 5, a non-exclusive, non-transferable, license
               to make, use and import Aurora Mutant GFP under the Aurora
               Patents solely in the Field in the Territory during the Term.

        2.1.2  Non-exclusive License to Stanford Patents. Aurora hereby grants
               to ZymoGenetics, subject to ZymoGenetics' obligations described
               in Sections 3, 4 and 5, a non-exclusive, non-transferable,
               license to make, use and import Aurora Mutant GFP under the
               Stanford Patents solely in the Field in the Territory during the
               Term.

        2.1.3  Non-exclusive License to Aurora Technology. Aurora hereby grants
               to ZymoGenetics, subject to ZymoGenetics' obligations described
               in Sections 3, 4 and 5, a non-exclusive, non-transferable,
               license to make and use Aurora Mutant GFP under the Aurora
               Technology solely in the Field in the Territory during the Term.

        2.1.4  Limitations. Except as otherwise expressly provided in this
               Agreement, nothing in this Agreement is intended to convey or
               transfer ownership by one party to the other of any rights, title
               or interest in any Confidential Information, technology (e.g.
               know-how), copyrights or patent rights owned or Controlled by a
               party. Except as expressly provided for in this Agreement,
               nothing in this Agreement shall be construed as a license or
               sublicense by one party to the other of any rights in any
               technology, copyrights, or patent rights owned or Controlled by a
               party. All rights not expressly licensed by Aurora are retained
               by Aurora. The Aurora Mutant GFP within the scope of license
               grants of Sections 2.1.1, 2.1.2 and 2.1.3 are limited to Aurora
               Mutant GFP within the scope *** (i) ***; (ii) ***; or (iii) ***.
               The license rights granted to ZymoGenetics in Section 2.1 do not
               include: (a) the right to sublicense such rights; (b) the right
               to conduct any activities outside the Field under the Aurora
               Patents or Stanford Patents or with Aurora Technology; or (c) the
               right to conduct activities inside the Excluded Fields under the
               Aurora Patents or Stanford Patents or with Aurora Technology.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       5
<PAGE>   6

2.2     Supply. Aurora shall deliver the Aurora Technology to ZymoGenetics
        within *** business days after the Effective Date in the quantities
        described on Exhibit C.

3.      COMPENSATION

3.1     Technology Access Fee. As consideration for the Aurora Technology
        provided to ZymoGenetics pursuant to section 2.2, ZymoGenetics shall pay
        to Aurora within *** after the Effective Date, a *** Dollars ($***).

3.2     Settlement Fee. As consideration for the covenant provided to
        ZymoGenetics pursuant to Section 5.1, ZymoGenetics shall pay to Aurora
        within *** after the Effective Date, *** settlement fee of *** Dollars
        ($***). Such payment by Zymogenetics is made solely ***.

3.3     Annual Maintenance Fee. As consideration for the rights granted in
        Section ***, ZymoGenetics will pay to Aurora a *** fee as payment for
        the upcoming year *** Dollars ($***) on the first anniversary of the
        Effective Date and then each anniversary of the Effective Date
        thereafter.

4.      PAYMENTS AND MILESTONES

4.1     Currency of Payment. All payments to be made under this Agreement shall
        be paid in U.S. dollars by wire transfer or other mutually acceptable
        means to a bank account designated by Aurora. Wiring instructions for
        payments are as follows:

                                       ***

4.2     Milestones. When any ZymoGenetics Product reaches any of the following
        milestones, ZymoGenetics shall pay to Aurora the corresponding
        non-creditable, non-refundable milestone payment; ***

<TABLE>
           Milestone                                 Payment
           ---------                                 -------
           <S>                                       <C>
           1.  ***                                   $ ***
           2.  ***                                   $ ***
</TABLE>
December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       6
<PAGE>   7
<TABLE>
          <S>                                       <C>
           3.  ***                                   $ ***
           4.  ***
</TABLE>

        4.2.1  Payment and Reporting. The milestones due under this Section 4
               shall be paid within *** days after the end of each calendar
               quarter period in which such milestones are reached for each
               ZymoGenetics Product or for a ZymoGenetics Product earned and not
               previously reported.

        4.2.2  Tracking. ZymoGenetics Products will be recorded and stored by
               ZymoGenetics using its customary means and in a computer
               searchable database on a storage device. Records of any ***
               (including, ***) that would *** subject to additional *** will be
               *** file or database that ***. ZymoGenetics shall keep
               appropriate records of ZymoGenetics Products discovered,
               identified or profiled under the rights granted herein ***. All
               the records described in this Section are collectively referred
               to as tracking records (the "Tracking Records"). ***
               ZymoGenetics, and subject to a confidential relationship with
               ZymoGenetics *** Tracking Records once per year upon reasonable
               prior written request *** milestone under ***. The Tracking
               Records shall be securely retained according to ZymoGenetics' ***
               for no less than *** from the date a ***. Until all of the
               milestones have been paid, *** that may be used to calculate
               milestones. Such reports shall be sent to the attention of SVP,
               Intellectual Property via first class mail, overnight courier or
               facsimile.

        4.2.3  Trade Secret Milestones. The parties acknowledge that a
               significant value contributed by Aurora under this Agreement is
               the enhanced probability of identifying products, such as human
               pharmaceutical products (or other products having commercial
               value), and the potential to generate multiple cell lines or
               leads, either or both of which the parties reasonably believe
               will lessen the time required to bring pharmaceutical products to
               market and increase the efficiency of drug discovery and
               development processes and technologies. Additionally, the parties
               acknowledge that Aurora may not own or Control patent
               applications or

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       7
<PAGE>   8

               patents covering the manufacture, offer for sale, sale, use or
               importation of a particular product. ZymoGenetics acknowledges
               and agrees that the value it receives hereunder is in the access
               and use of Aurora Technology, Aurora Patents or Stanford Patents.
               *** a patent application or patent within the Aurora Patents or
               Stanford Patents.

4.3     ***. If ZymoGenetics makes a payment to *** under such Third Party
        patent rights, biological materials or know-how, *** ZymoGenetics, ***
        payments in annual maintenance fees or milestones, described in Sections
        3.3 and 4.2 respectively, to Aurora totaling *** dollars ($***),
        ZymoGenetics *** made to *** amount payable under Section *** dollars
        ($***) ***.

5.      COVENANTS

5.1     Aurora's Covenant. Subject to ZymoGenetics' obligations in accordance
        with Section 3, the first paragraph of Section 4.2 and Sections 4.2.1,
        5.2.1 and 5.2.2, Aurora covenants *** by ZymoGenetics under the Aurora
        Patents or Stanford Patents, and such *** making or using Aurora Mutant
        GFP's ***. Such covenant *** any ZymoGenetics' successors in interest,
        ***, in part or in whole.

5.2     Covenants of ZymoGenetics:

        5.2.1  ***

        5.2.2  ***

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       8
<PAGE>   9

        5.2.3  Except as expressly licensed herein, ZymoGenetics covenants not
               to make or use Aurora Technology or polynucleotides or proteins
               under the Aurora Patents or Stanford Patents. ***

6. REPRESENTATIONS AND WARRANTIES

6.1     Representations and Warranties of Aurora and ZymoGenetics

        Each Party hereby represents and warrants:

               Corporate Power. Such party is duly organized and validly
               existing and in good standing under the laws of the state of its
               incorporation and has all requisite corporate power and authority
               to enter into this Agreement and to carry out the provisions
               hereof.

               Due Authorization. Such party is duly authorized to execute and
               deliver this Agreement and to perform its obligations hereunder.

               Binding Agreement. This Agreement is a legal and valid obligation
               binding upon it and 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
               jurisdiction over it.

6.2     Representations and Warranties of Aurora. To the best knowledge of
        Aurora, as of the Effective Date, Aurora represents and warrants to
        ZymoGenetics, except as otherwise provided or disclosed herein: (i) it
        Controls under valid licenses or by virtue of ownership all right, title
        and interest in and to the Aurora Patents and Stanford Patents and
        Aurora Technology licensed hereunder; (ii) *** (iii) ***; and (iv) ***.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       9
<PAGE>   10

7. NEGATION OF WARRANTIES

7.1     Except as expressly set forth in this Agreement, Aurora MAKES NO
        REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
        IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
        OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE AURORA
        TECHNOLOGY WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER
        RIGHTS OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

8. CONFIDENTIALITY

8.1     Confidential Information. Except as expressly provided herein, the
        parties agree that, for the Term and five (5) years thereafter, the
        receiving party shall keep completely confidential and shall not publish
        or otherwise disclose to another party and shall not use for any purpose
        other than to perform the purposes contemplated by this Agreement any
        Confidential Information furnished to it by the disclosing party hereto
        pursuant to this Agreement, except that to the extent that it can be
        established by the receiving party by written evidence that such
        Confidential Information:

               was already known to the receiving party, other than under an
               obligation of confidentiality, at the time of disclosure;

               was generally available to the public or otherwise part of the
               public domain at the time of its disclosure to the receiving
               party;

               became generally available to the public or otherwise part of the
               public domain after its disclosure and other than through any act
               or omission of the receiving party in breach of this Agreement;
               or

               was lawfully disclosed to the receiving party by a person other
               than a party hereto,

               or

               was independently developed by the receiving party.

8.2     Permitted Use and Disclosures. Each party hereto may use or disclose
        Confidential Information disclosed to it by the other party to the
        extent such use or disclosure is reasonably necessary in filing or
        prosecuting patent applications, prosecuting or defending litigation,
        complying with applicable law, governmental regulation or court order,
        submitting information to tax or other governmental authorities, making
        a permitted sublicense or otherwise exercising its rights hereunder,
        provided that if a party is required to make any such disclosure of
        another party's Confidential Information, other than

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       10
<PAGE>   11

        pursuant to a confidentiality agreement, it will give reasonable advance
        notice to the latter party of such disclosure and, save to the extent
        inappropriate in the case of patent applications, will use reasonable
        efforts to secure confidential treatment of such information prior to
        its disclosure (whether through protective orders or otherwise).

8.3     Confidential Terms. Except as expressly provided herein, each party
        agrees not to disclose *** to another party without the consent of the
        other party, not to be unreasonably withheld; provided, however, each
        party reserves the right to make reasonable disclosures (including the
        mutually agreed redaction of material or financial terms) as required by
        securities or other applicable laws, or to actual or prospective
        investors or corporate partners, or to accountants, attorneys and other
        professional advisors on a need-to-know basis under circumstances that
        reasonably ensure the confidentiality thereof, or to the extent required
        by law. A party shall have the further right to disclose the material
        financial terms of this Agreement under strictures of confidentiality to
        any potential acquirer, bona fide potential strategic partner or
        collaborator, merger partner, bank, venture capital firm, or other
        financial institution to obtain financing. If any Confidential
        Information is to become public information by disclosure of the
        disclosing party (except by way of issuance of a patent), the disclosing
        party must obtain the written consent of the non-disclosing party in
        order to disclose the information or allow the non-disclosing party to
        obtain protection of the Confidential Information, if necessary.

9. TERMINATION

9.1     Term. This Agreement shall continue until the date the last patent of
        the Aurora Patents or Stanford Patents expires ("Term").

9.2     Termination for Material Breach. Either party shall have the right to
        terminate this Agreement at any time for a material breach of this
        Agreement by the other party, provided that the non-breaching party
        shall have first given thirty (30) days prior written notice (ten (10)
        days in the event of non-payment of any amounts due under this
        Agreement) to the breaching party describing such breach and stating the
        non-breaching party's intention to terminate this Agreement if such
        breach remains uncured, and the breaching party thereafter fails to cure
        same within a reasonable time. In no case will a party be liable for
        punitive or consequential damages.

9.3     Termination by ZymoGenetics. ZymoGenetics may, at anytime after the date
        of the seventh (7th) anniversary of the Effective Date, terminate the
        license rights granted in Section 2.1 upon *** days written notice to
        Aurora and ***.

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       11
<PAGE>   12

9.4     Any termination pursuant to Section 9.2 or 9.3 shall not relieve
        ZymoGenetics of any obligation or liability accrued hereunder prior to
        such termination, including the obligation to pay applicable license
        fees and milestones. The licenses granted to ZymoGenetics under this
        Agreement shall terminate in the event the Agreement is terminated or
        otherwise expired. Upon termination of the Agreement all licenses
        granted will thereby terminate and Materials with an Aurora Mutant GFP
        will be destroyed or returned to Aurora at the direction of Aurora
        within sixty (60) days.

10. MISCELLANEOUS

10.1    Binding Effect; Assignment. This Agreement shall be binding upon the
        parties' respective successors and permitted assigns. ZymoGenetics may
        not assign or otherwise transfer this Agreement or any of its rights or
        obligations hereunder without the prior written consent of Aurora ***
        and any such attempted assignment or other transfer shall be void.
        Aurora may assign this Agreement, upon notice to ZymoGenetics.

10.2    Effect of Waiver. No waiver of any default, condition, provisions or
        breach of this Agreement shall be deemed to imply or constitute a waiver
        of any other like default, condition, provision or breach of this
        Agreement.

10.3    Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
        ANY SPECIAL, CONSEQUENTIAL, INCIDENTIAL, OR INDIRECT DAMAGES ARISING OUT
        OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

10.4    Indemnification. ZymoGenetics shall indemnify, hold harmless and defend
        Aurora, its officers, employees, and agents (collectively, the
        "Indemnities") against any and all claims, suits, losses, liabilities,
        damages, costs, fees, and expenses resulting from or arising out of
        exercise of this license described herein. This indemnification
        includes, but is not limited to, any product liability. ZymoGenetics
        shall have no obligation under this Section 10.4 to the extent any such
        claim, suit, loss, liability, damages, cost, fee or expense was the
        result of the willful misconduct or gross negligence of any Indemnitee.
        ZymoGenetics shall have no obligation under this Section 10.4 unless:
        (i) Aurora gives ZymoGenetics prompt written notice of any such claim,
        suit, loss, liability, damages, cost, fee or expense; (ii) ZymoGenetics
        is granted full authority and control over the defense as well as any
        settlement of such claims, suit, losses, liability, damages, costs, fees
        and expenses; and (iii) Aurora and all Indemnitees seeking
        indemnification reasonably cooperate with

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       12
<PAGE>   13

        ZymoGenetics and its agents in such defense.

10.5    Force Majeure. Neither party shall lose any rights hereunder or be
        liable to the other party for damages or losses on account of failure of
        performance by the defaulting party if the failure is occasioned by war,
        strike, fire, act of God(s), el nino, la nina, earthquake, flood,
        lockout, embargo, governmental acts or orders or restrictions, failure
        of suppliers, or any other reason where failure to perform is beyond the
        reasonable control and not caused by the gross negligence or intentional
        conduct or misconduct of the nonperforming party, and such party has
        exerted all reasonable efforts to avoid or remedy such force majeure;
        provided, however, that in no event shall a party be required to settle
        any labor dispute or disturbance.

10.6    Amendment. No modification, supplement to or waiver of this Agreement or
        any Addendum hereto or any of their provisions shall be binding upon a
        party hereto unless made in writing and duly signed by an authorized
        representative of both ZymoGenetics and Aurora. In no event may the
        terms of this Agreement be changed, deleted, supplemented or waived by
        any notice, purchase order, receipt, acceptance, bill of lading or other
        similar form of document. A failure of either party to exercise any
        right or remedy hereunder, in whole or in part, or on one or more
        occasions, shall not be deemed either a waiver of such right or remedy
        to the extent not exercised, or of any other right or remedy, on such
        occasion or a waiver of any right or remedy on any succeeding occasion.

10.7    Entire Agreement. This Agreement, and each Exhibit attached hereto, and
        each supplemental written agreement contemplated hereunder, sets forth
        the entire understanding and agreement of the parties as to the subject
        matter thereof, and there are no other understandings, representations
        or promises, written or verbal, not set forth herein or on which either
        party has relied. If any provisions of any such addendum or supplemental
        written agreement conflict with any provisions set forth in this
        Agreement, the provisions of this Agreement shall take precedence,
        unless such addendum or supplemental written agreement expressly refers
        to the specific provision(s) of this Agreement that it is intended to
        replace or modify (and which shall be limited in force and effect to
        such addendum or supplemental written agreement only).

10.8    Notices. All Notices under this Agreement shall be given in writing and
        shall be addressed to the parties at the following addresses:

                      For ZymoGenetics:
                             Senior Director, Legal Affairs
                             ZymoGenetics, Inc.
                             1201 Eastlake Avenue East

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       13
<PAGE>   14

                             Seattle, WA  98102
                             Facsimile (206)442-6678

                             Copies to:
                             Bruce Carter, Ph.D.
                             CEO and President
                             ZymoGenetics, Inc.
                             1201 Eastlake Avenue East
                             Seattle, WA  98102
                             Facsimile: (206)442-6678

                      For Aurora:
                             Stuart J. M. Collinson, Ph.D., M.B.A.
                             CEO and President
                             Aurora Biosciences Corporation
                             11010 Torreyana Road
                             San Diego, CA.  92121

                             Copies to:
                             John D. Mendlein
                             Chief Knowledge Officer
                             Aurora Biosciences Corporation
                             11010 Torreyana Road
                             San Diego, CA.  92121

        Notices shall be in writing and shall be deemed delivered when received,
        if delivered by a courier, or if by facsimile, with confirmation copy or
        on the second business day following mailing, if sent by first-class
        certified or registered mail, postage prepaid. Notice delivered upon
        receipt of fax (confirmation copy follows to support date of notice).

10.9    Arbitration. The parties recognize that disputes as to certain matters
        may from time to time arise during the term of this Agreement which
        relate to either party's rights and/or obligations hereunder, including,
        but not limited to attempted termination of the Agreement. It is the
        objective of the parties to establish procedures to facilitate the
        resolution of disputes arising under this Agreement in an expedient
        manner by mutual cooperation and without resort to arbitration. The
        parties agree that prior to any arbitration concerning this Agreement,
        Zymogenetics' CEO and Aurora's CEO will meet in person or by
        video-conferencing in a good faith effort to resolve any disputes
        concerning this Agreement. Within *** days of a formal request by either
        party to the other, any party

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       14
<PAGE>   15

        may, by written notice to the other, have such dispute referred to their
        respective officers designated or their successors, for attempted
        resolution by good faith negotiations, such good faith negotiations to
        begin within *** days after such notice is received and not to be
        continued for more than *** days after initiation of such negotiations
        unless the parties mutually agree to an extension thereto. Except as
        otherwise provided specifically herein, any controversy or claim under
        this Agreement shall be solely settled by arbitration by one arbitrator
        pursuant to the Commercial Arbitration Rules of the American Arbitration
        Association (the "Association"); provided that the parties shall first
        use their best efforts to resolve such dispute by negotiation.
        Arbitration shall be initiated by a written request for arbitration
        proceedings by one party to the other after such *** day good faith
        negotiation period. The arbitration shall be conducted ***. The
        arbitrator shall be selected by the joint agreement of the parties, but
        if they do not so agree within *** days of the date of a request for
        arbitration, the selection shall be made pursuant to the rules of the
        Association. The decision reached by the arbitrator shall be conclusive
        and binding upon the parties hereto and may be filed with the clerk of
        any court of competent jurisdiction, and a judgment confirming such
        decision may, if desired by any party to the arbitration, be entered in
        such court. Each of the parties shall pay its own expenses of
        arbitration and the expenses of the arbitrator(s) shall be equally
        shared; provided, however, that if in the opinion of the arbitrator(s)
        any claim hereunder or any defense or objection thereto was
        unreasonable, the arbitrator(s) may assess, as part of the award, all or
        any part of the arbitration expenses (including reasonable attorneys'
        fees) against the party raising such unreasonable claim, defense or
        objection. Nothing herein set forth shall prevent the parties from
        settling any dispute by mutual agreement at any time. Notwithstanding
        anything to the contrary in this Section 10, either party may seek
        immediate injunctive or other interim relief from any court of competent
        jurisdiction with respect to enforcement and protection of the patent
        rights, copyrights, trademarks, or other intellectual property rights
        owned or Controlled by such party. For clarity, this arbitration
        provision, Section 10.12, shall not apply to any claim of infringement
        or a lawsuit to determine the enforceability or validity of intellectual
        property, including patents. In no event shall a demand for arbitration
        be made after the date when the institution of a legal or equitable
        proceeding based on such claim, dispute or other matter in question
        would be barred by the applicable statute of limitations.

10.10   Governing Law. This Agreement shall be governed by and construed in
        accordance with the laws of the State of California.

10.11   Severability and Survival. This Agreement is intended to be severable.
        If any provision(s) of this Agreement are or become invalid, are ruled
        illegal by a court of competent jurisdiction or are deemed unenforceable
        under the current applicable law from time to time in effect during the
        term hereof, it is the intention of the parties that the remainder of
        the Agreement shall not be affected thereby and shall continue to be
        construed to the

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       15
<PAGE>   16

        maximum extent permitted by law at such time. It is further the
        intention of the parties that in lieu of each such provision which is
        invalid, illegal, or unenforceable, there shall be substituted or added
        as part of this Agreement by mutual agreement of the parties or
        arbitration, a provision which shall be as similar as possible, in
        economic and business objectives as intended by the parties to such
        invalid, illegal or unenforceable provision, but shall be valid, legal
        and enforceable. Unless expressly stated otherwise, the provision of
        Sections 4, 5, 6, 7, 8, and 10 and any other provision intended by its
        meaning to survive, will survive the expiration or any other termination
        of this Agreement.

10.12   Headings. Captions and paragraph headings are for convenience only and
        shall not form an interpretative part of this Agreement. Unless
        otherwise specifically provided, all references to a Section incorporate
        all Sections or subsections thereunder. This Agreement shall be
        construed without regard to the drafting or non-drafting party hereto
        and may be executed in two or more counterparts, each of which will be
        deemed an original and the same instrument. Counterparts may be signed
        and delivered by facsimile, each of which shall be binding when sent,
        and in each case an original shall be sent via overnight courier. This
        Agreement will not be enforceable and shall have no effect if this
        Agreement is not executed by Zymogenetics on or before December 17,
        1999.

IN WITNESS WHEREOF, Aurora and ZymoGenetics have executed, by duly authorized
representatives, this Agreement.

For ZymoGenetics, Inc.

By:  /s/  Bruce Carter                      Date: 12/17/99
   -------------------------------               -------------------------------
Name: Bruce Carter
     -----------------------------

Title: President
      ----------------------------

For Aurora Biosciences Corporation

By:  /s/  John Mendlein                     Date: 12/16/99
   -------------------------------               -------------------------------

Name: John Mendlein
     -----------------------------

Title: CKO
      ----------------------------

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       16

<PAGE>   17

                                    EXHIBIT A
                                 AURORA PATENTS

                                       ***

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       17
<PAGE>   18

                                    EXHIBIT B
                                STANFORD PATENTS

                                       ***

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       18
<PAGE>   19

                                       ***

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       19
<PAGE>   20

                                    EXHIBIT C
                                       ***

                                       ***

December 17, 1999
ZymoGenetics.Aurora License Agrt.-
*** CONFIDENTIAL TREATMENT REQUESTED

                                       20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]