Document:

<PAGE>   1
                                                                   EXHIBIT 10.10

                            AGREEMENT BY AND BETWEEN
                           ARENA PHARMACEUTICALS, INC.
                                       AND
                        FUJISAWA PHARMACEUTICAL CO., LTD.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----

<S>                                                                              <C>
Article I.     Definitions                                                          1

Article II.    Preliminary Activities And Transfer Of Material And Data             6

Article III.   CART(TM) Activation Of Arena ************** Orphan Receptors         9

Article IV.    License and Screening With Fujisawa Activated Receptor
               Using Fujisawa Receptor Assay; Maintenance Fee; Exclusivity Fee     10

Article V.     Clinical Development Of CART Identified Compound                    12

Article VI.    Drug Product Revenue                                                14

Article VII.   Confidentiality                                                     16

Article VIII.  Patent Infringement And Enforcement                                 17

Article IX.    Representations And Warranties                                      17

Article X.     Indemnity                                                           18

Article XI.    Termination                                                         19

Article XII.   Relationship of the Parties                                         20

Article XIII.  Miscellaneous Provisions                                            20

Signature Blocks                                                                   23

Appendices                                                                A-1 and A-2

Exhibits                                                              Ex1 through Ex7
</TABLE>

                                 --PLEASE NOTE--

Provisions Within This Agreement Are Deemed "CONFIDENTIAL" In Accordance With
The Terms of Article VII.

         Reviewers are advised to confirm with their attorney as to any
       obligations and/or requirements regarding review of this Agreement

Confidential Treatment has been requested for the portions marked as ***.

                                   COVER PAGE
<PAGE>   2

                                    AGREEMENT

        This Agreement ("Agreement") is effective as of January 24, 2000
("Effective Date") by and between ARENA PHARMACEUTICALS, INC., having a place of
business at 6166 Nancy Ridge Drive, San Diego, California, 92121 USA ("Arena"),
and FUJISAWA PHARMACEUTICAL CO., LTD, having a place of business at 4-7,
Doshomachi 3-Chome, Chuo-Ku, Osaka 541-8514, JAPAN ("Fujisawa").

        WHEREAS, Fujisawa is a pharmaceutical company dedicated to innovative
research to discover drugs that satisfy unmet medical needs;

        WHEREAS, Arena is a biopharmaceutical organization focused on the
discovery and development of innovative therapeutics;

        WHEREAS, Arena and Fujisawa each desire to enter into this Agreement on
the terms and conditions set forth herein.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Arena and Fujisawa hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

        Unless otherwise specifically provided herein, the following terms shall
have the following meanings (all referenced statutes set forth in the following
definitions are collectively appendixed to this Agreement as "APPENDIX A"):

"Affiliate" when used with reference to a specified person, any person or entity
directly or indirectly controlling, controlled by or under common control with
the specified person, means the direct or indirect ownership of at least 50% of
the outstanding voting securities of an entity.

"Annual" means the period between January 1 and December 31, inclusive.

"Arena" means Arena and its Affiliates.

"Arena Activation Technology" means an Arena proprietary approach to identifying
and selecting a region within a G Protein Coupled Receptor that, when altered,
leads to constitutive activation of the altered receptor.

"Arena Activated Receptor" means an Arena ************** Orphan Receptor that
has been constitutively activated by Arena using the Arena Activation
Technology.

"Arena Antisense Oligonucleotide" and "Arena Antisense Oligonucleotides" means
oligonucleotide(s) designed by or on behalf of Arena to specifically bind with
the nucleic acid of a designated Arena ************** Orphan Receptor(s) to
inhibit the expression of such Arena ************** Orphan Receptor(s).

"Arena ************** Orphan Receptor" and "Arena ************** Orphan
Receptors" means any Orphan Receptor evidencing sequence homology with a

                                       1
                                  CONFIDENTIAL
<PAGE>   3

previously identified ********* receptor discovered, or provided to Fujisawa
hereunder, by Arena.

"Arena Library Compounds" means Library Compounds synthesized by Arena prior to
the Effective Date or during the term of the Agreement, or obtained by Arena
from a Third Party prior to the Effective Date or during the term of this
Agreement, excluding: (i) any compound(s) set forth in any Arena patent
application(s) filed with the United States Patent & Trademark Office prior to
Screening of any Fujisawa Activated Receptor, and/or (ii) any compound(s)
licensed by Arena to any Third Party prior to Screening of any Fujisawa
Activated Receptor, and/or (iii) any compound(s) that is the subject of any
negotiation between Arena and a Third Party prior to Screening of any Fujisawa
Activated Receptor.

"Arena Missense Oligonucleotide" and "Arena Missense Oligonucleotide(s)" means
oligonucleotide(s) designed by or on behalf of Arena that are the same length
and having the same base composition as a corresponding Arena **************
Orphan Receptor(s), but having a different sequence from the corresponding Arena
************** Orphan Receptor(s).

"Arena Patent Rights" means all present and/or future patents (including
inventor's certificates) and all present and/or future applications (including
provisional applications) therefor throughout the world as the case may be, and
substitutions, extensions, reissues, renewals, divisions, continuations, or
continuation-in-part thereof or therefor, owned or controlled (either fully or
partially) by Arena, or under which Arena may grant licenses or sublicenses, to
the extent they are directed to (1) Arena Activation Technology applied to
Fujisawa Activated Receptor(s) and/or (2) Arena Activated Receptor(s) and/or (3)
Fujisawa Receptor Assay(s) and/or (4) CART Identified Compound and/or (5) Drug
Product and/or (6) Screening Assay. It is understood that Fujisawa's exclusive
patent right on Fujisawa Library Compound described in the Section 4.1(c) hereof
shall be excluded from the scope of Arena Patent Right. A list of Arena Patent
Rights shall be attached hereto as APPENDIX B as of the Effective Date and Arena
shall update APPENDIX B from time to time during the terms of this Agreement by
sending Fujisawa such updated APPENDIX B and also the updated APPENDIX B as of
the end of December in each year within one (1) month after such date.

"Back-Up Compound" has the same meaning as set forth in Section 5.2(a) of this
Agreement.

"Best Reasonable Commercial Efforts" means efforts to achieve a designated
objective, which efforts are based upon reasonably prudent business factors and
considerations.

"CART Identified Compound(s)" means a compound, and/or a Derivative of a CART
Identified Compound, that has been identified as a modulator of a Fujisawa
Activated Receptor provided to Fujisawa by Arena hereunder, provided, however,
that for the purposes of this Agreement the following specific compounds shall
be excluded from the scope of the CART Identified Compound: *************
********************* and Derivatives of ********************************** and
any compound to be identified by Fujisawa as a back-up compound of *************
******************** by providing notice to Arena before completion of Fujisawa
Activities described in the Section 2.4.

                                       2
                                  CONFIDENTIAL
<PAGE>   4

"Combination Product(s)" means any product containing both an agent or
ingredient which constitutes a CART Identified Compound and one or more other
active agents or ingredients which do not constitute CART Identified Compounds.

"Cooperative Efficacy Criteria" has the same meaning as set forth in Section
2.3(c) of this Agreement.

"Derivative" and "Derivatives" of a first compound means a compound having the
same core structure as the first compound.

"Developing Receptor Fee" has the same meaning as set forth in Section 3.1 of
this Agreement.

"Drug Product" means a therapeutic product comprising a CART Identified
Compound.

"Drug Product Revenue" means an aggregate gross amount of monies received by
Fujisawa, Fujisawa's Licensee(s), and/or Affiliates of Fujisawa, for the sale of
Drug Product, provided, however, that sales between and among Fujisawa and its
Affiliates and Fujisawa's Licensee of Drug Product which are subsequently resold
or to be resold by such Affiliates or Fujisawa Licensees shall be excluded from
the scope of Drug Product Revenue. In the case of a Combination Product for
which the agent or ingredient constituting a CART Identified Compound and each
of the other active agents or ingredients not constituting CART Identified
Compounds have established market prices when sold separately, Drug Product
Revenue shall be determined by multiplying the Drug Product Revenue for each
such Combination Product by a fraction, the numerator of which shall be the
established market price for the Drug Product(s) contained in the Combination
Product and the denominator of which shall be the sum of the established market
prices for the CART Identified Compound(s) plus the other active agents or
ingredients contained in the Combination Product. When such separate market
prices are not established, then the parties shall negotiate in good faith to
determine a fair and equitable method of calculating Drug Product Revenue in
question.

"Effective Date" means the date first above written in this Agreement.

"Endogenous" means naturally occurring.

"FDA" means the United States Food and Drug Administration.

"Fujisawa" means Fujisawa and its Affiliates.

"Fujisawa Activated Receptor" has the same meaning as set forth in Section
3.1(a) of this Agreement.

"Fujisawa Animal Models(s)" has the same meaning as set forth in Section 2.3(a)
of this Agreement.

"Fujisawa Library Compounds" means Library Compounds owned or acquired by
Fujisawa or to which Fujisawa has a certain rights including, but not limited
to, development, manufacture or commercialization thereof.

"Fujisawa's Licensee(s)" means any person or entity to which Fujisawa has
granted sublicenses as referred to in Section 4.1

                                       3
                                  CONFIDENTIAL
<PAGE>   5

"Fujisawa Receptor Assay" has the same meaning as set forth in Section 3.1(b) of
this Agreement.

"Fujisawa Receptor Information" has the same meaning as set forth in Section
3.1(c) of this Agreement.

"Fujisawa Selected Receptor" has the same meaning as set forth in Section 3.1 of
this Agreement.

"G Protein Coupled Receptor" means an Endogenous cell-surface receptor defined
by having three (3) intracellular loops, three (3) extracellular loops, an amino
terminus and a carboxy terminus.

"Information" has the same meaning as set forth in Section 7.1 of this
Agreement.

"Initiation Notice" has the same meaning as set forth in Section 2.6 of this
Agreement.

"Investigational New Drug Application" and "IND" each has the same meaning as
set forth in 21 C.F.R. Section 312.20, including any and all amendments,
modifications or changes as may be made thereto in the future, or the equivalent
thereof in any applicable country within the Territory.

"In Vivo Data" has the same meaning as set forth in Section 2.4(b) of this
Agreement.

"Library Compounds" means chemical compounds.

"Localization Data" has the same meaning as set forth in Section 2.1(b) of this
Agreement.

"Marketing Authorization" means the granting or authorization, by an appropriate
governmental agency, to commercialize a pharmaceutical product; by way of
example, the FDA is an appropriate governmental agency.

"Measured Response" when used in reference to the phrase "Arena Activated
Receptor" means counts per minute based upon use of a radiolabeled tracer.

"Non-Success Data" has the same meaning as set forth in Section 2.4(b)(1) of
this Agreement.

"Non-Success Notice" has the same meaning as set forth in Section 2.4(b)(1) of
this Agreement.

"Notice" has the same meaning as set forth in Section 13.11 of this Agreement.

"Orphan Receptor" means a G Protein Coupled Receptor that is not constitutively
active and for which the Endogenous ligand is not publicly known.

"Phase 3 Clinical Study" has the same meaning as set forth in 21 C.F.R. Section
312.21(c), including any and all amendments, modifications or changes thereto as
may be made thereto in the future, or the equivalent thereof, in any applicable
country within the Territory.

                                       4
                                  CONFIDENTIAL
<PAGE>   6

"Party" means either Arena or Fujisawa, as the case may be; "Parties" means both
Arena and Fujisawa.

"Regulation Data" has the same meaning as set forth in Section 2.1 of this
Agreement.

"Regulatory Agency" includes, but is not be limited to, FDA, or similar
regulatory bodies in the Territory.

"Screening" means the process of contacting a chemical compound with a Fujisawa
Activated Receptor.

"Screening Assay" means an Arena assay approach for Screening that has been
validated based upon Successful Screening of a Fujisawa Activated Receptor.

"Screening Terms" has the same definition as set forth in Section 4.2(b) of this
Agreement.

"Success Notice" has the same meaning as set forth in Section 2.4(b)(2) of this
Agreement.

"Successful Screening" when used in conjunction with the phrase "Fujisawa
Selected Receptor" means that the results of the Screening has been positive
whereby at least one molecule that has been contacted with the Fujisawa
Activated Receptor reduces the Measured Response of the Fujisawa Activated
Receptor by at least two (2) standard deviations from the mean response of a
screening plate that includes that compound.

"Technical Information" means all information, trade secrets, know-how, methods
of manufacture, processes, documents and materials (excluding Fujisawa Activated
Receptor(s) and Fujisawa Receptor Assay(s) ), related to Fujisawa Activated
Receptor(s) and/or Fujisawa Receptor Assay(s), and other proprietary
information, whether patentable or unpatentable, related to Fujisawa Activated
Receptor(s) and/or Fujisawa Receptor Assay(s), including but not limited to,
improvements, that are owned or possessed by Arena, whether now existing or
hereafter developed.

"Technology" means Arena Patent Rights and Technical Information.

"Territory" means the world.

"Third Party" means any person or entity other than Fujisawa, Fujisawa's
Licensee(s) and Arena.

"Valid Claim" means a claim which, but for the license granted hereunder, would
be infringed by Fujisawa's manufacture, having manufactured, use, having used,
sale or having sold of the Drug Product, and which is in an unexpired issued
patent included within the Arena Patent Rights which has not been held invalid
or unenforceable by a decision of a court of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and which has not
been admitted to be invalid by the owner through reissue or disclaimer. If there
should be two or more decisions that are conflicting with respect to the
invalidity of the same claim, the decision of the higher or highest tribunal
shall thereafter control.

                                       5
                                  CONFIDENTIAL
<PAGE>   7

                                   ARTICLE II
                             PRELIMINARY ACTIVITIES
                                       AND
                          TRANSFER OF MATERIAL AND DATA

        2.1 Arena Activities. Subject to the terms and conditions of this
Agreement, Arena agrees to use Best Reasonable Commercial Efforts to complete
the following within four (4) months of the Effective Date:

               (a) Arena shall select at least eight (8), but not more than
twelve (12), Arena ************** Orphan Receptors for evaluation;

               (b) Arena shall determine the ******** and/or *********
localization of each Arena ************** Orphan Receptor selected in accordance
with Section 2.1(a) of this Agreement ("Localization Data");

               (c) Arena shall develop at least one (1) Arena Antisense
Oligonucleotide and at least one (1) corresponding Arena Missense
Oligonucleotide for each Arena ************** Orphan Receptor that has been
localized in accordance with Section 2.1(b) of this Agreement;

               (d) Arena shall evaluate the effect of each Arena Antisense
Oligonucleotide and Arena Missense Oligonucleotide developed in accordance with
Section 2.1(c) of this Agreement on the activation of astrocyte and microglia;

               (e) Arena shall determine the expression of each Arena
************** Orphan Receptor selected in accordance with Section 2.1(a) of
this Agreement in brain tissue prepared and supplied by Fujisawa from animal
model(s) selected by Fujisawa in such manner as separately agreed upon between
the Parties in accordance with the terms and conditions of the Material Transfer
Agreement ("MTA") attached hereto as EXHIBIT A.

The Parties acknowledge and agree that Arena may, but is not obligated to,
determine the regulation of Arena ************** Orphan Receptor(s) in an in
vitro model of *** *************************** ("Regulation Data"). The Parties
further acknowledge and agree that after the Effective Date, if the Endogenous
ligand for any Arena ************** Orphan Receptor is discovered, then such
non-orphan receptor shall continue to be treated as an Arena **************
Orphan Receptor for purposes of this Agreement.

        2.2 Material Transfer. For EACH Arena ************** Orphan Receptor
that has been localized in accordance with Section 2.1(b) of this Agreement for
which at least one (1) Arena Antisense Oligonucleotide has been developed in
accordance with Section 2.1(c) of this Agreement, Arena shall transfer to
Fujisawa the following in accordance with the terms and conditions of MTA
attached hereto as EXHIBIT A which MTA shall form a complete part of this
Agreement (The Parties acknowledge and agree that to the extent that any term of
the MTA is in conflict with any term of this Agreement, this Agreement in such
instances shall control):

                                       6
                                  CONFIDENTIAL
<PAGE>   8

               (a) such reasonable quantities of at least one (1) Arena
Antisense Oligonucleotide corresponding to each Arena ************** Orphan
Receptor as requested by Fujisawa to conduct Fujisawa Activities of Section 2.4;
and

               (b) such reasonable quantities of at least one (1) Arena Missense
Oligonucleotide corresponding to each Arena Antisense Oligonucleotide of Section
2.2(a) Receptor as requested by Fujisawa to conduct Fujisawa Activities of
Section 2.4; and

               (c) Localization Data and data developed in accordance with
Section 2.1(d); and

               (d) data developed in accordance with Section 2.1(e) indicating
the expression in animal model(s) brain tissue for the Arena **************
Orphan Receptor of Section 2.1(a); and

               (e) if developed by Arena, Regulation Data.

The Parties hereto acknowledge and agree that *********************************
******** for the activities of Section 2.1 of this Agreement and for the
transfer of materials under Section 2.2 of this Agreement. Arena agrees that the
transfer to Fujisawa under this Section 2.2 shall be accomplished within one (1)
month after completion of Arena Activities of Section 2.1.

        2.3 Joint Activities. Subject to the terms and conditions of this
Agreement, the Parties jointly agree to cooperate in completing the following
within one (1) month of the Effective Date:

               (a) Fujisawa shall provide Arena with a written outline of animal
model(s) developed by Fujisawa ("Fujisawa Animal Model(s)") for the in vivo
analysis of Arena Antisense Oligonucleotides and the behavioral and/or
biological end-points that indicate the efficacy of such Arena Antisense
Oligonucleotides in accepted animal models of ************************
*****************;

               (b) Arena shall thereafter provide Fujisawa with comments and/or
suggestions as to the written outline provided by Fujisawa in accordance with
Section 2.3(a) of this Agreement;

               (c) the Parties shall thereafter develop a mutually agreed-to set
of criteria for establishing the efficacy of the Arena Antisense
Oligonucleotides in the Fujisawa Animal Model(s) ("Cooperative Efficacy
Criteria"). Such Cooperative Efficacy Criteria shall include the amount of each
Arena Antisense Oligonucleotide and Arena Missense Oligonucleotide required by
Fujisawa to conduct such in vivo analysis, and shall be attached hereto as
EXHIBIT B and shall form a complete part of this Agreement.

        2.4 Fujisawa Activities. Subject to the terms and conditions of this
Agreement, Fujisawa agrees to use Best Reasonable Commercial Efforts to
complete, per each Arena ************** Orphan Receptor, the following within
twelve (12) months of the date that Fujisawa receives all materials to be
transferred in accordance with Section 2.2 hereof from Arena; Fujisawa shall
provide Arena with quarterly interim status reports for each three (3) month
period of the twelve (12) month period:

               (a) For each Arena Antisense Oligonucleotide and its
corresponding Arena Missense Oligonucleotide transferred to Fujisawa in
accordance with Section 2.2

                                       7
                                  CONFIDENTIAL
<PAGE>   9

of this Agreement, Fujisawa shall conduct in vivo analysis thereof with using
Fujisawa Animal Model(s) set forth in the Cooperative Efficacy Criteria.

               (b) Within ten (10) days after completion of the in vivo analysis
of each Arena Antisense Oligonucleotide ("In Vivo Data"), Fujisawa shall provide
Notice to Arena indicating whether such tested Arena Antisense Oligonucleotide
has met the Cooperative Efficacy Criteria:

                        (1)     Non-Success Notice. In the event that the Arena
                                Antisense Oligonucleotide does not meet the
                                Cooperative Efficacy Criteria, then all data
                                developed by Fujisawa thereon ("Non-Success
                                Data") shall be transferred to Arena within one
                                (1) month of the date of such Non-Success
                                Notice, and all such Non-Success Data shall be
                                owned exclusively, even as to Fujisawa, by
                                Arena.

                        (2)     Success Notice. In the event that the Arena
                                Antisense Oligonucleotide meets the Cooperative
                                Efficacy Criteria, then the Parties acknowledge
                                and agree that the provisions of Article III
                                shall automatically begin with respect to the
                                Arena ************** Orphan Receptor
                                corresponding to such Arena Antisense
                                Oligonucleotide.

The Parties hereto acknowledge and agree that no fees shall be paid by Arena to
Fujisawa for the activities of Section 2.4(a) of this Agreement or for the
transfer of data under Section 2.4(b)(1) of this Agreement.

        2.5 Ownership. Except as provided for in Section 2.6 of this Agreement,
the Parties acknowledge and agree that Arena shall exclusively have and
exclusively retain full right, title and interest in Arena ************** Orphan
Receptor(s); Arena Antisense Oligonucleotide(s); Arena Missense
Oligonucleotide(s); Localization Data; Regulation Data; In Vivo Data; and
Non-Success Data; provided, however, that either Party may use In Vivo Data and
Non-Success Data for research purposes. The Parties further acknowledge and
agree that in the event that a Third Party wishes to secure rights to any Arena
************** Orphan Receptor, Arena shall provide Notice to Fujisawa informing
Fujisawa of such Third Party interest together with documentation evidencing
such Third Party interest; Fujisawa shall thereafter have twenty-one (21) days
to provide Notice to Arena as to whether Fujisawa shall exercise the provisions
of Section 2.6 of this Agreement. In the event that Arena does provide such
Notice to Fujisawa and Fujisawa does not provide Notice to Arena within such
twenty-one (21) day period, Fujisawa shall be deemed to have understood the
rights of Arena to exercise its ownership interests in and to such Arena
************** Orphan Receptor, and all data related thereto, whether developed
by Arena or Fujisawa.

        2.6 Initiation of Collaboration. Fujisawa may at any time prior to
completion of the in vivo analysis referred to in Section 2.4 (a) provide Notice
to Arena that Fujisawa shall exercise the provisions of Article III with respect
to selection of any or all Arena ************** Orphan Receptor(s) ("Initiation
Notice"). If such selected Arena ************** Orphan Receptor(s) has not been
licensed or obligated by Arena to any Third Party prior to the date of receipt
by Arena of such Initiation Notice or Fujisawa provides notice to Arena of such
Initiation Notice in accordance with Section 2.5, then the provisions of Article
III of this Agreement shall automatically apply with respect to any Arena
************** Orphan Receptor(s) set forth in the Initiation Notice.

                                       8
                                  CONFIDENTIAL
<PAGE>   10

                                   ARTICLE III
                               CART(TM) ACTIVATION
                             OF ARENA **************
                                ORPHAN RECEPTORS

        3.1 Collaboration Initiation; Developing Receptor Fee. Upon selection by
Fujisawa of the first Arena ************** Orphan Receptor that is the subject
of a Success Notice or Initiation Notice, Fujisawa shall, within one (1) month
of such Success Notice or one (1) month of such Initiation Notice, provide to
Arena Developing Receptor Fee of Five Hundred Thousand Dollars (US$500,000). (It
is understood and agreed between the Parties that Fujisawa is not required to
pay such Developing Receptor Fee to Arena in case that Fujisawa does not select
any Arena ************** Orphan Receptor). The Developing Receptor Fee shall
only be applicable with respect to this Agreement. Upon receipt of such
Developing Receptor Fee by Arena, any Arena ************** Orphan Receptor
selected by Fujisawa ("Fujisawa Selected Receptor") shall be the subject of an
exclusive collaboration between Arena and Fujisawa, as set forth below, and in
accordance with terms and conditions of this Agreement (The Parties acknowledge
and agree that the maximum amount of Developing Receptor Fee that Fujisawa would
be required to make to Arena under this Agreement is Five Hundred Thousand
Dollars (US$500,000) irrespective of the number of Fujisawa Selected Receptor.):

               (a) Arena shall apply the Arena Activation Technology, using Best
Reasonable Commercial Efforts, to constitutively activate each Fujisawa Selected
Receptor ("Fujisawa Activated Receptor").

               (b) For each Fujisawa Activated Receptor, Arena, using Best
Reasonable Commercial Efforts, shall establish a corresponding Screening Assay
("Fujisawa Receptor Assay").

               (c) Arena shall use Best Reasonable Commercial Efforts to
complete the Section 3.1 (a) and (b) hereof within one (1) month per each
Fujisawa Activated Receptor and immediately after completion transfer to
Fujisawa EACH Fujisawa Activated Receptor (in the cell line used by Arena to
develop the Fujisawa Receptor Assay) and the protocol for its respective
Fujisawa Receptor Assay as well as any Technical Information owned or possessed
by Arena and necessary for Fujisawa to evaluate the Fujisawa Receptor Assay for
its intended purpose (collectively, "Fujisawa Receptor Information"). For each
Fujisawa Receptor Information transferred by Arena to Fujisawa, Fujisawa shall
have one (1) month from the date of such transfer to evaluate such Fujisawa
Receptor Information; at the end of such one month period, Fujisawa shall inform
Arena of its decision either to (a) decline to take the Fujisawa Receptor
Information and return that Fujisawa Receptor Information to Arena, or (b) make
the applicable payment of Section 3.2 of this Agreement.

        3.2 Assay Transfer Fee. Within one (1) month after Fujisawa has informed
Arena of its decision to make payment in accordance with Section 3.1 (c) on EACH
Fujisawa Receptor Information transferred from Arena in accordance with Section
3.1(c) that is not returned to Arena by Fujisawa, Fujisawa shall provide Arena
with an Assay Transfer Fee of ******************************************. Upon
payment of

                                       9
                                  CONFIDENTIAL
<PAGE>   11

such Assay Transfer Fee, the exclusive license provisions of Article IV
regarding such Fujisawa Receptor Information shall become effective.

        3.3 Transfer of Technical Information. Within forty-five (45) days
following receipt by Arena of such Assay Transfer Fee, Arena shall make
available to Fujisawa a copy of all additional Technical Information owned or
possessed by Arena then.

                                   ARTICLE IV

                           LICENSE AND SCREENING WITH
                           FUJISAWA ACTIVATED RECEPTOR
                         USING FUJISAWA RECEPTOR ASSAY;
                        MAINTENANCE FEE; EXCLUSIVITY FEE

        4.1 Arena License. Upon receipt by Arena of an Assay Transfer Fee in
accordance with Section 3.2, Arena grants to Fujisawa, subject to the provisions
of Sections 4.3 and 4.4 of this Agreement, the following with respect ONLY to
the Fujisawa Receptor Information that is the subject of such Assay Transfer
Fee:

               (a) an exclusive right and license, exclusive even as to Arena,
to use, have used, sell, have sold, import, have imported, further develop,
improve and otherwise exploit in any manner the Technology, for the purpose of
identification of CART Identified Compound(s) and develop, manufacture, have
manufactured, promote, market, sell and distribute CART Identified Compound(s)
and/or Drug Product(s) in the Territory including the right to sublicense the
rights granted to Fujisawa by Arena hereunder,

               (b) in the event that Fujisawa sublicenses any right granted by
Arena hereunder, Fujisawa warrants that it shall notify Arena within one (1)
month of the effective date of any such sublicense agreement; at all times
during the term of this Agreement, Fujisawa shall have an affirmative obligation
to make any such payments to Arena that Fujisawa would be required to make to
Arena hereunder, irrespective of the financial situation of any such Fujisawa's
Licensee(s).

               (c) Fujisawa's Ownership. Fujisawa shall exclusively have and
exclusively retain full right, title and interest in any and all preclinical and
clinical data as well as the patent right to the inventions and/or discoveries
related to the Fujisawa Library Compounds, including, but not limited to, CART
Identified Compound and Drug Product, that are Fujisawa Library Compounds.

               (d) Improvements.

                      (1) Fujisawa shall notify Arena, in writing, of any
improvement related to Technology except related to CART Identified Compound
discovered or developed by Fujisawa and/or Fujisawa Licensee(s) within one (1)
month of the discovery or development of such improvement right, title and
interest in which shall be retained by Fujisawa.

                      (2) Arena shall notify Fujisawa, in writing, of any
improvement discovered or developed by Arena related to Technology within one
(1) month of the discovery or development of such improvement.

                                       10
                                  CONFIDENTIAL
<PAGE>   12

                      (3) The obligations of Sections 4.1(c)(1) and (2) of this
Agreement shall be continuing throughout the term of this Agreement. During the
term of this Agreement, Fujisawa shall be entitled to use any such improvement
in accordance with the provisions of Sections 4.1 (a) and (b) of this Agreement.

                      (4) Subject to Section 4.1 (a) hereof, Arena shall have a
royalty-free, non-exclusive right and license to use all improvements of
Fujisawa and/or Fujisawa Licensee(s) referred to in Section 4.1(d)(1) hereof and
to disclosure and sublicense the same to its licensees, if any.

               (e) Fujisawa and Arena expressly acknowledge and agree that to
the extent that Fujisawa is granted the right to sublicense hereunder, Fujisawa
shall sublicense such right to Fujisawa's Licensee(s). Except as specifically
set forth herein, Fujisawa expressly acknowledges and agrees, on behalf of
itself and Fujisawa Licensee, that the Arena Activation Technology shall not
otherwise be utilized by Fujisawa or any Fujisawa Licensee, and that any such
use is unauthorized and expressly prohibited under the terms of this Agreement.

               (f) Both Parties acknowledge and agree that Arena has exclusive
ownership of the Technology.

               (g) ARENA MAKES NO REPRESENTATION THAT ANY FUJISAWA ACTIVATED
RECEPTOR OR FUJISAWA RECEPTOR ASSAY TRANSFERRED BY ARENA TO FUJISAWA WILL NOT
INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHT OF ANY
OTHER PERSON. ARENA MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
ANY FUJISAWA ACTIVATED RECEPTOR OR Fujisawa receptor assaY, AS THE CASE MAY BE.

               (h) The Parties acknowledge and agree that any and all payments
to be made by Fujisawa to Arena under this Agreement are to be (i) in United
States Dollars and (ii) in full as indicated; provided, however, that any income
or other tax which Fujisawa is required to pay or withhold on behalf of Arena
with respect to payments payable to Arena hereunder shall be deducted from the
amounts of such payments. Fujisawa agrees to reasonably cooperate with Arena in
obtaining a foreign tax credit in the U.S. with respect to such payment due to
Arena.

        4.2 Screening.

               (a) For EACH Fujisawa Activated Receptor and its corresponding
Fujisawa Receptor Assay transferred by Arena to Fujisawa in accordance with
Section 3.1(c), Fujisawa is entitled to conduct Screening of Fujisawa Library
Compounds using the Fujisawa Receptor Information, and upon Screening of five
thousand (5,000) compounds, Fujisawa shall provide Arena with a Screening
Milestone Fee of ************ ******************* within one (1) month of the
Screening of such compounds. When requested by Fujisawa in writing, Arena shall
use its Best Reasonable Commercial Efforts to assist Fujisawa in setting-up the
Fujisawa Receptor Assays at Fujisawa's facility within the time period(s)
requested by Fujisawa.

               (b) Fujisawa may, but is not obligated to, request that Arena
conduct Screening of Arena Library Compounds using Fujisawa Receptor
Information. In the

                                       11
                                  CONFIDENTIAL
<PAGE>   13

event that such request is made by Fujisawa, the Parties shall enter into
discussions to determine mutually agreeable terms and conditions for such
Screening by Arena ("Screening Terms"). In the event that Arena declines to
conduct such Screening, then the provisions of Section 4. 2(a) of this Agreement
shall apply.

        4.3 Maintenance Fee. For EACH Fujisawa Activated Receptor and its
corresponding Fujisawa Receptor Assay and Technical Information transferred by
Arena to Fujisawa in accordance with Section 3.1(c), Fujisawa shall retain
exclusive rights in and to such Fujisawa Activated Receptor and its
corresponding Fujisawa Receptor Assay and Technical Information only to the
extent that Fujisawa provides Arena with a Maintenance Fee of ************
************************* before the expiration of three hundred and sixty five
(365) days from the date of such transfer of Fujisawa Activated Receptor and its
corresponding Fujisawa Receptor Assay and Technical Information by Arena to
Fujisawa ("Transfer Anniversary Date"). The entire portion of the Maintenance
Fee shall be credited by Fujisawa against any royalty due to Arena under Article
VI of this Agreement.

        4.4 Exclusivity Fee. For EACH Fujisawa Activated Receptor and its
corresponding Fujisawa Receptor Assay and Technical Information that Fujisawa
has provided to Arena a Maintenance Fee in accordance with Section 4.3, and
during the term of this Agreement, Fujisawa shall retain exclusive rights in and
to such Fujisawa Activated Receptor and its corresponding Fujisawa Receptor
Assay and Technical Information only to the extent that Fujisawa provides Arena
with a yearly Exclusivity Fee of ************************************ for a
period of four (4) years, with such Exclusivity Fee being paid by Fujisawa on or
before the anniversary date of Transfer Anniversary Date. To the extent that
such Exclusivity Fee is not paid by Fujisawa for a period of four (4) years
after Transfer Anniversary Date, Fujisawa's exclusive rights in and to such
Fujisawa Activated Receptor and its corresponding Fujisawa Receptor Assay shall
automatically convert to a non-exclusive rights. In the event that Fujisawa
unilaterally decides to convert its exclusive rights in and to any Fujisawa
Activated Receptor, and if Arena is able to find an additional partner for such
Fujisawa Activated Receptor desirous of obtaining a non-exclusive license to
such Fujisawa Activated Receptor, the Parties agree to discuss, in good faith,
the reduction of the milestones payments of Article V and the Marketing Fee and
royalty of Article VI that pertains to such Fujisawa Activated Receptor. The
entire portion of the Exclusivity Fee paid with respect to any Fujisawa
Activated Receptor shall be credited by Fujisawa against any royalty due to
Arena under Article VI of this Agreement with respect to any Drug Product
developed using such Fujisawa Activated Receptor.

                                    ARTICLE V
                              CLINICAL DEVELOPMENT
                           OF CART IDENTIFIED COMPOUND

        5.1 During the term of this Agreement, the following shall apply with
respect to EACH Fujisawa Activated Receptor used by Fujisawa, and/or Fujisawa
Licensee(s):

               (a) One Time IND Milestone. Upon the filing of the first IND in
the Territory for clinical investigation of the first CART Identified Compound
identified using such Fujisawa Activated Receptor, Fujisawa shall provide to
Arena a One Time IND Milestone of Two Million Dollars (US $2,000,000) within one
(1) month of such filing.

                                       12
                                  CONFIDENTIAL
<PAGE>   14

               (b) The Parties acknowledge and agree that the maximum amount
that Fujisawa would be required to pay to Arena under the provisions of Section
5.1 of this Agreement for each Fujisawa Activated Receptor would be Two Million
Dollars (US$2,000,000) irrespective of the number of CART Identified Compounds
identified using such Fujisawa Activated Receptor.

        5.2 During the term of this Agreement, and in addition to any fees due
under Section 5.1 of this Agreement, the following shall apply with respect to
EACH CART Identified Compound used by Fujisawa, and/or Fujisawa Licensee(s):

               (a) Phase 3 Clinical Study Milestone. Upon the initiation of
Phase 3 Clinical Study in the Territory of each CART Identified Compound,
Fujisawa shall provide to Arena with a Phase 3 Clinical Study Milestone for each
CART Identified Compound of ******************************* within one (1) month
of dosing of the first patient in such Phase 3 Clinical Study. The Parties
acknowledge and agree that if Fujisawa discontinues Phase 3 clinical development
of any CART Identified Compound after the Phase 3 Clinical Study Milestone has
been made, then if Fujisawa replaces that particular CART Identified Compound
with another CART Identified Compound ("Back-Up Compound") and initiates another
Phase 3 Clinical Study using such Back-Up Compound, then Fujisawa shall not be
required to make an additional Phase 3 Clinical Study Milestone for such Back-Up
Compound.

               (b) Marketing Authorization Milestone. Upon the first filing for
Marketing Authorization in the Territory for each CART Identified Compound,
Fujisawa shall provide to Arena a Marketing Authorization Milestone for each
CART Identified Compound of ********** ********** ********* within one (1) month
of such filing. The Parties acknowledge and agree that if Fujisawa fails to
receive Marketing Authorization of any CART Identified Compound after the
Marketing Authorization Milestone has been made, then if Fujisawa replaces that
particular CART Identified Compound with Back-Up Compound and file another
Marketing Authorization of such Back-Up Compound, then Fujisawa shall not be
required to make an additional Marketing Authorization Milestone for such
Back-Up Compound.

               (c) The Parties acknowledge and agree that the maximum amount
that Fujisawa would be required to pay to Arena under the provisions of Section
5.2 of this Agreement for each CART Identified Compound would be
******************** *******.

        5.3 Drug Master File. Fujisawa shall be responsible for the preparation
and submission of a drug master file with FDA (as set forth in 21 C.F.R Section
314.420(b)), or any similar file required by any Regulatory Agency. Arena shall,
upon request by Fujisawa, give all reasonable assistance to Fujisawa to enable
Fujisawa to develop, and obtain Marketing Authorization of, CART Identified
Compound.

        5.4 NEITHER PARTY MAKES ANY REPRESENTATION TO THE OTHER THAT ANY CART
IDENTIFIED COMPOUND WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER
PROPRIETARY RIGHT OF

                                       13
                                  CONFIDENTIAL
<PAGE>   15

ANY OTHER PERSON. NEITHER PARTY MAKES ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, TO THE OTHER
WITH RESPECT TO ANY CART IDENTIFIED COMPOUND.

                                   ARTICLE VI
                              DRUG PRODUCT REVENUE

        6.1 Marketing Fee. For EACH Drug Product that has received Marketing
Authorization, Fujisawa shall provide Arena with a Marketing Fee of **********
*********************** within one (1) month of the first sale of such Drug
Product anywhere in the Territory.

        6.2 Royalty Payment. For EACH Drug Product that has received Marketing
Authorization, Fujisawa shall provide Arena with a royalty payment based on
Annual Drug Product Revenue as set forth below; such royalty payment shall be
made within three (3) months of December 31 for the Annual period to which the
Annual Drug Product Revenue applies:

               (a) In any country within the Territory ("Valid Claim Countries")
where there is a Valid Claim under the Arena Patent Rights on such Drug Product,
so long as such Valid Claim is effective and for a period of two (2) years
thereafter on a country-by-country basis:

                        (1)     *************** of the portion of Annual Drug
                                Product Revenue in Valid Claim Countries between
                                ****** and ************; and

                        (2)     ************ of the portion of Annual Drug
                                Product Revenue in Valid Claim Countries between
                                *******************************; and

                        (3)     ********************************* of the portion
                                of Annual Drug Product Revenue in Valid Claim
                                Countries between **************** and
                                **************; and

                        (4)     *************** of the portion of Annual Drug
                                Product Revenue in Valid Claim Countries above
                                **************.

               (b) In any country within the Territory ("No Valid Claim
Countries") where there is (1) no Valid Claim and (2) pending claim under the
Arena Patent Rights covering either the manufacture of the Drug Product in such
country of the manufacture or the use or sale of the Drug Product in the country
of sale until any patent including the Valid Claim has been granted, such
pending claim has been abandoned on a country by country basis or twenty (20)
years has passed from the Effective Date, whichever occurs first:

                                       14
                                  CONFIDENTIAL
<PAGE>   16

                        (1)     *************************** of the portion of
                                Annual Drug Product Revenue in No Valid Claim
                                Countries between *************************; and

                        (2)     ************************** of the portion of
                                Annual Drug Product Revenue in No Valid Claim
                                Countries between
                                *********************************; and

                        (3)     ********************************** of the
                                portion of Annual Drug Product Revenue in No
                                Valid Claim Countries between ************** and
                                ************; and

                        (4)     *****************of the portion of Annual Drug
                                Product Revenue in No Valid Claim Countries
                                above **************.

        6.3 Audit. In order to verify the completeness and correctness of Drug
Product Revenue, Fujisawa shall maintain up to date books and records and Arena
shall each have the right to conduct, through independent Certified Public
Accountants, at its own cost and at any reasonable time during business hours,
not more often than once each Annual period for not more than three (3) previous
years, and upon reasonable prior notice, an audit of the accounting procedures
and records of Fujisawa in computing and calculating Royalty Payment for Annual
Drug Product Revenue due hereunder. The auditor shall make available to Fujisawa
and Arena a report enumerating the period covered by the audit of Drug Product
Revenue computed and calculated by the auditor. The costs of such audit shall be
borne by Fujisawa in the event that a discrepancy of more than ************* is
discovered through such audit.

        6.4 NEITHER PARTY MAKES ANY REPRESENTATION TO THE OTHER THAT ANY DRUG
PRODUCT WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY
RIGHT OF ANY OTHER PERSON. NEITHER PARTY MAKES ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED,
TO THE OTHER WITH RESPECT TO ANY DRUG PRODUCT.

                                       15
                                  CONFIDENTIAL
<PAGE>   17

                                   ARTICLE VII
                                 CONFIDENTIALITY

        7.1 Each party shall neither disclose to any Third Party any and all of
the information ("Information") disclosed by the other party hereunder and under
the Confidential Disclosure Agreement of September 3, 1999 between Arena and
Fujisawa, nor permit any such Third Party to have access to such Information,
nor use such Information for any purpose other than for purpose of this
Agreement, without the prior written consent of the other party.

        7.2 The receiving party's obligations under Article 7.1 hereof shall not
apply, with respect to any of such Information to the extent that the receiving
party can establish by competent proof that such Information:

               (a) is published, known publicly, or is already in the public
domain at the time of receipt of it by the receiving party;

               (b) is published, becomes known publicly or becomes a part of the
public domain by publication or otherwise after the time of receipt of it by the
receiving party, except by breach of this Agreement by the receiving party;

               (c) is obtained from a third party after the receipt of it by the
receiving party, provided, however, that said Third Party has not obtained it
directly or indirectly from the disclosing party;

               (d) is in the receiving party's possession on the date of the
receipt of it and was not acquired directly or indirectly from the disclosing
party; or

               (e) is subsequently developed by the receiving party independent
of the information received hereunder, as evidenced by competent written records
established by the receiving party.

        7.3 Notwithstanding anything to the contrary in this Agreement, the
receiving party shall be entitled to disclose such Information (i) to the extent
required by applicable law or court order provided that the receiving party
furnishes the disclosing party with written notice of such request, in advance
of any such disclosure of the Information or (ii) to a government agency,
regulatory authority, clinical research organization, clinical investigator or
other third party to whom disclosure is necessary for development of the CART
Identified Compound in connection with drug development, approval or
registration of the CART Identified Compound and/or Drug Product.

The foregoing obligations of confidentiality shall survive for five (5) years
after any termination or expiration of this Agreement. All terms and conditions
of Article II, Article III, Article IV, Article V and Article VI of this
Agreement are designated CONFIDENTIAL by Arena and Fujisawa.

                                       16
                                  CONFIDENTIAL
<PAGE>   18

                                  ARTICLE VIII
                       PATENT INFRINGEMENT AND ENFORCEMENT

        8.1 Notification of Infringement. Each Party shall promptly provide
Notice to the other of any infringement (of which it becomes aware) of the
intellectual property rights including patent rights on any Fujisawa Activated
Receptor(s) and/or Fujisawa Receptor Assay(s) and/or CART Identified Compound(s)
and/or Drug Product(s) by any Third Party and shall provide the other with any
available evidence of such infringement of which the Party is aware.

        8.2 Suit for Infringement.

               (a) During the term of this Agreement, Arena shall be responsible
for enforcement of the Arena Patent Rights including, but not limited to, the
bringing of an action for patent infringement, selection of the forum for such
action, and counsel, settlement of any such action, and the costs devoted to
such action. Fujisawa agree to provide reasonable assistance except for
financial assistance to Arena in the enforcement of Arena Patent Rights and
Fujisawa may join such action as initiated by Arena with counsel at its own
expense and seek its own damages and other relief. If within ninety (90) days of
Fujisawa's giving notice to Arena of a Third Party infringement in the Territory
Arena fails to institute the infringement suit that Fujisawa reasonably feels is
required, Fujisawa may institute such infringement proceedings against said
Third Party at its expense and Fujisawa shall have the right to receive all the
amounts payable by said Third Party as a result of such proceedings. And in such
case, Fujisawa shall also have the right at any time thereafter to cease paying
royalties on *********************of the Royalty Payment of Drug Product so long
as infringement exists in the Territory.

               (b) In the event a claim of patent infringement is made against
Fujisawa by a Third Party in the Territory by reasons of Fujisawa's commercial
activities hereunder, Fujisawa and Arena shall meet to analyze the infringement
claim and avoidance of the same. If it is necessary to obtain an appropriate
license from such a Third Party, the Parties shall, in negotiating such a
license, make every efforts to minimize the amount of license fees and/or
royalties payable to such Third Party and (i) in case that such license is
related to Arena Activation Technology, Arena shall be responsible for such
license fees and/or royalties, (ii) in case that such license is related to
Fujisawa Activated Receptor and/or Fujisawa Receptor Assay, Arena shall be
responsible for a half amount of such license fees and/or royalties.

                                   ARTICLE IX
                          REPRESENTATION AND WARRANTIES

        9.1 Representations and Warranties of Fujisawa. Fujisawa represents and
warrants to Arena as follows:

               (a) The execution and delivery of this Agreement have been duly
and validly authorized, and all necessary action has been taken to make this
Agreement a legal, valid and binding obligation of Fujisawa enforceable in
accordance with its terms.

               (b) The execution and delivery of this Agreement and the
performance by Fujisawa of its obligations hereunder will not contravene or
result in the breach of the Certificate of Incorporation or Bylaws of Fujisawa
or result in any material breach or

                                       17
                                  CONFIDENTIAL
<PAGE>   19

violation of or material default under any material agreement, indenture,
license, instrument or understanding or, to the best of its knowledge, result in
any law, rule, regulation, statute, order or decree, to which Fujisawa is a
party or by which it or any of its property is subject.

               (c) Fujisawa has the appropriate facilities and personnel and
expertise to undertake its designated activities set forth in Article II,
Article IV and Article V.

        9.2 Representations and Warranties of Arena. Arena represents and
warrants to Fujisawa as follows:

               (a) The execution and delivery of this Agreement have been duly
and validly authorized, and all necessary action has been taken to make this
Agreement a legal, valid and binding obligation of Arena enforceable in
accordance with its terms.

               (b) The execution and delivery of this Agreement and the
performance by Arena of its obligations hereunder will not contravene or result
in the breach of the Certificate of Incorporation or Bylaws of Arena or result
in any material breach or violation of or material default under any material
agreement, indenture, license, instrument or understanding or, to the best of
its knowledge, result in any law, rule, regulation, statute, order or decree, to
which Arena is a party or by which it or any of its property is subject.

               (c) Arena has not received notice of any claim, and as of the
Effective Date has no knowledge, that the Arena Activation Technology infringes
upon any Third Party's know-how, patent or other intellectual property rights.

               (d) Arena has the appropriate facilities and personnel and
expertise to undertake its designated activities set forth in Article II and
Article III.

                                    ARTICLE X
                                    INDEMNITY

        10.1 Indemnification by Fujisawa. Fujisawa will indemnify and hold
harmless Arena and its Affiliates, employees, officers, directors, shareholders
and agents (an "Arena Indemnified Party") from and against all liability, loss,
damages, costs and expenses (including reasonable attorneys' fees) which Arena
Indemnified Party may incur, suffer or be required to pay resulting from or
arising in connection with (i) the breach by Fujisawa of any agreement,
covenant, representation or warranty of Fujisawa obtained in this Agreement, or
(ii) negligence or omission of Fujisawa.

        10.2 Indemnification by Arena. Arena will indemnify and hold harmless
Fujisawa and its Affiliates, employees, officers, directors, shareholders and
agents (an "Fujisawa Indemnified Party") from and against all liability, loss,
damages, costs and expenses (including reasonable attorneys' fees) which
Fujisawa Indemnified Party may incur, suffer or be required to pay resulting
from or arising in connection with (i) the breach by Arena of any agreement,
covenant, representation or warranty of Arena obtained in this Agreement, or
(ii) negligence or omission of Arena.

        10.3 Conditions to Indemnification. The obligations of the indemnifying
Party under Sections 10.1 and 10.2 of this Agreement are conditioned upon the
prompt Notice to the indemnifying Party of any of the aforementioned suits or
claims in writing within

                                       18
                                  CONFIDENTIAL
<PAGE>   20

fifteen (15) days after receipt of notice by the indemnified Party of such suit
or claim. The indemnifying Party shall have the right to assume the defense of
any such suit or claim unless, in the reasoned judgment of the indemnified
Party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business, operations or assets of the
indemnified party, in which event the indemnified party may participate in the
defense of such suit or claim at its sole cost and expense. The provision for
indemnification shall be void and there shall be no liability against a party as
to any suit or claim for which settlement or compromise or an offer of
settlement or compromise is made without the prior consent of the indemnifying
Party.

                                   ARTICLE XI
                                   TERMINATION

        11.1 Breach. Failure by either Party to comply with any of its material
obligations contained in the Agreement shall entitle the other Party to give
Notice to the Party in default specifying the nature of the default and
requiring it to cure such default. If such default is not cured within one (1)
month after receipt of such Notice, the notifying Party shall be entitled,
without prejudice to any of its other rights conferred on it by this Agreement,
to terminate this Agreement and the licenses granted to the breaching Party
hereunder with immediate effect by giving notice to such termination. The right
of either Party to terminate this Agreement as herein provided shall not be
affected in any way by its waiver of, or failure to take action with respect to,
any previous default.

In the event that Fujisawa has obtained the right to terminate this Agreement
pursuant to this Section 11.1 hereof, Fujisawa shall have an option to
alternatively continue this Agreement on the condition that any payments made by
Fujisawa to Arena thereafter in accordance with any provisions of this Agreement
shall be reduced by *********** ********** without prejudice to Fujisawa's
rights to seek any other remedies.

        11.2 Early Termination. Except as otherwise provide under Section 2.5 of
this Agreement, Fujisawa may, without prejudice, terminate this Agreement prior
to the Non-Success Notice or the first Success Notice and/or the first
Initiation Notice by providing termination Notice to Arena

        11.3 Duration of this Agreement.

               (a) This Agreement shall become effective from the Effective Date
and continue to be in effect until expiration of Fujisawa's obligation of
royalty payment hereunder. Thereafter, all licenses or sublicenses granted
hereunder shall become fully paid-up irrecoverable license. Upon written Notice,
Fujisawa may also terminate this Agreement without cause on and after notifying
Arena of Non-Success Notice and/or the first Success Notice and/or the first
Initiation Notice by returning all Arena Patent Rights to Arena.

               (b) Either Party shall be entitled to terminate this Agreement in
the event of

                (1)     insolvency of the other Party or commencement of
                        bankruptcy proceedings by such Party; or

                                       19
                                  CONFIDENTIAL
<PAGE>   21

                (2)     dissolution of the other Party by that Party, or
                        liquidation of such Party by that Party.

               (c) The Parties agree that in the event that Fujisawa sublicenses
any of the rights granted to it under this Agreement to a Third Party, such
sublicense shall include provisions whereby if such sublicensee(s) becomes
insolvent, commences bankruptcy proceedings, dissolves, and/or liquidates its
assets, any and all rights granted by Fujisawa to such sublicensee(s) shall
automatically revert back to Fujisawa.

        11.4 Accrued Rights; Surviving Obligations. Termination or expiration of
this Agreement for any reason shall be without prejudice to any rights which
shall have accrued to the benefit of either Party prior to such termination or
expiration, nor shall such termination or expiration relieve either Party from
obligations which are expressly indicated to survive termination or expiration
of this Agreement.

                                   ARTICLE XII
                           RELATIONSHIP OF THE PARTIES

        Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee, or joint venture relationship between
the Parties. All activities by each Party hereunder shall be provided as an
independent contractor. No Party shall incur any debts or make any commitments
for the other, except to the extent, if at all, specifically provided herein.

                                  ARTICLE XIII
                            MISCELLANEOUS PROVISIONS

        13.1 Limitations on Assignment. Neither this Agreement nor any interest
hereunder shall be assignable or transferable by Fujisawa without the prior
written consent of Arena, which consent shall not be unreasonably withheld.

        13.2 Further Acts and Instruments. Each Party hereto agrees to execute,
acknowledge and deliver such further instruments and to do all such other acts
as may be necessary or appropriate to carry out the purpose and intent of this
Agreement.

        13.3 Entire Agreement. This Agreement constitutes and contains the
entire agreement of the Parties and supersedes any and all prior negotiations,
correspondence, understandings, Letters of Intent and agreements between the
Parties respecting the subject matter hereof. This Agreement may be amended or
modified or one or more provisions hereof waived only by a written instrument
signed by the Parties.

        13.4 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded.

        13.5 Captions. The captions to this Agreement are for convenience only
and are to be of no force or effect in construing and interpreting the
provisions of this Agreement.

                                       20
                                  CONFIDENTIAL
<PAGE>   22

        13.6 Force Majeure. Neither Party shall be liable to the other for loss
or damages, or have any right to terminate this Agreement for any default or
delay, attributable to any act of God, flood, fire, explosion, breakdown or
plant strike, lockout, labor dispute, casualty, accident, war, revolution, civil
commotion, act of a public enemy, blockage, embargo, injunction, law, order,
proclamation, regulation, ordinance, demand or requirement of any government or
subdivision, authority or representative of any government, or any other cause
beyond the reasonable control of such Party.

        13.7 No Trade Name or Trademark License.

               (a) No right, express or implied, is granted by this Agreement to
Fujisawa, Fujisawa collaborators or Fujisawa's Licensees to use in any manner
the name "Arena," "Arena Pharmaceuticals," "CART" or any trade name or trademark
of Arena in any business dealing which is not directly connected with the
performance of this Agreement; provided, however, that Fujisawa shall have the
right to use or disclose the name Arena only to the extent and the manner as may
be required by law.

               (b) No right, express or implied, is granted by this Agreement to
Arena, Arena collaborators or Arena licensees to use in any manner the name
"Fujisawa" or any trade name or trademark of Fujisawa in any business dealing
which is not directly connected with the performance of this Agreement;
provided, however, that Arena shall have the right to use or disclose the name
Fujisawa only to the extent and the manner as may be required by law.

               (c) During the term of this Agreement, the Parties may issue a
press release regarding the acceptance of this Agreement by the Parties with
prior written consent of the other party on the contents of such release, which
consent shall not be unreasonably withheld . (it is not necessary to obtain the
consent of the other party for disclosing the information regarding this
Agreement which a Party is required by law to disclose).

        13.8 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed under applicable federal law of the United States of
America and the laws of the State of Illinois, excluding any conflict of law
provisions. Each Party hereto hereby voluntarily and irrevocably waives trial by
jury in any action or proceeding brought in connection with this Agreement. Each
Party hereby expressly waives any and all rights to bring any suit, action or
other proceeding in or before any court or tribunal other than the International
Chamber of Commerce and covenants that it shall not seek in any manner to
resolve any dispute other than as set forth in this Section 13.8 or to challenge
or set aside any decision, award or judgment obtained in accordance with the
provisions hereof. Each Party hereby expressly waives any and all objections it
may have to venue, including, without limitation, the inconvenience of such
forum, in any of such courts. In addition, each Party consents to the service of
process by personal service or any manner in which notices may be delivered
hereunder in accordance with Section 13.11. Each Party hereby voluntarily and
irrevocably waives trial by jury in any action or other proceeding brought in
connection with this agreement, any of the other transaction documents or any of
the transactions contemplated hereby or thereby. The Parties further agree that
any dispute resolution initiated by Fujisawa under this Section 13.8 shall take
place in San Diego, California (U.S.A.) and that any dispute resolution
initiated by Arena under this Section 13.8 shall take place in Chicago, Illinois
(U.S.A.).

                                       21
                                  CONFIDENTIAL
<PAGE>   23

        13.9 Expenses. Except as otherwise provided herein, each Party hereto
shall bear its legal and other expenses incurred in connection with the
negotiation, execution, delivery and performance of this Agreement.

        13.10 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.

        13.11 Notice. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the Party to be notified or upon
deposit with the United States Post Office registered or certified mail, postage
prepaid, or upon deposit with an internationally recognized express courier with
proof of delivery, postage prepaid and addressed to the Party to be notified at
the address or addresses indicated below, or upon the date of fax transmission
of such notice (with proof of such fax transmission established by the sender's
fax receipt) using the fax numbers listed below, or at such other address or fax
number as such Party may designate by ten (10) days' advance written notice to
the other Party with copies to be provided as follows:

               IF TO ARENA, ADDRESSED TO:
                      Arena Pharmaceuticals, Inc.
                      6166 Nancy Ridge Drive
                      San Diego, CA  92121 USA
                      Attention: Jack Lief
                                 President & CEO
                      Fax: (858) 453-7210
                      with a copy to: General Counsel
                      Address: same as above
                      Fax: same as above

               IF TO FUJISAWA, ADDRESSED TO:
                     Fujisawa Pharmaceutical Co., Ltd.
                     1-6, Kashima 2-Chome,
                     Yodogawa-Ku
                     Osaka 532-8514, JAPAN
                     Attention: Executive Director of Research Division

                     Fax: 06-6304-5460
                     with a copy to:        Director, Legal Affairs Division
                     Address :              4-7, Doshomachi
                                            3-Chome, Chuo-Ku
                                            Osaka 541-8514, JAPAN
                     Fax :                  06-6206-7929

        13.12 Surviving Obligations. The following Articles and Sections shall
survive any termination or expiration of this Agreement: Article I
(Definitions); Article VII (Confidentiality); Article VIII (Patent Infringement
and Enforcement); Article IX

                                       22
                                  CONFIDENTIAL
<PAGE>   24

(Representations and Warranties); Article X (Indemnity); and Sections 2.5,
4.1(c), 4.1(f), 5.4, 6.4, 13.1, 13.2, 13.7, 13.8, 13.11 and 13.12.

        WHEREUPON, the Parties have caused this Agreement to be executed by
their duly authorized agents, as of the dates listed below.

ARENA PHARMACEUTICALS, INC.                    FUJISAWA PHARMACEUTICAL CO., LTD.
--------------------------------------------------------------------------------

By: /s/ JACK LIEF                           By: /s/ MASANOBU KOHSAKA
   ------------------------------              ---------------------------------
Name: Jack Lief                             Name: Masanobu Kohsaka
Title: President & CEO                      Title: Executive Director

Date: January 17, 2000                      Date: January 24, 2000

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

                                       23
                                  CONFIDENTIAL
<PAGE>   25

                                   APPENDIX A
                              STATUTORY REFERENCES

                                    ATTACHED

                                      A-1
                                  CONFIDENTIAL
<PAGE>   26

                                   APPENDIX B
                               ARENA PATENT RIGHTS

        ALL OF THE FOLLOWING CASES HAVE BEEN FILED WORLD-WIDE VIA THE PCT*

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
    SERIAL NO.                     APPLICATION TITLE                   DATE FILED
                                                                  (REVERSE DATE ORDER)
--------------------------------------------------------------------------------------
<S>                    <C>                                        <C>
   A. 09/417,044       Human Orphan G Protein-Coupled Receptors         10/12/99
--------------------------------------------------------------------------------------
   B. 09/416,760       Non-Endogenous, Constitutively Activated         10/12/99
                           Human G Protein-Coupled Receptors
--------------------------------------------------------------------------------------
   C. 09/364,425        Endogenous, Constitutively Activated G          07/30/99
                               Protein-Coupled Receptors
--------------------------------------------------------------------------------------
   D. 09/170,496       Non-Endogenous, Constitutively Activated         10/13/98
                           Human G Protein-Coupled Receptors
--------------------------------------------------------------------------------------
   E. 09/060,188         A Method of Identifying Modulators of          04/14/98
                        Cell Surface Membrane Receptors Useful
                              in the Treatment of Disease
--------------------------------------------------------------------------------------
</TABLE>

PCT NUMBERS

        A.     PCT/US99/23687

        B.     PCT/US99/24065

        C.     PCT/US99/17425

        D.     PCT/US99/23938

        E.     PCT/US98/07496

                      Case E was also filed separately in Japan via the PCT:
                      PCT/US99/23935

                                      A-2
                                  CONFIDENTIAL
<PAGE>   27

                                    EXHIBIT A
                           MATERIAL TRANSFER AGREEMENT

                                      Ex-1
                                  CONFIDENTIAL
<PAGE>   28
                                                                    [ARENA LOGO]

                    NON-ACADEMIC MATERIALS TRANSFER AGREEMENT
                           ARENA PHARMACEUTICALS, INC.

        This MATERIALS TRANSFER AGREEMENT is made as of January ___, 2000 by and
between ARENA PHARMACEUTICALS, INC. ("Arena"), and FUJISAWA PHARMACEUTICAL CO.,
LTD. ("Fujisawa").

        WHEREAS, Arena possesses certain material or materials described on
SCHEDULE 1-(1) hereto (hereinafter, together with any derivatives, components,
modifications, products or part thereof, referred to as the "MATERIALS-A"); and
Fujisawa possesses certain material or materials described on SCHEDULE 1-(2)
hereto (hereinafter referred to as "MATERIALS-F), "MATERIALS-A" and
"MATERIALS-F" hereinafter collectively called "MATERIALS",

        WHEREAS, Fujisawa desires to obtain from Arena such MATERIALS-A for the
purposes described on SCHEDULE 2-(1) hereto (hereinafter the "PROJECT-A"); and
Arena desires to obtain from Fujisawa such MATERIALS-F for the purposes
described on SCHEDULE 2-(2) hereto (hereinafter the "PROJECT-F"), "PROJECT-A"
and "Project-F" hereinafter collectively called "PROJECTS".

        WHEREAS, Arena is willing to make available to Fujisawa the MATERIALS-A
for use in connection with the PROJECT-A, and Fujisawa is willing to make
available to Arena the MATERIALS-F for use in connection with the PROJECT-F
subject to the following terms and conditions.

        NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

SECTION 1. OWNERSHIP. Arena retains all rights and title in and to the
MATERIALS-A, subject to the limited right of use granted to Fujisawa herein.
Fujisawa retains all rights and title in and to the MATERIALS-F, subject to the
limited right of use granted to Arena herein

SECTION 2. USE. Fujisawa agrees that the MATERIALS-A (i) shall be used solely in
connection with the PROJECT-A and in accordance with SCHEDULE 2-(1) hereto; (ii)
are provided solely for investigational use in laboratory animals and/or in
vitro studies but shall not be used in humans; and (iii) shall not be used,
directly or indirectly, for commercial purposes and it shall return to Arena the
remaining Materials-A, if any, after completion of Fujisawa Activities described
in the Section 2.4 of the agreement executed as of the same date of this
Agreement between Arena and Fujisawa ("Main Agreement"). Fujisawa specifically
agrees that it shall, under no circumstances, seek to determine by any means the
sequence of any MATERIALS transferred hereunder, and/or any other associated
genetic material. Arena agrees that the MATERIALS-F shall be used solely in
connection with the PROJECT-F and in accordance with SCHEDULE 2-(2) hereto and
it shall return to Fujisawa the remaining of MATERIALS-F, if any, after
completion of Arena Activities described in the Section 2.1 of the Main
Agreement

SECTION 3. DISTRIBUTION AND CONTROL. Both Parties agree not to transfer or
distribute any of the other party's MATERIALS or any information resulting from
the Projects (the

                                      Ex-2
                                  CONFIDENTIAL
<PAGE>   29

"Information") to any third party without the prior written permission of the
other party. In addition, both Parties shall allow only employees and agents
under its direct control and supervision to have access to the MATERIALS and
Information. The MATERIALS-A shall be used only at Fujisawa and MATERIALS-F
shall be used only at Arena.

SECTION 4. NO LICENSE. No license is granted under this Agreement by either
party to the other either expressly or by implication, except for both parties'
right to use the MATERIALS for purposes of each PROJECT.

SECTION 5. INVENTIONS. Any inventions or discoveries related to the MATERIALS
provided by the other party, such as a new use of the MATERIALS, shall be owned
by the providing party of such MATERIALS. Each Party shall cooperate in
assigning any rights it may have in such inventions or discoveries to the other
party.

SECTION 6. COMPLIANCE WITH LAW. Both parties agree to comply with all laws,
rules and regulations applicable to the use of the MATERIALS and Information.
Because all of the MATERIALS' characteristics are not known, both parties
acknowledge that the MATERIALS must be used with caution and prudence.

SECTION 7. NO WARRANTY. Each party acknowledges that the Materials are
experimental in nature. EACH PARTY MAKES NO WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. EACH
PARTY MAKES NO REPRESENTATION THAT THE USE OF THE MATERIALS OR INFORMATION WILL
NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHT OF ANY
OTHER PERSON.

SECTION 8. NO AGENCY RELATIONSHIP. Nothing in this Agreement is intended to or
shall be construed to establish a relationship of principal and agent between
the parties hereto.

SECTION 9. GOVERNING LAW. The validity and interpretation of this Agreement
shall be governed by the laws of the State of Illinois, excluding the body of
law governing conflicts of law.

SECTION 10. ASSIGNMENT. This Agreement may not be assigned without the prior
written permission of the other party.

SECTION 11. COUNTERPARTS. This Agreement shall become binding when any one or
more counterparts hereof, individually or taken together, bear the signatures of
both parties. Each counterpart shall be deemed an original as against any party
whose signature appears thereon, but all counterparts hereof shall constitute
but one and the same instrument.

SECTION 12. IACUC COMPLIANCE ACKNOWLEDGEMENT. Arena endeavors to comply with
applicable regulations and guidelines regarding the care and use of animals in
its research activities. If contract activities covered by this Agreement
include the use of animals by Fujisawa on behalf of or in conjunction with
Arena, the following applies. By signing this Agreement, Fujisawa acknowledges
that it has or will possess, prior to initiation of the PROJECT-A, (a) an IACUC
protocol applicable to the Project and (b) approval of the Project by Fujisawa's
IACUC and, (c) USDA and or AAALAC registration/accreditation or equivalent for
Fujisawa located outside the United States.

                                      Ex-3
                                  CONFIDENTIAL
<PAGE>   30

        IN WITNESS THEREOF, Arena and Fujisawa have caused this Agreement to be
executed in duplicate by their respective duly authorized officers.

ARENA PHARMACEUTICALS, INC.              FUJISAWA PHARMACEUTICAL CO., LTD.

By: /s/ JACK LIEF                        By: /s/ MASANOBU KOHSAKA
   --------------------------------         ------------------------------------
   Jack Lief                                Name: Masanobu Kohsaka
   President & CEO                          Title: Executive Director
   Arena Pharmaceuticals, Inc.              Fujisawa Pharmaceutical Co., Ltd.
   6166 Nancy Ridge Drive                   4-7 Doshomachi
   San Diego, CA 92121 USA                  3-Chome Chuo-Ku
                                            Osaka 541-8514, JAPAN

Date: January 17, 2000                   Date: January 24, 2000

Approved by Legal:____/init/_____

                                      Ex-4
                                  CONFIDENTIAL
<PAGE>   31

                                   SCHEDULE 1

                            DESCRIPTION OF MATERIALS

(1) MATERIALS-A

        ARENA ANTISENSE OLIGONUCLEOTIDE(s)

        ARENA MISSENSE OLIGONUCLEOTIDE(s)

        LOCALIZATION DATA

        REGULATORY DATA

        ASTROCYTE AND MICROGLIA ACTIVATION DATA

        ARENA ************** ORPHAN RECEPTOR EXPRESSION DATA

(2) MATERIALS-F

        BRAIN TISSUE PREPARED FROM FUJISAWA ANIMAL MODEL(s)

                                      Ex-5
                                  CONFIDENTIAL
<PAGE>   32

                                   SCHEDULE 2

                             DESCRIPTION OF PROJECT

(1) PROJECT-A

    IN VIVO ANALYSIS OF MATERIALS BY FUJISAWA AT FUJISAWA FACILITY.

(2) PROJECT-F

    DETERMINATION OF THE EXPRESSION OF EACH ARENA ************** ORPHAN RECEPTOR
    SELECTED IN BRAIN TISSUE

                                      Ex-6
                                  CONFIDENTIAL
<PAGE>   33

                                    EXHIBIT B
                          COOPERATIVE EFFICACY CRITERIA

                                      Ex-7
                                  CONFIDENTIAL<PAGE>   1
                                                                   EXHIBIT 10.12

                            AGREEMENT BY AND BETWEEN

                              ARENA PHARMACEUTICALS

                                       AND

                          NEUROCRINE BIOSCIENCES, INC.

                                Table of Contents

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>            <C>                                                          <C>
Article I.     Definitions                                                     1

Article II.    Arena Activities And Grant of License                           3

Article III.   Screening By Arena Using Neurocrine Receptor Assay              6

Article IV.    Neurocrine Obligations                                          8

Article V.     Confidentiality                                                 9

Article VI.    Patent Infringement And Enforcement                            10

Article VII.   Representations And Warranties                                 10

Article VIII.  Indemnity                                                      11

Article IX.    Completion                                                     12

Article X.     Relationship of the Parties                                    13

Article XI.    Miscellaneous Provisions                                       13

Signature Blocks                                                              16
</TABLE>

                                 --PLEASE NOTE--

                        PROVISIONS WITHIN THIS AGREEMENT
                            ARE DEEMED "CONFIDENTIAL"
                    IN ACCORDANCE WITH THE TERMS OF ARTICLE V

         REVIEWERS ARE ADVISED TO CONFIRM WITH THEIR ATTORNEY AS TO ANY
       OBLIGATIONS AND/OR REQUIREMENTS REGARDING REVIEW OF THIS AGREEMENT

<PAGE>   2

                                    AGREEMENT

        This Agreement ("Agreement") is effective as of the Effective Date (as
defined below), by and between ARENA PHARMACEUTICALS, INC., having a place of
business at 6166 Nancy Ridge Drive, San Diego, California, 92121 ("Arena"), and
NEUROCRINE BIOSCIENCES, INC., having a place of business at 10555 Science Center
Drive, San Diego, CA 92121 ("Neurocrine").

        WHEREAS, Neurocrine is a neuroimmunology company focused on the
discovery and development of novel therapeutics to treat diseases and disorders
of the central nervous and immune systems;

        WHEREAS, Arena is a biopharmaceutical organization focused on the
discovery and development of innovative therapeutics;

        WHEREAS, Arena and Neurocrine each desire to enter into this Agreement
on the terms and conditions set forth herein.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Arena and Neurocrine hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

        Unless otherwise specifically provided herein, the following terms shall
have the following meanings:

"Activated Orphan Receptor" means an Orphan Receptor that has been
constitutively activated by Arena using the Arena Activation Technology.

"Affiliate" when used with reference to a specified person, any person or entity
directly or indirectly controlling, controlled by or under common control with
the specified person, means the direct or indirect ownership of at least 50% of
the outstanding voting securities of an entity.

"Arena" means Arena and its Affiliates, excluding ChemNavigator.com, Inc. and
excluding Aressa Pharmaceuticals, Inc.

"Arena Activation Technology" shall mean an Arena proprietary mathematical
algorithmic approach to identifying and selecting a region within a G Protein
Coupled Receptor that, when altered, leads to constitutive activation of the
altered receptor.

"Arena Library Compounds" shall mean Library Compounds obtained by Arena from an
Arena Collaborator prior to August 12, 1999, excluding: (i) any compound(s) set
forth in any Arena patent application(s) filed with the United States Patent &
Trademark Office prior to Screening of any Neurocrine Activated Receptor, and/or
(ii) any compound(s) licensed by Arena to any Third Party prior to Screening of
any Neurocrine Activated Receptor, and/or (iii) any compound(s) that is the
subject of any negotiation between Arena and a Third Party prior to Screening of
any Neurocrine Activated Receptor.

                                       1
<PAGE>   3

"Arena Patent Rights" means all present and/or future patents (including
inventor's certificates) and all present and/or future applications (including
provisional applications) therefor throughout the world as the case may be, and
substitutions, extensions, reissues, renewals, divisions, continuations, or
continuation-in-part thereof or therefor, owned or controlled (either fully or
partially) by Arena, or under which Arena may grant licenses or sublicenses, to
the extent they are directed to the Arena Activation Technology.

"Aressa Pharmaceuticals, Inc." means a separate corporation existing under the
laws of the State of Delaware and focused on the clinical development of
pre-clinical pharmaceutical compounds.

"Best Reasonable Commercial Efforts" means efforts to achieve a designated
objective, which efforts are based upon reasonably prudent business factors and
considerations.

"ChemNavigator.com, Inc." means a separate corporation existing under the laws
of the State of Delaware and focused on i-research on the Internet for the
selection and purchase of chemical compounds.

"Collaborator" means an individual or entity, other than an Affiliate, working
under the direction of, or in conjunction with, a Party.

"Effective Date" means the date on which the last of either Arena or Neurocrine
has signed this Agreement.

"Endogenous" means naturally occurring.

"G Protein Coupled Receptor" means an Endogenous cell-surface receptor defined
by having four (4) intracellular loops, three (3) extracellular loops, an amino
terminus and a carboxy terminus, and which is amenable to expression using
mammalian recombinant DNA expression technology.

"Library Compounds" shall mean small molecule chemical compounds which are
amenable to Screening.

"Library Compounds Database" shall mean computer accessible information
developed and owned by an Arena Collaborator, related to the Arena Library
Compounds and licensed to Arena prior to August 12, 1999.

"Measured Response" when used in reference to the phrase "Activated Orphan
Receptor" means counts per minute based upon use of a radiolabeled tracer.

"Neurocrine" means Neurocrine and its Affiliates.

"Neurocrine Activated Receptors" shall have the definition as set forth in
Section 2.1(a) of this Agreement.

"Neurocrine Library Compounds" shall mean Library Compounds owned or acquired by
Neurocrine.

"Neurocrine Orphan Receptors" means Orphan Receptor(s) in the possession of
Neurocrine prior to the Effective Date, or acquired by Neurocrine after the
Effective Date, or publicly available, and for which Neurocrine knows and
simultaneously transfers to Arena: (i) the nucleic acid sequence thereof; (ii)
the amino acid sequence thereof; (iii) the predominant G protein form that
couples to the intracellular region(s) of the Orphan

                                       2
<PAGE>   4

Receptor, and (iv) the nucleic acid sequence in an expression and/or shuttle
vector which can be expressed as a functional protein using a commercially
available mammalian cellular expression system; "Neurocrine Orphan Receptors"
excludes (i) any Orphan Receptor that was in the possession of Arena and
subjected to the Arena Activation Technology prior to the Effective Date; (ii)
any Activated Orphan Receptor existing prior to the Effective Date; or (iii) any
Orphan Receptor or Activated Orphan Receptor that is the subject of
collaborative or licensing activities between Arena and any Third Party and/or
Arena Collaborator.

"Neurocrine Receptor Assay" shall have the definition as set forth in Section
2.1(a) of this Agreement.

"Neurocrine Receptor Information" shall have the same definition as set forth in
Section 2.1(b) of this Agreement.

"Orphan Receptor" shall mean a G Protein Coupled Receptor that is not
constitutively active and for which the Endogenous ligand is not publicly known.

"Party" means either Arena or Neurocrine, as the case may be; "Parties" means
both Arena and Neurocrine.

"Screening" shall mean the process of contacting a small molecule chemical
compound with an Activated Orphan Receptor.

"Screening Assay" shall mean an Arena assay approach for Screening that has been
validated based upon Successful Screening of an Activated Orphan Receptor.

"Screening Terms" shall have the same definition as set forth in Section 3.1 of
this Agreement.

"Successful Screening" when used in conjunction with the phrase "Activated
Orphan Receptor" means that the results of the Screening has been positive
whereby at least one molecule within Library Compounds that has been contacted
with the Activated Orphan Receptor reduces the Measured Response of the
Activated Orphan Receptor by at least two (2) standard deviations from the mean
response of a screening plate that includes that compound.

"Third Party" means any entity other than a Party, Collaborator of Affiliate.

                                   ARTICLE II
                      ARENA ACTIVITIES AND GRANT OF LICENSE

        2.1    Arena Activities. Subject to the terms and conditions of this
Agreement, Arena agrees to the following:

               (a)    Arena shall apply the Arena Activation Technology, using
Best Reasonable Commercial Efforts, to constitutively activate three (3)
Neurocrine Orphan Receptors ("Neurocrine Activated Receptors") and establish a
Screening Assay for each such Neurocrine Activated Receptor ("Neurocrine
Receptor Assay"), in accordance with the following:

                                       3
<PAGE>   5

               (1)    Transfer To be Completed Within Set Time Period.
Neurocrine shall be obligated to provide three (3) Neurocrine Orphan Receptors
to Arena prior to the expiration of three hundred and sixty five (365) days from
the Effective Date. In the event that less than three (3) Neurocrine Orphan
Receptors are provided to Arena by Neurocrine as of the expiration of the three
hundred and sixty fifth day from the Effective Date, then Arena's activities and
obligations hereunder shall be limited to only those Neurocrine Orphan Receptors
transferred to Arena prior to such expiration.

               (2)    In order to provide Arena with an appropriate time period
in which to conduct its activities hereunder, the Parties agree that Neurocrine
shall transfer Neurocrine Orphan Receptor(s) to Arena using one of the two
following approaches:

                      (a)    Simultaneous Transfer. When Neurocrine provides
Arena with three (3) Neurocrine Orphan Receptors within the same six (6) month
period, the first Neurocrine Activated Receptor and its corresponding Neurocrine
Receptor Assay shall be provided to Neurocrine within six (6) months of the date
of transfer of the third Neurocrine Orphan Receptor to Arena; the second
Neurocrine Activated Receptor and its corresponding Neurocrine Receptor Assay
shall be provided to Neurocrine within twelve (12) months of the date of
transfer of the third Neurocrine Orphan Receptor to Arena; and the third
Neurocrine Activated Receptor and its corresponding Neurocrine Receptor Assay
shall be provided to Neurocrine within eighteen (18) months of the date of
transfer of the third Neurocrine Orphan Receptor to Arena. The Parties agree
that Arena may, but is not required to, transfer Neurocrine Activated
Receptor(s) and corresponding Neurocrine Receptor Assay(s) to Neurocrine in
periods of time less than those set forth in this Section 2.1(a)(2)(a).

                      (b)    Consecutive Transfer. When Neurocrine provides
Arena with three (3) Neurocrine Orphan Receptors in the following consecutive
manner, the first Neurocrine Activated Receptor and its corresponding Neurocrine
Receptor Assay shall be provided to Neurocrine within six (6) months of the date
of transfer of the first Neurocrine Orphan Receptor to Arena; Neurocrine shall
thereafter provide the second and third Neurocrine Orphan Receptors to Arena,
and thereafter, the second Neurocrine Activated Receptor and its corresponding
Neurocrine Receptor Assay shall be provided to Neurocrine within six (6) months
of the date of transfer of the second Neurocrine Orphan Receptors to Arena, and
the third Neurocrine Activated Receptor and its corresponding Neurocrine
Receptor Assay shall be provided to Neurocrine within twelve (12) months of the
date of transfer of the second Neurocrine Orphan Receptor to Arena. The Parties
agree that Arena may, but is not required, to transfer Neurocrine Activated
Receptor(s) and corresponding Neurocrine Receptor Assay(s) to Neurocrine in
periods of time less than those set forth in this Section 2.1(a)(2)(b).

               (b)    Arena shall maintain separate laboratory notebook(s) for
the benefit of Neurocrine in accordance with the same procedures that Arena uses
with respect to maintaining its internal laboratory notebooks, and such
notebook(s) shall contain data developed by Arena directed to application of the
Arena Activation Technology to Neurocrine Orphan Receptor and the protocols and
procedures used by Arena in working to establish the corresponding Neurocrine
Receptor Assays (collectively, the "Neurocrine Receptor Information").
Neurocrine Receptor Information shall be transferred to Neurocrine with each
Neurocrine Activated Receptor transferred to Neurocrine in accordance with the
provisions of Section 2.1(a) of this Agreement; one (1) copy of the Neurocrine
Receptor Information may be made and maintained by Neurocrine, and both the
original and copy of the Neurocrine Receptor Information shall be maintained at
the Neurocrine address listed above. The Parties agree that Arena shall

                                       4
<PAGE>   6

be permitted to maintain one (1) copy of Neurocrine Receptor Information for
legal, archival purposes.

               (c)    When requested by Neurocrine in writing, Arena shall use
its Best Reasonable Commercial Efforts to assist Neurocrine in setting-up the
Neurocrine Receptor Assays at Neurocrine's facility at the address listed above
within the time period(s) requested by Neurocrine.

        2.2    Arena License.

               (a)    With respect to each Neurocrine Activated Receptor
developed by Arena and transferred to Neurocrine in accordance with the
provisions of Section 2.1 of this Agreement, and to the extent permitted by law,
Arena grants to Neurocrine, subject to the limitations of Section 2.2(c) of this
Agreement, a world-wide, exclusive, non-fee, non-royalty bearing license,
including the right to sub-license, under Arena Patent Rights applicable to the
use of, or having used, each such Neurocrine Activated Receptor.

               (b)    With respect to each Neurocrine Receptor Assay developed
by Arena and transferred to Neurocrine in accordance with the provisions of
Section 2.1 of this Agreement, and to the extent permitted by law, Arena grants
to Neurocrine, subject to the limitations of Section 2.2(c) of this Agreement, a
world-wide, exclusive, non-fee, non-royalty bearing license, including the right
to sub-license, under Arena intellectual property applicable to the use of, or
having used, each such Neurocrine Receptor Assay transferred by Arena to
Neurocrine.

               (c)    Neurocrine expressly acknowledges and agrees that the
licenses granted in accordance with Section 2.2 of this Agreement are limited to
the use of the specific material and/or specific information transferred by
Arena to Neurocrine, and that any Third Party and/or Neurocrine Collaborator
that is provided with such material and/or information by Neurocrine
("Neurocrine Receptor Parties") shall do so only by written agreement between
Neurocrine and such Neurocrine Receptor Parties acknowledging and agreeing to
the same. Except as specifically set forth herein, Neurocrine expressly
acknowledges and agrees, on behalf of itself and Neurocrine Receptor Parties,
that the Arena Activation Technology shall not otherwise be utilized by
Neurocrine or any Neurocrine Receptor Parties, and that any such use is
unauthorized and expressly prohibited under the terms of this Agreement.

        2.3    NEITHER ARENA NOR NEUROCRINE MAKE ANY REPRESENTATION TO THE OTHER
THAT THE USE OF THE THEIR RESPECTIVE TECHNOLOGIES ON BEHALF OF THE OTHER PARTY
AND IN THE FURTHERANCE OF THE PROVISIONS AND/OR GRANT OF ARTICLE II OF THIS
AGREEMENT WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER
PROPRIETARY RIGHT OF ANY OTHER PERSON. NEITHER ARENA NOR NEUROCRINE MAKES ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY NEUROCRINE ORPHAN RECEPTOR,
THE Arena ACTIVATION TECHNOLOGY, SCREENING ASSAYS, neurocrine activated
receptor, neurocrine receptor assay, NEUROCRINE RECEPTOR INFORMATION, ARENA
LIBRARY COMPOUNDS AND/OR NEUROCRINE LIBRARY COMPOUNDS, AS THE CASE MAY BE.
ARTICLE III SCREENING BY ARENA USING NEUROCRINE RECEPTOR ASSAY

                                       5
<PAGE>   7

                                   ARTICLE III
                               SCREENING BY ARENA
                         USING NEUROCRINE RECEPTOR ASSAY

        3.1    Arena Library Compounds. At such time that a Neurocrine Receptor
Assay is transferred to Neurocrine, Neurocrine shall have fifteen (15) days from
the date of such transfer to request, in writing, that Arena provide to
Neurocrine the terms and conditions under which Arena shall utilize the
Neurocrine Receptor Assay for Screening the Arena Library Compounds at the Arena
address listed above ("Screening Terms"). Arena shall then have seven (7) days
from the date of such request to provide Notice to Neurocrine with such
Screening Terms, which the Parties agree shall include such terms as are
necessary to effectuate a pass-through to Neurocrine of any royalty and/or fee
obligations that would otherwise be due and owing by Arena, further including at
least the following:

               (a)    For each Neurocrine Receptor Assay for which Neurocrine
requests Screening of Arena Library Compounds, Arena shall use its Best
Reasonable Commercial Efforts in Screening the Arena Library Compounds using the
Neurocrine Receptor Assay within three (3) months of the effective date of a
definitive, mutually acceptable agreement incorporating the Screening Terms;

               (b)    Neurocrine shall be fully responsible for the payment of
any and all fees and/or royalties that Arena would otherwise be required to pay
to any Third Party and/or Arena Collaborator for: (i) the use of the Arena
Library Compounds in any Neurocrine Receptor Assay; and/or (ii) for the use of
the Library Compounds Database in connection with Screening of the Arena Library
Compounds using any Neurocrine Receptor Assay; and/or (iii) for the making,
having made, using, having used, importing into the United States, having
imported into the United States, selling and/or having sold any compound(s)
resulting from the Successful Screening of Arena Library Compounds using any
Neurocrine Activated Receptor. Arena shall provide in the Screening Terms a list
of any fees and/or royalties which are known by Arena to be applicable to
Neurocrine based upon any relationship between Arena and any Arena
Collaborator(s), and these shall be maintained by Neurocrine under the
conditions of confidentiality set forth in Article V of this Agreement;

               (c)    If Neurocrine requests Screening of the Arena Library
Compounds using a Neurocrine Receptor Assay, the structure(s) of up to, but not
exceeding, the greater of one percent (1%) of, and 100, compounds resulting from
the Successful Screening of the Arena Library Compounds using such Neurocrine
Receptor Assay shall be provided by Arena to Neurocrine, and the structures of
up to 250 inactive compounds located near the compound(s) resulting from the
Successful Screening of the Arena Library Compounds may be obtained by
Neurocrine per each Neurocrine Receptor Assay, provided that the structures of
no more than 25 inactive compounds located near any one compound resulting from
the Successful Screening of the Arena Library Compounds may be obtained by
Neurocrine; and

                                       6
<PAGE>   8

               (d)    ARENA SHALL MAKE NO REPRESENTATION THAT ANY COMPOUND
RESULTING FROM THE SUCCESSFUL SCREEN OF THE ARENA LIBRARY COMPOUND USING THE
NEUROCRINE RECEPTOR ASSAY WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR
OTHER PROPRIETARY RIGHT OF ANY OTHER PERSON. ARENA SHALL MAKE NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY COMPOUND RESULTING FROM THE SUCCESSFUL
SCREEN OF THE ARENA LIBRARY COMPOUND USING THE NEUROCRINE ACTIVATED RECEPTOR
ASSAY;

Neurocrine shall thereafter have seven (7) days from the date of such Notice to
either accept or reject the Screening Terms. In the event that Neurocrine does
not request Screening Terms from Arena as set forth above, or in the event that
Neurocrine does not respond to the Arena Notice as set forth above, Neurocrine
shall be deemed to have affirmatively waived any right that it may have under
this Section 3.1 and Arena shall have no obligation(s) to Neurocrine otherwise
required under this Section 3.1.

        3.2    Neurocrine Library Compounds. At such time that a Neurocrine
Receptor Assay is transferred to Neurocrine, Neurocrine shall have fifteen (15)
days from the date of such transfer to request, in writing, that Arena provide
to Neurocrine the terms and conditions under which Arena shall screen Neurocrine
Library Compounds, at the Neurocrine address listed above, using such Neurocrine
Receptor Assay ("Neurocrine Screening Terms"). Arena shall then have seven (7)
days from the date of such request to provide Notice to Neurocrine with such
Neurocrine Screening Terms, which the Parties agree shall include such terms as
are necessary to effectuate a pass-through to Neurocrine of any royalty and/or
fee obligations that would otherwise be due and owing by Arena, further
including at least the following:

               (a)    For each Neurocrine Receptor Assay for which Neurocrine
requests Arena to screen the Neurocrine Library Compounds, Arena shall use its
Best Reasonable Commercial Efforts to screen the Neurocrine Library Compounds
using the Neurocrine Receptor Assay: (i) within three (3) months of the
effective date of a definitive, mutually acceptable agreement incorporating the
Screening Terms if the number of compounds within the Neurocrine Library
Compounds is less than 30,000; or (ii) within six (6) months of the effective
date of a definitive, mutually agreeable agreement incorporating the Screening
Terms if the number of compounds within the Neurocrine Library Compounds is
greater than 30,000 but less than 100,001; or (iii) within a mutually agreeable
time period if the number of Neurocrine Library Compounds exceeds 100,001;

               (b)    Neurocrine shall be fully responsible for the payment of
any and all fees and/or royalties that would otherwise be required to paid to
any Third Party and/or Neurocrine Collaborator for: (i) Screening of the
Neurocrine Library Compounds using any Neurocrine Activated Receptor or
Neurocrine Receptor Assay; and/or (ii) for the making, having made, using,
having used, importing into the United States, having

                                       7
<PAGE>   9

imported into the United States, selling and/or having sold any compound(s)
resulting from the Successful Screening of Neurocrine Library Compounds using
any Neurocrine Activated Receptor or Neurocrine Receptor Assay;

               (c)    ARENA SHALL MAKE NO REPRESENTATION THAT ANY COMPOUND
RESULTING FROM THE SUCCESSFUL SCREEN OF THE NEUROCRINE LIBRARY COMPOUNDS USING
THE NEUROCRINE RECEPTOR ASSAY WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK
OR OTHER PROPRIETARY RIGHT OF ANY OTHER PERSON. ARENA SHALL MAKE NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY COMPOUND RESULTING FROM THE SUCCESSFUL
SCREEN OF THE NEUROCRINE LIBRARY COMPOUNDS USING THE NEUROCRINE RECEPTOR ASSAY;

Neurocrine shall thereafter have seven (7) days from the date of such Notice to
either accept or reject the Neurocrine Screening Terms. In the event that
Neurocrine does not request Neurocrine Screening Terms from Arena as set forth
above, or in the event that Neurocrine does not respond to the Arena Notice as
set forth above, Neurocrine shall be deemed to have affirmatively waived any
right that it may have under this Section 3.2 and Arena shall have no
obligation(s) to Neurocrine otherwise required under this Section 3.2.

                                   ARTICLE IV
                             NEUROCRINE OBLIGATIONS

        As the exclusive inducement for Arena to enter into this Agreement, and
in complete reliance thereon by Arena, as of the Effective Date, Neurocrine
agrees to the following:

        4.1    Neurocrine, for itself, its officers, directors, investors,
employees, assigns and successors, fully and forever releases and discharges
Arena, and each of its present and former directors, officers, employees,
affiliates, related entities, founders, predecessors, successors, benefit plans,
agents and assigns with respect to any and all claims, liabilities, causes of
action, and any allegation as to any and all claims, liabilities allegations and
causes of action, of every nature, kind and description, which previously have
existed or now exist, including but not limited to any and all claims,
liabilities, allegations and causes of action arising out of or relating to: (i)
the departure of Dominic P. Behan, Ph.D. ("Behan") and Derek T. Chalmers, Ph.D.
("Chalmers") from the employment of Neurocrine, and/or the activities of Behan
or Chalmers in their respective capacities as employees of Neurocrine; (ii) the
formation and activities of Arena by its officers, founders, employees,
directors, consultants, advisors and/or investors; (iii) the discovery and/or
development of any technology by Arena, its officers, founders, employees,
consultants and/or advisors; and/or (iv) any other act, event or omission which
occurred prior to the execution of this Agreement related to the departure of
Behan and Chalmers as employees of Neurocrine, the activities of Behan or
Chalmers as employees of Neurocrine, the formation of Arena by its officers,
founders, employees,

                                       8
<PAGE>   10

directors, consultants, advisors and/or investors, and/or the discovery and/or
development of any technology by Arena, its officers, founders, employees,
consultants and/or advisors.

        4.2    Neurocrine, for itself, its officers, directors, investors,
employees, assigns and successors, expressly waives any and all rights and
benefits under Section 1542 of the California Civil Code, which states:

        "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
        KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
        RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
        SETTLEMENT WITH THE DEBTOR."

Neurocrine expressly agrees and understands that this Agreement shall apply to
all unknown and unsuspected claims, despite the fact that Neurocrine may later
discover facts in addition to or different from those which Neurocrine now
believes to be true.

        4.3    The Parties agree that nothing contained in this Agreement will
constitute or be treated as an admission of wrongdoing or liability on the part
of Behan, Chalmers, and/or Arena, its founders, officers, employees, directors,
consultants and/or investors.

        4.4    The Parties agree that after the Effective Date, Neurocrine shall
be permitted, when applicable, to enforce the provisions of Article II and
Article III hereunder with respect to any duty or obligation that Arena has
undertaken with respect to its performance under the terms and conditions of
this Agreement, but in no case and under no circumstances shall Neurocrine be
permitted to assert, publicly allege, threaten to bring or bring any claim
against Arena for any act, event or omission which occurred prior to the
Effective Date related to the departure of Behan or Chalmers from the employment
by Neurocrine, the activities of Behan or Chalmers when employed by Neurocrine,
the formation of Arena by its officers, founders, employees, directors,
consultants, advisors and/or investors, and/or the discovery and/or development
of any technology by Arena, its officers, founders, employees, consultants
and/or advisors.

                                    ARTICLE V
                                 CONFIDENTIALITY

        All information provided by one Party to the other Party or its agents
under this Agreement shall be regarded as confidential to the extent that such
information is designated and marked as "CONFIDENTIAL", except information
which, as can be established by the receiving Party by competent evidence:

               (a)    was already known, otherwise than under an agreement of
secrecy or non-use, by the receiving Party at the time of its disclosure by the
furnishing Party;

               (b)    has passed into the public domain prior to or after its
disclosure by the disclosing Party otherwise than through any act or omission
attributable to officers, employees, consultants or agents of the receiving
Party; or

                                       9
<PAGE>   11

               (c)    was subsequently disclosed, otherwise than under an
agreement of secrecy or non-use, to the receiving Party by a Third Party that
had not acquired the information under an obligation of confidentiality to the
disclosing Party.

Notwithstanding the foregoing, each Party may disclose the other's confidential
information to the extent such disclosure is reasonably necessary to comply with
government regulations. The foregoing obligations of confidentiality shall
survive for five (5) years after any termination or expiration of this
Agreement. All terms and conditions of Article II, Article III and Article IV of
this Agreement are designated CONFIDENTIAL by Arena.

                                   ARTICLE VI
                       PATENT INFRINGEMENT AND ENFORCEMENT

        6.1    Notification of Infringement. Neurocrine shall promptly provide
Notice to Arena of any infringement (of which it becomes aware) of any
Neurocrine Activated Receptor(s) by any Third Party and shall provide Arena with
any available evidence of such infringement of which Neurocrine is aware.

        6.2    Suit for Infringement. Upon reasonable Notice of infringement
provided by Neurocrine to Arena, including the evidence that Neurocrine believes
supports an allegation of infringement, Arena, using Best Reasonable Commercial
Efforts, shall determine if Neurocrine shall have the opportunity to bring any
suit or action for infringement of any patent rights related to the Neurocrine
Activated Receptor(s). Any such action shall be solely at Neurocrine's expense,
and any amount recovered, whether by judgment, award, decree or settlement,
shall belong entirely to Neurocrine. Arena shall, if requested by Neurocrine and
if fully compensated therefor by Neurocrine, assist Neurocrine in the
prosecution of such action.

                                   ARTICLE VII
                          REPRESENTATION AND WARRANTIES

        7.1    Representations and Warranties of Neurocrine. Neurocrine
represents and warrants to Arena as follows:

               (a)    The execution and delivery of this Agreement have been
duly and validly authorized, and all necessary action has been taken to make
this Agreement a legal, valid and binding obligation of Neurocrine enforceable
in accordance with its terms.

               (b)    The execution and delivery of this Agreement and the
performance by Neurocrine of its obligations hereunder will not contravene or
result in the breach of the Certificate of Incorporation or Bylaws of Neurocrine
or result in any material breach or violation of or material default under any
material agreement, indenture, license, instrument or understanding or, to the
best of its knowledge, result in any law, rule, regulation, statute, order or
decree to which Neurocrine or its Affiliates is a party or by which any of them
or any of their property is subject.

               (c)    Neurocrine has not received notice of any claim, and as of
the Effective Date has no knowledge, that any Neurocrine Orphan Receptor, when
provided by Neurocrine to Arena, infringes upon any Third Party's know-how,
patent or other intellectual property rights.

                                       10
<PAGE>   12

        7.2    Representations and Warranties of Arena. Arena represents and
warrants to Neurocrine as follows:

               (a)    The execution and delivery of this Agreement have been
duly and validly authorized, and all necessary action has been taken to make
this Agreement a legal, valid and binding obligation of Arena enforceable in
accordance with its terms.

               (b)    The execution and delivery of this Agreement and the
performance by Arena of its obligations hereunder will not contravene or result
in the breach of the Certificate of Incorporation or Bylaws of Arena or result
in any material breach or violation of or material default under any material
agreement, indenture, license, instrument or understanding or, to the best of
its knowledge, result in any law, rule, regulation, statute, order or decree to
which Arena or its Affiliates is a party or by which any of them or any of their
property is subject.

               (c)    Arena has not received notice of any claim, and as of the
Effective Date has no knowledge, that the Arena Activation Technology infringes
upon any Third Party's know-how, patent or other intellectual property rights.
At the time that any Neurocrine Receptor Information is transferred by Arena to
Neurocrine, Arena shall indicate to Neurocrine as to whether or not Arena has
received notice of any claim, and whether or not, as of the date of such
transfer, Arena has no knowledge, that the Arena Activation Technology infringes
upon any Third Party's know-how, patent or other intellectual property rights,
and to the extent that it can, Arena shall represent and warrant to Neurocrine
that Arena has not received notice of any claim, and as of the date of such
transfer has no knowledge, that the Arena Activation Technology infringes upon
any Third Party's know-how, patent or other intellectual property rights.

                                  ARTICLE VIII
                                    INDEMNITY

        8.1    Indemnification by Neurocrine. Neurocrine will indemnify and hold
harmless: (i) Arena and its Affiliates, employees, officers, directors,
shareholders and agents; (ii) ChemNavigator.com, Inc. and its Affiliates,
employees, officers, directors, shareholders and agents; and (iii) Aressa
Pharmaceuticals, Inc. and its Affiliates, employees, officers, directors,
shareholders and agents, (an "Arena Indemnified Party") from and against all
liability, loss, damages, costs and expenses (including reasonable attorneys'
fees) which Indemnified Party may incur, suffer or be required to pay resulting
from or arising in connection with (i) the breach by Neurocrine of any
agreement, covenant, representation or warranty of Neurocrine obtained in this
Agreement, or (ii) the successful enforcement by an Arena Indemnified Party of
any of the foregoing.

        8.2    Indemnification by Arena. Arena will indemnify and hold harmless
Neurocrine and its Affiliates, employees, officers, directors, shareholders and
agents (an "Neurocrine Indemnified Party") from and against all liability, loss,
damages, costs and expenses (including reasonable attorneys' fees) which
Neurocrine Indemnified Party may incur, suffer or be required to pay resulting
from or arising in connection with (i) the breach by Arena of any agreement,
covenant, representation or warranty of Arena obtained in this Agreement, or
(ii) the successful enforcement by a Neurocrine Indemnified Party of any of the
foregoing.

        8.3    Conditions to Indemnification. The obligations of the
indemnifying Party under Sections 8.1 and 8.2 of this Agreement are conditioned
upon the prompt Notice to the indemnifying Party of any of the aforementioned
suits or claims in writing within

                                       11
<PAGE>   13

fifteen (15) days after receipt of notice by the indemnified Party of such suit
or claim. The indemnifying Party shall have the right to assume the defense of
any such suit or claim unless, in the reasoned judgment of the indemnified
Party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business, operations or assets of the
indemnified party, in which event the indemnified party may participate in the
defense of such suit or claim at its sole cost and expense. The provision for
indemnification shall be void and there shall be no liability against a party as
to any suit or claim for which settlement or compromise or an offer of
settlement or compromise is made without the prior consent of the indemnifying
Party.

                                   ARTICLE IX
                                   COMPLETION

        9.1    Breach.

               (a)    Failure by either Party to comply with any of its material
obligations contained in the Agreement shall entitle the other Party to give
Notice to the Party in default specifying the nature of the default and
requiring it to cure such default. If such default is not cured within sixty
(60) days after receipt of such Notice, the notifying Party shall be entitled,
without prejudice to any of its other rights conferred on it by this Agreement,
to terminate this Agreement and the licenses granted to the breaching Party
hereunder with immediate effect by giving Notice of such termination. The right
of either Party to terminate this Agreement as herein provided shall not be
affected in any way by its waiver of, or failure to take action with respect to,
any previous default.

               (b)    With respect to any breach by Arena of its obligations
under Article II or Article III of this Agreement, to the extent that Neurocrine
provides Notice to Arena regarding such breach and Arena does not cure such
breach as set forth in this Section 9.1, the Parties acknowledge and agree to
the extent that Neurocrine is successful in any action brought by Neurocrine
against Arena with respect to a breach by Arena as to its obligations under
Article II and Article III of this Agreement, Arena, by operation of this
Agreement, agrees that it shall be required to reimburse Neurocrine for all
legal costs (including attorney fees) associated with the successful enforcement
by Neurocrine of any such action.

        9.2    Completion of Activities And Obligations Under This Agreement.
The Parties acknowledge and agree that the intention of both Parties is to, in
good faith, complete all of their respective obligations with respect to the
Neurocrine Orphan Receptors transferred to Arena in a time-sensitive manner. The
Parties, both being in the business of drug discovery and drug development,
further understand that, owing to the unpredictable nature of science and
technology, neither Party can provide any assurances or guarantees to the other
as to any desired outcome or result with respect to the activities and
obligations of both Parties as set forth in Articles II and III of this
Agreement. The Parties agree that Arena's activities and obligations to
Neurocrine shall be deemed completed in accordance with the following, and that
following such completion and except as otherwise provided herein, Arena's
activities and obligations to Neurocrine shall terminate:

               (a)    The Parties acknowledge and agree that Arena's obligation
to accept any Neurocrine Orphan Receptor shall cease in accordance with the
provisions of Section 2.1(a)(1) and (2) of this Agreement.

                                       12
<PAGE>   14

               (b)    The Parties acknowledge and agree that Arena's obligation
to screen any Neurocrine Activated Receptor transferred to Neurocrine shall
cease in accordance with the provisions of Section 3.1 and Section 3.2 of this
Agreement, as the case may be.

        9.3    Accrued Rights; Surviving Obligations. Termination or expiration
of this Agreement for any reason shall be without prejudice to any rights which
shall have accrued to the benefit of either Party (in accordance with the terms
of this Agreement) prior to such termination or expiration, nor shall such
termination or expiration relieve either Party from obligations which are
expressly indicated to survive termination or expiration of this Agreement.

                                    ARTICLE X
                           RELATIONSHIP OF THE PARTIES

        Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee, or joint venture relationship between
the Parties. All activities by each Party hereunder shall be provided as an
independent contractor. No Party shall incur any debts or make any commitments
for the other, except to the extent, if at all, specifically provided herein.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

        11.1   Limitations on Assignment. Neither this Agreement nor any
interest hereunder shall be assignable or transferable by Neurocrine without the
prior written consent of Arena.

        11.2   Further Acts and Instruments. Each Party hereto agrees to
execute, acknowledge and deliver such further instruments and to do all such
other acts as may be necessary or appropriate to carry out the purpose and
intent of this Agreement.

        11.3   Entire Agreement. This Agreement constitutes and contains the
entire agreement of the Parties and supersedes any and all prior negotiations,
correspondence, understandings, Letters of Intent and agreements between the
Parties respecting the subject matter hereof. This Agreement may be amended or
modified or one or more provisions hereof waived only by a written instrument
signed by the Parties.

        11.4   Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded.

        11.5   Captions. The captions to this Agreement are for convenience only
and are to be of no force or effect in construing and interpreting the
provisions of this Agreement.

        11.6   Force Majeure. Neither Party shall be liable to the other for
loss or damages, or have any right to terminate this Agreement for any default
or delay, attributable to any act of God, flood, fire, explosion, breakdown or
plant strike, lockout, labor dispute, casualty, accident, war, revolution, civil
commotion, act of a public enemy, blockage, embargo, injunction, law, order,
proclamation, regulation, ordinance, demand

                                       13
<PAGE>   15

or requirement of any government or subdivision, authority or representative of
any government, or any other cause beyond the reasonable control of such Party.

        11.7   No Trade Name or Trademark License.

               (a)    No right, express or implied, is granted by this Agreement
to Neurocrine, Affiliates of Neurocrine, Neurocrine Collaborators or Neurocrine
licensees to use in any manner the name "Arena," "Arena Pharmaceuticals,"
"ChemNavigator," "Aressa," "Aressa Pharmaceuticals" or any trade name or
trademark of Arena in any business dealing which is not directly connected with
the performance of this Agreement; provided, however, that Neurocrine shall have
the right to use or disclose the name Arena only to the extent and the manner as
may be required by law.

               (b)    No right, express or implied, is granted by this Agreement
to Arena, Affiliates of Arena, Arena Collaborators or Arena licensees to use in
any manner the name "Neurocrine" or any trade name or trademark of Neurocrine in
any business dealing which is not directly connected with the performance of
this Agreement; provided, however, that Arena shall have the right to use or
disclose the name Neurocrine only to the extent and the manner as may be
required by law.

               (c)    During the term of this Agreement, the Parties may issue a
joint press release regarding the acceptance of this Agreement by the Parties.
Neither Party is permitted to issue a press release or other public statement
regarding this Agreement or the terms and conditions thereof without prior
written approval from the other Party, which approval may be withheld in the
sole discretion of such Party.

        11.8   Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed under applicable federal law and the laws of the State
of California, excluding any conflict of law provisions. Each Party hereto
hereby voluntarily and irrevocably waives trial by jury in any action or
proceeding brought in connection with this Agreement.

        11.9   Expenses. Except as otherwise provided herein, each Party hereto
shall bear its legal and other expenses incurred in connection with the
negotiation, execution, delivery and performance of this Agreement.

        11.10  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.

        11.11  Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the Party to be notified or upon
deposit with the United States Post Office registered or certified mail, postage
prepaid, or upon deposit with an internationally recognized express courier with
proof of delivery, postage prepaid and addressed to the Party to be notified at
the address or addresses indicated below, or upon the date of fax transmission
of such notice (with proof of such fax transmission established by the sender's
fax receipt) using the fax numbers listed below, or at such other address or fax
number as such Party may designate by ten (10) days' advance written notice to
the other Party with copies to be provided as follows:

                --THE REST OF THIS PAGE IS INTENTIONALLY BLANK--

                                       14
<PAGE>   16

               If to Arena, addressed to:

                      Arena Pharmaceuticals, Inc.
                      6166 Nancy Ridge Drive
                      San Diego, CA 92121
                      Attention: Jack Lief
                                 President & CEO
                      Fax: (619) 453-7210
                      with a copy to: General Counsel

               If to Neurocrine, addressed to:

                     Neurocrine Biosciences, Inc.
                     10555 Science center Drive
                     San Diego, CA 92121
                     Attention: Gary Lyons
                                President & CEO
                     Fax: (619) 658-7605
                     With a copy to: General Counsel

        11.12  Surviving Obligations. The following Articles and Sections shall
survive the sooner expiration or termination of this Agreement: Article I
(Definitions); Article IV (Neurocrine Obligations); Article V (Confidentiality);
Article VI (Patent Infringement and Enforcement); Article VII (Representations
and Warranties); Article VIII (Indemnity); and Sections 2.2, 2.3, 3.1(d),
3.2(c), 9.1(b), 11.1, 11.2, 11.7, 11.8, 11.11 and 11.12.

                --THE REST OF THIS PAGE IS INTENTIONALLY BLANK--

                                       15
<PAGE>   17

        WHEREUPON, the Parties have caused this Agreement to be executed by
their duly authorized agents, as of the dates listed below.

                                        ARENA PHARMACEUTICALS, INC.

Date:                                   By: /s/  Jack Lief
      ------------------                   ----------------------------------
                                        Name: Jack Lief
                                        Title: President & CEO

Reviewed and approved
by General Counsel:   /its/
                    ------------

                                        NEUROCRINE BIOSCIENCES, INC.

Date:                                   By: /s/  Gary Lyons
      ------------------                   ----------------------------------
                                        Name: Gary Lyons
                                        Title: President & CEO

Reviewed and approved by
General Counsel:
                 -------

                       **********************************

                                       16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}]]