Document:

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                                                                    EXHIBIT 10.8
                                                                  EXECUTION COPY

            SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT

                             ELAN CORPORATION, PLC

                       ELAN INTERNATIONAL SERVICES, LTD.

                                      AND

                         CELTRIX PHARMACEUTICALS INC.

                                      AND

                              CELTRIX NEWCO LTD.
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                                     INDEX

CLAUSE 1  DEFINITIONS

CLAUSE 2  NEWCO'S BUSINESS

CLAUSE 3  REPRESENTATIONS AND WARRANTIES

CLAUSE 4  AUTHORIZATION AND CLOSING

CLAUSE 5  DEVELOPMENT FUNDING

CLAUSE 6  SUBLICENSE AND ASSIGNMENT RIGHTS

CLAUSE 7  OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION

CLAUSE 8  TRADEMARKS

CLAUSE 9  DIRECTORS; MANAGEMENT AND R&D COMMITTEES

CLAUSE 10 THE BUSINESS PLAN AND REVIEWS

CLAUSE 11 RESEARCH AND DEVELOPMENT

CLAUSE 12 INTELLECTUAL PROPERTY RIGHTS

CLAUSE 13 COMMERCIALIZATION

CLAUSE 14 MANUFACTURING

CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE

CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
          ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL

CLAUSE 17 REGULATORY

CLAUSE 18 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS

CLAUSE 19 MATTERS REQUIRING PARTICIPANTS' APPROVAL

CLAUSE 20 DISPUTES

                                     -i-
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CLAUSE 21 TERMINATION

CLAUSE 22 INTENTIONALLY OMITTED

CLAUSE 23 CONFIDENTIALITY

CLAUSE 24 COSTS

CLAUSE 25 GENERAL

                                     -ii-
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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION

THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 21st day
of April, 1999

among:

(1)  ELAN CORPORATION, PLC, a public limited company incorporated under the laws
     of Ireland, and having its registered office at Lincoln House, Lincoln
     Place, Dublin 2, Ireland ("ELAN");

(2)  ELAN INTERNATIONAL SERVICES, LTD., an exempted company incorporated under
     the laws of Bermuda, and having its registered office at Clarendon House, 2
     Church St., Hamilton, Bermuda ("EIS");

(3)  CELTRIX PHARMACEUTICALS INC. a corporation duly incorporated and validly
     existing under the laws of Delaware, and having its principal place of
     business at 2033 Gateway Place, Suite 600, San Jose, California 95110,
     United States of America ("CELTRIX"); and

(4)  CELTRIX NEWCO LTD. an exempted company incorporated under the laws of
     Bermuda, and having its registered office at Clarendon House, 2 Church St.,
     Hamilton, Bermuda ("NEWCO").

                                   RECITALS:

A.   Newco desires to issue and sell to the Participants (as defined below), and
     the Participants desire to purchase from Newco, for aggregate consideration
     of [*****], apportioned between them as set forth herein, [*****] ordinary
     shares (the "SHARES") of Newco's common stock, par value $1.00 per share
     (the "COMMON STOCK"), allocated [*****] shares to Celtrix and [*****]
     shares to EIS.

B.   Elan owns all right, title and interest in and to certain patents which
     have been granted or are pending in relation to the MEDIPAD(R) Drug
     Delivery System.

C.   Celtrix owns all right, title and interest in and to certain patents that
     have been granted or are pending in relation to SomatoKine(R).

D.   As of the date hereof, Elan has entered into a license agreement with
     Newco, and Celtrix has entered into a license agreement with Newco, in
     connection with the license to Newco of the Elan Intellectual Property and
     the Celtrix Intellectual Property, respectively (each as defined below).

E.   Elan and Celtrix have agreed to co-operate in the establishment and
     management of a business for the research, development and
     commercialization of the Products (as defined below) based on the Licensed
     Technologies (as defined below).
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F.   Elan and Celtrix have agreed to enter into this Agreement for the purpose
     of recording the terms and conditions of the joint venture and of
     regulating their relationship with each other and certain aspects of the
     affairs of and their dealings with Newco.

NOW IT IS HEREBY AGREED AS FOLLOWS:

                                   CLAUSE 1

                                  DEFINITIONS

1.1  In this Agreement, the following terms shall, where not inconsistent with
     the context, have the following meanings respectively.

     "AFFILIATE" of any Person (in the case of a legal entity) shall mean any
     other Person controlling, controlled by or under the common control with
     such first Person, as the case may be. For the purposes of this definition,
     "control" shall mean direct or indirect ownership of 50% or more of the
     stock or shares entitled to vote for the election of directors or capital
     interests representing at least 50% of the equity thereof and "controlling"
     and "controlled" shall be construed accordingly. Notwithstanding the
     foregoing, Newco shall not be construed to be an Affiliate, as defined
     herein, of Elan or EIS.

     "AGREEMENT" means this agreement (which expression shall be deemed to
     include the Recitals and the Schedules hereto).

     "BUSINESS" means the business of Newco as described in Clause 2 and as more
     particularly specified in the Business Plan and such other business as the
     Participants may agree from time to time in writing (each in its sole
     discretion) should be carried on by Newco.

     "BUSINESS PLAN" shall mean the business plan and program of development to
     be agreed to by Elan and Celtrix within 60 days of the Closing Date, with
     respect to the research, development, and commercialization of the
     Products, which shall be reviewed and updated by Elan and Celtrix on an
     annual basis, upon mutual written agreement.

     "CELTRIX DIRECTORS" has the meaning set forth in Clause 7.

     "CELTRIX IMPROVEMENTS" has the meaning assigned thereto in the Celtrix
     License Agreement.

     "CELTRIX INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
     Celtrix License Agreement.

                                       2
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     "CELTRIX KNOW-HOW" shall mean any and all rights owned or licensed by
     Celtrix with respect to any knowledge, information, discovery, invention,
     trade secret, technique, process, system, formulation, design, data and
     expertise relating to SomatoKine(R) whether or not covered by any patent,
     copyright, design, trademark, trade secret or other industrial or
     intellectual property right.

     "CELTRIX LICENSE AGREEMENT" means the license agreement between Celtrix and
     Newco, of even date herewith, attached hereto in Schedule 2.

     "CELTRIX PATENT RIGHTS" shall mean the patents and patent applications
     (including provisional applications) relating to SomatoKine(R) that are
     forth in Schedule 1 of the Celtrix License Agreement, that are owned or
     licensed by or on behalf of Celtrix. Celtrix Patent Rights shall also
     include all extensions, continuations, continuations-in-part, divisionals,
     patents-of-addition, re-examinations, re-issues, supplementary protection
     certificates and foreign counterparts of such patents and patent
     applications and any patents issuing thereon and extensions of any patents
     licensed under the Celtrix License Agreement.

     "CELTRIX SECURITIES PURCHASE AGREEMENT" means that certain securities
     purchase agreement, of even date herewith, by and between Celtrix and EIS.

     "CLOSING DATE" shall mean the date upon which the Transaction Documents are
     executed and delivered by the Parties and the transactions effected thereby
     are closed.

     "COMMON STOCK EQUIVALENTS" means any options, warrants, rights or any other
     securities convertible, exercisable or exchangeable, in whole or in part,
     for or into Common Stock.

      "DIRECTORS" means, at any time, the directors of Newco.

     "EIS DIRECTOR" has the meaning set forth in Clause 9.

     "ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan License
     Agreement.

     "ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the Elan
     License Agreement.

                                       3
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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
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EXCHANGE COMMISSION

    "ELAN KNOW-HOW" shall mean any and all rights owned or licensed by Elan
    relating to any knowledge, information, discovery, invention, trade
    secret, technique, process, system, formulation, design, data and
    expertise with respect to the MEDIPAD(R) Drug Delivery System whether
    or not covered by any patent, copyright, design, trademark, trade
    secret or other industrial or intellectual property right.

    "ELAN LICENSE AGREEMENT" means the license agreement between Elan and
    Newco, of even date herewith, attached hereto in Schedule 1.

    "ELAN PATENT RIGHTS" shall mean the patents and patent applications
    (including provisional applications) relating to the MEDIPAD(R) Drug
    Delivery System as set forth in Schedule 1 of the Elan License
    Agreement, and that are owned or licensed by or on behalf of Elan. Elan
    Patent Rights shall also include all extensions, continuations,
    continuations-in-part, divisionals, patents-of-addition,
    re-examinations, re-issues, supplementary protection certificates and
    foreign counterparts of such patents and patent applications and any
    patents issuing thereon and extensions of any patents licensed under
    the Elan License Agreement.

    "ENCUMBRANCE" means any liens, charges, encumbrances, equities, claims,
    options, proxies, pledges, security interests, or other similar rights
    of any nature.

    "EPT" shall mean Elan Pharmaceutical Technologies, a division of Elan.

    "EXCHANGE RIGHT" has the meaning assigned to such term in the Amended
    and Restated Certificate of Incorporation of Celtrix in effect on the
    date hereof.

    "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

    "EXCHANGE RIGHT TERM" shall mean the period commencing on the Effective
    Date and ending on the exercise by Elan of the Exchange Right.

    "FIELD" shall mean [*****]

    "FINANCIAL YEAR" means each year commencing on January 1 (or in the
    case of the first Financial Year, the date hereof) and expiring on
    December 31 of each year.

    "FULLY DILUTED COMMON STOCK" means all of the issued and outstanding Common
    Stock, assuming the conversion, exercise or exchange of all outstanding
    Common Stock Equivalents.

                                       4
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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION

    "FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
    date hereof, between EIS and Celtrix.

    "LICENSE AGREEMENTS" means the Elan License Agreement and the Celtrix
    License Agreement.

    "LICENSED TECHNOLOGIES" means, collectively, the Elan Intellectual
    Property and the Celtrix Intellectual Property.

    "MEDIPAD(R) DRUG DELIVERY SYSTEM" shall mean the [*****] as disclosed
    in the Elan Patent Rights set forth in Schedule 1 of the Elan License
    Agreement.

    "NEWCO INTELLECTUAL PROPERTY" shall mean all rights to technology,
    patents and know-how belonging to Newco, other than the Elan
    Intellectual Property and the Celtrix Intellectual Property, including
    any technology acquired by or licensed to Newco from or by a third
    party and any newly developed technology that is not Elan Intellectual
    Property or Celtrix Intellectual Property.

    "NEWCO MEMORANDUM OF ASSOCIATION AND BYE-LAWS" shall mean the
    Memorandum of Association and Bye-Laws of Newco.

    "OSTEOPOROSIS" shall mean a skeletal condition characterized by
    decreased density of normal mineralized bone, which bone density, as
    measured by dual-energy x-ray absorptiometry (DXA), is more than 2.5
    standard deviations below the mean for the young adult reference range.

    "PARTICIPANT" means Celtrix or Elan, as the case may be, and
    "PARTICIPANTS" means both Celtrix and Elan together;

    "PARTY" means Elan, Celtrix, or Newco, as the case may be, and
    "PARTIES" means all three together;

    "PERSON" means an individual, partnership, corporation, limited
    liability company, business trust, joint stock company, trust,
    unincorporated association, joint venture, governmental entity or
    authority or other entity of whatever nature.

    "PERMITTED TRANSFEREE" means any Affiliate or subsidiary of Elan, EIS
    or Celtrix, to whom this Agreement may be assigned, in whole or in
    part, pursuant to

                                       5
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    the terms hereof or, in the case of Elan/EIS, an off-balance sheet
    special purpose entity created by Elan or EIS.

    "PRODUCTS" shall mean the MEDIPAD(R) Drug Delivery System incorporating
    SomatoKine(R) as its primary active ingredient.

    "PROJECT" shall mean all activity as undertaken by or on behalf of
    Newco in order to develop the Products in accordance with the Business
    Plan.

    "REGISTRATION RIGHTS AGREEMENTS" means the Registration Rights
    Agreements of even date herewith relating to Newco and Celtrix,
    respectively.

    "REGULATORY APPLICATION" means any regulatory application or any other
    application for marketing approval for a Product, which Newco will file
    in any country of the Territory, including any supplements or
    amendments thereto.

    "REGULATORY APPROVAL" means the final regulatory approval to market a
    Product in any country of the Territory, and any other approval which
    is required to launch the Product in the normal course of business.

    "RHA" means any relevant government health authority (or successor
    agency thereof) in any country of the Territory whose approval is
    necessary to market a Product in the relevant country of the Territory.

    "SECURITIES ACT" means the Securities Act of 1933, as amended.

    "SHARES" means the shares of Common Stock of Newco.

    "SOMATOKINE"(R) shall mean [*****]

    "STOCKHOLDER" means any of EIS, Celtrix, any Permitted Transferee or
    any other Person who subsequently becomes bound by this Agreement as a
    holder of the Shares, and "STOCKHOLDERS" means all of the Stockholders
    together.

    "SUBSIDIARY" means any company that is a subsidiary of Newco within the
    meaning of applicable laws.

    "TECHNOLOGICAL COMPETITOR OF ELAN" shall mean [*****]

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION

    "TECHNOLOGICAL COMPETITOR OF CELTRIX" shall mean [*****]

    "TERM" means the term of this Agreement.

    "TERRITORY" means [*****]

    "TRANSACTION DOCUMENTS" means this Agreement, the Funding Agreement,
    the Elan License Agreement, the Celtrix License Agreement, the Celtrix
    Securities Purchase Agreement, the Registration Rights Agreements and
    associated documentation of even date herewith, by and between Celtrix,
    Elan, EIS and Newco, as applicable.

    "UNITED STATES DOLLAR" and "US$" and "$" means the lawful currency of
    the United States of America.

1.2 In addition, the following definitions have the meanings in the Clauses
    corresponding thereto, as set forth below.

   DEFINITION                             CLAUSE
   ----------                             ------

   "Buyout Option"                        21.4
   "Closing"                              4.2
   "Common Stock"                         Recital
   "Confidential Information"             23.1
   "Co-sale Notice"                       18.3
   "Elan/Newco Option"                    13.2
   "Expert"                               20.3
   "Management Committee"                 9.2.1
   "Notice of Exercise"                   18.2
   "Notice of Intention"                  18.2
   "Offered Shares"                       18.2
   "Offering Price"                       18.2
   "Presiding Justice"                    20.3
   "Proposing Participant"                21.4
   "Proposing Participant Price"          21.6
   "Purchase Price"                       21.6
   "R&D Committee"                        9.2.2
   "Recipient Participant"                21.4
   "Recipient Participant Price"          21.6
   "Remaining Stockholders"               18.3

                                       7
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<TABLE>
<CAPTION>
   DEFINITION                             CLAUSE
   ----------                             ------
<S>                                       <C>
   "Relevant Event"                       21.2
   "Selling Stockholder"                  18.2
   "Tag-Along Right"                      18.3
   "Transaction Proposal"                 18.2
   "Transfer"                             18.1
   "Transferee Terms"                     18.3
   "Transferring Stockholders"            18.3
</TABLE>

1.3  Words importing the singular shall include the plural and vice versa.

1.4  Unless the context otherwise requires, reference to a recital, article,
     paragraph, provision, clause or schedule is to a recital, article,
     paragraph, provision, clause or schedule of or to this Agreement.

1.5  Reference to a statute or statutory provision includes a reference to it as
     from time to time amended, extended or re-enacted.

1.6  The headings in this Agreement are inserted for convenience only and do
     not affect its construction.

1.7  Unless the context or subject otherwise requires, references to words in
     one gender include references to the other genders.

1.8  Capitalized terms used but not defined herein shall have the meanings
     ascribed in the Transaction Documents, if defined therein.

                                   CLAUSE 2

                               NEWCO'S BUSINESS

2.1  The primary objective of Newco and any Subsidiaries is to carry on the
     business of the development, testing, registration, manufacture,
     commercialization and licensing of Products in the Territory and to achieve
     the objectives set out in this Agreement. The focus of the collaborative
     venture will be to develop the Products using the Elan Intellectual
     Property, the Celtrix Intellectual Property and the Newco Intellectual
     Property in accordance with agreed-upon specifications and timelines.

2.2  Except as the Participants otherwise agree in writing and except as may be
     provided in this Agreement, the Business Plan or the License Agreements,
     the Participants shall exercise their respective powers in relation to
     Newco so as to ensure that the Business is carried on in a proper and
     prudent manner.

                                       8
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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
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EXCHANGE COMMISSION

2.3  Each Participant shall use all commercially reasonable and proper means at
     its disposal and within its power to maintain, extend and improve the
     Business of Newco, within the limits of this Agreement, and to further the
     reputation and interests of Newco.

2.4  The central management and control of Newco shall be exercised in Bermuda
     and shall be vested in the Directors and such Persons as such Directors may
     delegate the exercise of their powers in accordance with the Newco
     Memorandum of Association and Bye-Laws. The Participants shall use their
     best efforts to ensure that to the extent required pursuant to the laws of
     Bermuda, and to ensure the sole residence of Newco in Bermuda, all meetings
     of the Directors are held in Bermuda or other jurisdictions outside the
     United States and generally to ensure that Newco is treated as resident for
     taxation purposes in Bermuda.

                                   CLAUSE 3

                        REPRESENTATIONS AND WARRANTIES

3.1  REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
     warrants to each of the Stockholders as follows, as of the date hereof:

     3.1.1     ORGANIZATION: Newco is an exempted company duly organized,
               validly existing and in good standing under the laws of Bermuda,
               and has all the requisite corporate power and authority to own
               and lease its properties, to carry on its business as presently
               conducted and as proposed to be conducted, to execute this
               Agreement, which has been duly authorized and is enforceable
               against Newco in accordance with its terms, and to carry out the
               transactions contemplated hereby.

     3.1.2     CAPITALIZATION: As of the date hereof, the authorized capital
               stock of Newco consists of [*****] shares of Common Stock. Prior
               to the date hereof, no shares of capital stock of Newco have been
               issued.

     3.1.3     AUTHORIZATION: The execution, delivery and performance by Newco
               of this Agreement, including the issuance of the Shares, have
               been duly authorized by all requisite corporate actions; this
               Agreement has been duly executed and delivered by Newco and is
               the valid and binding obligation of Newco, enforceable against it
               in accordance with its terms except as limited by applicable
               bankruptcy, insolvency, reorganization, moratorium and other laws
               of general application affecting the enforcement of creditors'
               rights generally, and except as enforcement of rights to

                                       9
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               indemnity and contribution hereunder may be limited by United
               States federal or state securities laws or principles of public
               policy. The Shares, when issued as contemplated hereby, will be
               validly issued and outstanding, fully paid and non-assessable and
               not subject to preemptive or any other similar rights of the
               Stockholders or others.

     3.1.4     NO CONFLICTS: The execution, delivery and performance by Newco of
               this Agreement, the issuance, sale and delivery of the Shares,
               and compliance with the provisions hereof by Newco, will not:

               (i)   violate any provision of applicable law, statute, rule or
                     regulation applicable to Newco or any ruling, writ,
                     injunction, order, judgment or decree of any court,
                     arbitrator, administrative agency or other governmental
                     body applicable to Newco or any of its properties or
                     assets;

               (ii)  conflict with or result in any breach of any of the terms,
                     conditions or provisions of, or constitute (with notice or
                     lapse of time or both) a default (or give rise to any right
                     of termination, cancellation or acceleration) under its
                     charter or organizational documents or any material
                     contract to which Newco is a party, except where such
                     violation, conflict or breach would not, individually or in
                     the aggregate, have a material adverse effect on Newco; or

               (iii) result in the creation of, any Encumbrance upon any of the
                     properties or assets of Newco.

     3.1.5     APPROVALS: As of the date hereof, no permit, authorization,
               consent or approval of or by, or any notification of or filing
               with, any Person is required in connection with the execution,
               delivery or performance of this Agreement by Newco. Newco has
               full authority to conduct its business as contemplated in the
               Business Plan and the Transaction Documents.

     3.1.6     DISCLOSURE: This Agreement does not contain any untrue statement
               of a material fact or omit to state any material fact necessary
               to make the statements contained herein not misleading. Newco is
               not aware of any material contingency, event or circumstance
               relating to its business or prospects, which could have a
               material adverse effect thereon, in order for the disclosure
               herein relating to Newco not to be misleading in any material
               respect.

                                      10
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     3.1.7     NO BUSINESS; NO LIABILITIES: Newco has not conducted any business
               or incurred any liabilities or obligations prior to the date
               hereof, except solely in connection with its organization and
               formation.

3.2  REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS: Each of the
     Stockholders hereby severally represents and warrants to Newco as follows
     as of the date hereof:

     3.2.1     ORGANIZATION: Such Stockholder is a corporation duly organized
               and validly existing under the laws of its jurisdiction of
               organization and has all the requisite corporate power and
               authority to own and lease its respective properties, to carry on
               its respective business as presently conducted and as proposed to
               be conducted and to carry out the transactions contemplated
               hereby.

     3.2.2     AUTHORITY: Such Stockholder has full legal right, power and
               authority to enter into this Agreement and to perform its
               obligations hereunder, which have been duly authorized by all
               requisite corporate action. This Agreement is the valid and
               binding obligation of such Stockholder, enforceable against it in
               accordance with its terms except as limited by applicable
               bankruptcy, insolvency, reorganization, moratorium and other laws
               of general application affecting the enforcement of creditors'
               rights generally, and except as enforcement of rights to
               indemnity and contribution hereunder may be limited by United
               States federal or state securities laws or principles of public
               policy.

     3.2.3     NO CONFLICTS: The execution, delivery and performance by such
               Stockholder of this Agreement, purchase of the Shares, and
               compliance with the provisions hereof by such Stockholder will
               not:

               (i)  violate any provision of applicable law, statute, rule or
                    regulation known by and applicable to such Stockholder or
                    any ruling, writ, injunction, order, judgment or decree of
                    any court, arbitrator, administrative agency or other
                    governmental body applicable to such Stockholder or any of
                    its properties or assets;

               (ii) conflict with or result in any breach of any of the terms,
                    conditions or provisions of, or constitute (with notice or
                    lapse of time or both) a default (or give rise to any right
                    of termination, cancellation or acceleration) under the
                    charter or organizational documents of such Stockholder or
                    any material contract to which such Stockholder is a party,
                    except where such violation, conflict or breach would not,

                                      11
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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
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                     individually or in the aggregate, have a material adverse
                     effect on such Stockholder; or

               (iii) result in the creation of, any Encumbrance upon any of the
                     properties or assets of such Stockholder.

     3.2.4     APPROVALS: As of the date hereof, no permit, authorization,
               consent or approval of or by, or any notification of or filing
               with, any Person is required in connection with the execution,
               delivery or performance of this Agreement by such Stockholder.

     3.2.5     INVESTMENT REPRESENTATIONS: Such Stockholder is capable of
               evaluating the merits and risks of its investment in Newco. Such
               Stockholder has not been formed solely for the purpose of making
               this investment and such Stockholder is acquiring the Common
               Stock and Preferred Stock for investment for its own account, not
               as a nominee or agent, and not with the view to, or for resale in
               connection with, any distribution of any part thereof. Such
               Stockholder understands that the Shares have not been registered
               under the Securities Act or applicable state and foreign
               securities laws by reason of a specific exemption from the
               registration provisions of the Securities Act and applicable
               state and foreign securities laws, the availability of which
               depends upon, among other things, the bona fide nature of the
               investment intent and the accuracy of such Stockholders'
               representations as expressed herein. Such Stockholder understands
               that no public market now exists for any of the Shares and that
               there is no assurance that a public market will ever exist for
               such Shares.

                                   CLAUSE 4

                           AUTHORIZATION AND CLOSING

4.1  Newco has authorized the issuance to (i) EIS of [*****] shares of Common
     Stock and (ii) Celtrix of [*****] shares of Common Stock, issuable as
     provided in Clause 4.3 hereof.

4.2  The closing (the "CLOSING") shall take place at the offices of Brock
     Silverstein LLC at 153 East 53rd Street, New York, New York 10022 on the
     date hereof or such other places if any, as the Parties may agree and shall
     occur contemporaneously with the closing under the Celtrix Securities
     Purchase Agreement.

4.3  At the Closing:

                                      12
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     4.3.1     Newco shall issue and sell to EIS, and EIS shall purchase from
               Newco, upon the terms and subject to the conditions set forth
               herein, [*****] shares of Common Stock for an aggregate purchase
               price of [*****] Newco shall issue and sell to Celtrix, and
               Celtrix shall purchase from Newco, upon the terms and conditions
               set forth herein, [*****] shares of Common Stock for an aggregate
               purchase price of [*****]

     4.3.2     The Parties shall execute and deliver to each other, as
               applicable, certificates in respect of the Common Stock described
               above and any other certificates, resolutions or documents which
               the Parties shall reasonably require.

4.4  EXEMPTION FROM REGISTRATION:

     The Shares will be issued under an exemption or exemptions from
     registration under the Securities Act. Accordingly, the certificates
     evidencing the Shares shall, upon issuance, contain the following legend:

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR
     OTHER JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
     TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER THAN TO AN AFFILIATE OF THE
     ORIGINAL HOLDER OR AS OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO
     WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
     STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
     BLUE SKY LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
     SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO
     THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
     REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
     REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.

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                                   CLAUSE 5

                              DEVELOPMENT FUNDING

It is estimated that Newco will require approximately an additional [*****] (the
"DEVELOPMENT FUNDING") within the first [*****] of the date hereof, to commence
development of the first Product or Products based upon the Elan Technology, the
Celtrix Technology and/or Newco Technology. The funds necessary for such
development shall be provided in accordance with the Participants' respective
ownership in Newco at such time or times as shall be reasonably determined in
good faith by decision of Newco's board of directors with the affirmative vote
of at least the EIS Director and one Celtrix Director, pursuant to the terms and
conditions of the Funding Agreement.

                                   CLAUSE 6

                       SUBLICENSE AND ASSIGNMENT RIGHTS

6.1  Newco shall not assign or, except as set forth in Section 6.2 below,
     otherwise transfer any of its rights under the Licenses for the Licensed
     Technologies and/or the Newco Intellectual Property without the prior
     written consent of Elan and Celtrix.

6.2  Newco shall not sublicense any of its rights under the Licenses for the
     Licensed Technologies and/or the Newco Intellectual Property without the
     prior written consent of Elan and Celtrix, which consent shall not be
     unreasonably withheld or delayed; provided, that the consent of Elan and/or
     Celtrix may be withheld in Elan's or Celtrix's sole discretion in the case
     of a proposed sublicense of such rights to a Technological Competitor of
     Elan or a Technological Competitor of Celtrix, as the case may be.

6.3  Newco shall not enter into any agreement with any third party for
     development or exploitation of the Elan Intellectual Property and/or the
     Celtrix Intellectual Property without the prior written consent of Elan or
     Celtrix, respectively, which consent may be withheld in Elan's or Celtrix's
     sole discretion, as the case may be. Any agreement between Newco and any
     permitted third party for the development or exploitation of the Elan
     Intellectual Property and/or the Celtrix Intellectual Property shall
     require such third party to maintain the confidentiality of all information
     concerning the Elan Intellectual Property and/or the Celtrix Intellectual
     Property, as applicable, provided that such obligation of confidentiality
     shall be no less stringent than that set forth in Clause 23 and shall
     provide that all right, title and interest in and to any [*****] shall be

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     owned by [*****] and all right, title and interest in and to any [*****]
     shall be owned by [*****]

6.4  Newco shall not enter into any agreement with any third party for
     development of Newco Intellectual Property without the approval of the
     Management Committee.

6.5  Upon 30 days' prior notice in writing from Elan to Newco and Celtrix, Newco
     shall assign the Newco Intellectual Property including without limitation,
     all rights and obligations related thereto, from Newco to a wholly-owned
     subsidiary of Newco to be incorporated in Ireland, which company shall be
     newly incorporated by Elan and Celtrix to facilitate such assignment.

                                   CLAUSE 7

           OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION

The Parties acknowledge and agree to be bound by:

7.1  the provisions of Clause 2 of the Elan License Agreement (as supplemented
     by the provision of relevant definitions in the Elan License Agreement) and
     Clause 2 of the Celtrix License Agreement (as supplemented by the provision
     of relevant definitions in the Celtrix License Agreement) which set forth
     the agreement between the parties thereto in relation to the ownership of
     intellectual property rights; and

7.2  the provisions of Clause 5 of the Elan License Agreement and the provisions
     of Clause 5 of the Celtrix License Agreement which set forth the agreement
     between the parties thereto in relation to the non-competition obligations
     of Elan and Celtrix, respectively.

                                   CLAUSE 8

                                  TRADEMARKS

8.1  Elan shall grant to Newco [*****] in accordance with the terms and
     conditions of the Elan License Agreement. Elan shall at all times be and
     remain the owner of such trademark licensed to Newco.

8.2  Celtrix shall grant to Newco [*****]

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     in accordance with the terms and conditions of the Celtrix License
     Agreement. Celtrix shall at all times be and remain the owner of such
     trademark licensed to Newco.

                                   CLAUSE 9

                   DIRECTORS; MANAGEMENT AND R&D COMMITTEES

9.1. DIRECTORS:

     The Board of Directors of Newco shall be composed of [*****] Directors.
     Celtrix shall have the right to nominate [*****] directors of Newco
     ("CELTRIX DIRECTORS") and EIS shall have the right to nominate [*****]
     Director of Newco ("EIS DIRECTOR"). Celtrix may appoint [*****] of the
     Celtrix Directors to be the chairman of Newco.

     9.1.1.    If the chairman is unable to attend any meeting of the Board,
               [*****] shall be entitled to appoint another Director to act as
               chairman in his place at the meeting.

     9.1.2.    If EIS removes the [*****], or Celtrix removes [*****] EIS or
               Celtrix, as the case may be, shall indemnify the other
               Stockholder against any claim by such removed Director arising
               from such removal.

     9.1.3.    The Directors shall meet not less than [*****] in each Financial
               Year and all Directors' meetings shall be held in [*****] to the
               extent required pursuant to the laws of [*****]

     9.1.4.    At any such meeting, the presence [*****] shall be required to
               constitute a quorum and, subject to Clause 19 hereof, the
               affirmative vote of a majority of the Directors present at a
               meeting at which such a quorum is present shall constitute an
               action of the Directors. In the event of any meeting being
               inquorate, the meeting shall be adjourned for a period of seven
               days. A notice shall be sent to the EIS Director and the Celtrix
               Directors specifying the date, time and place where such
               adjourned meeting is to be held and reconvened.

     9.1.5.    The chairman of Newco, or his duly appointed successor, shall
               hold office until the first meeting of the Directors after the
               [*****] by [*****] of [*****]

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               In the event that [*****] is exercised at any time by [*****],
               each of [*****] and [*****] shall cause the board of directors of
               Newco to be reconfigured so that an [*****] of Directors are
               designated by [*****] and [*****.] Thereafter, (a) a quorum shall
               require an [*****] and (b) each of [*****] and [*****] beginning
               with EIS, shall have the right, exercisable [*****] to be [*****]
               of Newco for a term of [*****] If the chairman of Newco is unable
               to attend any meeting of the Directors, the Directors shall be
               entitled to appoint another Director to act as chairman of Newco
               in his place at the meeting.

     9.1.6.    In case of an equality of votes at a meeting of the board of
               directors of Newco, the chairman of Newco shall not be entitled
               to a second or casting vote. In the event of continued deadlock,
               the board of directors shall resolve the deadlock pursuant to the
               provisions set forth in Clause 20,

9.2. MANAGEMENT AND R&D COMMITTEES:

     9.2.1.    The Directors shall appoint a management committee (the
               "MANAGEMENT COMMITTEE") to perform certain operational functions,
               such delegation to be consistent with the directors' right to
               delegate powers pursuant to the Newco Memorandum of Association
               of Bye-Laws. The Management Committee shall initially consist of
               [*****] members, [*****] of whom will be nominated by EIS and
               [*****] of whom will be nominated by Celtrix, and each of whom
               shall be entitled to [*****] vote, whether or not present at any
               Management Committee meeting during which such operational
               functions are discussed. Decisions of the Management Committee
               shall require approval by at least [*****] and [*****] Each of
               EIS and Celtrix shall be entitled to remove any of their nominees
               to the Management Committee and appoint a replacement in place of
               any nominees so removed. The number of members of the Management
               Committee may be altered if agreed to by a majority of the
               directors of Newco; provided that, each of Elan and Celtrix shall
               be entitled to appoint [*****] number of members to the
               Management Committee.

     9.2.2.    The Management Committee shall appoint a research and development
               committee (the "R&D COMMITTEE") which shall initially be
               comprised of [*****] members, [*****] of whom will be nominated
               by Elan and [*****] of whom will be nominated by Celtrix, and
               each of whom shall have [*****] vote, whether or not present at
               an R&D Committee meeting during which research and development
               issues are discussed. Decisions of the R&D

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                 Committee shall require approval by at least [*****] and
                 [*****] Each of Elan and Celtrix shall be entitled to remove
                 any of their nominees to the R&D Committee and appoint a
                 replacement in place of any nominees so removed. The number of
                 members of the R&D Committee may be altered if agreed to by a
                 majority of the Directors; provided that, each of Elan and
                 Celtrix shall be entitled to appoint an [*****] of members to
                 the R&D Committee. The R & D Committee shall meet at least
                 [*****] each calendar quarter alternately at the offices of
                 Elan and Celtrix (except where otherwise agreed) to monitor the
                 progress of that portion of the Business Plan that relates to
                 the Project and to report on their progress to the Management
                 Committee.

         9.2.3   The Management Committee shall be responsible for, inter alia,
                 devising, implementing and reviewing strategy for the business
                 of Newco, and the operation of Newco, and in particular,
                 devising Newco's strategy for research and development and to
                 monitor and supervise the implementation of Newco's strategy
                 for research and development. The Management Committee shall
                 report all significant developments to the Directors on the
                 occurrence thereof, and in addition, shall report at quarterly
                 intervals to the Directors in accordance with Clause 10.2 of
                 this Agreement.

         9.2.4.  The R&D Committee shall be responsible for:

                 9.2.4.1. designing that portion of the Business Plan that
                          relates to the Project for consideration by the
                          Management Committee;

                 9.2.4.2. establishing a joint Project team consisting of an
                          [*****] of team members from Elan and Celtrix,
                          including [*****] from each of Elan and Celtrix; and

                 9.2.4.3. implementing such portion of the Business Plan that
                          relates to the Project, as approved by the Management
                          Committee.

         9.2.4   In the event of any dispute amongst the R&D Committee, the R&D
                 Committee shall refer such dispute to the Management Committee
                 whose decision on the dispute shall be binding on the R&D
                 Committee.

                 If the Management Committee cannot resolve such matter or any
                 other matter under consideration by the Management Committee,
                 then the dispute will be referred to the [*****] and the
                 [*****]
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                 and thereafter, in the event of continued deadlock, pursuant to
                 the deadlock provisions to be set forth in Clause 20, involving
                 inter alia, the referral of the dispute to an expert, whose
                 decision, however, will ultimately be non-binding on the
                 Participants.

         9.2.6.  [*****] Elan and Celtrix shall permit Newco or its duly
                 authorized representative on reasonable notice and at any
                 reasonable time during normal business hours to have access to
                 inspect and audit the accounts and records of Elan or Celtrix
                 and any other book, record, voucher, receipt or invoice
                 relating to the calculation or the cost of the Project and to
                 the accuracy of the reports which accompanied them. Any such
                 inspection of Elan's or Celtrix's records, as the case may be,
                 shall be at the expense of Newco, except that if such
                 inspection reveals an overpayment in the amount paid to Elan or
                 Celtrix, as the case may be, for the Project hereunder in any
                 Financial Year of [*****] or more of the amount due to Elan or
                 Celtrix, as the case may be, then the expense of such
                 inspection shall be borne solely by Elan or Celtrix, as the
                 case may be, instead of by Newco. Any surplus over the sum
                 properly payable by Newco to Elan or Celtrix, as the case may
                 be, shall be paid promptly by Elan or Celtrix, as the case may
                 be, to Newco. If such inspection reveals a deficit in the
                 amount of the sum properly payable to Elan or Celtrix, as the
                 case may be, by Newco, Newco shall pay the deficit to Elan or
                 Celtrix, as the case may be.

                                   CLAUSE 10

                         THE BUSINESS PLAN AND REVIEWS

10.1     The Directors shall meet together as soon as reasonably practicable
         after the Closing Date hereof and shall agree upon and approve the
         Business Plan for the current Financial Year within 60 days of the date
         hereof. In subsequent Financial Years, the Directors shall meet
         together prior to the accounting reference date specified in Clause 16
         and agree upon and approve the Business Plan for the following
         Financial Year, or any amendment or modification to the Business Plan.

10.2     The Participants agree that the Management Committee shall submit to
         the Directors on [*****] or as soon as reasonably practicable
         thereafter in each Financial Year a report on the performance of the
         Business and research and development activities of Newco, and the
         Directors shall hold such meeting as may be necessary to review the
         performance of Newco against the Business Plan for the relevant year.

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                                   CLAUSE 11

                         RESEARCH AND DEVELOPMENT WORK

11.1     Research and development work related to the Products and the Newco
         Intellectual Property may include but shall not be limited to,
         screening, in-vitro pharmacology, toxicology, stability, prototype
         dosage form development, formulation, optimization, clinical and
         regulatory activities. Such work shall be agreed to and jointly
         conducted by Elan and Celtrix as provided in the Business Plan.

11.2     Elan (or an Affiliate of Elan nominated by Elan, including, without
         limitation, Elan Pharmaceutical International, Ltd., an Irish company)
         and Celtrix shall undertake for a period of thirty (30) months from the
         Effective Date, pursuant to the Business Plan and in accordance with
         the terms of the Funding Agreement, certain research and development
         work (a) with respect to the development and commercialization of the
         Products, and (b) in furtherance of the development of patent rights
         and know-how related to the Elan Intellectual Property, Celtrix
         Intellectual Property and Newco Intellectual Property. Newco shall pay
         Celtrix and Elan or Elan's Affiliate nominated by Elan hereunder for
         any research and development work carried out by them on behalf of
         Newco at the end of each month during the Project, subject to the
         proper vouching of research and development work and expenses. An
         invoice shall be issued to Newco by Celtrix or Elan or Elan's Affiliate
         nominated by Elan hereunder, as applicable, by the [*****] of the month
         following the month in which work was performed. The payments by Newco
         to Celtrix or Elan or Elan's Affiliate nominated by Elan hereunder
         shall be calculated by reference to [*****] in carrying out such
         research and development work, [*****] Research and development
         activities that are [*****] shall be charged to Newco at [*****]

                                   CLAUSE 12

                         INTELLECTUAL PROPERTY RIGHTS

12.1     Newco shall permanently mark or otherwise use reasonable efforts to
         cause any third party to permanently mark all Products and/or the
         packaging therefor with such license or patent notices to comply with
         the laws of the country of sale or otherwise to generally communicate
         the existence of any Elan Patents Rights or Celtrix Patent Rights for
         the countries of the Territory and in such manner as Elan

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         or Celtrix, as the case may be, may reasonably request in writing prior
         to the sale or commercial use thereof.

12.2     The Participants shall discuss in good faith all material issues
         relating to filing, prosecution and maintenance of Elan Patent Rights
         and Celtrix Patent Rights insofar as such patent rights are of
         relevance to the License Agreements and any patentable inventions and
         discoveries within the Elan Intellectual Property, Celtrix Intellectual
         Property and Newco Intellectual Property that relate to the License
         Agreements and any patentable improvements thereto. Subject to mutual
         agreement to the contrary by Celtrix and Elan the following provisions
         shall apply:

         12.2.1  Elan, [*****], shall make a good faith effort (a) to secure the
                 grant of any patent applications within the Elan Patent Rights
                 that relate to the Field; (b) to file and prosecute patent
                 applications covering the Elan Improvements that relate to the
                 Field; (c) to defend all such applications against third party
                 oppositions; and (d) to maintain in force any issued patent or
                 letters patent within the Elan Patent Rights that relate to the
                 Field (including any such patents that may issue covering any
                 such Elan Improvements that relate to the Field). Elan shall
                 have the sole right in its reasonable business discretion to
                 control such filing, prosecution, defense and maintenance;
                 provided, however, that Newco, at its request, shall be
                 provided with copies of all documents relating to such filing,
                 prosecution, defense, and maintenance in sufficient time to
                 review such documents and comment thereon prior to filing.

         12.2.2  Celtrix, [*****], shall make a good faith effort (a) to secure
                 the grant of any patent applications within the Celtrix Patent
                 Rights that relate to the Field; (b) to file and prosecute
                 patent applications covering the Celtrix Improvements that
                 relate to the Field; (c) to defend all such applications
                 against third party oppositions; and (d) to maintain in force
                 any issued patent or letters patent within the Celtrix Patent
                 Rights that relate to the Field (including any such patents
                 that may issue covering any such Celtrix Improvements that
                 relate to the Field). Celtrix shall have the sole right in its
                 reasonable business discretion to control such filing,
                 prosecution, defense and maintenance; provided, however, that
                 Newco shall have the right to inspect copies of all documents
                 relating to such filing, prosecution, defense, and maintenance,
                 and to make copies thereof, upon reasonable prior notice to
                 Celtrix.

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         12.2.3  In the event that a Participant informs Newco that it does not
                 intend to file patent applications on patentable inventions and
                 discoveries within its respective Intellectual Property that
                 relate to the Field or patentable Improvements that relate to
                 the Field in one or more countries in the Territory or fails to
                 file such an application within a reasonable period of time,
                 Newco shall have the right, but not the obligation, at Newco's
                 [*****] to file and prosecute such patent application(s) in the
                 joint names of Newco and the relevant Participant. Upon written
                 request from Newco, the relevant Participant shall execute all
                 documents, forms and declarations and do all things as shall be
                 reasonably necessary to enable Newco to exercise such option
                 and right.

         12.2.4  Newco shall have responsibility and shall bear [*****]
                 necessary (a) to file and prosecute patent applications on
                 patentable inventions and discoveries within the Newco
                 Intellectual Property (b) to defend all such applications
                 against third party oppositions; and (c) to maintain in force
                 any issued patent, letters patent within the Newco Intellectual
                 Property (including any patents that issue on patentable
                 inventions and discoveries within the Newco Intellectual
                 Property).

12.3     The Participants and Newco shall promptly inform each other in writing
         of any infringement or alleged infringement of any patents within the
         Elan Patent Rights, Celtrix Patent Rights or Newco Intellectual
         Property or any misappropriation or alleged misappropriation of trade
         secrets within the Elan Intellectual Property, Celtrix Intellectual
         Property or the Newco Intellectual Property by a third party of which
         it becomes aware and provide the other with any available evidence of
         such infringement or misappropriation.

         12.3.1

                 12.3.1.1 Subject to Clauses 12.3.1.2 and 12.3.1.3 below and
                          during the term of the License Agreements, Newco shall
                          have the right to pursue legal action at [*****] to
                          protect against any such alleged infringements of the
                          Elan Patent Rights and Celtrix Patent Rights or
                          misappropriation of the Elan Intellectual Property and
                          Celtrix Intellectual Property; provided, however, that
                          such infringements or misappropriation must relate
                          solely to the Field. In the event that Newco takes
                          such action, Newco shall do so at [*****] At Newco's
                          request, the relevant Participant will co-operate with
                          such

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                          action insofar as the said action relates to the
                          Field at Newco's [*****] [*****]

                 12.3.1.2 In the event that (i) Newco decides, by unanimous vote
                          of the Management Committee, not to pursue such
                          infringers, within a reasonable period but in any
                          event within [*****] after receiving written notice of
                          such alleged infringement or misappropriation, or (ii)
                          if such alleged infringement or misappropriation does
                          not relate [*****] then either Elan, where the
                          infringement or misappropriation relates [*****] to
                          the [*****] or Celtrix, where the infringement or
                          misappropriate relates [*****] to the [*****] (in
                          either case, the [*****]), may in its discretion
                          initiate such proceedings in its own name, at [*****]
                          At the Affected Participant's request, Newco will
                          cooperate with such action at the [*****] At the
                          option and in the sole discretion of such Affected
                          Participant, the Affected Participant may request the
                          cooperation of the other Participant in such action;
                          in such case, the Participants may agree to institute
                          such proceedings in [*****] and shall reach agreement
                          [*****] to the third party.

                 12.2.1.3 In the event that the infringement of either the Elan
                          Patent Rights or Celtrix Patent Rights affects both
                          the Field as well as other products being developed or
                          commercialized by the Affected Participant or its
                          commercial partners outside the Field, then the
                          [*****] may in its discretion initiate such
                          proceedings in [*****] At the Affected Participant's
                          request, Newco will cooperate with such action at the
                          [*****] [*****]

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                          the [*****] may request the cooperation of the other
                          Participant in such action; in such case, the
                          Participants may agree to institute such proceedings
                          in [*****] and shall reach agreement [*****] to the
                          third party.

         12.3.2  During the term of the License Agreements, Newco shall have the
                 first right but not the obligation to bring suit or otherwise
                 take action against any alleged infringement of the Newco
                 Intellectual Property or alleged misappropriation of the Newco
                 Intellectual Property. If any such alleged infringement or
                 misappropriation occurs which gives rise to a cause of action
                 both [*****] Newco shall negotiate, together with Elan and
                 Celtrix, in good faith to determine the cause of action to be
                 taken. In the event that Newco takes such action, Newco shall
                 do so solely [*****] and all damages and monetary awards
                 recovered in or with respect to such action shall be the
                 property of Newco. At Newco's request, Elan and Celtrix will
                 cooperate with any such action at Newco's [*****]

         12.3.3  In the event that Newco does not bring suit or otherwise take
                 action against any alleged infringement of the Newco
                 Intellectual Property or alleged misappropriation of the Newco
                 Intellectual Property and so notifies the Participants in
                 writing within [*****] of receiving notice of such
                 infringement, (i) if only [*****] desires to and does pursue
                 such suit or take such action [*****], it shall be entitled
                 [*****] recovered in or with respect to such action, and (ii)
                 if both Participants want to pursue such suit or action outside
                 of Newco, they will negotiate in good faith an appropriate
                 allocation of costs, expenses and recovery amounts.

12.4     In the event that a claim is or proceedings are brought against Newco
         by a third party alleging that the sale, distribution or use of a
         Product in the Territory solely because of Newco's use of either the
         Elan Intellectual Property or the Celtrix Intellectual Property, as the
         case may be, infringes the intellectual property rights of such party,
         Newco shall promptly advise either Elan or Celtrix, as the case may be,
         of such threat or suit.

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12.5     Newco shall indemnify, defend and hold Elan or Celtrix, as the case may
         be, harmless against all actions, losses, claims, demands, damages,
         costs and liabilities (including reasonable attorneys fees) relating
         directly or indirectly to all such claims or proceedings referred to in
         Clause 12.3 provided that Elan or Celtrix, as the case may be, shall
         not acknowledge to the third party or to any other person the validity
         of any claims of such a third party, and shall not compromise or settle
         any claim or proceedings relating thereto without the prior written
         consent of Newco, not to be unreasonably withheld or delayed. At its
         option, Elan or Celtrix, as the case may be, may elect to take over the
         conduct of such proceedings from Newco; provided that Newco's
         indemnification obligations shall continue; the costs of defending such
         claim shall be borne by Elan or Celtrix, as the case may be; and such
         Participant shall not compromise or settle any such claim or proceeding
         without the prior written consent of Newco, such consent not to be
         unreasonably withheld or delayed.

                                   CLAUSE 13

                               COMMERCIALIZATION

13.1     Newco will diligently pursue the research, development, prosecution and
         commercialization of the Products in accordance with the Business Plan.
         The Participants shall reasonably assist and cooperate with Newco in
         such research, development, prosecution and commercialization of the
         Products.

13.2     Notwithstanding anything contained in this Agreement to the contrary,
         [*****] shall have the right [*****] to enter into any agreement with
         Newco [*****] Such right of [*****] shall be exercised as follows:

         13.2.1   If Newco intends to commercialize or enter into an agreement
                  with a third party to commercialize the Products, then Newco
                  immediately shall notify [*****] in writing that [*****] may
                  elect to enter into negotiations referred to in this Clause
                  13.2. [*****] shall indicate its desire to enter into such
                  negotiations pursuant to this Clause 13.2 by delivering
                  written notice to Newco within [*****] of Elan's receipt of
                  the written notification from Newco to Elan (the "ELAN/NEWCO
                  OPTION"). If [*****] elects to enter into such negotiations,
                  the Parties shall negotiate in good faith the terms of an
                  applicable agreement.

         13.2.2   If, despite such good faith negotiations, [*****] and Newco do
                  not reach agreement on the terms of such an agreement within
                  [*****]

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION

                 from [*****] exercise of the [*****] then Newco shall be free
                 to offer a third party[*****] terms to commercialize in the
                 Territory the Product that is subject to [*****]

                                   CLAUSE 14

                                 MANUFACTURING

14.1     If Newco elects to finance, develop and/or exploit the commercial
         production of a Product, it is the expectation of the Participants that
         Newco shall enter into a supply agreement with Elan or Celtrix, as the
         case may be, to allow for the commercial production of such Product on
         behalf of Newco, subject to the following: (a) Celtrix shall
         manufacture and supply, and/or subcontract the manufacture and supply,
         of SomatoKine(R) with respect to the Products, (b) Elan shall
         manufacture and supply, and/or subcontract the manufacture and supply,
         of the MEDIPAD(R) Drug Delivery System with respect to the Products,
         and (c) Elan shall have the [*****] The supply agreements shall be
         negotiated and agreed to by the Parties not later than the date of
         completion of Phase III (as such term is commonly used in connection
         with FDA applications) of the Project. The terms of the said supply
         agreements shall be on normal commercial terms, and shall be negotiated
         in good faith by the Parties thereto; provided that the Management
         Committee shall have the authority to approve the cost to Newco of such
         manufacture and supply of SomatoKine(R) and MEDIPAD(R) Drug Delivery
         System to Newco.

                                   CLAUSE 15

                       TECHNICAL SERVICES AND ASSISTANCE

15.1     Whenever commercially and technically feasible, Newco shall contract
         with Celtrix or Elan, as the case may be, to perform such other
         services as Newco may require, other than those specifically dealt with
         hereunder or in the License Agreements. In determining which Party
         should provide such services, the Management Committee shall take into
         account the respective infrastructure, capabilities and experience of
         Elan and Celtrix.

15.2     Newco shall, if appropriate, conclude an administrative support
         agreement with Elan and/or Celtrix on such terms as the Parties thereto
         shall in good faith negotiate. The administrative services shall
         include one or more of the following administrative services as
         requested by Newco:

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION

         15.2.1   accounting, financial and other services;

         15.2.2   tax services;

         15.2.3   insurance services;

         15.2.4   human resources services;

         15.2.5   legal and company secretarial services;

         15.2.6   patent and related intellectual property services; and

         15.2.7   all such other services consistent with and of the same type
                  as those services to be provided pursuant to this Agreement,
                  as may be required.

         The foregoing list of services shall not be deemed exhaustive and may
         be changed from time to time upon written request by Newco.

15.3.    The Parties agree that each Party shall effect and maintain [*****]
         insurance in respect of all clinical trials and other activities
         performed by them on behalf of Newco. The Stockholders and Newco shall
         ensure that the industry standard insurance policies shall be in place
         for all activities to be carried out by Newco.

15.4     If Elan or Celtrix so requires, Celtrix or Elan, as the case may be,
         shall receive, at times and for periods mutually acceptable to the
         Parties, employees of the other Party (such employees to be acceptable
         to the receiving Party in the matter of qualification and competence)
         for instruction in respect of the Elan Intellectual Property or the
         Celtrix Intellectual Property, as the case may be, as necessary to
         further the Project.

15.5     The employees received by Elan or Celtrix, as the case may be, shall be
         subject to obligations of confidentiality no less stringent than those
         set out in Clause 23 and such employees shall observe the rules,
         regulations and systems adopted by the Party receiving the said
         employees for its own employees or visitors.

                                   CLAUSE 16

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                     AUDITORS, BANKERS, REGISTERED OFFICE,
                 ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL

Unless otherwise agreed by the Stockholders and save as may be provided to the
contrary herein:

16.1     the auditors of Newco shall be [*****]

16.2     the bankers of Newco shall be [*****] or such other bank as may be
         mutually agreed from time to time;

16.3     the accounting reference date of Newco shall be December 31st in each
         Financial Year; and

16.4     the secretary of Newco shall be [*****] or such other Person as may be
         appointed by the Directors from time to time.

                                   CLAUSE 17

                                  REGULATORY

17.1     Newco shall keep the other Parties promptly and fully advised of
         Newco's regulatory activities, progress and procedures. Newco shall
         inform the other Parties of any dealings it shall have with an RHA, and
         shall furnish the other Parties with copies of all correspondence
         relating to the Products. The Parties shall collaborate to obtain any
         required regulatory approval of the RHA to market the Products.

17.2     Newco shall, at its own cost, file, prosecute and maintain any and all
         Regulatory Applications for the Products in the Territory in accordance
         with the Business Plan.

17.3     Any and all Regulatory Approvals obtained hereunder for any Product
         shall remain the property of Newco, provided that Newco shall allow
         Elan and Celtrix access thereto to enable Elan and Celtrix to fulfill
         their respective obligations and exercise their respective rights under
         this Agreement. Newco shall maintain such Regulatory Approvals at its
         own cost.

17.4     It is hereby acknowledged that there are inherent uncertainties
         involved in the registration of pharmaceutical products with the RHA's
         insofar as obtaining approval is concerned and such uncertainties form
         part of the business risk

                                      28
<PAGE>

         involved in undertaking the form of commercial collaboration as set
         forth in this Agreement. Therefore, except for liabilities resulting
         from failure to use reasonable efforts, none of Elan, EIS or Celtrix
         shall have any liability to Newco solely as a result of any failure of
         a Product to achieve the approval of any RHA.

                                   CLAUSE 18

                             TRANSFERS OF SHARES;
                    RIGHT OF FIRST OFFER; TAG ALONG RIGHTS

18.1     GENERAL:

         No Stockholder shall, directly or indirectly, sell or otherwise
         transfer (each, a "TRANSFER") any Shares held by it except in
         accordance with this Agreement. Newco shall not, and shall not permit
         any transfer agent or registrar for any Shares to, transfer upon the
         books of Newco any Shares from any Stockholder to any transferee, in
         any manner, except in accordance with this Agreement, and any purported
         transfer not in compliance with this Agreement shall be void.

18.2     RIGHTS OF FIRST OFFER:

         If at any time after the end of the Term, a Stockholder shall desire to
         Transfer any Shares owned by it (a "SELLING STOCKHOLDER"), in any
         transaction or series of related transactions other than a Transfer to
         an Affiliate or subsidiary or to an off-balance sheet special purpose
         entity established by EIS or Celtrix, as the case may be, then such
         Selling Stockholder shall deliver prior written notice of its desire to
         Transfer (a "NOTICE OF INTENTION") (i) to Newco and (ii) to the
         Stockholders who are not the Selling Stockholder (and any transferee
         thereof permitted hereunder, if any), as applicable, setting forth such
         Selling Stockholder's desire to make such Transfer, the number of
         Shares proposed to be transferred (the "OFFERED SHARES") and the
         proposed form of transaction (the "TRANSACTION PROPOSAL"), together
         with any available documentation relating thereto and the price at
         which such Selling Stockholder proposes to Transfer the Offered Shares
         (the "OFFER PRICE"). The "Right of First Offer" provided for in this
         Clause 18 shall be subject to any "Tag Along Right" benefiting a
         Stockholder which may be provided for by Clause 18.3, subject to the
         exceptions set forth therein.

         Upon receipt of the Notice of Intention, the Stockholders who are not
         the Selling Stockholder shall have the right to purchase at the Offer
         Price the Offered Shares, exercisable by the delivery of notice to the
         Selling Stockholder (the "NOTICE OF EXERCISE"), with a copy to Newco,
         within 10 business days from the date of receipt of the Notice of
         Intention. If no such Notice of Exercise has been delivered by the
         Stockholders who are not the Selling Stockholder within such 10-
         business day period, or such Notice of Exercise does not relate to all
         of the

                                      29
<PAGE>

          Offered Shares covered by the Notice of Intention, then the Selling
          Stockholder shall be entitled to Transfer all of the Offered Shares to
          the intended transferee. In the event that all of the Offered Shares
          are not purchased by the non-selling Stockholders, the Selling
          Stockholder shall sell the available Offered Shares within 30 days
          after the delivery of such Notice of Intention on terms no more
          favorable to a third party than those presented to the non-selling
          Stockholders. If such sale does not occur, the Offered Shares shall
          again be subject to the Right of First Refusal set forth in Clause
          18.2.

          In the event that any of the Stockholders who are not the Selling
          Stockholder exercises their right to purchase all of the Offered
          Shares (in accordance with this Clause 18.2), then the Selling
          Stockholder shall sell all of the Offered Shares to such
          Stockholder(s), in the amounts set forth in the Notice of Intention,
          after not less than 10 business days and not more than 25 business
          days from the date of the delivery of the Notice of Exercise. In the
          event that more than one of the Stockholders who are not the Selling
          Stockholders wish to purchase the Offered Shares, the Offered Shares
          shall be allocated to such Stockholders on the basis of their pro rata
          equity interests in Newco.

          The rights and obligations of each of the Stockholders pursuant to the
          Right of First Offer provided herein shall terminate upon the date
          that the Common Stock is registered under Section 12(b) or 12(g) of
          the Exchange Act.

          At the closing of the purchase of all of the Offered Shares by the
          Stockholders who are not the Selling Stockholder (scheduled in
          accordance with Clause 18.2), the Selling Stockholder shall deliver
          certificates evidencing the Offered Shares being sold, duly endorsed,
          or accompanied by written instruments of transfer in form reasonably
          satisfactory to the Stockholders who are not the Selling Stockholder,
          duly executed by the Selling Stockholder, free and clear of any
          adverse claims, against payment of the purchase price therefor in
          cash, and such other customary documents as shall be necessary in
          connection therewith.

18.3      TAG ALONG RIGHTS:

          Subject to Clause 18.2, a Stockholder (the "TRANSFERRING STOCKHOLDER")
          shall not Transfer (either directly or indirectly), in any one
          transaction or series of related transactions, to any Person or group
          of Persons, any Shares, unless the terms and conditions of such
          Transfer shall include an offer to the other Stockholders who have not
          exercised the Right of First Offer set forth above in Clause 18.2 (the
          "REMAINING STOCKHOLDERS"), to sell Shares at the same price and on the
          same terms and conditions as the Transferring Stockholder has agreed
          to sell its Shares (the "TAG ALONG RIGHT").

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<PAGE>

          In the event a Transferring Stockholder proposes to Transfer any
          Shares in a transaction subject to this Clause 18.3, it shall notify,
          or cause to be notified, the Remaining Stockholders in writing of each
          such proposed Transfer. Such notice shall set forth: (i) the name of
          the transferee and the amount of Shares proposed to be transferred,
          (ii) the proposed amount and form of consideration and terms and
          conditions of payment offered by the transferee (the "TRANSFEREE
          TERMS") and (iii) that the transferee has been informed of the Tag
          Along Right provided for in this Clause 18.3, if such right is
          applicable, and the total number of Shares the transferee has agreed
          to purchase from the Stockholders in accordance with the terms hereof.

          The Tag Along Right may be exercised by each of the Remaining
          Stockholders by delivery of a written notice to the Transferring
          Stockholder (the "CO-SALE NOTICE") within 10 business days following
          receipt of the notice specified in the preceding subsection. The Co-
          sale Notice shall state the number of Shares owned by such Remaining
          Stockholder which the Remaining Stockholder wishes to include in such
          Transfer; provided, however, that without the written consent of the
          Transferring Stockholder, the amount of such securities belonging to
          the Remaining Stockholder included in such Transfer may not be greater
          than such Remaining Stockholder's percentage beneficial ownership of
          Fully Diluted Common Stock multiplied by the total number of shares of
          Fully Diluted Common Stock to be sold by both the Transferring
          Stockholder and all Remaining Stockholders. Upon receipt of a Co-sale
          Notice, the Transferring Stockholder shall be obligated to transfer at
          least the entire number of Shares set forth in the Co-sale Notice to
          the transferee on the Transferee Terms; provided, however, that the
          Transferring Stockholder shall not consummate the purchase and sale of
          any Shares hereunder if the transferee does not agree to purchase all
          such Shares specified in all Co-sale Notices. If no Co-sale Notice has
          been delivered to the Transferring Stockholder prior to the expiration
          of the 10 business day period referred to above and if the provisions
          of this Section have been complied with in all respects, the
          Transferring Stockholder shall have the right for a 45 day calendar
          day period to Transfer Shares to the transferee on the Transferee
          Terms without further notice to any other party, but after such 45-day
          period, no such Transfer may be made without again giving notice to
          the Remaining Stockholders of the proposed Transfer and complying with
          the requirements of this Clause 18.3.

          At the closing of any Transfer of Shares subject to this Clause 18.3,
          the Transferring Stockholder, and the Remaining Stockholder, in the
          event such Tag

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SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          Along Right is exercised, shall deliver certificates evidencing such
          securities as have been transferred by each, duly endorsed, or
          accompanied by written instruments of transfer in form reasonably
          satisfactory to the transferee, free and clear of any adverse claim,
          against payment of the purchase price therefor.

          The rights and obligations of each of the Stockholders pursuant to the
          Tag Along Rights provided herein shall terminate upon the date that
          the Common Stock of Newco is registered under Section 12(b) or 12(g)
          of the Exchange Act.

          Notwithstanding the foregoing, this Clause 18 shall not apply to any
          sale of Common Stock pursuant to an effective registration statement
          under the Securities Act in a bona fide public offering.

                                   CLAUSE 19

                   MATTERS REQUIRING PARTICIPANTS' APPROVAL

19.1      Subject to the provisions of Clause 19.2, in consideration of Celtrix
          and Elan agreeing to enter into the License Agreements, the Parties
          hereby agree that Newco shall not without the prior approval of all of
          the EIS Directors and all of the Celtrix Directors:

          19.1.1.  engage in any activity other than the Business;

          19.1.2.  acquire or dispose of assets of a value in excess of [*****]
                   or sell the principal assets, undertaking or Business of
                   Newco;

          19.1.2.  create any fixed or floating charge, lien (other than a lien
                   arising by operation of law) or other encumbrance over the
                   whole or any part of the undertaking, property or assets of
                   Newco or of any Subsidiary;

          19.1.4.  borrow any sum in excess of a maximum aggregate sum
                   outstanding at any time of [*****];

          19.1.5.  make any loan or advance or give any credit (other than
                   normal trade credit) in excess of [*****] to any Person;

          19.1.6.  give any guarantee or indemnity to secure the liabilities or
                   obligations of any Party other than those which it is usual
                   to give in the ordinary course of a business similar to the
                   Business;

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

     19.1.7.  enter into any contract, arrangement or commitment involving
              expenditure on capital account or the realization of capital
              assets if the amount or the aggregate amount of such expenditure
              or realization by Newco would exceed [*****] in any one year or in
              relation to any one project, and for the purpose of this paragraph
              the aggregate amount payable under any agreement for hire, hire
              purchase or purchase on credit sale or conditional sale terms
              shall be deemed to be capital expenditure incurred in the year in
              which such agreement is entered into;

     19.1.8.  issue any unissued Shares or create or issue any new shares
              (including a split of the Shares), except as expressly permitted
              by the Newco Memorandum of Association and Bye-Laws;

     19.1.9.  alter any rights attaching to any class of share in the capital of
              Newco or alter the Newco Memorandum of Association and Bye-Laws;

     19.1.10. consolidate, sub-divide or convert any of Newco's share capital or
              in any way alter the rights attaching thereto;

     19.1.11. dispose of Newco or of any shares in Newco;

     19.1.12. enter into any partnership or profit sharing agreement with any
              Person other than arrangements with trade representatives and
              similar Persons in the ordinary course of business;

     19.1.13. do or permit or suffer to be done any act or thing whereby Newco
              may be wound up (whether voluntarily or compulsorily), save as
              otherwise expressly provided for in this Agreement;

     19.1.14. issue any debentures or other securities convertible into shares
              or debentures or any share warrants or any options in respect of
              shares in Newco;

     19.1.15. enter into any contract or transaction except in the ordinary and
              proper course of the Business on arm's length terms;

     19.1.16. acquire, purchase or subscribe for any shares, debentures,
              mortgages or securities (or any interest therein) in any company,
              trust or other Person;

     19.1.17. adopt any employee benefit program or incentive schemes;

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[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

     19.1.18. engage any new employee at remuneration of greater than
              [*****] per annum;

     19.1.19. pay any remuneration to the Directors by virtue of holding such
              office other than Directors who hold executive office;

     19.1.20. licence or sub-licence any of the Elan Intellectual Property,
              Celtrix Intellectual Property or Newco Intellectual Property;

     19.1.21. amend or vary the terms of the Celtrix License Agreement or the
              Elan License Agreement;

     19.1.22. permit a person other than Newco to own a regulatory approval
              relating to the Product(s);

     19.1.23. change the authorized signatories on Newco bank accounts;

     19.1.24. amend or vary the Business Plan;

     19.1.25. alter the number of Directors;

     19.1.26. pay dividends or distributions in respect of, or redeem or
              repurchase, the equity of Newco;

     19.1.27. enter into joint venture agreements or any similar arrangements
              with any Person; or

     19.1.28. create, acquire or dispose of any Subsidiary or of any shares in
              any Subsidiary.

19.3 Notwithstanding any provision in this Agreement to the contrary, any
     decision regarding U.S. tax elections to be made by Newco, such as whether
     [*****], shall be made by unanimous vote of the Board of Directors.

                                   CLAUSE 20

                                   DISPUTES

20.1 Should any dispute or difference arise between Elan and Celtrix, or between
     Elan or Celtrix and Newco, during the period that this Agreement is in
     force, other than a dispute or difference relating to (i) the
     interpretation of any provision of this

                                      34
<PAGE>

          Agreement, (ii) the interpretation or application of law, or (iii) the
          ownership of any intellectual property, then any Party may forthwith
          give notice to the other Parties that it wishes such dispute or
          difference to be referred to the chief executive officer of Celtrix
          and the President of EPT.

  20.2    In any event of a notice being served in accordance with Clause 20.1,
          each of the Participants shall within 14 days of the service of such
          notice prepare and circulate to the chief executive officer of Celtrix
          and the President of EPT a memorandum or other form of statement
          setting out its position on the matter in dispute and its reasons for
          adopting that position. Each memorandum or statement shall be
          considered by the chief executive officer of Celtrix and the President
          of EPT who shall endeavor to resolve the dispute. If the chief
          executive officer of Celtrix and the President of EPT agree upon a
          resolution or disposition of the matter, they shall each sign a
          statement which sets out the terms of their agreement. The
          Participants agree that they shall exercise the voting rights and
          other powers available to them in relation to Newco to assure that the
          agreed terms are fully and promptly carried into effect.

  20.3    The chief executive officer of Celtrix and the President of EPT shall,
          if they are unable to resolve a dispute or difference when it is
          referred to them under Clause 20.2, refer the matter to an independent
          expert in pharmaceutical product development and marketing (including
          clinical development and regulatory affairs) (the "EXPERT"). The
          Expert shall be selected by the presiding justice of the Supreme Court
          of the State of New York sitting in the County, City and State of New
          York (the "PRESIDING JUSTICE") or, if the Expert should have a
          conflict of interest, by such other Person as such justice shall
          select, having assured himself as to such Person's independence. In
          each case, the Expert shall be selected having regard to his
          suitability to determine the particular dispute or difference on which
          the Expert is being requested to determine. Unless otherwise agreed
          between the chief executive officer of Celtrix and the President of
          EPT, the following rules shall apply to the appointment of the Expert.
          The fees of the Expert shall be shared equally between the Parties in
          dispute. The Expert shall be entitled to inspect and examine all
          documentation and any other material which the Expert may consider to
          be relevant to the dispute. The Expert shall afford each Party a
          reasonable opportunity (in writing or orally) of stating reasons in
          support of such contentions as each Party may wish to make relative to
          the matters under consideration. The Expert shall give notice in
          writing of his determination to the Parties within such time as may be
          stipulated in his terms of appointment or in the absence of such
          stipulation as soon as practicable but in any event within four weeks
          from the reference of the dispute or difference to him.

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<PAGE>

  20.4    Any determination by the Expert of a dispute or difference shall not
          be final and binding on the Parties; provided, however, that any
          determination by the Expert of a dispute or difference referred by the
          Parties pursuant to Clause 21.6. shall be final and binding on the
          Parties.

                                   CLAUSE 21

                                  TERMINATION

  21.1    This Agreement shall govern the operation and existence of Newco until
          (i) terminated by written agreement of all Parties hereto or (ii)
          otherwise terminated in accordance with this Clause 21.

  21.2    For the purpose of this Clause 21, a "RELEVANT EVENT" is committed or
          suffered by a Participant if:

          21.2.1   it commits a material breach of its obligations under this
                   Agreement or the applicable License and fails to remedy it
                   within 60 days of being specifically required in writing to
                   do so by the other Participant; provided, however, that if
                   the breaching Participant has proposed a course of action to
                   rectify the breach and is acting in good faith to rectify
                   same but has not cured the breach by the 60th day, such
                   period shall be extended by such period as is reasonably
                   necessary to permit the breach to be rectified;

          21.2.2   a distress, execution, sequestration or other process is
                   levied or enforced upon or sued out against a material part
                   of its property which is not discharged or challenged within
                   30 days;

          21.2.3   it is unable to pay its debts in the normal course of
                   business;

          21.2.4   it ceases wholly or substantially to carry on its business,
                   otherwise than for the purpose of a reconstruction or
                   amalgamation, without the prior written consent of the other
                   Participant (such consent not to be unreasonably withheld);

          21.2.5   the appointment of a liquidator, receiver, administrator,
                   examiner, trustee or similar officer of such Participant or
                   over all or substantially all of its assets under the law of
                   any applicable jurisdiction, including without limitation,
                   the United States of America, Bermuda or Ireland;

          21.2.6   an application or petition for bankruptcy, corporate re-
                   organization, composition, administration, examination,
                   arrangement or any other procedure similar to any of the
                   foregoing under the law of any applicable jurisdiction,
                   including without limitation, the United States of America,
                   Bermuda or Ireland, is filed, and is not discharged within 60
                   days, or a Participant applies for or consents to the
                   appointment of a receiver, administrator, examiner or similar
                   officer of it or of all or a material part

                                      36
<PAGE>

                   of its assets, rights or revenues or the assets and/or the
                   business of a Participant are for any reason seized,
                   confiscated or condemned.

  21.4    If either Participant commits or suffers a Relevant Event, the other
          Participant shall be entitled, within three months of the occurrence
          of the Relevant Event, to require the defaulting Participant (the
          "RECIPIENT PARTICIPANT") to sell on reasonable terms of payment to the
          non-defaulting Participant (the "PROPOSING PARTICIPANT") all (but not
          some only) of the Shares, held or beneficially owned by the Recipient
          Participant for an amount equal to the fair market value of the Shares
          of the Recipient Participant (the "BUYOUT OPTION").

  21.5    The Proposing Participant shall notify the Recipient Participant of
          the exercise of the Buyout Option, no later than 30 business days
          prior to the proposed exercise thereof, by delivering written notice
          to the Recipient Participant stating that the Buyout Option is
          exercised and the price at which the Proposing Participant is willing
          to purchase the Shares of the Recipient Participant.

  21.6    In the event that the Participants do not agree upon a purchase price
          for the Shares within five Business Days following the receipt by the
          Recipient Participant of written notice from the Proposing Participant
          pursuant to Clause 21.5 above, the Proposing Participant may contact
          the Presiding Justice and request that an independent US-based
          arbitrator who is knowledgeable of the pharmaceutical/biotechnology
          industry be appointed within 10 Business Days. The Presiding Justice
          shall endeavor to select an arbitrator who is technically
          knowledgeable in the pharmaceutical/biotechnology industry (and who
          directly and through his affiliates, has no business relationship
          with, or shareholding in, either the Proposing Participant or the
          Recipient Participant). Promptly upon being notified of the
          arbitrator's appointment, the Proposing Participant and the Recipient
          Participant shall submit to the arbitrator details of their assessment
          of the fair market value for the Shares of the Recipient Participant
          together with such information as they think necessary to validate
          their assessment. The arbitrator shall notify the Recipient
          Participant of the fair market value assessed by the Proposing
          Participant (the "PROPOSING PARTICIPANT PRICE") and shall notify the
          Proposing Participant of the fair market value assessed by the
          Recipient Participant (the "RECIPIENT PARTICIPANT PRICE"). The
          Proposing Participant and the Recipient Participant shall then be
          entitled to make further submissions to the arbitrator within five
          Business Days explaining why the Recipient Participant

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SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          Price or the Proposing Participant Price, as the case may be, is
          unjustified. The arbitrator shall thereafter meet with the Proposing
          Participant and the Recipient Participant and shall thereafter choose
          either the Recipient Participant Price or the Proposing Participant
          Price (but not any other price) as the purchase price for the Shares
          (the "PURCHASE PRICE") on the basis of which price the Expert
          determines to be closer to the fair market value for the Shares of the
          Recipient Participant. The arbitrator shall use his best efforts to
          determine the Purchase Price within 30 Business Days of his
          appointment. The Proposing Participant and the Recipient Participant
          shall bear the costs of the arbitrator equally provided that the
          arbitrator may, in his discretion, allocate all or a portion of such
          costs to one Party. Any decision of the arbitrator shall be final and
          binding.

21.7      The Proposing Participant shall purchase the Shares of the Recipient
          Participant by delivery of the Purchase Price in cash no later than
          the 15th Business Day following determination of the Purchase Price by
          the Expert.

21.8      The Shares of the Recipient Participant so transferred shall be sold
          by the transferor as beneficial owner with effect from the date of
          such transfer free from any lien, charge or encumbrance with all
          rights and restrictions attaching thereto.

21.9      If the Proposing Participant exercises the Buyout Option, both parties
          will negotiate in good faith to agree to additional reasonable
          provisions and/or amendments to the License Agreements to protect the
          intellectual property rights of the Recipient Party.

21.10     If either Participant commits a Relevant Event, the other Stockholder
          shall have in addition to all other legal and equitable rights and
          remedies hereunder, the right to terminate this Agreement upon 30
          days' written notice.

21.11     In the event of a termination of the Elan License Agreement and/or the
          Celtrix License Agreement, both parties will negotiate in good faith
          to determine whether this Agreement should be terminated and if so,
          which provisions should survive termination.

21.12     The provisions of Clauses [*****] shall survive the termination of
          this Agreement under this Clause 21 in accordance with their terms;
          all other terms and provisions of this Agreement shall cease to have
          effect and be null and void upon the termination of this Agreement
          under this Clause 21.

                                      38
<PAGE>

                                   CLAUSE 22

                            [INTENTIONALLY OMITTED]

                                   CLAUSE 23

                                CONFIDENTIALITY

23.1      The Parties and/or Newco acknowledge and agree that it may be
          necessary, from time to time, to disclose to each other confidential
          and/or proprietary information, including without limitation,
          inventions, works of authorship, trade secrets, specifications,
          designs, data, know-how and other information, relating to the Field,
          the Products, present or future products, the Newco Intellectual
          Property, the Elan Intellectual Property or the Celtrix Intellectual
          Property, as the case may be, methods, compounds, research projects,
          work in process, services, sales suppliers, customers, employees
          and/or business of the disclosing Party, whether in oral, written,
          graphic or electronic form (collectively "CONFIDENTIAL INFORMATION").

23.2      Any Confidential Information revealed by a Party to another Party
          shall be maintained as confidential and shall be used by the receiving
          Party exclusively for the purposes of fulfilling the receiving Party's
          rights and obligations under this Agreement, and for no other purpose.
          Confidential Information shall not include:

          23.2.1  information that is generally available to the public;

          23.2.2  information that is made public by the disclosing Party;

          23.2.3  information that is independently developed by the receiving
                  Party, as evidenced by such Party's records, without the aid,
                  application or use of the disclosing Party's Confidential
                  Information;

          23.2.4  information that is published or otherwise becomes part of the
                  public domain without any disclosure by the receiving Party,
                  or on the part of the receiving Party's directors, officers,
                  agents, representatives or employees;

          23.2.5  information that becomes available to the receiving Party on a
                  non-confidential basis, whether directly or indirectly, from a
                  source other than the disclosing Party, which source did not
                  acquire this information on a confidential basis; or

                                      39
<PAGE>

          23.2.6  information which the receiving Party is required to disclose
                  pursuant to:

                  (i)   a valid order of a court or other governmental body or
                        any political subdivision thereof or as otherwise
                        required by law, rule or regulation; or

                  (ii)  other requirement of law; provided, however, that if the
                        receiving Party becomes legally required to disclose any
                        Confidential Information, the receiving Party shall give
                        the disclosing Party prompt notice of such fact so that
                        the disclosing Party may obtain a protective order or
                        confidential treatment or other appropriate remedy
                        concerning any such disclosure. The receiving Party
                        shall fully co-operate with the disclosing Party in
                        connection with the disclosing Party's efforts to obtain
                        any such order or other remedy. If any such order or
                        other remedy does not fully preclude disclosure, the
                        receiving Party shall make such disclosure only to the
                        extent that such disclosure is legally required; or

          23.2.7  information which was already in the possession of the
                  receiving Party at the time of receiving such information, as
                  evidenced by its records, provided such information was not
                  previously provided to the receiving party from a source which
                  was under an obligation to keep such information confidential;
                  or

          23.2.8  information that is the subject of a written permission to
                  disclose, without restriction or limitation, by the disclosing
                  Party.

23.3      Each Party agrees to disclose Confidential Information of another
          Party only to those employees, representatives and agents requiring
          knowledge thereof in connection with their duties directly related to
          the fulfilling of the Party's obligations under this Agreement, so
          long as such persons are under an obligation of confidentiality no
          less stringent than as set forth herein. Each Party further agrees to
          inform all such employees, representatives and agents of the terms and
          provisions of this Agreement and their duties hereunder and to obtain
          their written consent hereto as a condition of receiving Confidential
          Information. Each Party agrees that it will exercise the same degree
          of care and protection to preserve the proprietary and confidential
          nature of the Confidential Information disclosed by a Party, as the
          receiving Party would exercise to preserve its own Confidential
          Information. Each Party agrees that it will, upon request of another
          Party, return all documents and any copies thereof containing
          Confidential Information belonging to or disclosed by such other
          Party. Each Party shall promptly notify

                                      40
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

        the other Parties upon discovery of any unauthorized use or disclosure
        of the other Parties' Confidential Information.

23.4    Notwithstanding the above, each Party may use or disclose Confidential
        Information disclosed to it by another Party to the extent such use or
        disclosure is reasonably necessary in filing or prosecuting patent
        applications, prosecuting or defending litigation, complying with patent
        applications, prosecuting or defending litigation, complying with
        applicable governmental regulations or otherwise submitting information
        to tax or other governmental authorities, conducting clinical trials, or
        granting a permitted sub-license or otherwise exercising its rights
        hereunder; provided, that if a Party is required to make any such
        disclosure of the other Party's Confidential Information, other than
        pursuant to a confidentiality agreement, such Party shall inform the
        third party recipient of the terms and provisions of this Agreement and
        their duties hereunder and shall obtain their consent hereto as a
        condition of releasing to the third party recipient the Confidential
        Information.

23.5    Any breach of this Clause 23 by any employee, representative or agent of
        a Party is considered a breach by the Party itself.

23.6    The provisions relating to confidentiality in this Clause 23 shall
        remain in effect during the Term and for a period of [*****] following
        the termination of this Agreement.

23.7    The Parties agree that the obligations of this Clause 23 are necessary
        and reasonable in order to protect the Parties' respective businesses,
        and each Party expressly agrees that monetary damages would be
        inadequate to compensate a Party for any breach by the other Party of
        its covenants and agreements set forth herein. Accordingly, the Parties
        agree and acknowledge that any such violation or threatened violation
        will cause irreparable injury to a Party and that, in addition to any
        other remedies that may be available, in law or in equity or otherwise,
        any Party shall be entitled to obtain injunctive relief against the
        threatened breach of the provisions of this Clause 23, or a continuation
        of any such breach by the other Party, specific performance and other
        equitable relief to redress such breach together with its damages and
        reasonable counsel fees and expenses to enforce its rights hereunder,
        without the necessity of proving actual or express damages.

23.8    If it is necessary for Celtrix to file a copy of this Agreement with the
        Securities and Exchange Commission pursuant to applicable law, then (a)
        Celtrix shall consult with Elan, and keep Elan fully informed, with
        respect thereto, and (b) Celtrix shall use its best efforts to obtain
        confidential treatment to the maximum extent possible with respect to
        such filing of this Agreement.

                                      41
<PAGE>

                                   CLAUSE 24

                                     COSTS

24.1    Each Stockholder shall bear its own legal and other costs incurred in
        relation to preparing and concluding this Agreement and the Transaction
        Documents.

24.2    All other costs, legal fees, registration fees and other expenses
        relating to the transactions contemplated hereby, including the costs
        and expenses incurred in relation to the incorporation of Newco, shall
        be borne by Newco.

                                   CLAUSE 25

                                    GENERAL

25.1    GOOD FAITH:

        Each of the Parties hereto undertakes with the others to do all things
        reasonably within its power that are necessary or desirable to give
        effect to the spirit and intent of this Agreement.

25.2    FURTHER ASSURANCE:

        At the request of any of the Parties, the other Party or Parties shall
        (and shall use reasonable efforts to procure that any other necessary
        parties shall) execute and perform all such documents, acts and things
        as may reasonably be required subsequent to the signing of this
        Agreement for assuring to or vesting in the requesting Party the full
        benefit of the terms hereof.

25.3    NO REPRESENTATION:

        Each of the Parties hereto hereby acknowledges that in entering into
        this Agreement it has not relied on any representation or warranty
        except as expressly set forth herein or in any document referred to
        herein.

25.4    FORCE MAJEURE:

        Neither Party to this Agreement shall be liable for delay in the
        performance of any of its obligations hereunder if such delay is caused
        by or results from causes beyond its reasonable control, including
        without limitation, acts of God, fires, strikes, acts of war (whether
        war be declared or not), insurrections, riots, civil commotions,
        strikes, lockouts or other labor disturbances or intervention of any
        relevant government authority, but any such delay or failure shall be
        remedied by such Party as soon as practicable.

                                      42
<PAGE>

25.5    RELATIONSHIP OF THE PARTIES:

        Nothing contained in this Agreement is intended or is to be construed to
        constitute Elan/EIS and Celtrix as partners, or Elan/EIS as an employee
        or agent of Celtrix, or Celtrix as an employee or agent of Elan/EIS.

        No Party hereto shall have any express or implied right or authority to
        assume or create any obligations on behalf of or in the name of another
        Party or to bind another Party to any contract, agreement or undertaking
        with any third Party.

25.6    COUNTERPARTS:

        This Agreement may be executed in any number of counterparts, each of
        which when so executed shall be deemed to be an original and all of
        which when taken together shall constitute this Agreement.

25.7    NOTICES:

        Any notice to be given under this Agreement shall be sent in writing by
        registered or recorded delivery post or reputable overnight courier such
        as Federal Express or telecopied to:

        Elan/EIS at:

        Lincoln House, Lincoln Place, Dublin 2, Ireland
        Attention:  Vice President & General Counsel
        Elan Pharmaceutical Technologies,
        a division of Elan Corporation, plc
        Telephone:  353-1-709-4000
        Fax:        353-1-709-4124

        and

        Elan International Services, Ltd.
        102 St. James Court
        Flatts, Smiths FL04
        Bermuda
        Attention:  President
        Telephone:  441-292-9169
        Fax:        441-292-2224

                                      43
<PAGE>

     with a copy to:

     Brock Silverstein LLC
     One Citicorp Center, 56th Floor
     New York, NY 10022 United States of America
     Attention:  David Robbins, Esq.
     Telephone    212-371-2000
     Fax:         212-371-5500

    Celtrix at:

    2033 Gateway Place, Suite 600
    San Jose, CA 95110 United States of America
    Attention:    President
    Telephone:    408-573-6263
    Fax:          408-573-6228

    with a copy to:

    Venture Law Group
    2800 Sand Hill Road
    Menlo Park, CA 94025 United States of America
    Attention:    Ned Ruffin
    Telephone:    650-854-4488
    Fax:          650-233-8386

    Newco at:

    102 St. James Court
    Flatts, Smiths FL04
    Bermuda
    Attention:    Secretary
    Telephone:    441-292-9169
    Fax:          441-292-2224

    or to such other address(es) as may from time to time be notified by
    any Party to the others hereunder.

    Any notice sent by mail shall be deemed to have been delivered within
    three Business Days after dispatch or delivery to the relevant courier
    and any notice sent by telecopy shall be deemed to have been delivered
    upon confirmation of receipt. Notices of change of address shall be
    effective upon receipt. Notices by telecopy shall also be sent by
    another method permitted hereunder.

                                      44
<PAGE>

25.8     GOVERNING LAW;

         This Agreement shall be governed by and construed in accordance with
         the laws of the State of New York without giving effect to any choice
         or conflict or law provision or rule. For the purpose of this Agreement
         the Parties submit to the personal jurisdiction of the United States
         District Court for the State of New York. The Parties each further
         irrevocably consent to the service of any complaint, summons, notice or
         other process by delivery thereof to it by any manner in which notices
         may be given pursuant to this Agreement.

         25.9.1   SEVERABILITY.

                  If any provision in this Agreement is agreed in writing by the
                  Parties to be, or is deemed to be, or becomes invalid,
                  illegal, void or unenforceable under any law that is
                  applicable hereto, (i) such provision will be deemed amended
                  to conform to applicable laws so as to be valid and
                  enforceable without materially altering the intention of the
                  Parties, and (ii) the validity, legality and enforceability of
                  the remaining provisions of this Agreement shall not be
                  impaired or affected in any way.

25.10    AMENDMENTS:

         No amendment, modification or addition hereto shall be effective or
         binding on any Party unless set forth in writing and executed by a duly
         authorized representative of all Parties.

25.11    WAIVER:

         No waiver of any right under this Agreement shall be deemed effective
         unless contained in a written document signed by the Party charged with
         such waiver, and no waiver of any breach or failure to perform shall be
         deemed to be a waiver of any future breach or failure to perform or of
         any other right arising under this Agreement.

                                      45
<PAGE>

25.12    ASSIGNMENT:

         None of the Parties shall be permitted to assign its rights or
         obligations hereunder without the prior written consent of the other
         Parties except as follows:

         25.12.1  Elan, EIS and/or Celtrix shall have the right to assign their
                  rights and obligations hereunder to their Affiliates provided,
                  however, that such assignment does not result in adverse tax
                  consequences for any other Parties.

         25.12.2  Elan, EIS and/or Celtrix shall have the right to assign their
                  rights and obligations hereunder to an off-balance sheet
                  special purpose entity established by Elan, EIS and/or
                  Celtrix.

25.13    WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:

         This Agreement (including the Schedules attached hereto) and the
         Transaction Documents set forth all of the agreements and
         understandings between the Parties with respect to the subject matter
         hereof, and supersedes and terminates all prior agreements and
         understandings between the Parties with respect to the subject matter
         hereof. There are no agreements or understandings with respect to the
         subject matter hereof, either oral or written, between the Parties
         other than as set forth in this Agreement and the Transaction
         Documents.

         In the event of any ambiguity or conflict arising between the terms of
         this Agreement and those of the Newco Memorandum of Association and
         Bye-Laws, the terms of this Agreement shall prevail.

         No provision of this Agreement shall be construed so as to negate,
         modify or affect in any way the provisions of any other agreement
         between any of the Parties unless specifically referred to, and solely
         to the extent provided herein. In the event of a conflict between the
         provisions of this Agreement and the provisions of the License
         Agreements, the terms of this Agreement shall prevail unless this
         Agreement specifically provide otherwise.

25.14    SUCCESSORS:

         This Agreement shall be binding upon and inure to the benefit of the
         Parties hereto, their successors and permitted assigns.

                                      46
<PAGE>

          IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the day first set forth above.

<TABLE>
<S>                                               <C>
                                                  SIGNED

                                                  BY: /s/ Kevin Insley
                                                      -------------------------

                                                      for and on behalf of
                                                      ELAN CORPORATION, PLC

in the presence of: /s/ [Illegible]
                   ------------------
                                                  SIGNED

                                                  BY: /s/ Kevin Insley
                                                      ----------------------------

                                                      for and on behalf of
                                                      ELAN INTERNATIONAL SERVICES, LTD.

in the presence of: /s/ [Illegible]
                   ------------------

                                                  SIGNED

                                                  BY: /s/ Andreas Sommer
                                                      ----------------------------

                                                      for and on behalf of
                                                      CELTRIX PHARMACEUTICALS INC.

in the presence of: /s/ Kia P. Royal-Barrett          SIGNED
                   -------------------------

                                                  BY: /s/ Andreas Sommer
                                                      ----------------------------

                                                      for and on behalf of
                                                      CELTRIX NEWCO LTD.

in the presence of:/s/ Kia P. Royal-Barrett
                   -------------------------
</TABLE>

                                      47
<PAGE>

                                  SCHEDULE 1

                            ELAN LICENSE AGREEMENT
<PAGE>

                                  SCHEDULE 2

                           CELTRIX LICENSE AGREEMENT<PAGE>

                                                                    EXHIBIT 10.9
                                                                  Execution Copy

                               LICENSE AGREEMENT

                                BY AND BETWEEN

                              CELTRIX NEWCO LTD.

                               A BERMUDA COMPANY

                                      AND

                         CELTRIX PHARMACEUTICALS, INC.

                              A DELAWARE COMPANY
<PAGE>

                               TABLE OF CONTENTS

SECTION                                                                 PAGE
-------                                                                 ----
1.   DEFINITIONS.......................................................   1

2.   GRANT OF RIGHTS...................................................   7

3.   SUBLICENSE AND ASSIGNMENT RIGHTS..................................   8

4.   TRADEMARKS........................................................   9

5.   NON-COMPETITION...................................................  11

6.   FINANCIAL PROVISIONS..............................................  11

7.   CONFIDENTIAL INFORMATION..........................................  13

8.   WARRANTIES/INDEMNITIES............................................  16

9.   INTELLECTUAL PROPERTY OWNERSHIP RIGHTS............................  18

10.  TERM AND TERMINATION OF AGREEMENT.................................  18

11.  IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE......................  20

12.  SETTLEMENT OF DISPUTES; PROPER LAW................................  20

13.  ASSIGNMENT........................................................  21

14.  NOTICES...........................................................  21

15.  MISCELLANEOUS CLAUSES.............................................  22
<PAGE>

LICENSE AGREEMENT dated April 21, 1999 between CELTRIX NEWCO LTD., a Bermuda
limited company, and CELTRIX PHARMACEUTICALS, INC., a Delaware corporation.

                                    WHEREAS

A.   Contemporaneously herewith, Celtrix, Elan, EIS and Newco (capitalized terms
     used herein are defined below) are entering into the Development Agreement
     for the purpose of recording the terms and conditions of a joint venture
     and of regulating their relationship with each other and certain aspects of
     the affairs of and their dealings with Newco.

B.   Celtrix owns all right, title and interest in and to certain patents that
     have been granted or are pending in relation to SomatoKine(R).

C.   Newco desires to obtain from Celtrix, and Celtrix desires to grant to
     Newco, an exclusive license under the Celtrix Intellectual Property to
     develop, use, import, sell, offer for sale and otherwise distribute
     Products in the Field and in the Territory on the terms and subject to the
     conditions set forth herein.

D.   The Parties entered into a letter agreement dated March 31, 1999, pursuant
     to which the Parties agreed to enter into the Definitive Documents.

     NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:

1.   DEFINITIONS.

     1.1.  In this Agreement, the following definitions shall apply:

           "Affiliate" shall mean any corporation or entity other than Newco
controlling, controlled by or under the common control with Elan or Celtrix, as
the case may be. For the purposes of this definition, "control" shall mean
direct or indirect ownership of fifty percent (50%) or more of the outstanding
stock or shares of a corporation entitled to vote for the election of directors
or comparable equity interest in any other type of entity and "controlling" and
"controlled" shall be construed accordingly.

           "Agreement" shall mean this agreement (which expression shall be
deemed to include the Recitals and the Schedules hereto).

           "Business Plan" shall mean the business plan and program of
development to be agreed to by Elan and Celtrix within sixty (60) days of the
Effective Date with respect to the research, development, prosecution and
commercialization of the Products, which Business Plan shall be reviewed and
mutually agreed to in writing by Elan and Celtrix on an annual basis.
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          "Celtrix" shall mean Celtrix Pharmaceuticals, Inc., a Delaware
corporation, its successors and permitted assigns.

          "Celtrix Improvements" shall mean any improvements to the Celtrix
Patent Rights and/or Celtrix Know-How developed (a) [*****] whether or not
pursuant to the Project, (b) [*****] pursuant to the Project, [*****] pursuant
to the Project, except as limited by agreements with third parties. Celtrix
Improvements shall be deemed, immediately upon development, to be included in
the license of the Celtrix Intellectual Property granted to Newco under the
hereunder. The Celtrix License shall specifically exclude any right to use
Celtrix Improvements outside of the Field. If the inclusion of a Celtrix
Improvement in the license of Celtrix Intellectual Property granted to Newco
hereunder is restricted or limited by a third party agreement, then Celtrix
shall use reasonable commercial efforts to exclude or where applicable to
minimize any such restriction or limitation. All rights, title, and interest to
any Celtrix Improvements [*****] Newco, Elan and any such third party shall
execute and deliver documents, and take such other actions as Celtrix may
reasonably request, to effect or evidence such ownership.

          "Celtrix Intellectual Property" shall mean the Celtrix Know-How,
the Celtrix Patent Rights and/or the Celtrix Improvements. Notwithstanding
anything contained in this Agreement to the contrary, Celtrix Intellectual
Property shall exclude (a) inventions, patents and know-how [*****] and (b)
inventions, patents and know-how that are subject to contractual obligations of
Celtrix to Independent Third Parties as of the Effective Date; provided,
however, that if the inclusion of inventions, patent rights and know-how in the
license of Celtrix Intellectual Property granted to Newco hereunder is
restricted or limited by such contractual obligations of Celtrix to Independent
Third Parties, then Celtrix shall use reasonable commercial efforts to exclude
or, where applicable, to minimize any such restriction or limitation.

          "Celtrix Know-How" shall mean any and all rights owned or licensed by
Celtrix with respect to any knowledge, information, discovery, invention, trade
secret, technique, process, system, formulation, design, data and expertise
relating to SomatoKine whether or not covered by any patent, copyright, design,
trademark, trade secret or other industrial or intellectual property right.

          "Celtrix License" shall have the meaning set forth in Clause 2.1
hereof.

          "Celtrix Patent Rights" shall mean the patents and patent applications
(including provisional applications) relating to SomatoKine(R) that are set
forth in Schedule 1 attached hereto, and that are owned or licensed by or on
behalf of Celtrix. Celtrix Patent Rights shall also include all extensions,
continuations, continuations-in-part, divisionals, patents-of-addition, re-
examinations, re-issues, supplementary protection certificates and foreign
counterparts of such patents and patent applications and any patents issuing
thereon and extensions of any patents licensed hereunder.

          "Celtrix Securities Purchase Agreement" shall mean that certain
securities purchase agreement, of even date herewith, by and between Celtrix and
EIS.
                                      -2-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          "Celtrix Trademark(s)" shall mean one or more trademarks, trade
names, or service marks that are owned or licensed by or on behalf of Celtrix
that Celtrix may nominate and approve in writing from time to time for use in
connection with the sale or promotion of the Product by Newco. For the purposes
of this Agreement, the trademark "SomatoKine(R)" is deemed to be a Celtrix
Trademark hereunder.

          "cGCP", "cGLP" and "cGMP" shall mean current Good Clinical Practices,
current Good Laboratory Practices and current Good Manufacturing Practices
respectively.

          "Change of Control Event" shall mean the occurrence of the following:
a Technological Competitor of Elan shall, directly or indirectly, (a) acquire
[*****] or more of the capital stock of Celtrix or Newco, or (b) otherwise
control or influence in any material respect their management or business, or
(c) otherwise merge, consolidate or enter into any similar transaction (or
binding agreement in respect thereof) with either of such entities, or (d)
otherwise have entered into any joint venture, collaboration, license or other
arrangement with Celtrix or Newco to such an extent that such Technological
Competitor of Elan is materially engaged or involved with the business or
development of Celtrix or Newco.

          "Definitive Documents" shall mean this Agreement, the Elan License
Agreement, the Development Agreement, the Celtrix Securities Purchase Agreement,
the Funding Agreement, the Registration Rights Agreements and associated
documentation of even date herewith, by and among Newco, Elan, Celtrix and EIS,
as applicable.

          "Development Agreement" shall mean the Subscription, Joint Development
and Operating Agreement of even date herewith entered into among Celtrix, Elan,
EIS and Newco.

          "Effective Date" shall mean the date upon which the Definitive
Documents are executed and delivered by Celtrix, Elan, and Newco and the
transactions effected thereby are closed.

          "EIS" shall mean Elan International Services, Ltd., a Bermuda company.

          "Elan" shall mean Elan Pharmaceutical Technologies, a division of Elan
Corporation, plc, a public limited company incorporated under the laws of
Ireland, its successors and permitted assigns.

          "Elan Improvements" shall mean any improvements to the Elan Patent
Rights and Elan Know-How developed (a) [*****] whether or not pursuant to the
Project, (b) [*****] pursuant to the Project, and/or (c) [*****] pursuant to the
Project, except as limited by agreements with third parties. Elan Improvements
shall be deemed, immediately upon development, to be included in the license of
the Elan Intellectual Property granted to Newco under the Elan License
Agreement. The Elan License specifically excludes

                                      -3-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

any right to use Elan Improvements outside of the Field. If the inclusion of an
Elan Improvement in the license of Elan Intellectual Property granted to Newco
under the Elan License Agreement is restricted or limited by a third party
agreement, then Elan shall use reasonable commercial efforts to exclude or where
applicable to minimize any such restriction or limitation. All rights, title,
and interest to any Elan Improvements [*****] Newco, Celtrix and any such third
party shall execute and deliver documents, and take such other actions as Elan
may reasonably request, to effect or evidence such ownership.

          "Elan Intellectual Property" shall mean the Elan Know-How, the Elan
Patent Rights and/or the Elan Improvements. Notwithstanding anything contained
in this Agreement to the contrary, Elan Intellectual Property shall consist of
Elan Know-How, Elan Patent Rights and/or Elan Improvements controlled by Elan
Corporation plc doing business as Elan Pharmaceutical Technologies, and shall
exclude (a) inventions, patents and know-how [*****] and [*****] including,
without limitation, [*****] and (b) inventions, patents and know-how that are
subject to contractual obligations of Elan to third parties as of the Effective
Date; provided, however, that if the inclusion of inventions, patent rights and
know-how in the license of Elan Intellectual Property granted to Newco under the
Elan License Agreement is restricted or limited by such contractual obligations
of Elan to third parties, then Elan shall use reasonable commercial efforts to
exclude or, where applicable, to minimize any such restriction or limitation.

          "Elan Know-How" shall mean any and all rights owned or licensed by
Elan with respect to any knowledge, information, discovery, invention, trade
secret, technique, process, system, formulation, design, data and expertise
relating to the MEDIPAD(R) Drug Delivery System whether or not covered by any
patent, copyright, design, trademark, trade secret or other industrial or
intellectual property right.

          "Elan License" shall have the meaning set forth in Clause 2.1 of the
Elan License Agreement.

          "Elan License Agreement" shall mean that certain license agreement, of
even date herewith, entered into between Elan and Newco.

          "Elan Patent Rights" shall mean the patents and patent applications
(including provisional applications) relating to the MEDIPAD(R) Drug Delivery
System that are set forth in Schedule 1 of the Elan License Agreement, and that
are owned or licensed by or on behalf of Elan. Elan Patent Rights shall also
include all extensions, continuations, continuations-in-part, divisionals,
patents-of-addition, re-examinations, re-issues, supplementary protection
certificates and foreign counterparts of such patents and patent applications
and any patents issuing thereon and extensions of any patents licensed under the
Elan License Agreement.

          "Elan Trademark(s)" shall have the meaning given to such term in the
Elan License Agreement.

                                      -4-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          "Exchange Right" shall have the meaning set forth in the Amended and
Restated Certificate of Incorporation of Celtrix in effect on the date hereof.

          "Exchange Right Term" shall mean the period commencing on the
Effective Date and ending on the exercise by Elan of the Exchange Right.

          "FDA" shall mean the United States Food and Drug Administration or any
successors or agency the approval of which is necessary to commercially market a
product in the United States of America.

          "Field" shall mean [*****]

          "First Commercial Sale" shall mean the first commercial sale for use
or consumption of a Product. A sale to an Affiliate or sublicensee shall not
constitute a "First Commercial Sale," unless the Affiliate or sublicensee is the
end user of the Product.

          "Funding Agreement" shall mean the Funding Agreement, dated as of the
date hereof, between EIS and Celtrix.

          "Independent Third Party" shall mean any person other than Newco,
Elan, Celtrix or any of their respective Affiliates.

          "In Market" shall mean [*****] or where applicable by a sublicensee or
a distributor, [*****] such as [*****]

          "Licensed Technologies" shall mean the Elan Intellectual Property and
the Celtrix Intellectual Property.

          "Licenses" shall mean the Elan License and the Celtrix License.

          "Lien" shall mean any and all liens, security interests, restrictions,
claims, encumbrances or rights of third parties of every kind and nature.

          "Management Committee" shall have the meaning set forth in the
Development Agreement.

          "Marketing Authorization" shall mean the procurement of registrations
and permits required by applicable government authorities in a country in the
Territory for the marketing, sale, and distribution of a Product in such
country.

          "MEDIPAD(R) Drug Delivery System" shall mean the [*****]

                                      -5-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

as disclosed in the Elan Patent Rights set forth in Schedule 1 of the Elan
License Agreement.

          "Net Sales" shall mean [*****]

          "Newco" shall mean Celtrix Newco Ltd., a Bermuda limited company.

          "Newco Intellectual Property" shall mean all rights to technology,
patents and know-how belonging to Newco, other than the Elan Intellectual
Property and the Celtrix Intellectual Property, including any technology
acquired by or licensed to Newco from or by a third party and any newly
developed technology that is not Elan Intellectual Property or Celtrix
Intellectual Property.

          "Osteoporosis" shall mean a skeletal condition characterized by
decreased density of normally mineralized bone, which bone density, as measured
by dual-energy x-ray absorptiometry (DXA), is more than 2.5 standard deviations
below the mean for the young adult reference range.

          "Parties" shall mean Celtrix and Newco.

          "Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.

          "Project" shall mean all activity as undertaken by Elan, Celtrix and
Newco in order to develop the Products in accordance with the Business Plan.

          "Products" shall mean the MEDIPAD(R) Drug Delivery System
incorporating SomatoKine(R) as its primary active ingredient.

          "Registration Rights Agreements" shall mean the Registration Rights
Agreements of even date herewith relating to Newco and Celtrix respectively.

                                      -6-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          "Regulatory Authority" shall mean any regulatory authority outside the
United States of America, the approval of which is necessary to market a
Product.

          "SomatoKine(R)" shall mean [*****]

          "Technological Competitor of Celtrix" shall mean [*****]

          "Technological Competitor of Elan" shall mean [*****]

          "Term" shall have the meaning set forth in Section 10 hereof.

          "Territory" shall mean [*****]; and

          "United States Dollar" and "US$" shall mean the lawful currency for
the time being of the United States of America.

     1.2. Interpretation. In this Agreement the following shall apply:

          1.2.1   The singular includes the plural and vice versa, the masculine
includes the feminine and vice versa.

          1.2.2.  Any reference to a Clause or Schedule shall, unless otherwise
specifically provided, be to a Clause or Schedule of this Agreement.

          1.2.3.  The headings of this Agreement are for ease of reference only
and shall not affect its construction or interpretation.

2.   GRANT OF RIGHTS.

     2.1. Celtrix hereby grants to Newco an exclusive license for the Term in
the Territory under the Celtrix Intellectual Property to develop, import, use,
offer for sale, sell and otherwise distribute Products, and [*****] practice any
process or method covered by the Celtrix Patent Rights, in the Field, subject to
any contractual obligations of Celtrix to third parties as of the Effective Date
and, unless prohibited by Clause 5 hereof ("Non-Competition"), contractual
obligations that Celtrix may enter into after the Effective Date (the "Celtrix
License"). Except as expressly provided herein, [*****] with respect to the
[*****] shall at all times remain solely with [*****]

                                      -7-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

     2.2.    To the extent royalty or other compensation obligations to third
parties that are payable with respect to Celtrix Intellectual Property would be
triggered by a proposed use of such Celtrix Intellectual Property in connection
with the Project, Celtrix will inform Newco and Elan of such royalty or
compensation obligation promptly upon Celtrix becoming aware that such proposed
use may trigger such royalty or compensation obligation. [*****]

     2.3.    If [*****]. If the Elan representatives on the Management Committee
determine that Newco should not [*****] shall be free to fully exploit [*****]
with respect thereto.

     2.4.    Elan shall be a third party beneficiary to this Agreement and shall
have the right to cause Newco to enforce Newco's rights against Celtrix
hereunder.

     2.5.    Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in Section 5.1 hereof, Celtrix shall
have the right, outside of the Field, to fully exploit and grant licenses and
sublicenses with respect to the Celtrix Intellectual Property.

3.   SUBLICENSE AND ASSIGNMENT RIGHTS

     3.1.    Newco shall not assign any of its rights under the Celtrix
License and/or the Newco Intellectual Property without the prior written consent
of Celtrix.

     3.2.    Newco shall not sublicense any of its rights under the Celtrix
License and/or the Newco Intellectual Property without the prior written consent
of Celtrix, which consent shall not be unreasonably withheld or delayed;
provided, however, that the consent of Celtrix may be withheld in Celtrix's sole
discretion in the case of a proposed sublicense of such rights to a
Technological Competitor of Celtrix.

     3.3.    Newco shall not enter into any agreement with any third party
for development or exploitation of the Celtrix Intellectual Property without the
prior written consent of Celtrix, which consent may be withheld in Celtrix's
sole discretion. Any agreement between Newco and any permitted third party for
the development or exploitation of the Celtrix Intellectual Property shall
require: (i) such third party to maintain the confidentiality of all information
concerning the Celtrix Intellectual Property provided that such obligation of
confidentiality shall be no less stringent than that set forth in Clause 7
herein, (ii) shall provide that all right, title and interest in and to any
Celtrix Improvements shall be owned by Celtrix, and (iii) shall

                                      -8-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

permit an assignment of rights by Newco to Celtrix in accordance with the terms
of Clause 3.1 hereof.

     3.4.    Newco shall not enter into any agreement with any third party for
development of the Newco Intellectual Property without the prior approval of the
Management Committee.

     3.5.    Notwithstanding anything to the contrary herein, upon thirty (30)
days prior notice in writing from Elan to Newco and Celtrix, Newco shall assign
the Newco Intellectual Property, including, without limitation, all rights and
obligations related thereto, from Newco to a wholly-owned subsidiary of Newco to
be incorporated in Ireland, which company shall be newly incorporated by Elan
and Celtrix to facilitate such assignment.

     3.6.    Newco shall remain responsible for all acts and omissions of any
sublicensee, including Elan, as if such acts and omissions were those of Newco.

     3.7.    Rights of permitted third party sublicensees in and to the Celtrix
Intellectual Property granted by Newco in accordance with Clause 3.2 above shall
survive the termination of the Celtrix License granting said intellectual
property rights to Newco; and Newco and Celtrix shall in good faith agree upon
the form most advantageous to Celtrix in which the rights of the sublicensor
under any such sublicenses are to be held (which form may include continuation
of Newco solely as the holder of such licenses or assignment of such rights to a
third party or parties, including an assignment to Celtrix). Upon any such
assignment, Elan and Celtrix shall enter into good faith negotiations with
respect to additional reasonable confidentiality protections which Elan or
Celtrix shall reasonably require.

4.   TRADEMARKS

     4.1.    Celtrix hereby grants to Newco for the Term a [*****] in the
Territory to use the Celtrix Trademarks solely to research, develop, import,
use, offer for sale and sell the Products in the Field in the Territory, in
accordance with the terms and conditions of this Agreement including, without
limitation, the following:

             4.1.1   Newco shall ensure that each reference to and use of a
Celtrix Trademark by Newco is in a manner approved by Celtrix and accompanied by
an acknowledgement, in a form approved by Celtrix, that the same is a trademark
of Celtrix.

             4.1.2   From time to time, upon the reasonable request of Celtrix,
Newco shall submit samples of the Product to Celtrix or its duly appointed agent
to ensure compliance with quality standards and specifications. Celtrix, or its
duly appointed agent, shall have the right to inspect the premises of Newco
where the Product is held or stored, and Newco shall permit such inspection,
upon advance notice at any reasonable time, of the methods and procedures used
in the storage and sale of the Product. Newco shall not sell or otherwise
dispose of any Product under the Celtrix Trademarks that fails to comply with
the quality standards and specifications referred to in this Clause 4, as
determined by Celtrix.

                                      -9-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

          4.1.3   Newco shall not use any Celtrix Trademark in any way that
might materially prejudice its distinctiveness or validity or the goodwill of
Celtrix therein.

          4.1.4   The Parties recognize that the Celtrix Trademarks have
considerable goodwill associated therewith. Newco shall not use in relation to
the Products any trademarks other than the Celtrix Trademarks (except for the
Elan Trademarks) without obtaining the prior consent in writing of Celtrix with
respect to such use and display, which consent may not be unreasonably withheld
or delayed. However, such use and display that has been so approved by Celtrix
must not conflict with the use and display of any Celtrix Trademark.

          4.1.5   Newco shall not use in the Territory any trademarks or trade
names so resembling any Celtrix Trademark as to be likely to cause confusion,
dilution or deception.

          4.1.6   Newco shall promptly notify Celtrix in writing of any alleged
infringement or unauthorized use of which it becomes aware by a third party of
the Celtrix Trademarks and provide Celtrix with any applicable evidence of
infringement or unauthorized use.

          4.1.7   Newco shall favorably consider promoting and using the Celtrix
Trademarks in each country of the Territory and provide proof of such use upon
request by Celtrix.

     4.2. Newco shall not be permitted to assign or sublicense any of its rights
under the Celtrix Trademarks without the prior written consent of Celtrix, which
consent shall not be unreasonably withheld or delayed.

     4.3. Celtrix shall, [*****] file and prosecute applications to register and
maintain registrations of the Celtrix Trademarks in the Territory. Newco shall
reasonably co-operate with Celtrix in such efforts.

     4.4. Celtrix will be entitled to conduct all enforcement proceedings
relating to the Celtrix Trademarks and shall at its sole discretion decide what
action, if any, to take in respect to any enforcement proceedings related to the
Celtrix Trademarks or any other claim or counter-claim brought in respect to the
use or registration of the Celtrix Trademarks. Any such proceedings shall be
conducted [*****] and for its own benefit. Newco and Celtrix shall reasonably
cooperate with Celtrix in such efforts, [*****].

     4.5. Newco shall promptly notify Celtrix in writing in the event that Newco
becomes aware that any Celtrix Trademark has been challenged by a third party in
a judicial or administrative proceeding in a country in the Territory as
infringing on the rights of a third party and Celtrix shall have the first right
to decide whether or not to defend against such allegations, or to adopt an
alternative mark. If Celtrix decides not to defend the Celtrix Trademark, then
Newco may request Celtrix to defend the Celtrix Trademark, [*****]

                                     -10-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

provided, however, that if Celtrix believes that such requested defense is
unsubstantiated and without merit, then Celtrix may elect not to initiate
defense proceedings.

     4.6.  Newco will have no ownership rights in or to the Celtrix
Trademarks or of the goodwill associated therewith, and Newco hereby
acknowledges that, except as expressly provided in this Agreement, it shall not
acquire any rights in respect thereof and that all such rights and goodwill are,
and will remain, vested in Celtrix.

     4.7.  Nothing in this Agreement shall be construed as a warranty on
the part of Celtrix regarding the Celtrix Trademarks, including without
limitation, that use of the Celtrix Trademarks in the Territory will not
infringe the rights of any third parties. Accordingly, Newco acknowledges and
agrees that Celtrix makes no warranty regarding the Celtrix Trademarks.

     4.8.  Celtrix assumes no liability to Newco or to any third parties
with respect to the quality, performance or characteristics of any of the goods
manufactured or sold by Newco under the Celtrix Trademarks pursuant to this
Agreement.

5.   NON-COMPETITION

     5.1.  [*****]

6.   FINANCIAL PROVISIONS.

     6.1.  In consideration of the license to the Celtrix Patent Rights,
Newco shall pay to Celtrix the following amounts:

           (i)    [*****]

                  Notwithstanding anything contained herein to the contrary,
payments to Newco by Independent Third Parties with respect to development work
performed on

                                     -11-
<PAGE>

behalf of Newco by Elan or Celtrix, as the case may be, shall be paid to the
party that performed such development work.

     6.2.  Payment of royalties pursuant to Clause 6.1(i), if any, shall be
made quarterly within thirty (30) days after the end of the calendar quarter in
which payments from Net Sales are received by Newco. The method of payment shall
be by wire transfer to an account specified by Celtrix and shall be
nonrefundable to Newco. Each payment made to Celtrix shall be accompanied by a
written report showing a true accounting of all Products sold by Newco, its
Affiliates and its sublicensees, if any, during such quarter. Such accounting
shall include, on a country-by-country and Product-by-Product basis, Net Sales
(and the calculation thereof) and each calculation of royalties with respect
thereto, including the calculation of all adjustments and currency conversions.

     6.3.  Newco shall maintain and keep clear, detailed, complete, accurate and
separate records for a period of three (3) years after a calendar quarter in
sufficient detail to permit Celtrix to confirm the accuracy of any royalties on
Net Sales due hereunder, including, without limitation, any deductions made in
determining Net Sales.

     6.4.  All payments due hereunder shall be made in United States Dollars.
Payments due on Net Sales of any Product for each calendar quarter made in a
currency other than United States Dollars shall first be calculated in the
foreign currency for the country of origin of such payment and then converted to
United States Dollars on the basis of the average exchange rate in effect for
such quarter for the purchase of United States Dollars with such foreign
currency quoted in The Wall Street Journal (or comparable publication if not
quoted in The Wall Street Journal) with respect to the currency of the country
of origin of such payment, determined by averaging the rates so quoted on each
business day of such quarter.

     6.5.  If, at any time, legal restrictions in the Territory prevent the
prompt payment when due of royalties or any portion thereof to Celtrix, the
Parties shall meet to discuss suitable and reasonable alternative methods of
reimbursing Celtrix the amount of such royalties. In the event that Newco is
prevented from making any payment under this Agreement to Celtrix by virtue of
the statutes, laws, codes or government regulations of the country from which
the payment is to be made, then such payments may be paid by depositing them in
the currency in which they accrue to Celtrix's account in a bank acceptable to
Celtrix in the country the currency of which is involved or as otherwise agreed
by the Parties.

     6.6.  Celtrix and Newco agree to cooperate in all respects necessary to
take advantage of any double taxation agreements or similar agreements as may,
from time to time, be available.

     6.7.  Any taxes payable by Celtrix on any payment made to Celtrix pursuant
to this Agreement shall be paid by Celtrix for its own account. If so required
by applicable law, any payment made pursuant to this Agreement shall be made by
Newco after deduction of the appropriate withholding tax, in which event the
Parties shall cooperate to obtain the

                                     -12-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

appropriate tax clearance as soon as is practicable. On receipt of such
clearance and a refund of any such amount, Newco shall ensure that the amount so
withheld is promptly paid to Celtrix.

     6.8.    Newco shall, [*****], permit Celtrix or its duly authorized
representatives upon reasonable notice and at any reasonable time during normal
business hours to inspect and audit the accounts and records of Newco and any
other book, record, voucher, receipt or invoice relating to the calculation of
the royalty payments on Net Sales or any other payments made by Newco to Celtrix
hereunder. Any such inspection of Newco's records shall be at the expense of
Celtrix, except that if any such inspection reveals a deficiency in the amount
of the royalty actually paid to Celtrix hereunder in any calendar quarter of
[*****] or more of the amount of any royalty actually due to Celtrix hereunder,
then the expense of such inspection shall be borne solely by Newco. Any amount
of deficiency shall be paid promptly to Celtrix by Newco. If such inspection
reveals a surplus in the amount of royalties actually paid to Celtrix by Newco,
Celtrix shall reimburse Newco the surplus within fifteen (15) days after
determination.

     6.9.    In the event of any unresolved dispute regarding any alleged
deficiency or overpayment of royalty payments hereunder, the matter will be
referred to mutually agreeable independent firm of accountants for a resolution
of such dispute. Any decision by the said independent firm of accountants shall
be binding on the Parties.

     6.10.   The parties acknowledge and agree that the methods for calculating
the royalties and fees hereunder are for the purposes of the convenience of the
parties, are freely chosen and not coerced.

7.   CONFIDENTIAL INFORMATION.

     7.1.    The Parties acknowledge that it may be necessary, from time to
time, to disclose to each other confidential and/or proprietary information,
including, without limitation, inventions, works of authorship, trade secrets,
specifications, designs, data, know-how and other information relating to the
Field, the Products, the Celtrix Intellectual Property, the Newco Intellectual
Property or this Agreement, as the case may be, whether in oral, written,
graphic or electronic form (collectively, "Confidential Information"). Any
Confidential Information revealed by either Party to the other Party shall be
maintained confidential in accordance with this Clause 7 and shall be used by
the receiving Party exclusively for the purposes of fulfilling the receiving
Party's obligations under this Agreement and the Development Agreement and for
no other purpose.

     7.2.    Each Party agrees to disclose Confidential Information of the other
Party only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the fulfilling of
the Party's obligations under this Agreement, so long as such persons are
parties to appropriate written agreements that contain an obligation of
confidentiality no less stringent than as set forth herein. Each Party further

                                     -13-
<PAGE>

agrees to inform all such employees, representatives and agents of the terms and
provisions of this Agreement and their duties hereunder and to obtain their
consent hereto as a condition of receiving Confidential Information. Each Party
agrees that it will exercise the same degree of care, but in no event less than
a reasonable degree of care to preserve the proprietary and confidential nature
of the Confidential Information disclosed by the other Party, as the receiving
Party would exercise to preserve its own Confidential Information. Each Party
agrees that it will, upon request of the other Party, return all documents and
any copies thereof containing Confidential Information belonging to or disclosed
by such Party. Each Party shall promptly notify the other Party upon discovery
of any unauthorized use or disclosure of the other Party's Confidential
Information.

     7.3.   Notwithstanding the foregoing, each Party may use or disclose
Confidential Information disclosed to it by the other Party to the extent such
use or disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with patent
applications, complying with applicable governmental regulations or otherwise
submitting information to tax or other governmental authorities, conducting
clinical trials, or granting a permitted sublicense or otherwise exercising its
rights hereunder, provided that if a Party is required to make any such
disclosure of the other Party's Confidential Information, other than pursuant to
a confidentiality agreement, such Party shall inform the recipient of the terms
and provisions of this Agreement and such recipient's duties hereunder and
obtain such recipient's written consent hereto as a condition to receiving such
Confidential Information.

     7.4.   Any breach of this Clause 7 by any employee, representative or
agent of a Party is considered a breach by the Party itself.

     7.5.   Confidential Information shall not include:

            (i)   information that becomes publicly available, except through a
                  breach of this Agreement by the receiving Party;

            (ii)  information which is made public by the disclosing Party or
                  with such Party's prior written consent;

            (iii) information which is independently developed by the receiving
                  Party as evidenced by such Party's records, without the aid,
                  application, use of or reference to the disclosing Party's
                  Confidential Information;

            (iv)  information that is published or otherwise becomes part of the
                  public domain without any disclosure by the receiving Party,
                  or on the part of the receiving Party's directors, officers,
                  agents, representatives or employees;

            (v)   information that becomes available to the receiving Party on a
                  non-confidential basis, whether directly or indirectly, from a
                  source other

                                     -14-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

               than the disclosing Party, which source did not acquire this
               information on a confidential basis; or

       (vi)    information which the receiving Party is required to disclose
               pursuant to:

               (A)    a valid order of a court or other governmental body or any
                      political subdivision thereof having competent
                      jurisdiction or otherwise as required by law, rule or
                      regulation; or

               (B)    any other requirement of law or the rules of any
                      applicable securities exchange;

       (vii)   information which was already in the possession of the receiving
               Party at the time of receiving such information, as evidenced by
               its records, provided such information was not previously
               provided to the receiving party from a source which was under an
               obligation to keep such information confidential; or

       (viii)  information that is the subject of a written permission to
               disclose, without restriction or limitation, by the disclosing
               Party;

  7.6. If the receiving Party becomes legally required to disclose any
Confidential Information, the receiving Party shall give the disclosing Party
prompt notice of such fact so that the disclosing Party may obtain a protective
order or confidential treatment or other appropriate remedy concerning any such
disclosure. The receiving Party shall fully cooperate with the disclosing Party
in connection with the disclosing Party's efforts to obtain any such order or
other remedy. If any such order or other remedy does not fully preclude
disclosure, the receiving Party shall make such disclosure only to the extent
that such disclosure is legally required.

  7.7. The provisions relating to confidentiality in this Clause 7 shall remain
in effect during the Term, and for a period of [*****] following the expiration
or earlier termination of this Agreement.

  7.8.  The Parties agree that the obligations of this Clause 7 are necessary
and reasonable in order to protect the Parties' respective businesses, and each
Party expressly agrees that monetary damages would be inadequate to compensate a
Party for any breach by the other Party of its covenants and agreements set
forth in this Clause 7. Accordingly, the Parties agree and acknowledge that any
such violation or threatened violation will cause irreparable injury to a Party
and that, in addition to any other remedies that may be available, in law or in
equity or otherwise, any Party shall be entitled to obtain injunctive relief
against the threatened breach of the provisions of this Clause 7, or a
continuation of any such breach by the other Party, specific performance and
other equitable relief to redress such breach together with its damages and
reasonable counsel fees and expenses to enforce its rights

                                     -15-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

hereunder, without the necessity of proving actual or express damages.

8.   WARRANTIES/INDEMNITIES

     8.1.    Celtrix represents and warrants to Elan and Newco that, as of
the Effective Date, except for the European Opposition Proceedings between
Genentech Inc. and Celtrix relating to their IGFBP-3 patents (EP 0 451 194 and
EP 0 406 272):

             8.1.1   to Celtrix's best knowledge, Celtrix has the right to grant
                     the Celtrix License and any other rights granted herein;

             8.1.2   Schedule 1 contains the Celtrix Patent Rights existing as
                     of the Effective Date;

             8.1.3   to Celtrix's best knowledge, [*****]

             8.1.4   Celtrix is the owner or exclusive licensee of all rights,
                     title and interest in the Celtrix Intellectual Property
                     free and clear of all Liens, and Celtrix has the right to
                     use the Celtrix Intellectual Property, in the Territory;

             8.1.5   to Celtrix's best knowledge, there is no infringement by
                     third parties of any Celtrix Intellectual Property;

             8.1.6   there is not pending, or to Celtrix's best knowledge,
                     threatened action, suit, proceeding or claim by others
                     challenging Celtrix' rights in or to such Celtrix
                     Intellectual Property, or the validity or scope of such
                     Celtrix Intellectual Property;

             8.1.7   there is not pending, or to Celtrix's best knowledge,
                     threatened action, suit, proceeding or claim by others that
                     Celtrix Intellectual Property, infringe or otherwise
                     violate any patent, or intellectual property rights of
                     others; and

             8.1.8   to Celtrix's best knowledge, there is no patent or patent
                     application of others which contains claims that dominate
                     Celtrix Intellectual Property.

     8.2.    During the Term, Celtrix shall not grant, or suffer to exist, a
Lien in or to the Celtrix Intellectual Property that would have a material
adverse effect, individually or in the aggregate, on the financial condition,
results of operation, business, and/or assets (including the Licensed
Technologies and/or the Newco Intellectual Property) of Newco.

                                     -16-
<PAGE>

     8.3.    Newco represents and warrants to Celtrix that the execution of this
Agreement by Newco and the full performance and enjoyment of the rights of Newco
under this Agreement will not breach the terms and conditions of any license,
contract, understanding or agreement, whether express, implied, written or oral
between Newco and any third party.

     8.4.    Newco represents and warrants to Celtrix that the Products shall be
developed, transported, stored, handled, packaged, marketed, promoted,
distributed, offered for sale and sold in accordance with all regulations and
requirements of the FDA and Regulatory Authorities including, without
limitation, cGCP, cGLP, cGMP regulations. The Products shall not be adulterated
or misbranded as defined by the United States Federal Food, Drug and Cosmetic
Act (or applicable foreign law) and shall not violate any section of such Act if
introduced in interstate commerce.

     8.5.    In addition to any other indemnifications provided for herein,
Celtrix shall indemnify and hold harmless Newco and its Affiliates and their
respective employees, agents, partners, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable attorney's fees
and expenses) incurred or sustained by Newco arising out of any (a) breach of
any representation, covenant, warranty or obligation by Celtrix hereunder, or
(b) any act or omission on the part of Celtrix or any of its agents or employees
in the performance of this Agreement.

     8.6.    In addition to any other indemnifications provided for herein,
Newco shall indemnify and hold harmless Celtrix and its Affiliates and their
respective employees, agents, partners, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable attorney's fees
and expenses) incurred or sustained by Celtrix arising out of or in connection
with any (a) breach of any representation, covenant, warranty or obligation by
Newco hereunder, or (b) any act or omission on the part of Newco or any of its
agents or employees in the performance of this Agreement.

     8.7.    The Party seeking an indemnity shall:

             8.7.1   fully notify the other Party of any claim or proceeding, or
threatened claim or proceeding within thirty (30) days of becoming aware of such
claim or threatened claim;

             8.7.2   permit the indemnifying Party to take sole control of the
defense and/or settlement of such claim or proceeding;

             8.7.3   cooperate in the investigation, defense and/or settlement
of such claim or proceeding;

             8.7.4   not compromise or otherwise settle any such claim or
proceeding without the prior written consent of the other Party, which consent
shall not be unreasonably withheld, conditioned or delayed; and

                                     -17-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

           8.7.5   take all reasonable steps to mitigate any loss or liability
in respect of any such claim or proceeding.

     8.8.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO
EVENT SHALL CELTRIX OR NEWCO BE LIABLE TO THE OTHER BY REASON OF ANY
REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW,
OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, INCIDENTAL,
SPECIAL, PUNITIVE OR INDIRECT LOSS OR DAMAGE (WHETHER FOR LOSS OF PROFIT OR
OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES,
THEIR EMPLOYEES OR AGENTS OR OTHERWISE.

     8.9.  [*****] CELTRIX IS GRANTING THE LICENSES HEREUNDER ON AN "AS IS"
BASIS WITHOUT RECOURSE, REPRESENTATION OR WARRANTY WHETHER EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY
DISCLAIMED.

9.   INTELLECTUAL PROPERTY OWNERSHIP RIGHTS

     9.1.  Subject to the terms and conditions of this Agreement, [*****] shall
own all legal and equitable right, title and interest in and to the [*****]

     9.2.  Subject to the terms and conditions of this Agreement, [*****] shall
own all legal and equitable right, title and interest in and to the [*****].

     9.3.  Newco hereby grants to Celtrix a [*****] license, with the right to
sublicense, to the [*****] the Field on an as-is basis to make, use, offer for
sale and sell [*****]

     9.4.  Newco represents and warrants that it has the sole, exclusive and
unencumbered right to grant the licenses and rights herein granted to Celtrix
and that it has not granted any option, license, right or interest in or to the
Celtrix Intellectual Property, the Newco Intellectual Property, or other
property to any third party which would conflict with the rights granted by this
Agreement and the Definitive Documents.

10.  TERM AND TERMINATION OF AGREEMENT.

     10.1. The term of this Agreement (the "Term") shall commence as of the
Effective Date and expire on a Product-by-Product basis and on a country-by-
country basis on the last to occur of:

                                     -18-
<PAGE>

       10.1.1  fifteen (15) years from the date of the First Commercial
Sale of a Product in a particular country in the Territory; or

       10.1.2  the last to expire of the patents covering the Product
in such particular country in the Territory or a method of making or using the
Product included in the Celtrix Patent Rights and/or patents resulting from the
Newco Intellectual Property in such particular country in the Territory.

   10.2.   If either party breaches any material provision of this
Agreement and if such breach not cured within sixty (60) days after the
non-breaching party gives written notice of the breach to the breaching party,
the non-breaching party may terminate this Agreement immediately by giving
notice of the termination, effective on the date of the notice, provided,
however, that if any such breach is not capable of being cured within such sixty
(60) day period, so long as the breaching party commences to cure the breach
promptly after receiving notice of the breach from the non-breaching party and
thereafter diligently prosecutes the cure to completion as soon as is
practicable, the non-breaching Party may not terminate this Agreement unless the
breaching party, notwithstanding such efforts, is unable to cure the breach
within ninety (90) days after the other party gives notice of the default, in
which case the non-breaching party may terminate this Agreement immediately by
giving notice of the termination, effective on the date of the notice.

   10.3.   Either Party may terminate this Agreement prior to the
expiration of the Term in the event that (a) an application or petition for
bankruptcy, corporate re-organization, composition, administration, examination,
arrangement or any other procedure similar to any of the foregoing under the law
of any applicable jurisdiction, including, without limitation, the United States
of America or Bermuda (other than as part of a bona fide restructuring or
reorganization), is filed by or against the other Party and is not discharged
within forty-five (45) days, or (b) if the other Party applies for or consents
to the appointment of a liquidator, receiver, administrator, examiner, trustee
or similar officer over such Party or over all or a material part of its assets,
rights or revenues, or (c) the assets and/or the business of the other Party are
for any reason seized, confiscated or condemned.

   10.4.   Upon exercise of those rights of termination as specified in
Clause 10.1 to Clause 10.3 inclusive or elsewhere within this Agreement, or the
wind-up of Newco's business, this Agreement shall, subject to the other
provisions of this Agreement that survive termination as set forth in this
Agreement, automatically terminate forthwith and be of no further legal force or
effect.

   10.5.   Upon expiration or termination of the Agreement:

       10.5.1  any sums that were due from Newco to Celtrix with
respect to the license granted hereunder, including without limitation royalties
on Net Sales, in the Territory or in such particular country or countries in the
Territory (as the case may be) prior to the expiration or termination of this
Agreement as set forth herein shall be paid in full within

                                     -19-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

sixty (60) days after the expiration or termination of this Agreement for the
Territory or for such particular country or countries in the Territory (as the
case may be);

       10.5.2  Clauses [*****] shall survive termination or expiration
of this Agreement and shall remain in full force and effect;

       10.5.3  all representations, warranties and indemnities shall
insofar as are appropriate remain in full force and effect;

       10.5.4  expiration or termination of this Agreement for any
reason shall not release any Party hereto from any liability which, at the time
of such termination, has already accrued to the other Party or which is
attributable to a period prior to such termination nor preclude either Party
from pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement;

       10.5.5  except as provided in Clause 3.7, the Celtrix Intellectual
Property and all rights and licenses granted in and pursuant to this Agreement
shall cease for the Territory or for such particular country or countries in the
Territory (as the case may be) and shall immediately revert to Celtrix.
Following such expiration or termination, Newco may not thereafter use in the
Territory or in such particular country or countries in the Territory (as the
case may be) (a) any valid and unexpired Celtrix Patent Rights, (b) any Celtrix
Intellectual Property and/or (c) any Celtrix Trademarks;

       10.5.6  all rights to Newco Intellectual Property shall be
transferred to and jointly owned by Elan and Celtrix and may be utilized by one
party with the consent of the other pursuant to a written agreement to be
negotiated in good faith.

11.     IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE.

   11.1.   Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results from
causes beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, or intervention of a government authority,
non-availability of raw materials, provided that any such delay or failure shall
be remedied by such Party as soon as practicable.

12.     SETTLEMENT OF DISPUTES; PROPER LAW.

   12.1.   The Parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation between
executives of the Parties. In the event that such negotiations do not result in
a mutually acceptable resolution, the Parties agree to consider other dispute
resolution mechanisms including mediation. In the event that

                                     -20-
<PAGE>

the Parties fail to agree on a mutually acceptable dispute resolution mechanism,
any such dispute shall be finally settled by the courts of competent
jurisdiction.

   12.2.   This Agreement is construed under and governed by the laws of
the State of New York without giving effect to any choice conflict of law
provision or rule. For the purpose of this Agreement the Parties submit to the
personal jurisdiction of the United States District Court for the State of New
York. The Parties each further irrevocably consent to the service of any
complaint, summons, notice or other process by delivery thereof to it by any
manner in which notices may be given pursuant to this Agreement.

13.     ASSIGNMENT.

   13.1.   This Agreement may not be assigned by either Party without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed; subject to the following (a) that
either Party may, without such consent, assign this Agreement to its respective
Affiliates, provided that such assignment does not have any material adverse tax
consequence on the other Party; and (b) that either Party may, without such
consent, assign its rights and obligations hereunder in connection with a sale
of all or substantially all its assets to an Independent Third Party or merger,
combination or reorganization of either Party such that the stockholders of such
Party hold less than fifty percent (50%) of the capital stock of the successor
following completion of such transaction, unless such action shall constitute a
Change of Control Event. Celtrix and Newco will discuss any assignment by either
Party to an Affiliate prior to its implementation in order to avoid or reduce
any additional tax liability to the other Party resulting solely from different
tax law provisions applying after such assignment to an Affiliate. For the
purpose hereof, an additional tax liability shall be deemed to have occurred if
either Party would be subject to a higher net tax on payments made hereunder
after taking into account any applicable tax treaty and available tax credits
than such Party was subject to before the proposed assignment. Notwithstanding
any assignment hereof, each Party will remain fully liable hereunder.

14.     NOTICES.

   14.1.   Any notice to be given under this Agreement shall be sent in
writing in English by registered airmail or telefaxed to the following
addresses:

       If to Newco at:  Newco
                        102 St. James Court
                        Flatts, Smiths FL04
                        Bermuda
                        Attention:  Secretary
                        Telephone:  441-292-9169
                        Telefax:    441-292-2224

       with a copy to:  Elan Corporation plc
                        Lincoln House, Lincoln Place, Dublin 2, Ireland

                                     -21-
<PAGE>

                Attention: Vice President, General Counsel,
                Elan Pharmaceutical Technologies,
                a division of Elan Corporation, plc
                Telephone:  + 353 1 709 4000
                Telefax:    + 353 1 662 4960

       If to Celtrix at: Celtrix Pharmaceuticals, Inc.
                         2033 Gateway Place, Suite 600
                         San Jose, CA 95110
                         Attention: Andreas Sommer, Ph.D.
                         Telephone: (408) 573-6263
                         Telefax: (408) 573-6228

       with a copy to:   Venture Law Group
                         2800 Sand Hill Road
                         Menlo Park, CA 94025
                         Attention: Ned Ruffin, Esq.
                         Telephone: (650) 854-4488
                         Telefax: (650) 233-8386

   or to such other address(es) and telefax numbers as may from time to
   time be notified by either Party to the other hereunder.

   14.2.   Any notice sent by mail shall be deemed to have been delivered
within seven (7) working days after dispatch and any notice sent by telex or
telefax shall be deemed to have been delivered within twenty four (24) hours of
the time of the dispatch. Notice of change of address shall be effective upon
receipt.

15.     MISCELLANEOUS CLAUSES.

   15.1.   No waiver of any right under this Agreement shall be deemed
effective unless contained in a written document signed by the Party charged
with such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any other breach or failure to perform or of any other
right arising under this Agreement.

   15.2.   If any provision in this Agreement is agreed in writing by the
Parties to be, or is deemed to be, or becomes invalid, illegal, void or
unenforceable under any law that is applicable hereto, (i) such provision will
be deemed amended to conform to applicable laws so as to be valid and
enforceable without materially altering the intention of the Parties, and (ii)
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be impaired or affected in any way.

   15.3.   The Parties shall use reasonable efforts to ensure that the
Parties and any necessary third party shall execute and perform all such further
deeds, documents, assurances,

                                     -22-
<PAGE>

acts and things as any of the Parties hereto may reasonably require by notice in
writing to the other Party or such third party to carry out the provisions of
this Agreement.

   15.4.   This Agreement shall be binding upon and inure to the benefit of
the Parties hereto, their successors and permitted assigns and sub-licenses.

   15.5.   This Agreement (including the Schedules attached hereto), and
the other Definitive Documents set forth all of the agreements and
understandings between Parties hereto with respect to the subject matter hereof,
and supersedes and terminates all prior agreements and understandings between
the Parties with respect to the subject matter hereof, either oral or written,
between the Parties other than as set forth in this Agreement and the other
Definitive Documents. No provision of this Agreement shall be construed so as to
negate, modify or affect in any way the provisions of any other agreement
between the Parties unless specifically referred to, and solely to the extent
provided, in any such other agreement. In the event of a conflict between the
provisions of this Agreement and the provisions of the Development Agreement,
the terms of the Development Agreement shall prevail unless this Agreement
specifically provides otherwise.

   15.6.   No amendment, modification or addition hereto shall be effective
or binding on either Party unless set forth in writing and executed by a duly
authorized representative of each Party. Amendments hereto shall be subject to
the prior written approval of Elan, which approval shall not be unreasonably
withheld or delayed.

   15.7.   This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.

   15.8.   Each of the Parties undertakes to do all things reasonably
within its power which are necessary or desirable to give effect to the spirit
and intent of this Agreement.

   15.9.   Each of the Parties hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty except as
expressly set out herein or in any document referred to herein.

                                     -23-
<PAGE>

   15.10.  Nothing contained in this Agreement is intended or is to be
construed to constitute Celtrix, Elan, and Newco as partners, or Celtrix as an
employee or agent of Newco or Elan, or Newco and Elan as an employee or agent of
Celtrix. Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the name of the
other Party or to bind the other Party to any contract, agreement or undertaking
with any third party without the prior written consent of the other Party.

IN WITNESS WHEREOF the Parties hereto have executed this Agreement in duplicate.

CELTRIX PHARMACEUTICALS, INC.

By: /s/ Andreas Sommer
   -----------------------------------------
Name:  Andreas Sommer
     ---------------------------------------
Title: President and Chief Executive Officer
      --------------------------------------

CELTRIX NEWCO LTD.

By: /s/ Andreas Sommer
   -----------------------------------------
Name:  Andreas Sommer
     ---------------------------------------
Title: President
      --------------------------------------

AGREED TO:

ELAN PHARMACEUTICAL TECHNOLOGIES,
A DIVISION OF ELAN CORPORATION, PLC

By: /s/ Kevin Insley
   -----------------------------------------
Name:  Kevin Insley
     ---------------------------------------
Title: Authorized Signatory
      --------------------------------------

                                     -24-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                  SCHEDULE 1

                             CELTRIX PATENT RIGHTS

<TABLE>
<CAPTION>
IGF-I/IGFBP-3  ISSUED/ALLOWED PATENTS                                        US STATUS:   FOREIGN #
-----------------------------------------------------------------------------------------------------------
<S>      <C>                                                                 <C>          <C>
1.       An Insulin-like growth factor-binding protein-3 composition           5,200,509  EP 308500
                                                                                          JP 2648951
                                                                                          AU 627423
                                                                                          CA 1340295

2.       IGF-I/IGFBP-3 for systemic treatment of tissue injury                 5,407,913  Foreign filed in
                                                                                          WO 94/04030

3.       IGF-I/IGFBP-3 for the treatment of anemia                             5,527,776  AU 688793
                                                                                          Foreign filed in
                                                                                          WO 95/08567

4.       A method for use of IGFBP-3 antibodies                                5,624,805  Foreign filed in
                                                                                          WO 90/06950

5.       IGF/IGFBP-3 for the treatment of catabolic conditions                 5,643,867  Foreign filed in
                                                                                          WO 94/04030

6.       A method for recombinant production of IGFBP-3                        5,670,341  Foreign filed in
                                                                                          WO 90/06950

7.       Therapeutic uses of IGF/IGFBP-3 and IGFBP-3                           5,681,818  Foreign filed in
         (including osteoporosis)                                                         WO 90/06950

8.       IGFBP-3 composition and methods for production; therapeutic uses    see # 4,6,7  EP 0 451 194*
         of IGF/IGFBP-3 and IGFBP-3 (including osteoporosis)                              HK 1000826

9.       IGF/IGFBP-3 for the treatment of renal disorders                      5,723,441  AU 690941

10.      Methods for predicting drug response                                  5,824,467  Foreign filed in
                                                                                          WO 98/37423
[*****]  [*****]                                                             [*****]      [*****]
[*****]  [*****]                                                             [*****]      [*****]
[*****]  [*****]                                                             [*****]      [*****]
         [*****]
</TABLE>

                                     -25-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

<TABLE>
<CAPTION>
       IGF-I/IGFBP-3 PATENT APPLICATIONS                                                          FOREIGN #/STATUS
------------------------------------------------------------------------------------------------------------------
<S>      <C>                                                                         <C>          <C>
1.       Therapeutic uses of IGFBP-3 and  IGF-I/IGFBP-3 (including                                WO 90/06950
         osteoporosis)                                                                            Granted in EP*
                                                                                     [*****]

[*****]  [*****]                                                                                  [*****]

[*****]  [*****]                                                                                  [*****]

4.       IGF-I/IGFBP-3 for wasting diseases and tissue repair                                     WO 94/04030
                                                                                     [*****]

5.       IGF-I/IGFBP-3 for the treatment of renal diseases                                        WO 95/13824
                                                                                     [*****]

6.       IGF-I/IGFBP-3 for the treatment of reproductive diseases                                 WO 95/03817
                                                                                     [*****]

7.       IGF-I/IGFBP-3 for the treatment of neurological disorders                                WO 95/13823
                                                                                     [*****]

8.       IGF-I/IGFBP-3 for the treatment of immunologic and hematologic disorders    WO 95/08567
                                                                                     [*****]

9.       IGF-1/IGFBP-3 for promoting bone formation and for regulating bone          WO 96/02565
         remodeling                                                                               [*****]

10.      IGF or IGF/IGFBP-3 for the treatment of psychological and metabolic         WO 98/36764
         disorders
[*****]  [*****]                                                                                  [*****]

[*****]  [*****]                                                                                  [*****]

[*****]  [*****]                                                                                  [*****]

[*****]  [*****]                                                                                  [*****]
</TABLE>

                                     -26-
<PAGE>

[*****] INDICATES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY IN A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

<TABLE>
<CAPTION>
EXPRESSION TECHNOLOGY ISSUED/ALLOWED PATENTS                                               U.S. STATUS    FOREIGN #
-------------------------------------------------------------------------------------------------------------------
<S>      <C>                                                                               <C>            <C>

1.        Methods and DNA expression systems for over-expression of proteins    5,459,051  AU 674741
          in host cells

2.        Chromosomal expression of heterologous genes in bacterial cells       5,470,727  AU 695886
                                                                                           WO 95/17499

3.        Fusion polypeptides and proteins                                      5,563,046  AU 688363
                                                                                            [*****]

4.        Expression of fusion polypeptides transported out of the cytoplasm    5,629,172  WO 95/04076
          without leader sequences

5.        Chromosomal expression of heterologous genes in bacterial cells       5,861,273  WO 96/40722
          (CIP of 5,470,727 )

6.        Method of producing IGF-I and IGF-BP3 with correct folding and        5,789,547  WO 96/40736
          disulfide bonding

7.        Polypeptide fusions to polypeptides of the beta trefoil fold          5,830,706  WO 95/04076
          structural family (continuation of 5,563,046)

[*****]   [*****]                                                                [*****]        [*****]

9.        Method for increasing yields of recombinant proteins                  ALLOWED    Filed via PCT
</TABLE>

                                     -27-

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