Document:

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                                                                   EXHIBIT 10.15

                       LICENSE AND DEVELOPMENT AGREEMENT

          THIS LICENSE AND DEVELOPMENT AGREEMENT (this "Agreement") is entered
into as of the 10th day of July, 2000 (the "Effective Date"), by and between
INSMED PHARMACEUTICALS, INC., a corporation organized under the laws of the
Commonwealth of Virginia and having a business address at 800 East Leigh Street,
Richmond, Virginia 23219 ("INSMED"), and TAISHO PHARMACEUTICAL CO., LTD., a
corporation organized under the laws of Japan and having a business address at
24-1, Takata 3-chome, Toshima-ku, Tokyo, 170-8633, Japan ("TAISHO").

          WHEREAS, INSMED owns or may acquire certain patents and patent
applications, certain licenses to patents and patent applications, and certain
know-how, trade secrets and scientific and technical information relating to D-
chiro-inositol; and

          WHEREAS, TAISHO desires to acquire from INSMED certain licenses and
sub-licenses to said patents, patent applications, licenses, and related know-
how, trade secrets and scientific and technical information, and INSMED is
agreeable to granting such licenses and sub-licenses pursuant to the terms and
conditions of this Agreement; and

          WHEREAS, INSMED and TAISHO entered into a letter of intent, effective
February 23, 2000, indicating their mutual agreement to execute a license and
development agreement for further development of D-chiro-inositol by either
party and/or both parties in and outside the Territory (defined below), and
commercialization of D-chiro-inositol and/or a product involving D-chiro-
inositol by TAISHO in the Territory and by INSMED outside the Territory;

          NOW, THEREFORE, in consideration of the foregoing recitals and of the
covenants and undertakings set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by both
parties, TAISHO and INSMED hereby agree as follows:

  ARTICLE 1 DEFINITIONS
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     For purposes of this Agreement, the following definitions, whether used in
the singular or plural, shall be applicable:

     1.1.  "Affiliate" means, with respect to any party, its respective direct
     or indirect parent company, if any, and any company, firm or other entity
     which is owned or controlled, directly or indirectly, by said party or by
     its parent company, but only for so long as said ownership or control shall
     continue. The term "control" used in this Article 1.1. means the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management and policies of a company, firm, or other
     entity, whether through the ownership of at least twenty five percent (25%)
     of voting securities, or at least twenty five percent (25%) of the equity
     interest of non-corporate entities.

     1.2.  "Combination Product" means one or more of the Licensed Products
     formulated in combination with one or more additional active components
     developed either inside or outside of the Joint Development Program.

     1.3.  "Compound" means D-chiro-inositol.

     1.4.  "Exclusive License" means the license granting TAISHO, as the sole
     licensee, rights in the Territory under this Agreement and excluding all
     other parties, including INSMED, from exercising such rights in the
     Territory, with the exception that INSMED, or any other party selected by
     INSMED, will retain (i) the right in the Territory, (a) upon notification
     to TAISHO and discussion of any concerns with TAISHO, to source,
     manufacture, formulate, package and/or label the Compound or Licensed
     Products for any use outside the Territory or (b) upon TAISHO's approval,
     to enter into a contract with a vendor to meet the TAISHO Parties'
     requirement for the Compound when it so desires under Article 3.14., and
     (ii) the rights under the Semi-Exclusive License to TAISHO for the People's
     Republic of China (hereinafter referred to as China) under Article 2.2.

     1.5.  "First Commercial Sale" means the first sale of Licensed Products by
     the TAISHO Parties, to a third party other than a TAISHO Party, in
     substantial quantities as are normal to the commercial launch of a product
     in that country in the Territory.

     1.6.  "Gross Sales" means gross revenue from all sales of Licensed Products
     by the TAISHO Parties to a third party other than a TAISHO Party.

     1.7.  "Indications" means type 2 diabetes and polycystic ovary syndrome
     (PCOS) (excluding diagnosis).

     1.8.  "Initiation" means the date that the first animal or human subject
     receives treatment in connection with a development activity that is
     conducted under the Joint Development Program Plan or the date that INSMED
     makes its first payment to a
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     contract research organization participating in the development activity
     that is conducted under the Joint Development Program Plan.

     1.9.  "INSMED Party" or "INSMED Parties" means Insmed Pharmaceuticals Inc.
     and its Affiliates and sub-licensees.

     1.10.  Joint Development Program" means any development activities related
     to the Compound and/or Licensed Products outside the Territory that TAISHO
     pays for pursuant to Article 3.7.1. and any development activities related
     to the Compound and/or Licensed Products inside the Territory that a TAISHO
     Party pays for pursuant to Article 3.7.2.

     1.11.  "Joint Development Program Plan" means any plans related to the
     Joint Development Program. The initial Joint Development Program Plan
     inside the Territory will be included as Schedule A to this Agreement at a
     later date through an amendment to this Agreement. The initial Joint
     Development Program Plan outside the Territory will be included as Schedule
     B to this Agreement at a later date through an amendment to this Agreement.
     The Joint Development Program Plan will thereafter be modified by the Joint
     Development Committee as provided in Article 3.

     1.12.  "License Agreement" means the Amended and Restated License Agreement
     between INSMED and the University of Virginia Alumni Patent Foundation
     dated June 11, 1991 and as amended from time to time and attached hereto as
     Schedule C.

     1.13.  "Licensed Products" means any final dosage form containing the
     Compound in whole (in its stand alone form) or in part (including
     Combination Products) for any Indications and/or the New Indications in
     humans.

     1.14.  "Licensed Patents" means all right, title, and interest in and to
     the patents and patent applications that are included in Licensed Patents
     Owned By INSMED and Licensed Patents Owned Jointly.

     1.15.  "Licensed Patents Owned By INSMED" means all right, title, and
     interest in and to the patents and patent applications that are part of
     INSMED's Technical Information including those identified in Schedule D to
     this Agreement or New Intellectual Property which are owned or controlled
     by or exclusively licensed to INSMED and a valid claim of which would be
     infringed by manufacture, use, sale or other activities of TAISHO, in
     connection with the Compound or the Licensed Products but for the licenses
     and rights granted to TAISHO by virtue of this Agreement, including all
     divisionals, continuations, renewals, continuations-in-part, patents of
     addition, supplementary protection certificates, extensions, registration
     or confirmation patents and reissues with respect to such patents and
     patent applications, and which have not lapsed, been canceled or become
     abandoned and have not been declared invalid or unenforceable by an
     unreversed and unappealable decision or judgment of a court or other
     appropriate body of competent jurisdiction and excludes Licensed Patents
     Owned Jointly.
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     1.16.  "Licensed Patents Owned Jointly" means all right, title, and
     interest in and to the patents and patent applications that are part of any
     New Intellectual Property which is jointly owned, controlled by or licensed
     to INSMED and TAISHO, including all divisionals, continuations, renewals,
     continuations-in-part, patents of addition, supplementary protection
     certificates, extensions, registration or confirmation patents and reissues
     with respect to such patents and patent applications, and which have not
     lapsed, been canceled or become abandoned and have not been declared
     invalid or unenforceable by an unreversed and unappealable decision or
     judgment of a court or other appropriate body of competent jurisdiction.

     1.17.  "NDA Approval" means the authorization to manufacture, formulate,
     sell, import, and export the Compound or the Licensed Products in the
     applicable country as granted by the relevant governmental or regulatory
     authorities.

     1.18.  "NDA Submission" means the submission of Technical Information, and
     other materials for review by the relevant governmental or regulatory
     authorities for evaluation for possible NDA Approval.

     1.19.  "Net Sales" means Gross Sales, less (i) trade, quantity and cash
     discounts and any other adjustments, including those granted on account of
     price adjustments, billing errors, recalls, returns, rebates,
     reimbursements or similar payments granted or given to wholesalers or other
     distributors, buying groups, health care insurance carriers or other
     institutions to the degree they are included in the calculation of Gross
     Sales, (ii) freight and insurance charges billed to the customers and (iii)
     customs or excise duties, sales tax, consumption tax, and other taxes
     (except income taxes) or duties relating to sales. In the case of sales of
     Combination Products by TAISHO Parties, Net Sales of the Combination
     Product shall be determined by multiplying the Net Sales of the Combination
     Product by a ratio calculated as follows:

          A is divided by the sum of A and B (A/[A+B]) where A is the Net Sales
          price of the Licensed Products incorporated into Combination Product,
          in their stand alone form, and B is the sum of the Net Sales prices of
          all active components incorporated in the Combination Product other
          than the Licensed Products, in their stand alone form.

     In case one or more of the active components other than the Licensed
     Product included in the Combination Product are not being sold in their
     stand alone form, thus preventing calculation of the Net Sales of the
     Combination Product by the methods described above, TAISHO and INSMED will
     negotiate the contribution of the Licensed Products to the Combination
     Product in order to arrive at an appropriate component percentage. In no
     case shall such percentage be less than forty percent (40%).

     1.20.  "New Indications" means any indication of a disease state other than
     the Indications, that is developed as part of the Joint Development Program
     (excluding diagnosis).
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     1.21.  "New Intellectual Property" means any Technical Information derived
     from the Joint Development Program.

     1.22.  "Phase III Study" means any clinical study, designated in the Joint
     Development Program Plan, whose results are or will be pivotal to receiving
     NDA Approval in any country or territory in or outside the Territory.

     1.23.  "Stock Purchase Agreement" means the Stock Purchase Agreement, dated
     March 7, 2000, between INSMED and TAISHO.

     1.24.  "Semi-Exclusive License To TAISHO" means a license granting co-equal
     rights to TAISHO or one party designated by TAISHO, and INSMED or one party
     designated by INSMED, as the only licensees granted rights to the Compound
     and Licensed Products for China, with the exception that INSMED, or any
     other party selected by INSMED will retain the right in China, (a) upon
     notification to TAISHO and discussion of any concerns with TAISHO, to
     source, manufacture, formulate, package and/or label the Compound or
     Licensed Products for any use outside the Territory or (b) upon TAISHO's
     approval, to enter into a contract with a vendor to meet the TAISHO
     Parties' requirement for the Compound when it so desires under Article
     3.14.

     1.25.  "TAISHO Party or TAISHO Parties" means Taisho Pharmaceutical Co.,
     Ltd., its Affiliates and sub-licensees.

     1.26.  "Technical Information" means all know-how, trade secrets, data,
     technology, scientific information, technical information, patents and
     patent applications that result from or relate to any research or
     development of the Compound and/or Licensed Products that are owned,
     controlled by or licensed to a TAISHO Party or an INSMED Party. The term
     "INSMED's Technical Information" means all Technical Information that is
     owned, controlled by, or licensed to INSMED as of the execution of this
     Agreement.

     1.27.  "Territory" means any country or territory listed in Schedule E to
     this Agreement.

  ARTICLE 2 LICENSES
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     2.1.  Exclusive License

     Subject to the terms of this Agreement, INSMED hereby grants to TAISHO an
     Exclusive License, with the right to sub-license, to the Licensed Patents
     Owned By INSMED, other INSMED's Technical Information and INSMED's New
     Intellectual Property, to use, research, develop, manufacture, have
     manufactured, formulate, sell, have sold, export, and import the Compound
     and/or the Licensed Products for treatment of and/or any other uses
     (excluding diagnosis) for the Indications and New Indications in the
     Territory except for China.
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     2.2.  Semi-Exclusive License To Taisho

     Subject to the terms of this Agreement, INSMED hereby grants a Semi-
     Exclusive License to TAISHO, with the right to sub-license, to the Licensed
     Patents Owned By INSMED, other INSMED's Technical Information and INSMED's
     New Intellectual Property, to use, research, develop, manufacture, have
     manufactured, formulate, sell, have sold, export, and import the Compound
     and the Licensed Products for treatment of and/or any other uses (excluding
     diagnosis) for the Indications and New Indications in China.

     2.3.  Outside the Territory

     The licenses granted to TAISHO herein to export the Compound and the
     Licensed Products permit only the export of the Compound and the Licensed
     Products within and between countries in the Territory, and do not permit
     export of the Compound or the Licensed Products to countries or territories
     outside the Territory, except as contemplated by Article 9.6., below.

  ARTICLE 3 JOINT DEVELOPMENT PROGRAM
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     3.1.  Collaboration

     INSMED and TAISHO agree to pursue the Joint Development Program as set
     forth in the Joint Development Program Plan. The Joint Development
     Committee will administer the Joint Development Program Plan. Either party
     may propose to the Joint Development Committee further research and
     development activities for any improvement regarding the Compound and/or
     Licensed Products.

     3.2.  Joint Development Committee

     The Joint Development Committee will consist of four (4) representatives,
     two (2) appointed by INSMED and two (2) appointed by TAISHO. The Chair of
     the Joint Development Committee will be appointed by INSMED. The Joint
     Development Committee will hold quarterly meetings, which may take place in
     person, by teleconference, or by video conference. Quarterly meetings held
     in person will be held at locations that are mutually agreed upon by the
     Joint Development Committee. The members of the Joint Development Committee
     will attempt to agree to the development of the Compound or Licensed
     Products by unanimous consent. In the event that the Joint Development
     Committee cannot agree regarding the development of the Compound or
     Licensed Products within the Territory with the exception of China,
     decisions as to the development of the Compound or Licensed Products will
     be made by the Joint Development Committee representatives appointed by
     TAISHO and these decisions will be final. In the event the Joint
     Development Committee cannot agree regarding the development of the
     Compound or Licensed Products outside the Territory, decisions will be made
     by the Joint Development Committee representatives appointed by INSMED and
     these decisions will be final.

     3.3.  Joint Development Program Plan
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     The Joint Development Committee will establish the objectives and planned
     activities of the Joint Development Program Plan. The Joint Development
     Committee shall direct the Joint Development Program Plan, review the
     progress of the Joint Development Program Plan and allocate each party's
     roles with respect to the Joint Development Program Plan. At its quarterly
     meetings, the Joint Development Committee shall assess TAISHO's and
     INSMED's progress against the Joint Development Program Plan and shall
     suggest such actions as may be necessary to implement the Joint Development
     Program Plan. INSMED will have primary responsibility for administering the
     Joint Development Program Plan outside the Territory and TAISHO will have
     primary responsibility for administering the Joint Development Program Plan
     inside the Territory with the exception of China.

          3.3.1.  Joint Development Program Plan outside the Territory

          At the Joint Development Committee meetings and at such other times as
          INSMED deems advisable, INSMED will provide the Joint Development
          Committee with a detailed description of all development activities,
          including expected costs related to the Compound and/or Licensed
          Products, that INSMED has planned for outside of the Territory. During
          the ninety (90) days following such presentation the Joint Development
          Committee will discuss alterations to such plans with the intention to
          maximize the value of such development activities to INSMED and TAISHO
          as follows. Within thirty (30) days following such presentation by
          INSMED, TAISHO may present a written request to the Joint Development
          Committee suggesting alterations to such plans. INSMED will review
          such request and within thirty (30) days of receiving such request
          will present a written response to the Joint Development Committee
          describing any alterations to such plans that it intends to make as a
          result of the request. Within thirty (30) days of receiving INSMED's
          response or at the next scheduled Joint Development Committee meeting,
          whichever occurs first, TAISHO will inform the Joint Development
          Committee in writing whether it accepts such planned development
          activities. If TAISHO accepts such planned development activities, the
          Joint Development Committee will amend the Joint Development Program
          Plan outside the Territory to reflect such planned development
          activities, and TAISHO will become obligated to fund such development
          activities as provided in Article 3.7.1. If TAISHO does not accept
          such planned development activities or fails to respond in a timely
          manner to such planned development activities, such planned
          development activities will be excluded from the Joint Development
          Program Plan outside the Territory and TAISHO shall have no obligation
          to fund such development activities as provided in Article 3.7.1.

          3.3.2.  The Joint Development Program Plan inside the Territory

          At the Joint Development Committee meetings and at such other times as
          TAISHO deems advisable, TAISHO will provide the Joint Development
          Committee with a detailed description of all development activities
          related to the Compound and/or Licensed Products, that a TAISHO Party
          has planned for inside of the Territory. During the ninety (90) days
          following such presentation the Joint Development
<PAGE>

          Committee will discuss alterations to such plans with the intention to
          maximize the value of such development activities to INSMED and TAISHO
          as follows. Within thirty (30) days following such presentation by
          TAISHO, INSMED may present a written request to the Joint Development
          Committee suggesting alterations to such plans. TAISHO will review
          such request and within thirty (30) days of receiving such request
          will present a written response to the Joint Development Committee
          describing any alterations to such plans that it intends to make as a
          result of the request. The Joint Development Committee will amend the
          Joint Development Plan to reflect such planned development activities
          in the Territory and TAISHO will be obligated to bear all costs of
          such development activities as provided in Article 3.7.2.

     3.4.  INSMED and TAISHO Project Managers

     INSMED and TAISHO will each appoint a project manager to manage INSMED's
     and TAISHO's day-to-day activities within each party with respect to the
     Joint Development Program and to act as a liaison with the other party with
     respect to the Joint Development Program.

     3.5.  Exchange of the Technical Information and New Intellectual Property

          3.5.1.  In order to allow each party to exercise its rights and
          fulfill its obligations set forth herein and subject to the
          confidentiality obligations set forth in Article 5. hereof, INSMED
          shall disclose to TAISHO at least once per quarter during the term of
          this Agreement, INSMED's New Intellectual Property; and TAISHO shall
          also disclose to INSMED TAISHO's New Intellectual Property. The party
          generating New Intellectual Property shall retain in its records data
          (including raw data), material, and information regarding such New
          Intellectual Property for five (5) years after expiration or
          termination of this Agreement.

          3.5.2.  In order to allow each party to exercise its rights and
          fulfill its obligations set forth herein and subject to the
          confidentiality obligations set forth in Article 5., INSMED will allow
          TAISHO to have access to INSMED's Technical Information (including raw
          data, if appropriate) that INSMED generated with respect to the
          Compound or Licensed Products for the Indications from development
          activities that have already been substantially completed by INSMED, a
          list of which development activities is attached as Schedule F to this
          Agreement. All Technical Information disclosed by INSMED to TAISHO
          prior to the Effective Date shall be deemed to have been disclosed
          pursuant to this Agreement and shall be subject to all applicable
          provisions of this Agreement.

          3.5.3.  The parties shall establish a system for exchange of safety
          information on the Compound or Licensed Products and prepare a written
          policy evidencing such system to meet the requirements of the
          applicable local and international regulations and guidelines.

     3.6.  Conduct of Development Activities Outside the Territory
<PAGE>

     INSMED will conduct the Joint Development Program outside the Territory, or
     will direct that any such development activities be conducted, in
     accordance with principles of GMP, GLP and GCP set forth by the United
     States Food and Drug Administration (FDA), the International Conference on
     Harmonization (ICH) guidelines or the applicable local government
     regulations. Upon obtaining INSMED's consent, TAISHO through its
     representatives and at TAISHO's expense may participate with and/or observe
     INSMED in such development outside the Territory. In accordance with
     Article 3.5.1., INSMED shall without delay disclose to TAISHO INSMED's New
     Intellectual Property for the purpose of NDA Submission and acquisition of
     NDA Approval by the TAISHO Parties in the Territory.

     3.7.  Payments for Development Activities

          3.7.1.  Outside the Territory

          For any development activities, excluding those listed in Schedule F,
          which are specified in the Joint Development Program Plan outside the
          Territory, TAISHO shall pay to INSMED the following amounts at the
          following times: within thirty (30) days from the receipt by TAISHO of
          written notification of such development activity's Initiation and
          invoice thereof, ten percent (10%) of the projected cost of the
          development activity as listed in the Joint Development Program Plan
          outside the Territory; and within thirty (30) days from the receipt by
          TAISHO of a written report describing the results of the development
          activity and the invoice thereof, an amount equal to the difference
          between twenty percent (20%) of the actual total cost of the
          development activity listed in the Joint Development Program Plan and
          the amount paid by TAISHO at the Initiation of the development
          activity. For this end INSMED shall provide TAISHO with supporting
          documents and materials to verify such actual development costs for
          such development activity.

          3.7.2.  Inside the Territory

          TAISHO will bear all costs associated with any development activities
          which are specified in the Joint Development Program Plan inside the
          Territory with the exception of China.

     3.8.  Failure to Make Timely Payments for Development Activities Outside
           the Territory

     In the event TAISHO does not make all such payments related to a
     development activity of the Joint Development Program Plan outside the
     Territory as contemplated in Article 3.7.1. in a timely manner, without any
     reasonable cause, such development activity will cease to be part of the
     Joint Development Program and INSMED's New Intellectual Property derived
     from or related to such development activity, with the exception of the
     provisions related to serious adverse event reporting, shall not be subject
     to the New Intellectual Property disclosure provisions of Article 3.5. or
     the licenses granted under Articles 2.1. and 2.2. of this Agreement. If
     TAISHO thereafter wishes to receive a license to such INSMED's New
     Intellectual Property in the Territory without having paid, in a
<PAGE>

     timely manner, the sharing cost for the development activity in question as
     referenced above in Article 3.7.1., INSMED and TAISHO will negotiate such a
     license in good faith.

     3.9.  Projected Costs, Invoicing and Expense Records for Joint Development
           Activities Outside the Territory

          3.9.1.  The Joint Development Program Plan outside the Territory sets
          forth projected costs for each development activity contemplated for
          the Joint Development Program. The Joint Development Committee may
          revise these projected costs from time to time, based upon new
          information that it may acquire. Any such changes in projected costs
          will be set forth by the resolution of the Joint Development Committee
          in an amendment to the Joint Development Program Plan outside the
          Territory.

          3.9.2.  Upon Initiation and completion of any development activities
          included in the Joint Development Program Plan outside the Territory,
          INSMED will provide TAISHO with invoices setting forth projected
          costs, actual total costs, and payments due from TAISHO, as set forth
          in Article 3.7.1. Within thirty (30) days of TAISHO's receipt of such
          invoices, TAISHO shall pay INSMED any amounts due as indicated on such
          invoices.

          (i)  3.9.3.  INSMED will maintain expense records associated with the
          invoices it sends to TAISHO pursuant to Article 3.9.2. Upon request by
          TAISHO, INSMED shall permit TAISHO, at TAISHO's expense and using
          independent, qualified public accountants employed by TAISHO and
          acceptable to INSMED, which acceptance shall not be unreasonably
          withheld, to examine such expense records for up to three (3) years
          after TAISHO's receipt of such invoices. TAISHO's right of examination
          may be exercised only once per invoice. Its accountants will be
          allowed to copy INSMED's books and records relevant to such audit. Any
          accountants selected by TAISHO and accepted by INSMED for such
          examinations shall, upon request by INSMED, enter into appropriate
          confidentiality agreements, and shall not disclose to TAISHO or any
          other party any information other than that specifically and directly
          related to the accuracy of INSMED's invoices. The determinations of
          such accountants with respect to the accuracy of such invoices shall
          be binding on the both parties.
<PAGE>

     3.10.  Conduct of Development Activities in the Territory with the
            exception of China

     TAISHO, at its expense, will conduct or will direct the development
     activities of the Joint Development Program Plan inside the Territory with
     the exception of China, and such activities will be conducted in accordance
     with principles of GLP, GMP and GCP set forth by the Japanese Ministry of
     Health and Welfare (Koseisho) and the ICH guidelines or the regulatory
     guidelines applicable to the country or territory in the Territory. Upon
     obtaining TAISHO's consent, INSMED through its representatives and at
     INSMED's expense may participate with and/or observe TAISHO in such
     development inside the Territory. Any New Intellectual Property owned by
     TAISHO shall be disclosed to INSMED pursuant to Article 3.5.1. without
     delay, and TAISHO will grant to the INSMED Parties exclusive rights to the
     New Intellectual Property owned by TAISHO to use, research, develop,
     manufacture, have manufactured, formulate, sell, have sold, export and
     import the Compound and Licensed Products only for the Indications and New
     Indications outside the Territory without any payment to TAISHO and TAISHO
     will grant to the INSMED Parties semi-exclusive rights to the New
     Intellectual Property owned by TAISHO to use, research, develop,
     manufacture, have manufactured, formulate, sell, have sold, export and
     import the Compountd and Licensed Products only for the Indications and New
     Indications in China, without any payment to TAISHO. Notwithstanding the
     foregoing upon notification to TAISHO and discussion of any concerns with
     TAISHO, INSMED shall have the right to source, manufacture, formulate,
     package and/or label the Compound and Licensed Products derived from such
     New Intellectual Property owned by TAISHO in countries in the Territory for
     any use outside the Territory.

     3.11.  Conduct of Development Activities in China

     The conduct of development activities in China shall be determined by
     mutual agreement between INSMED and TAISHO which will take into account the
     parties' equal interests with respect to the development and exploitation
     of the Compound and Licensed Products in China.

     3.12.  Amendment of the Joint Development Program Plans

     The Joint Development Committee has authority to amend the Joint
     Development Program Plan based upon review of progress and results of the
     Joint Development Program that, in the reasonable discretion of the Joint
     Development Committee, makes such amendment appropriate. In the event that
     the Joint Development Committee determines to amend the Joint Development
     Program Plan, Schedule A and/or Schedule B to this Agreement shall be
     amended to reflect such amendments.

     3.13.  Worldwide Development Coordination

     In the event INSMED enters into other License Agreements for the
     Indications or New Indications with a licensee in the United States or
     Europe, the TAISHO Parties and INSMED Parties will make an effort to
     coordinate the world-wide development activities for the Compound and/or
     Licensed Products to minimize the time period and cost of development while
     maximizing the market potential, profit potential, and likelihood of
     achieving commercial success; provided this Article 3.13. will be construed
     and carried
<PAGE>

     out only to the extent any such coordination will not violate relevant
     anti-trust or similar laws.

     3.14.  Supply of the Compound

          3.14.1.  In accordance with the Joint Development Program Plan inside
          the Territory and at the request of TAISHO, INSMED itself or through a
          third party of its choosing, shall supply TAISHO with all bulk
          Compound necessary solely for the research and/or development of the
          Compound and/or Licensed Products in the Territory [REDACTED],
          including any applicable shipping, customs duties, transportation,
          taxes, overhead and similar expenses [REDACTED].

          3.14.2.  TAISHO shall have the right to manufacture the Compound for
          the commercial use of the Licensed Products in the Territory. TAISHO
          shall notify INSMED in writing as to whether or not TAISHO will
          manufacture the Compound itself or through a third party of its
          choosing no later than the Initiation of the first Phase III study in
          the Territory that will be used for an NDA Submission for any Licensed
          Products in the Territory. In the event that TAISHO notifies INSMED
          that TAISHO exercises its right to manufacture the Compound, INSMED
          shall provide TAISHO with the required manufacturing information for
          the Compound to enable TAISHO to manufacture, subject to the
          confidentiality obligations of Article 5., without additional payment
          or royalty due from TAISHO to INSMED.

          3.14.3.   In the event that TAISHO does not exercise the option
          described in Article 3.14.2. and requests INSMED in writing to supply
          the Compound to TAISHO for the commercial use of the Licensed Products
          by the TAISHO Parties in the Territory, INSMED itself or through a
          third party of its choosing shall supply TAISHO with bulk Compound
          necessary for commercial use of the Licensed Products by the TAISHO
          Parties in the Territory. Such requests will be communicated to INSMED
          or a third party of INSMED's choosing in writing at least six (6)-
          months before the expected delivery date to TAISHO. INSMED itself or
          through a third party of its choosing will supply such bulk Compound
          to TAISHO [REDACTED], including any applicable shipping, customs
          duties, transportation, taxes, overhead and similar expenses
          [REDACTED]. In such case the parties will negotiate in good
          faith necessary terms and conditions of a supply arrangement other
          than the price of the Compound and shall also prepare documents
          required by applicable laws and regulations.
<PAGE>

          3.14.4.  In the event that TAISHO requests INSMED to supply the
          Compound after having exercised the option described in Article
          3.14.2. above, subject to INSMED's capacities and reasonable
          availability, INSMED, either itself or through a third party of its
          choosing, will use reasonable commercial efforts to supply TAISHO with
          bulk Compound necessary for commercial sale of the Licensed Products
          by the TAISHO Parties in the Territory [REDACTED], including any
          applicable shipping expenses, customs duties, transportation, taxes,
          overhead and similar expenses [REDACTED]. In such case the
          parties shall negotiate in good faith the terms and conditions of a
          supply arrangement other than the price of the Compound and shall also
          prepare documents required by applicable laws and regulations.

          3.14.5.  In case INSMED is unable to meet the TAISHO Parties'
          requirements of the Compound under this Article 3. for reasons outside
          of INSMED's control, both parties shall discuss in good faith
          alternative ways to meet the TAISHO Parties' requirements.

          3.14.6.  For the purposes of this Article 3., INSMED is under no
          obligation to supply Compound to a TAISHO party for sale of the
          Compound or Licensed Products in a country in the Territory where
          royalties are no longer being paid to INSMED. However, at TAISHO's
          request the parties will negotiate in good faith a separate supply
          agreement for such country providing for a profit margin to INSMED
          that is a reasonable margin for manufacturing by a company in the
          pharmaceutical manufacturing industry.

  ARTICLE 4 INITIAL LICENSE FEE, MILESTONE PAYMENTS, AND ROYALTIES
            ------------------------------------------------------

     4.1.  Consideration

     In consideration of the licenses and rights granted to TAISHO hereunder,
     TAISHO shall pay INSMED an initial license fee, milestone payments, and
     royalties as set forth herein.

     4.2.  Initial License Fee

     Within fifteen (15) business days after the Effective Date of this
     Agreement, TAISHO shall pay to INSMED an initial license fee in the sum of
     two million US dollars (US$2,000,000) by wire transfer to a bank account
     designated by INSMED.

     4.3.  Milestone Payments

          4.3.1.  Within thirty (30) days of the achievement of each milestone
          set forth below, TAISHO shall pay to INSMED milestone payments
          totaling [REDACTED] so long as this Agreement is in force and
          effective, as follows:
<PAGE>

<TABLE>
<CAPTION>
Milestone                                            for PCOS                     for Type2 diabetes
------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                          <C>
Initiation of the first Phase III Study              [REDACTED]                   [REDACTED]
outside the Territory in support of
registration in any country in
the Territory other than China

Initiation of the first Phase III Study              [REDACTED]                   [REDACTED]
inside the Territory in support of
registration in any country in the
Territory other than China

First NDA Submission in any country                  [REDACTED]                   [REDACTED]
in the Territory other than China

First NDA Approval in any country in the             [REDACTED]                   [REDACTED]
Territory other than China

$ in ( ) represent net payments after deducting withholding tax.
</TABLE>

          The milestone payments set forth above shall be paid when each
          milestone for PCOS is first achieved and when each milestone for type
          2 diabetes is first achieved. However, the Joint Development Committee
          may substitute a New Indication for either PCOS and/or type 2 diabetes
          on the following basis. In the event that the Joint Development
          Committee determines to pursue any New Indications instead of either
          or both of the Indications, the parties shall discuss and determine
          the milestone
<PAGE>

          payments with respect to the New Indications. The amount of milestone
          payments for such New Indications will be negotiated in good faith
          among the parties and will in principle be in a similar proportion to
          the market for such New Indication in the Territory as the milestones
          for the type 2 diabetes indication are to the size of the type 2
          diabetes market in the Territory. If the parties agree to replace the
          milestone payments for the Indications with new milestone payments for
          New Indications, such agreement shall be set forth in a written
          amendment to this Agreement. It is understood that TAISHO is only
          required to pay milestones for an aggregate of two (2) indications
          regardless of whether they are for the Indications or New Indications.
          However, all milestones for each of the first two Indications or New
          Indications, as the case may be, must be paid to INSMED before the
          First Commercial Sale of the Compound or Licensed Products for that
          particular Indication or New Indication in the Territory. In the event
          the parties elect to pursue New Indications as additions to, rather
          than substitutions for, the Indications and all milestone payments
          have already been paid by TAISHO for two (2) other Indications or New
          Indications as the case may be, then no further milestone payments
          will be payable for such additional New Indications.

     4.4.  Royalties in the Territory Other Than China

     In each country in the Territory other than China (the "Exclusive
     Territory") where the sale of Licensed Products is covered by one or more
     Licensed Patents Owned By INSMED, TAISHO shall pay INSMED the following
     royalties on Net Sales of the Licensed Products. TAISHO's obligation to pay
     such royalties shall expire upon the expiration of the last to expire of
     the Licensed Patents Owned By INSMED that enable the TAISHO Parties to
     make, use or sell the Licensed Products in the Exclusive Territory on an
     exclusive basis, as follows:

     i)  Royalty on Net Sales of the Licensed Products in Japan:

     Net Sales Range                                            Royalty Rate
     ---------------------------------------------------------------------------
     $0 up to $fifty (50) million (inclusive)                   [REDACTED]

     $fifty (50) up to $one hundred (100)
       million (inclusive)                                      [REDACTED]

     $one hundred (100) million and greater                     [REDACTED]
     ---------------------------------------------------------------------------

     ii)  Royalty on Net Sales of the Licensed Products in the Exclusive
     Territory other than Japan: [REDACTED].

     In each country in the Exclusive Territory where sale of the Licensed
     Products is not embraced within any claims of any unexpired Licensed
     Patents Owned By INSMED issued and in force in such country, royalties
     shall be the same as set forth above in Articles 4.4. i) and 4.4. ii),
     except that the duration of such royalties shall be for five (5) years
     after the First Commercial Sale of the Licensed Products in such country.
<PAGE>

     In the event the TAISHO Parties are legally required to pay a royalty or
     any fees to a third party in order to continue making, using or selling the
     Compound and Licensed Products in any country in the Territory, the dollar
     amount of the royalty payable to INSMED on Net Sales of Licensed Products
     in that country shall be reduced by [REDACTED] of the dollar amount of
     royalty or fee so paid to that third party; provided that the royalty paid
     to INSMED shall never be less than [REDACTED] of Net Sales of Licensed
     Products. TAISHO shall immediately provide INSMED with proof of payments to
     any such third party.

     4.5.  Royalties in China

     Royalties or profit sharing in China will be determined upon the mutual
     agreement of INSMED and TAISHO and shall in principle represent an equal
     distribution of profit resulting from distribution of Licensed Products in
     China. Upon reaching such agreement the parties shall prepare and enter
     into a written contract setting forth their agreement.

    4.6.  Accounting and Procedures for Payments.

          4.6.1.  Payments due from one party ("Paying Party") to the other
          party ("Receiving Party") under this Agreement shall be subject to the
          following provisions. The Paying Party will pay to the Receiving Party
          all royalties or shared profit due under this Agreement within sixty
          (60) days after the end of each calendar quarter. Each such payment
          shall be accompanied by a report identifying and detailing the
          Licensed Products, Gross Sales per Licensed Product, itemized
          deductions from Gross Sales, Net Sales, and royalties or shared profit
          payable to the Receiving Party. The Receiving Party shall maintain
          such reports in confidence; provided, however, that the Receiving
          Party may disclose the amount of any payment and accompanying reports
          to any of its accountants, other professional advisors and any other
          persons to whom the Receiving Party has a legal or fiduciary duty to
          share such information.

          4.6.2.  All payments from the Paying Party to the Receiving Party
          pursuant to this Agreement shall be made in U.S. dollars and shall be
          made by electronic transfer in immediately available funds via either
          a bank wire transfer, or any other means of electronic funds transfer,
          at Paying Party's election, to such bank account as the Receiving
          Party shall designate in writing at least fifteen (15) business days
          before the payment is due. For the purposes of determining the amount
          of payment due, the amount of Net Sales in any foreign currency shall
          be computed by converting such amount into U.S. dollars at a rate
          equal to the prevailing commercial average rate of exchange for
          selling and purchasing dollars with such foreign currency as published
          in the U.S. edition of the Wall Street Journal, for the close of the
          last business day of the calendar quarter for which the relevant
          payment is to be made by the Paying Party.
<PAGE>

          4.6.3.  The Paying Party shall, and shall cause its Affiliates and
          sub-licensees to, keep full and accurate books and records setting
          forth Gross Sales per Licensed Product, itemized deductions from Gross
          Sales, Net Sales, and amounts payable to the Receiving Party. Upon
          request by the Receiving Party, the Paying Party shall permit the
          Receiving Party, at the Receiving Party's expense and using
          independent, qualified public accountants employed by the Receiving
          Party and acceptable to the Paying Party, which acceptance shall not
          be unreasonably withheld, to examine the Paying Party's books and
          records for up to three (3) years after the Receiving Party's receipt
          of the reports to which they relate. Such accountants will be allowed
          to copy books and records relevant to such audit. The Receiving
          Party's right of examination may be exercised only once per report.
          Any accountants selected by the Receiving Party and accepted by the
          Paying Party for such examinations shall, upon request by the Paying
          Party, enter into appropriate confidentiality agreements, and shall
          not disclose to the Receiving Party any information other than that
          related to the accuracy of the Paying Party's reports. The
          determinations of such accountants with respect to the accuracy of
          such reports shall be binding on the both parties.

   ARTICLE 5 CONFIDENTIALITY
             ---------------

     5.1.  Undertaking

     For the purpose of this Article 5., Confidential Information means the
     other party's Technical Information, New Intellectual Property, and any
     other information or material supplied by the other party and designated as
     confidential or proprietary, orally or in writing, prior to or during the
     term of this Agreement. For any INSMED's Technical Information, INSMED New
     Intellectual Property and other Confidential Information supplied by
     INSMED, TAISHO shall hold such Confidential Information in confidence, and
     shall not disclose or use such Confidential Information for any purpose,
     except as specifically authorized herein, during the term of this Agreement
     and for ten (10) years (i) after termination or expiration of this
     Agreement for any reason or (ii) after expiration of all Licensed Patents
     and patents and patent applications included in INSMED's Technical
     Information but subject to the exceptions provided in Article 5.2.,
     whichever occurs later. For any TAISHO New Intellectual Property and other
     Confidential Information supplied by TAISHO, INSMED shall hold such
     Confidential Information in confidence, and shall not disclose or use such
     Confidential Information for any purpose, except as specifically authorized
     herein, during the term of this Agreement and for ten (10) years (i) after
     termination or expiration of this Agreement for any reason or (ii) after
     expiration of all Licensed Patents and patents and patent applications
     included in TAISHO's New Intellectual Property but subject to the
     exceptions provided in Article 5.2., whichever occurs later.

     5.2.  Exceptions

     Obligations of confidentiality and non-use set forth in Article 5.1.
     imposed on the receiver of the Confidential Information ("Recipient") shall
     not apply to the extent that any Confidential Information is: (i) already
     known to the Recipient at the time of
<PAGE>

     disclosure; (ii) publicly known prior to or after disclosure other than
     through acts or omissions of the Recipient or its employees; (iii)
     disclosed in good faith to Recipient by a third party under no obligation
     of confidentiality to the supplier of the Confidential Information; or (iv)
     disclosed or used by the Recipient pursuant to prior written approval of
     the supplier of Confidential Information for such disclosure. The Recipient
     may disclose the Confidential Information to pre-clinical investigators,
     clinical investigators, and other third parties under an enforceable
     confidentiality agreement with at least the equivalent confidentiality
     obligations as provided herein, provided that such disclosure is necessary
     for the Recipient to fulfill their obligations under this Agreement, and
     provided that Recipient shall notify the supplier of Confidential
     Information in advance of such disclosure. The Recipient may disclose the
     Confidential Information to governmental agencies, provided that the
     Recipient shall follow procedures normally taken in the pharmaceutical
     industry in the country where such governmental agencies are located or as
     may otherwise be required by law.

     5.3.  Publicity Related to this Agreement

     Except as otherwise specifically permitted by this Agreement, as required
     by law or as required by any securities exchange, neither party shall (i)
     disclose to any third party any financial or other terms or conditions of
     this Agreement, or (ii) originate any publicity, news release or public
     announcement, written or oral, whether to the public, press, stockholders
     or otherwise, communicating the economic terms of this Agreement, or any of
     its specific terms or conditions, without the express prior written consent
     of the other party, which consent will not be unreasonably withheld.

  ARTICLE 6 PATENTS AND INTELLECTUAL PROPERTY
            ---------------------------------

     6.1.  Ownership

          6.1.1.  INSMED shall own the entire right, title and interest in and
          to all Licensed Patents Owned By INSMED, INSMED's Technical
          Information and New Intellectual Property developed solely by INSMED
          or acquired solely by INSMED, subject to the licenses granted herein
          to TAISHO. TAISHO shall own the entire right, title and interest in
          and to New Intellectual Property that is developed or acquired solely
          by TAISHO, subject to the rights granted herein to INSMED. The parties
          shall jointly own the entire right, title and interest in all
          countries in the world, all Licensed Patents Owned Jointly and New
          Intellectual Property that is developed jointly by INSMED and TAISHO,
          subject to the conditions that (i) (a) INSMED has an exclusive right
          to use, research, develop, manufacture, have manufactured, formulate,
          sell, have sold, export and import the Compound and/or Licensed
          Products under the Licensed Patents Owned Jointly outside the
          Territory, and (b) TAISHO has an exclusive right under the Exclusive
          License to use, research, develop, manufacture, have manufactured,
          formulate, sell, have sold, export and import the Compound and/or
          Licensed Products under the Licensed Patents Owned Jointly in the
          Territory except China, and (c) INSMED and TAISHO each has semi-
<PAGE>

          exclusive rights in China to use, research, develop, manufacture, have
          manufactured, formulate, sell, have sold, export and import the
          Compound and/or Licensed Products under the Licensed Patents Owned
          Jointly.

          6.1.2.  If the Licensed Patents Owned Jointly are used for purposes
          that do not include the use, research, development, manufacture, have
          manufactured, formulate, sell, have sold, export and import of the
          Compound and Licensed Products ("Other Uses") (i) TAISHO shall have
          the exclusive right to Other Uses within the Territory excluding China
          without payment of royalties to INSMED, (ii) INSMED shall have the
          exclusive right to Other Uses outside the Territory without payment of
          royalties to TAISHO and (iii) INSMED and TAISHO shall each have the
          right to Other Uses in China without payment of royalties to either
          party. If with respect to the Other Uses (i) TAISHO wishes to make
          Other Uses in a country outside the Territory or (ii) INSMED wishes to
          make Other Uses in a country inside the Territory other than China,
          the parties will negotiate a separate license agreement in good faith
          for such use. Notwithstanding the foregoing, upon notification to
          TAISHO and discussion of any concerns with TAISHO, INSMED shall have
          the right to source, manufacture, formulate, package and/or label
          products derived from the Licensed Patents Owned Jointly in countries
          in the Territory for any use outside the Territory.

          6.1.3.  To the extent the Exclusive License and the Semi-Exclusive
          License granted by INSMED to TAISHO includes rights to Licensed
          Patents Owned By INSMED that have been licensed to INSMED under the
          License Agreement, TAISHO agrees to be bound by the obligations of the
          current License Agreement as of the date hereof or any future License
          Agreement provided the terms of such License Agreement require no
          greater obligation by TAISHO or unless otherwise agreed by TAISHO.
          INSMED warrants as of the Effective Date that, except for minor
          discrepancies, there is no material conflict between this Agreement
          and the License Agreement.

     6.2.  Prosecution and Maintenance

          6.2.1.  INSMED shall have the right and responsibility, within its own
          discretion and at its own expense, to prosecute and maintain patent
          protection for all Licensed Patents Owned By INSMED. TAISHO shall have
          the right and responsibility, within its own discretion and at its own
          expense, to prosecute and maintain patent protection for all patents
          included in the TAISHO's New Intellectual Property. INSMED shall have
          the right and responsibility outside the Territory, within its own
          discretion and at INSMED's expense, to prosecute and maintain patent
          protection for all Licensed Patents Owned Jointly. TAISHO shall have
          the right and responsibility inside the Territory, within its own
          discretion and at TAISHO's expense, to prosecute and maintain patent
          protection for all Licensed Patents Owned Jointly. Each party shall
          assist and cooperate with the other in connection with the other
          party's prosecution and maintenance of any Licensed Patents for which
          it is responsible.
<PAGE>

          6.2.2.  INSMED shall, within its own discretion, prosecute and
          maintain all patent protection for Licensed Patents Owned By INSMED,
          and TAISHO shall reimburse INSMED for all expenses, including
          attorney's fees, incurred by INSMED in prosecuting and maintaining
          Licensed Patents Owned By INSMED in the Territory. From time to time,
          INSMED will provide TAISHO with invoices setting forth such expenses,
          and TAISHO will pay INSMED the amounts on such invoices within sixty
          (60) days of receipt of the invoices. The failure to make payment,
          without reasonable cause, within thirty (30) days after written notice
          from INSMED that the invoice has not been paid in a timely manner,
          will result in a loss of the License for such patent in the applicable
          country.

          6.2.3.  Upon request by either party the other party ("Audited Party")
          will permit the requesting party ("Requesting Party"), at the
          Requesting Party's expense and using independent, qualified public
          accountants employed by the Requesting Party and acceptable to the
          Audited Party, which acceptance shall not be unreasonably withheld, to
          examine the Audited Party's expense records related to patent
          prosecution and maintenance, as set forth in this Article for up to
          three (3) years after the Requesting Party's receipt of such invoices.
          The Requesting Party's right of examination may be exercised only once
          per invoice. The Requesting Party's accountants will be allowed to
          copy books and records relevant to such audit. Any accountants
          selected by the Requesting Party and accepted by the Audited Party for
          such examinations shall, upon request by the Audited Party, enter into
          appropriate confidentiality agreements, and shall not disclose to the
          Requesting Party any information other than that specifically and
          directly related to the accuracy of the Audited Party's invoices. The
          determinations of such accountants with respect to the accuracy of
          such invoices shall be binding on both parties.

          6.2.4.  If INSMED desires TAISHO to file any patent applications for
          patents included in the TAISHO's New Intellectual Property in
          countries identified by INSMED outside the Territory and TAISHO agrees
          thereto, TAISHO, at INSMED's expense, will cause such patent
          applications to be filed or take such actions to allow INSMED to file
          such patent applications. For any such patent applications filed by
          INSMED, TAISHO shall allow INSMED, upon request, reasonable access to
          all documentation, filings, and communications necessary for INSMED to
          make such patent applications and INSMED shall keep TAISHO advised as
          to the status of such patent applications.

          6.2.5.  If TAISHO desires INSMED to file any patent applications for
          Licensed Patents Owned by INSMED in countries identified by TAISHO in
          the Territory, and INSMED agrees thereto, INSMED, at TAISHO's expense,
          will cause such patent applications to be filed or take such actions
          to allow TAISHO to file such patent applications. For any such patent
          applications filed by TAISHO, INSMED shall allow TAISHO, upon request,
          reasonable access to all documentation, filings, and
<PAGE>

          communications necessary for TAISHO to make such patent applications
          and TAISHO shall keep INSMED advised as to the status of such patent
          applications.

          6.2.6.  In the event INSMED elects not to seek or maintain patent
          protection on Licensed Patents Owned By INSMED in any country in the
          Territory or the Licensed Patents Owned Jointly outside the Territory,
          or TAISHO elects not to seek or maintain patent protection on patents
          included in the New Intellectual Property owned by TAISHO in any
          country outside the Territory, or the Licensed Patents Owned Jointly
          inside the Territory, the other party shall have the right, within its
          own discretion and at its expense to prosecute and/or maintain patent
          protection on such patent. No party shall abandon its interest in such
          a patent or patent application without at least sixty (60) days' prior
          written notice to the other party. If either party notifies the other
          party of its intent to abandon its interest in such a patent or patent
          application, the other party shall have the option to obtain an
          assignment of such patent and related applications free of charge and
          to continue the prosecution and maintenance of such patent and related
          applications in its own name within its own discretion and at its own
          expense.

   ARTICLE 7 INFRINGEMENT
             ------------

     7.1.  Notice

     TAISHO and INSMED will each promptly notify the other party in the event it
     becomes aware of (i) any potential infringement by any third party of
     Licensed Patents or patents included in TAISHO's New Intellectual Property,
     or (ii) any claims by any third party of alleged infringement by the TAISHO
     Parties or the INSMED Parties of the intellectual property of such third
     party with respect to the use, sale, manufacture or distribution of the
     Compound or the Licensed Products in the Territory.

     7.2.  Warranty

     INSMED warrants as of the Effective Date that it has not received any claim
     from a third party that the Licensed Patents Owned By INSMED or INSMED's
     Technical Information infringes the intellectual property rights of any
     third party.

     7.3.  Infringement by Third Party

          7.3.1.  INSMED itself or through another party of its choice shall
          have the right, but not the obligation, to institute litigation in
          connection with infringement by any third party of the Licensed
          Patents. TAISHO, upon request of INSMED, agrees to assist in any such
          litigation at INSMED's expense provided that in the event TAISHO
          desires to join INSMED in litigation related to the infringement of
          Licensed Patents Owned Jointly, TAISHO may do so at its own expense.
          If INSMED itself or through another party designated by it fails to
          institute litigation in connection with infringement of the Licensed
          Patents in the Territory by any third party,
<PAGE>

          TAISHO itself or through another party of its choice shall have the
          right, but not obligation, at TAISHO's expense, to do so. In the event
          the litigation connected with infringement in the Territory results in
          an award to INSMED or TAISHO, such award shall be used to first pay
          all expenses related to the cost of litigation with any residual
          distributed equally between INSMED and TAISHO.

          7.3.2.  TAISHO itself or through another party of its choice shall
          have the right, but not the obligation, to institute litigation in
          connection with infringement by any third party of patents included in
          the TAISHO's New Intellectual Property. INSMED, upon request of
          TAISHO, agrees to assist in any such litigation at TAISHO's expense.
          If TAISHO itself or through another party fails to institute
          litigation in connection with infringement by any third party of
          patents included in the TAISHO's New Intellectual Property, INSMED
          itself or through another party of its choice shall have the right,
          but not obligation, at INSMED's expense, to do so. In the event the
          above litigation results in an award to TAISHO or INSMED, such award
          shall be used to first pay all expenses related to the cost of
          litigation with any residual distributed equally between TAISHO and
          INSMED.

          7.3.3.  Notwithstanding anything to the contrary set forth in the
          other provisions of this Agreement, in the event that any third party
          takes any action which constitutes an infringement of both the
          Licensed Patents and the TAISHO's New Intellectual Property, and
          INSMED and TAISHO each determines to exercise its right to prosecute
          such infringement as contemplated in Articles 7.3.1. and 7.3.2., then
          outside the Territory INSMED itself or through another party of its
          choice shall have the right, but not obligation to institute
          litigation in connection with such infringement, provided that TAISHO
          itself or through another party of its choice shall have the right,
          but not obligation, to join INSMED in litigation related to the
          infringement at its own expense, and inside the Territory TAISHO
          itself or through another party of its choice shall have the right,
          but not obligation, to institute litigation in connection with such
          infringement, provided that INSMED itself or through another party of
          its choice shall have the right, but not obligation, to join TAISHO in
          litigation related to the infringement at its own expense. If the
          responsible party, subject to the two (2) preceding sentences, itself
          or through another party designated by it fails to institute in
          connection with infringement by any third party of the Licensed
          Patents and TAISHO's New Intellectual Property inside or outside the
          Territory, as the case may be, the other party itself or through
          another party of its choice shall have the right, but not obligation,
          at the other party's expense, to do so. Each party, upon request of
          the other party, agrees to assist in any such litigation at requesting
          party's expense. In the event the above litigation connected with
<PAGE>

          infringement in the Territory results in an award to TAISHO or INSMED,
          such award shall be used first to pay all expenses related to the cost
          of litigation with any residual distributed equally between INSMED and
          TAISHO.

     7.4.  Infringement on Third Party's Right

          7.4.1.  In the event any claims are brought against the TAISHO Parties
          by a third party that alleges that the TAISHO Parties are infringing
          patents owned by the third party by exercising the rights licensed to
          TAISHO under this Agreement, TAISHO itself or through a third party of
          choice shall have the right, within its own discretion, to defend
          against any such claims, and any such litigation shall be at TAISHO's
          expense. INSMED, upon request of TAISHO, agrees to assist in any such
          litigation at TAISHO's expense. If TAISHO fails to defend against any
          such claims, INSMED shall have the right but not the obligation, at
          INSMED's expense, itself or through a third party of choice, to defend
          against any such claims. In the event the above litigation results in
          an award in favor of plaintiff, such damages including attorney's fees
          required to be paid in the award shall be borne equally between INSMED
          and TAISHO.

          7.4.2.  In the event any claims of alleged infringement of a third
          party's intellectual property are brought against the INSMED Parties
          with respect to the Compound or the Licensed Products in the
          Territory, INSMED, itself or through a third party of its choice,
          shall have the right, within its own discretion, to defend against any
          such claims, and any such litigation shall be at INSMED's expense.
          TAISHO, upon request of INSMED, agrees to assist in any such
          litigation at INSMED's expense. If INSMED fails to defend against any
          such claims, TAISHO, itself or through a third party of choice, shall
          have the right but not the obligation, at TAISHO's expense, to defend
          against any such claims. In the event the above litigation results in
          an award in favor of plaintiff, such damages including attorney's fees
          required to be paid in the award shall be borne equally between INSMED
          and TAISHO.

          7.4.3.  In the event of any claims of alleged infringement of a third
          party's intellectual property against the TAISHO Parties and the
          INSMED Parties with respect to the Compound or the Licensed Products
          in the Territory, both parties, themselves or through a third party of
          their own choice, shall have the right, within their own discretion to
          defend against any such claims, and the cost of any such litigation
          shall be divided equally between the parties. Each party agrees to
          assist the other in any such litigation. If either party fails to
          defend against any such claims, the other party, itself or through a
          third party of choice, shall have the right but not the obligation, at
          its expense, to defend against any such claims. In the event the above
          litigation results in an award in favor of plaintiff, such damages
          including attorney's fees required to be paid in the award shall be
          borne equally between INSMED and TAISHO.
<PAGE>

          7.4.4.  If claims are brought by a third party against the TAISHO
          Parties and such claims relate to Licensed Patents Owned Jointly for
          Other Uses as defined in Article 6.1.2., TAISHO, itself or through a
          third party of its choice, shall have the right within its own
          discretion to defend such claims and any such litigation shall be at
          TAISHO'S expense. If TAISHO fails to defend against any such claims,
          INSMED, itself or through a third party of choice, shall have the
          right but not the obligation, at INSMED's expense, to defend against
          any such claims only for the purpose of protection of the Licensed
          Patents. All damages, including the third party's attorney's fees that
          are required to be paid in the award shall be borne by TAISHO.

          7.4.5.  If claims are brought by a third party against the INSMED
          Parties and such claims relate to Licensed Patents Owned Jointly for
          Other Uses as defined in Article 6.1.2., INSMED, itself or through a
          third party of its choice, shall have the right within its own
          discretion to defend such claims and any such litigation shall be at
          INSMED'S expense. If INSMED fails to defend against any such claims,
          TAISHO, itself or through a third party of choice, shall have the
          right but not the obligation, at TAISHO's expense, to defend against
          any such claims only for the purpose of protection of the Licensed
          Patents Owned Jointly or TAISHO's New Intellectual Property. All
          damages, including the third party's attorney's fees that are required
          to be paid in the award shall be borne by INSMED.

  ARTICLE 8 DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS
            ------------------------------------------------------

     8.1.  TAISHO development

     TAISHO will use commercially reasonable efforts to develop, market and sell
     the Licensed Products, as prescription medications, in the Territory for
     the Indications and/or New Indications . Upon written notice to INSMED and
     after payment of the initial license fee and all milestone payments to
     INSMED as described in Articles 4.2. and 4.3. to this Agreement, TAISHO
     may, but is not obligated to, market the Licensed Products as non-
     prescription medications in the Territory.

     8.2.  Trademark

     The trademark(s) for the Licensed Products sold by a TAISHO Party in the
     Territory (not excluding China) shall be established and owned by TAISHO.
     In no event shall TAISHO use INSMED's trademarks without INSMED's prior
     written consent. Notwithstanding the foregoing, in China, INSMED may use or
     allow others to use its own or other trademark(s) other than TAISHO's
     trademark(s) for INSMED's sale of the Licensed Products. On any packaging
     or advertising for the Licensed Products, TAISHO will include a notice
     provided by INSMED, that the Licensed Products are licensed from INSMED.
<PAGE>

  ARTICLE 9 TERM AND TERMINATION
            --------------------

     9.1.  Term of This Agreement

     This Agreement shall be effective as of the Effective Date, and shall
     remain in effect for so long as a party is obligated to make payments to
     the other party under this Agreement hereof, unless earlier terminated as
     provided herein. The provisions of Articles 3.5. (pertaining to the
     retention of data only), 3.9.2., 3.9.3., 4.6., 5., 6.1., 6.2.3., 7.3.,
     7.4., 9.7., 9.8., 10. and 11.1. shall survive the expiration or termination
     of this Agreement for any reason.

     9.2.  Termination for Convenience

     At any time, TAISHO, after six (6) months' written notice to INSMED, shall
     have the right, for any reason and at TAISHO's sole discretion, to
     terminate this Agreement, whereupon this Agreement shall terminate six (6)
     months after the date of such notice, or earlier at INSMED's discretion
     after notification in writing to TAISHO and all rights granted by INSMED
     hereunder to TAISHO shall terminate. In such case the parties will pay each
     other all amounts due as of the date of termination.

     9.3.  Termination for Breach or Insolvency

          9.3.1.  If either party materially breaches or defaults under this
          Agreement, and such breach or default is not cured within sixty (60)
          days after notice by the other party specifying such breach or
          default, the other party shall have the right to terminate this
          Agreement. A material breach or default by TAISHO shall be deemed to
          have occurred if TAISHO fails to make any payments as specified in
          Articles 3., 4., 6., or 7., or TAISHO fails to provide proper reports
          or other information needed to enable INSMED to perform an audit of
          royalty payments and expenses as set forth in this Agreement. A
          material breach and default by INSMED shall be deemed to have occurred
          if INSMED fails to make any payments as specified in Articles 4. or
          7., or INSMED fails to provide proper reports or other information
          needed to enable TAISHO to perform an audit of payments and expenses
          as set forth in this Agreement

          9.3.2.  INSMED has the right to terminate this Agreement immediately
          without any responsibility or liability to TAISHO other than those set
          forth in Article 9.7 herein in the event that TAISHO is subject to any
          proceedings under applicable bankruptcy laws to obtain protection from
          creditors, suffers the appointment of a receiver for its assets,
          becomes insolvent, approves a plan of liquidation or ceases to carry
          on pharmaceutical business.

          9.3.3.  Even if INSMED is subject to any proceedings under applicable
          bankruptcy laws to obtain protection from creditors, suffers the
          appointment of a receiver for its assets, becomes insolvent, approves
          a plan of liquidation or ceases to
<PAGE>

          carry on a pharmaceutical business, TAISHO may continue to research,
          develop, make, use, and sell the Compound and/or Licensed Products
          under the terms and conditions hereof without any adverse effect to
          TAISHO to the extent permitted by applicable laws, or terminate this
          Agreement without any responsibility or liability to INSMED other than
          those set forth in Article 9.7 herein.

     9.4.  Modification Due to Breach by INSMED

     In the event of early termination of this Agreement by TAISHO based on a
     material breach or failure by INSMED to meet its obligations hereunder,
     TAISHO shall have the right to continue using, developing and
     commercializing the Compound, and/or Licensed Products in the Territory
     under the Licensed Patents Owned By INSMED, other INSMED's Technical
     Information and INSMED's New Intellectual Property, subject to the payment
     of a reduced royalty and reduced milestone payments to be negotiated in
     good faith by INSMED and TAISHO.

     9.5.  Conversion to Non-Exclusive License

     If TAISHO (i) materially fails to use commercially reasonable efforts, for
     reasons other than those beyond TAISHO's control, to (a) make any progress
     in the Joint Development Program inside the Territory for a period
     exceeding six (6) months following the First NDA Approval outside the
     Territory and such failure is confirmed by the Joint Development Committee
     or, (b) market and sell the Licensed Products as prescription medications
     within six (6) months after the first NDA Approval inside the Territory
     (including listing of National Health Insurance (NHI) drug price thereof if
     such system exists) or (ii) fails to meet any other material obligation
     under this Agreement, INSMED may notify TAISHO of this failure and request
     that it commence actions to remedy such failure. If TAISHO does not take
     actions to remedy its failure within sixty (60) days after written notice
     from INSMED, the issues associated with the failure will be presented to
     the respective Presidents of TAISHO and INSMED for resolution. The
     Presidents or their representatives will meet within sixty (60) days after
     the end of the notice period. If no resolution is reached during that time,
     then INSMED with the approval of TAISHO, or if necessary after agreement
     through mediation as described in Article 10.2., may change the Exclusive
     License of TAISHO to a non-exclusive license by notifying TAISHO in writing
     of such a change.

     9.6.  Failure to Progress the Joint Development Program Outside the
           Territory

     If INSMED materially fails, for reasons other than those beyond INSMED's
     control, to make any progress in the Joint Development Program outside the
     Territory for a period exceeding six (6) months, and such failure is
     confirmed by the Joint Development Committee, TAISHO may notify INSMED of
     its intent to continue the progress of the Joint Development Program
     outside the Territory. If INSMED does not begin to progress the Joint
     Development Program within sixty (60) days after receipt of such notice,
     TAISHO may continue at TAISHO's expense, such development under the Joint
     Development Program without any additional payment to INSMED other than
     milestone payments and royalties as set forth in Article 4. In such case,
     (i) the New Intellectual Property generated by TAISHO's development of the
     Compound and/or Licensed
<PAGE>

     products outside the Territory will be owned by TAISHO, and (ii) TAISHO
     will grant to INSMED an exclusive license to such New Intellectual Property
     on terms to be negotiated in good faith among the parties. If INSMED elects
     to forego such license, INSMED will deliver written notice of its election
     to TAISHO and the parties will discuss the possibility of executing a
     separate license agreement, to be negotiated in good faith, giving Taisho
     the right to INSMED's Technical Information and New Intellectual Property
     outside of the Territory under which TAISHO may commercialize the Compound
     and/or Licensed Products outside the Territory. However, if within three
     (3) years of the commencement of TAISHO's independent development work
     outside the Territory hereunder, INSMED reimburses TAISHO for one-hundred
     percent (100%) of TAISHO's reasonable cost in developing the Compound
     and/or Licensed Products outside the Territory, then TAISHO will (i)
     transfer to INSMED the results (i.e. data, material or information)
     obtained from such TAISHO's development work and (ii) grant to INSMED an
     exclusive, royalty-free, fully paid license for rights outside the
     Territory to the TAISHO's New Intellectual Property generated by TAISHO's
     development of the Compound and/or Licensed Products with additional terms
     to be negotiated in good faith between the parties.

     9.7.  Effect of Termination

     Upon termination of this Agreement INSMED and TAISHO will receive all
     payments and awards due to them under this Agreement, and be entitled to
     any other remedies that they may otherwise have. Upon any termination of
     this Agreement by INSMED subject to Articles 9.3.1. or 9.3.2., or by TAISHO
     pursuant to Article 9.2. or 9.3.3., all rights granted herein to TAISHO
     shall terminate, and TAISHO shall allow INSMED to use its New Intellectual
     Property related to the Compound or the Licensed Products both inside and
     outside the Territory without payment to TAISHO of royalties or other fees.
     To the extent legally and practicably possible TAISHO will promptly deliver
     to INSMED all documentation with respect to any governmental or regulatory
     approvals (including any INDs or NDAs or their foreign equivalents) related
     to the Compound or the Licensed Products.

     9.8.  Effect of Expiration

     After the final royalty payment and any other payments due to INSMED are
     paid by TAISHO and an audit of such payments by INSMED if so requested has
     taken place then TAISHO shall have a full paid-up license with respect to
     all rights granted to TAISHO hereunder.

  ARTICLE 10 DISPUTE RESOLUTION
             ------------------

     10.1.  Governing Law, and Jurisdiction

     This Agreement shall be governed by the laws of the Commonwealth of
     Virginia without giving effect to the principles of conflicts of law.

     10.2.   Mediation
<PAGE>

     In the event of any dispute arising out of or in connection with this
     Agreement, including without limitation its validity and interpretation,
     prior to commencing any arbitration proceeding or action in any court (a)
     the parties agree that any matter in dispute will first be presented to the
     respective Presidents of TAISHO and INSMED for resolution and (b)if the
     Presidents or their respect representatives do not resolve such dispute
     within thirty (30) days after meeting, then the dispute shall be submitted
     to mediation through such mediator, mediation facility or organizations as
     the parties shall agree upon. The cost of mediation shall be shared equally
     by the parties. The place of mediation shall be in the country of the party
     other than the party requesting mediation. Mediation of the dispute shall
     be conducted promptly upon submission of the dispute to mediation and the
     parties agree to participate in such mediation in good faith with a view to
     achieving a mutually satisfactory resolution of the dispute. Mediation of
     the dispute shall be completed within fifteen (15) days of its commencement
     unless the parties extend such time by mutual agreement or the mediator
     earlier declares the parties to be at an impasse. Such mediation shall be
     conducted using the English language.

     10.3.  Arbitration

     If the dispute is not settled by negotiation or mediation as provided
     above, then the dispute shall be finally resolved by binding arbitration
     under ICC Rules. The situs of the arbitration proceedings shall be the
     country of the party other than the party who sought such arbitration. The
     award of arbitration shall be final and binding upon both parties. Such
     arbitration shall be conducted using the English language.

  ARTICLE 11 MISCELLANEOUS PROVISIONS
             ------------------------

     11.1.  Indemnity

     (a)  Each party shall indemnify, defend and hold harmless the other party
     and its Affiliates, licensees and sub-licensees, and their respective
     officers, directors, employees, agents and stockholders ("Related Parties")
     from and against any loss, liability, claim or damage (collectively
     referred to as "Losses") resulting from the failure by the indemnifying
     party to perform any of its covenants set forth herein.

     (b)  TAISHO assumes all risk of damage or injury to persons and to property
     arising out of TAISHO's manufacture, use or sale of the Licensed Products,
     Combination Products or Compound manufactured by TAISHO or its designated
     manufacturer, and shall hold harmless, defend and indemnify INSMED and its
     Related Parties from and against any Losses arising out of TAISHO's
     manufacture, use or sale of Licensed Products or Combination Products.

     (c)  INSMED assumes all risk of damage or injury to persons and to property
     arising out of the manufacture of the Compound sold to TAISHO by INSMED or
     its designated manufacturers pursuant to this Agreement and shall hold
     harmless, defend and indemnify TAISHO and its Related Parties from and
     against any Losses arising out of the
<PAGE>

     manufacture of the Compound sold to TAISHO by INSMED or its designated
     manufacturers. To the extent INSMED is providing the Compound to TAISHO at
     INSMED's cost, INSMED's liability hereunder will be limited to the greater
     of the indemnification given to INSMED by and recovered by INSMED from the
     manufacturer or manufacturers of the Compound or insurance proceeds payable
     pursuant to a product liability insurance policy maintained by INSMED or
     its manufacturer in an amount determined by the Joint Development Committee
     to be appropriate. However, if INSMED is providing the Compound to TAISHO
     at cost plus reasonable profit margin, the preceding sentence shall not be
     applied.

     (d)  Notwithstanding anything to the contrary set forth herein, in no event
     shall INSMED or TAISHO be liable to the other party for any incidental,
     consequential or punitive damages, including but not limited to lost
     profits and damage to reputation.

     11.2.  Waiver

     Any terms or conditions of this Agreement may be waived at any time by the
     party that is entitled to the benefit thereof, but no such waiver shall be
     effective unless set forth in a written instrument duly executed by or on
     behalf of the party or parties waiving such terms or conditions. Neither
     the waiver by any party of any terms or conditions of this Agreement nor
     the failure on the part of any party, on one or more instances, to enforce
     any of the provisions of this Agreement or to exercise any right or
     privilege, shall be deemed or construed to be a waiver of such terms or
     conditions for any similar instance in the future or of any subsequent
     breach hereof. All rights, remedies, undertakings, obligations and
     agreements contained in this Agreement shall be cumulative and none of them
     shall be a limitation of any other remedy, right, undertaking, obligation
     or agreement.

     11.3.  Force Majeure

     Neither TAISHO nor INSMED shall be responsible to the other for failure to
     perform any of its obligations (other than the obligation to pay money)
     imposed by this Agreement, if such failure caused by fire, flood,
     explosion, lightning, windstorm, earthquake, subsidence of soil, failure or
     destruction, in whole or in part, of machinery or equipment, failure of
     supply of materials, discontinuity in the supply of power, governmental
     interference, civil commotion, riot, war, strikes, labor disturbance,
     transportation difficulties, labor shortage, or any cause beyond the
     reasonable control of the party in question.

     11.4.  Severability

     If any provision of this Agreement is determined to be invalid or
     unenforceable, or shall render this entire Agreement to be unenforceable or
     invalid, such provision shall be of no effect and shall not affect the
     validity or enforceability of the remainder of this Agreement or any of its
     provisions; provided, however, that the parties shall use their reasonable
     good faith efforts to re-negotiate such provisions to best accomplish the
     original intentions of the parties.
<PAGE>

     11.5.   Independence of Parties

     INSMED and TAISHO are considered independent contractors from one another
     and therefore neither is considered an employee or an affiliate of the
     other.

     11.6.  No Warranty

     Nothing in this Agreement shall be construed as a warranty with respect to
     the Compound, the Licensed Patent, or New Intellectual Property, as an
     obligation for a party having such right to file infringement suits against
     third parties, or as a warranty that anything made, used, sold, or
     otherwise disposed of by the other party will be free of possible
     infringement of the intellectual property rights of third parties, unless
     otherwise specifically provided for hereunder.

     11.7.  Third Party Actions

     Except as expressly contemplated herein, none of the provisions of this
     Agreement shall be for the benefit of or enforceable by any third party
     including, without limitation, any creditor of either party hereto. No
     third party shall obtain any right under any provision of this Agreement or
     shall by reason of any such provision make any claim in respect of any
     debt, liability, or obligation against either party hereto.

     11.8.  Taxes

     Taxes related to the initial license fee, milestone, royalty and/or other
     payments made by a party to the other that are required to be withheld
     anywhere in and outside the Territory with respect to any Licensed Products
     shall be deducted by the paying party from the milestone, royalty and/or
     other payments due to the other party. The paying party shall provide
     receipts to the other party acknowledging payment of any such taxes along
     with the milestone, royalty and/or other payments when due.

     11.9.  Assignment

     This Agreement shall not be assignable by any party without the prior
     consent of the other, except (i) that INSMED may assign this Agreement, in
     whole or in part, to any Affiliate or to any successor to substantially all
     of INSMED's business or assets, who shall assume and be liable for all
     INSMED's obligations to TAISHO provided for in this Agreement and (ii) that
     INSMED may assign the proceeds from this Agreement in connection with
     financing transactions.

     11.10.  Notice

     Any notice, consent, approval, report, request, or other communication
     under this Agreement shall be in writing sent by registered airmail,
     postage prepaid, by courier service, or facsimile (confirmed by such
     registered mail or courier service) and addressed as follows:

--------------------------------------------------------------------------------
If to TAISHO:                              If to INSMED:
--------------------------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd.            INSMED PHARMACEUTICALS INC.
24-1. Takata 3-chome, Toshimaku,           800 E. Leigh Street
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
(2)  Tokyo, 170-8633, Japan                Richmond, Virginia  23219
--------------------------------------------------------------------------------
Fax: 011-81-3-3985-0716                    Fax: 001-1-804-828-6894
--------------------------------------------------------------------------------
Attention: General Manager                 Attention: President
Business Development Group
Ethical Business Strategy Div.
--------------------------------------------------------------------------------

     All notices shall be deemed to be effective on the date of mailing. In case
     any party changes its address at which notice is to be received, written
     notice of such change shall be given without delay to the other party.

     11.11.  Headings

     Headings in this Agreement are included herein for ease of reference only
     and shall have no legal effect. References to Articles, Articles and
     Schedules are to Articles and Schedules of this Agreement unless otherwise
     specified.

     11.12.  Binding Effect

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

     11.13.  Entire Agreement

     This Agreement, together with the Stock Purchase Agreement, constitutes the
     entire agreement and understanding between the parties with respect to the
     subject matter hereof, and all agreements (including the Confidentiality
     Agreement dated June 18, 1999, and the Binding Letter of Intent dated
     February 23, 2000) or understandings, verbal or written, made between the
     parties before the date hereof with respect to the subject matter hereof
     are superseded hereby. None of the terms of this Agreement shall be
     amended, supplemented or modified except in writing signed by the parties
     hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers, effective as of the Effective Date first
written above.

                                           (i)  INSMED PHARMACEUTICALS, INC.

By: /s/ Geoffrey Allan
    -------------------------------

Name:  Geoffrey Allan

Title: President and CEO

Date:  July 10, 2000
<PAGE>

                                           (ii) TAISHO PHARMACEUTICAL CO., LTD.

     By:  /s/ Akira Uehara
        -------------------------------

     Name:  Akira Uehara

     Title: President

     Date: July 14, 2000
          ----------------------
<PAGE>

                             b. LIST OF SCHEDULES
                                      TO
              THE TAISHO/INSMED LICENSE AND DEVELOPMENT AGREEMENT

A.   Joint Development Program Plan Inside the Territory

B.   Joint Development Program Plan Outside the Territory

C.   Amended and Restated License Agreement Between INSMED and the UVA Alumni
     Patents Foundation

D.   List of Licensed Patents Owned By INSMED

E.   List of Countries in the Territory

F.   List of Studies Substantially Completed to Date<PAGE>

                                                                   Exhibit 10.16

                                LEASE AGREEMENT

                                    Between

                VIRGINIA BIOTECHNOLOGY RESEARCH PARK AUTHORITY,
           a political subdivision of the Commonwealth of Virginia,
                                 as Landlord,

                                      and

                         INSMED PHARMACEUTICALS, INC.,
                            a Virginia Corporation,
                                   as Tenant

                                 BIOTECH ONE,
                     VIRGINIA BIOTECHNOLOGY RESEARCH PARK,
                              RICHMOND, VIRGINIA
<PAGE>

                                LEASE AGREEMENT

     THIS LEASE AGREEMENT (the "Lease"), dated March 24, 1997 between VIRGINIA
BIOTECHNOLOGY RESEARCH PARK AUTHORITY, a political subdivision of the
Commonwealth of Virginia (the "Landlord"), and INSMED PHARMACEUTICALS, INC., a
Virginia Corporation (the "Tenant"), recites and provides:

RECITALS:

     The Landlord owns a real estate project (the "Project") located in the City
of Richmond, Virginia, known as Biotech One, a portion of Phase I of the
Virginia Biotechnology Research Park.

     By lease dated as of August 18, 1994 (as amended, the "Master Lease"), the
Landlord leased the Project to Virginia Commonwealth University ("VCU").

     The Landlord desires to lease a portion of the Project to the Tenant in
accordance with the terms of this Lease.  VCU joins in this Lease solely to
release (but only during the term of this Lease) all of its right, title and
interest under the Master Lease in and to the Leased Premises hereby leased to
the Tenant, during the term of this Lease to the Tenant; however, as between
VCU, Landlord and Crestar Bank, nothing herein shall release VCU of its
obligation as tenant under the Master Lease including, without limitation, VCU's
obligations with respect to the Leased Premises during the term of this Lease.

     NOW, therefore, for and in consideration of the terms, conditions,
covenants, promises and agreements herein made, the Landlord hereby leases and
demises unto Tenant approximately 5,380 rentable square feet consisting of Suite
206 located on the second floor of the Project, as shown outlined in red on the
floor plan attached hereto as Exhibit A, ("the Leased Premises") together with a
right to use in common with other tenants of the Project the common areas and
common facilities as may be designated from time to time by the Landlord. This
Lease shall be subject to all of the terms and conditions of the Master Lease.

1.   Term.
     ----
     (a) The term of this Lease and the Tenant's obligation to pay rent
     hereunder shall commence on March 1, 1997 (the "Commencement Date"), unless
     the Tenant takes possession of the Leased Premises on an earlier date, in
     which event such earlier date shall be the Commencement Date. This Lease
     shall terminate on the last day of the fifth consecutive full Lease Year
     (the "Initial Term") unless earlier terminated as provided herein (the
     "Expiration Date"). The term "Lease Year" as used herein shall mean a
     period of 12 consecutive full calendar months. The first Lease Year shall
     begin on the Commencement Date if it is the first day of a calendar month.
     If the Commencement Date is not the first day of a calendar month, the
     first Lease Year shall begin on the first day of the calendar month
     immediately following the Commencement Date. Each succeeding Lease Year
     shall commence on the anniversary of the first day of the first Lease Year.
<PAGE>

     (b) Notwithstanding anything in this Lease to the contrary and provided
     that the Tenant is at no time in default under the Lease, this Lease may be
     renewed (the "Renewal Term"), for one additional two year renewal term
     ("Renewal Option") on the Initial Term Expiration Date. Each year of the
     Initial Term and each year of the Renewal Option shall be referred to
     individually as a "Lease Year." The Initial Term and the Renewal Term shall
     collectively be referred to as the "Term." The Renewal Option shall be
     subject to all of the same terms, covenants and conditions in this Lease,
     except there shall not be any further option to renew. If the Tenant
     desires to exercise the Renewal Option, Tenant shall so notify the
     Landlord, in writing, three months prior to the Expiration Date of the
     Initial Term.

     (c) The Tenant may terminate this Lease at any time within two years from
     the Commencement Date provided Tenant has given the Landlord at least six
     months prior notice of its election to so terminate the Lease. Tenant shall
     continue to pay base rent and additional rent until the Leased Premises
     have been relet, up to a maximum of six months.

2.   Rent.
     ----

     (a) Tenant covenants to pay Landlord the sum of $134,500.00 as base rent
     (the "Base Rent") during the first year of the initial terms in monthly
     installments of $11,208.33 due and payable in advance on the first day of
     each month (the "Monthly Rent"), without notice or demand and without
     setoff. Base Rent shall include the sum of $5.85 per square foot as the
     initial square foot cost of annual operating expenses (Base Operating
     Expenses Amount"). The Base Rent during the remaining years of the Initial
     Lease Term shall be:

                               Second year    $156,020.00
                               Third year      157,365.00
                               Fourth year     164,090.00
                               Fifth year      170,912.00

     If the Commencement Date is not the first day of a calendar month, the
Tenant shall pay on the first day of the first calendar month following the
Commencement Date a proportionate amount of the Monthly Rent for the period of
time from the Commencement Date to the date on which such first payment of
Monthly Rent is due. Rent shall be paid to the Landlord at 800 East Leigh
Street, Richmond, Virginia 23219, or to such other party and such other place as
Landlord may from time to time designate in writing as provided herein.

     (b) The Monthly Rent shall be increased on the first day of each Lease Year
     in the Renewal Option by an amount equal to two percent of the Monthly Rent
     payable during the preceding Lease Year.

     (c) All costs in addition to the Monthly Rent required to be paid by the
     Tenant in accordance with the terms of this Lease shall be deemed to be
     Additional Rent (the "Additional Rent"). Additional Rent shall be due and
     payable with the next installment of Monthly Rent unless some other due
     date is expressly provided under this Lease.

                                      -2-
<PAGE>

3.   Tenant Improvements.  The Landlord agrees to provide improvements as shown
     -------------------
     or described on Architectural Plans and Specifications prepared by HDR
     (Henningson, Durham & Richardson, Inc.) dated October 31, 1996, which are
     incorporated by reference herein (Exhibit B) approved by the Landlord and
                                       ---------
     Tenant (the "Tenant Improvements"). Landlord, Tenant and Contractor shall
     prepare a Punch List of items which were not completed in accordance with
     architectural plans and specifications prior to occupancy by Tenant.
     Landlord shall complete said Punch List within a reasonable time after the
     Lease Commencement Date.

4.   Use of Leased Premises. The Tenant shall use the Leased Premises solely for
     ----------------------
     biomedical and biotechnology research and related uses approved in writing
     by the Landlord and VCU.

5.   Security Deposit.
     ----------------
     (a) Upon execution of this Lease, the Tenant shall deposit with the
     Landlord a cash deposit (the "Security Deposit") in the amount of
     $12,000.00. The Security Deposit shall be held by the Landlord, without
     interest due to the Tenant, for the term of this Lease, and until all of
     the Tenant's monetary obligations under this Lease have been paid in full
     and Tenant has performed all of its obligations under this Lease.

     (b) If, at any time during the term of this Lease, any Monthly Rent,
     Additional Rent or other cost is not paid by Tenant when due, or if the
     Tenant fails to perform any of its obligations under this Lease, the
     Landlord may, at its option, apply all or any part of the Security Deposit
     to (1) the payment of any such Monthly Rent, Additional Rent or other cost,
     and/or (2) reimburse the Landlord for any loss or damage sustained as a
     result of the Tenant's failure to perform its obligations, and/or (3)
     reimburse the Landlord for the expenses incurred in performing obligations
     which were the responsibility of the Tenant.

     (c) If the Security Deposit, or any part thereof, is applied by the
     Landlord as provided in Section 5(b), upon written demand by the Landlord,
     the Tenant shall pay to the Landlord forthwith an amount equal to the
     amount necessary to restore the Security Deposit to the original amount set
     forth in Section 5(a). At the termination of this Lease, if all the
     Tenant's monetary obligations have been paid in full and Tenant has
     performed all of its obligations under this Lease, the Landlord shall
     return to the Tenant the Security Deposit or any lesser amount remaining
     after application of all or any portion of the Security Deposit as provided
     in Section 5(b).

6.   Common Areas and Common Facilities.
     ----------------------------------
     (a)  All common areas and common facilities furnished by the Landlord in or
     about the Project for the general use, in common, of tenants of the Project
     and their employees and invitees shall at all `times be subject to the
     exclusive control and management of the Landlord. The Landlord, with the
     approval of VCU, shall have the right from time to time to establish,
     modify and enforce reasonable rules and regulations with respect to all
     such common areas and facilities. The Landlord shall have the right to
     remove common areas from common use with the approval of VCU; to construct,
     maintain and operate lighting facilities in or on all such common areas and
     facilities; to police such areas and facilities; from time to time to
     change the area and arrangement of the common facilities with the

                                      -3-
<PAGE>

     approval of VCU; to close temporarily all or any portion of such areas or
     facilities for maintenance purposes; and to do and perform such other acts
     in and to such areas and facilities as the Landlord, in its reasonable
     discretion, shall deem advisable. The Tenant shall have the right to use,
     in common with other tenants of the Project, all such common areas and
     facilities of the Project. In the event of removal of the right to use a
     common area or diminution of a common area, the Landlord shall not be
     subject to any liability for damages caused to Tenant by such removal or
     diminution, nor shall the Tenant be entitled to any compensation or
     diminution or abatement of Monthly Rent or Additional Rent.

     (b) Notwithstanding anything to the contrary in Paragraph 6(a) of this
     Lease, Landlord hereby releases, discharges and shall indemnify, hold
     harmless and defend Tenant, at Landlord's sole cost and expense, for all
     losses, claims, liability, damages and expenses (including reasonable
     attorney's fees) sustained by Tenant for any damage or injury to persons or
     property of the parties hereto or of third persons occurring within the
     common areas of the Project, or which are caused by Landlord, Landlord's
     employees or contractors or which are caused by Landlord's breach of any
     term or condition of this Lease, unless such losses, claims, liability,
     damages or expenses are due to the negligence of Tenant or Tenant's agents,
     invitees or employees.

7.   Services and Utilities.
     ----------------------
     (a)  The Tenant shall be provided the following services (the "Building
     Services") during the term hereof, all at the expense of the Landlord:

          (i) Hot and cold water and lavatory supplies. Hot and cold water shall
          be provided only at those points of supply provided for the general
          use of other tenants of the Project.

          (ii) Automatically operated elevator service.

          (iii) Cleaning and janitorial services after normal business hours
          Monday through Friday of each week, except holidays recognized by the
          Commonwealth of Virginia, which services shall not be performed
          between 9:00 a.m. and 5:00 p.m.

          (iv) Heating and air conditioning in season Monday through Friday from
          8:00 a.m. to 6:00 p.m. and on Saturday from 9:00 a.m. to 2:00 p.m.,
          except on the following holidays: Christmas, New Year's Day,
          Thanksgiving, July 4th, Memorial Day and Labor Day.

          (v) Maintenance and electric lighting service for all common areas in
          the Project.

          (vi) Electricity and proper electrical facilities to furnish
          sufficient electricity, comparable to services provided for typical
          business office operations, for equipment of the Tenant installed
          under this Lease. To the extent the Leased Premises' is not then
          separately metered, then if any portion or all of the Tenant's
          equipment shall cause its demand for electricity to exceed an average
          of 5 watts per square foot of area in the Leased Premises, the Tenant
          shall pay for the cost of such excess electricity at the rate charged
          by the public utility for furnishing such

                                      -4-
<PAGE>

          excess, assuming continuous operation of the Tenant's equipment during
          normal business hours.

     (b) If any law, regulation or executive or administrative order requires
     the Landlord or Tenant to reduce or maintain at a certain level the
     consumption of electricity from the Leased Premises or the Project which
     affects the heating, air conditioning, lighting or hours of operation of
     the Leased Premises or the Project, the Tenant shall adhere to and abide by
     such laws, regulations or executive or administrative order without any
     reduction in rent.

     (c) Failure by the Landlord to any extent to furnish the Building Services
     listed above or any cessation thereof resulting from causes beyond the
     control of the Landlord shall not render the Landlord liable for damages to
     either person or property, nor be construed as an eviction of the Tenant,
     nor work an abatement of rent, nor relieve the Tenant from fulfillment of
     any of the terms and conditions of this Lease. If any equipment or
     machinery ceases to function properly, the Tenant shall have no claim for
     rent abatement or damages due to any interruptions in service occasioned
     thereby or resulting therefrom.

8.   Maintenance, Repair and Operating Expenses.  Landlord covenants that it
     ------------------------------------------
     shall maintain the Project and all common areas and common facilities in
     connection therewith, including the HVAC, elevators, plumbing, electrical
     and mechanical systems, all landscaping and other interior and exterior
     components of the Project in good working order and in a manner consistent
     with that of other professional scientific research facilities.

     (a) As used in this Lease, "Operating Expenses" means all expenses, costs
     and disbursements of every kind which Landlord incurs, pays or becomes
     obligated to pay in connection with the ownership, operation, repair, and
     maintenance of the building, which costs shall include all expenditures by
     Landlord to maintain all facilities in operation at the beginning of the
     Term and such additional facilities installed in subsequent years as
     Landlord may consider necessary or beneficial for the operation of the
     building. All Operating Expenses shall be determined according to generally
     accepted accounting principles (which shall be consistently applied) and
     shall include, but are not limited to, the following:

         (i) Wages, salaries, and fees of all personnel or entities (exclusive
         of Landlord's executive personnel) engaged in the operation, repair,
         maintenance, or security of the building, including taxes, insurance,
         and benefits relating thereto.

         (ii) All supplies and materials used in the operation, repair,
         security, and maintenance of the building.

         (iii) Cost of all maintenance and service agreements for the building
         and the equipment therein, including, without limitation, alarm
         service, water treatment services, janitorial services, security
         systems service, window cleaning, service on electrical and mechanical
         components, trash removal, elevator maintenance, extermination service,
         plumbing service, grounds keeping, and landscaping.

                                      -5-
<PAGE>

         (iv) Cost of all insurance relating to the building for which Landlord
         is responsible hereunder, or which Landlord considers reasonably
         necessary for the operation of the building, including, without
         limitation, the cost of property, casualty and liability insurance
         applicable to the building and Landlord's personal property used in
         connection therewith, and the cost of business interruption or rental
         insurance in such amounts as will reimburse Landlord for all losses of
         earnings and other income attributable to such perils as are commonly
         insured' against by prudent landlords or required by Landlord's lender.

         (v) Cost of repairs and maintenance (excluding repairs and maintenance
         paid by proceeds of insurance or by Tenant or other third parties, and
         alterations attributable solely to tenants of the building) of the
         building.

         (vi) All utility costs of the building including, without limitation,
         water, power, fuel, heating, lighting, air-conditioning, and
         ventilating.

         (vii) Amortization of the cost of installation of capital investment
         items which are primarily to reduce operating costs for the general
         benefit of the building's tenants or to enhance the building or which
         may be required by any governmental authority. All such costs,
         including interest costs, shall be amortized over the reasonable life
         of the capital investment items, with the reasonable life and
         amortization schedule being determined by Landlord according to
         generally accepted accounting principles, but in no event to extend
         beyond the reasonable life of the building.

         (viii) Landlord's central accounting costs, an annual audit and legal
         fees relating to the operation of the building.

         (ix) A management fee to the manager of the building.

         (x) Common area charges due from the owner of the Project under the
         Declaration of Reciprocal Easements encumbering the Project; and

         (xi) All real estate taxes, personal property taxes, general and
         special assessments, permit and license fees, and all other public
         charges and/or taxes of any nature whatsoever, assessed against the
         Project or any portion thereof, arising out of the ownership of the
         Project, and any sales tax, occupancy tax or excise tax, and any and
         all sums owed or paid by Landlord in lieu of any of such taxes,
         assessments, fees and charges (collectively, the "Impositions").

     (b) "Proportionate Share" shall mean:

         (i) with respect to expenses allocable solely to the Leased Premises,
         100% of such expense;

         (ii) with respect to expenses allocable to either the common areas of
         the Project or the entire Project, the proportion that the number of
         rentable square feet of the Leased Premises, as set forth on Lease Term
         Sheet of this Lease, as may be adjusted after expansion by the exercise
         of the expansion options, if any, set forth herein, bears to the total
         aggregate number of rentable square feet of the Project;

                                      -6-
<PAGE>

         (iii) with respect to expenses allocable to less than the entire
         Project but more than the Leased Premises, the proportion that the
         number of rentable square feet of the Leased Premises, as set forth on
         Lease Term Sheet of this Lease, as may be adjusted after expansion by
         the exercise of the expansion options, if any, set forth herein, bears
         to the total aggregate number of rentable square feet of the portion of
         the Project to which such expenses are allocable.

     (c) Throughout the Term, Tenant shall pay on a monthly basis, without
     demand as Additional Rent for the Leased Premises, its Proportionate Share,
     of the amount by which Operating Expenses computed on a square foot basis
     exceed the product of the Base Operating Expenses Amount ($5.85) and the
     rentable area of the building. Such payments shall be made as follows:

         (i) Before the beginning of each Lease Year during the Term, beginning
         on the first anniversary of the Commencement Date and on each
         successive annual anniversary of the Commencement Date thereafter
         during the Term, Landlord shall furnish Tenant with Landlord's estimate
         of the Operating Expenses for the following Lease Year. By the first
         day of each month during such Lease Year, Tenant shall pay 1/12th of
         its Proportionate Share of the estimated increase, if any, in the Base
         Operating Expenses Amount for such Lease Year.

         (ii) Within the first ninety (90) days of each Lease Year during the
         Term (beginning on the first anniversary of the Commencement Date), or
         as soon thereafter as reasonably practical, Landlord shall furnish to
         Tenant a statement of the actual Operating Expenses for the previous
         Lease Year. Within thirty (30) days after the delivery of that
         statement, a lump sum payment will be by Tenant equal to the amount, if
         any, by which Tenant's Proportionate Share of the actual Operating
         Expenses exceeds the amount, if any, which Tenant has paid toward the
         estimated increase in Operating Expenses. If Tenant's Proportionate
         Share of such items is less than the amount Tenant has paid toward the
         estimated increase in Operating Expenses, Landlord shall apply such
         amount to the next accruing installments of Rent due hereunder. The
         effect of this adjustment is that Tenant will pay during each Lease
         Year during the Term its Proportionate Share of the increase in actual
         Operating Expenses.

     (d) Until such time as the Project is 95% occupied, the Landlord shall
     adjust the Operating Expenses for such calendar year to reflect what the
     Operating Expenses would have been had the Project been 95% occupied at all
     times during such calendar year, and Tenant's Proportionate Share for such
     calendar year shall be based upon such adjustment in Operating Expenses.

     (e)  Landlord shall have the right to revise its estimate of the Operating
     Expenses from time to time during the calendar year, and Tenant shall pay
     the Operating Expenses monthly in accordance with such revised estimate(s).
     If Tenant's monthly payments exceeded the actual Operating Expenses, Tenant
     shall have a credit in the amount of the excess paid by the Tenant toward
     Tenant's next monthly payment of the estimated Operating Expenses. If
     Tenant's monthly payments were less than the actual expenses,

                                      -7-
<PAGE>

     Tenant shall pay the deficiency within thirty (30) days after receipt of
     the statement from Landlord.

     (f) If the number of square feet of the rentable area changes, then
     Tenant's Proportionate Share shall be adjusted effective as of the date of
     any such change. Any changes made pursuant hereto will not alter the method
     of computation of any increases in the Base Operating Expenses.

     (g) All other costs and expenses which Tenant assumes or agrees to pay to
     Landlord pursuant to this Lease shall also be deemed Additional Rent and,
     in the event of nonpayment thereof, Landlord shall have all the rights and
     remedies herein provided for in case of nonpayment of Rent.

     (h)  Notwithstanding anything to the contrary in Section 8 of this Lease,
     Tenant's Proportionate Share of any increase in actual Operating Expenses
     in any Lease Year will not exceed $2.00 per rental square foot of the
     Leased Premises.

9.   Tenant's Equipment, Fixtures and Alterations.
     --------------------------------------------
     (a)  The Tenant will not install in the Leased Premises any electrically
     operated equipment that will cause Tenant's consumption of electricity on
     Tenant's electrical demand to exceed the rated consumption on demand of the
     Leased Premises on a per square foot basis, without the prior written
     consent of the Landlord, which consent may be conditioned upon payment by
     the Tenant of Additional Rent as compensation for additional consumption of
     electricity or water, to the extent the Leased Premises is not then
     separately metered. The Tenant shall not install any equipment which will
     necessitate any changes, replacements or additions to, or changes in the
     use of, the water system, heating system, plumbing system, air-conditioning
     system or electrical system in the Leased Premises without the prior
     written consent of the Landlord. If Tenant uses equipment that increases
     the heat levels in the Leased Premises above those customarily found in an
     office, Landlord shall have the option to install supplemental air
     conditioning equipment. All costs of such installation, operation,
     maintenance and replacement of equipment by Landlord shall be at Tenant's
     expense.

     (b)  The Tenant shall not make or cause to be made any interior or exterior
     modifications or additions to the Leased Premises without the prior written
     consent of the Landlord. The Tenant shall present to the Landlord plans and
     specifications for such work at the time such consent is sought. If the
     plans and specifications are approved, the Tenant shall employ a
     contractor, selected by the Tenant and approved by the Landlord, to make
     the improvements. All improvements shall comply with the requirements of
     all federal, state and local governmental authorities. The Tenant shall be
     solely responsible for the prompt payment of all costs related to the
     improvements and, if any mechanics' or materialmen's lien is filed, the
     Tenant shall have such lien released by payment or bond within ten days
     after the Tenant receives notice thereof.

     (c) Upon the termination or expiration of the term of this Lease, the
     Tenant shall remove all trade fixtures and furnishings installed by the
     Tenant and not a part of the real estate or mechanical equipment and shall
     repair all damage to the Leased Premises caused by the installation or
     removal of any trade fixtures or other furnishings. All trade fixtures

                                      -8-
<PAGE>

     and furnishings which the Tenant has not removed prior to the termination
     or expiration of the term hereof shall, at the Landlord's option, become
     the property of the Landlord.

10.  Tenant's Insurance; Compliance with Laws.
     ----------------------------------------
     (a) Tenant shall maintain at its sole cost and expense the following
     insurance with respect to the Leased Premises:

         (i) Contractual and commercial general liability insurance against
         claims for bodily injury, death or property damage occurring on, in or
         about the Project, which insurance shall be written on an occurrence
         basis and shall provide protection with a combined single limit of Two
         Million ($2,000,000) Dollars (or in such increased limit to reflect
         declines in the purchasing power of the dollar as Landlord may, from
         time to time, reasonably request). Tenant shall hold the Landlord and
         VCU harmless from any liability for death or bodily injury to any
         person or damage to property owned by a third party occurring in the
         Leased Premises arising from any cause whatsoever.

         (ii) Insurance for the Tenant's furniture, furnishings, equipment,
         improvements and trade fixtures located in the Leased Premises under a
         standard fire and extended coverage insurance policy, in amounts to
         prevent Landlord, and Tenant from becoming co-insurers, and in any
         event, in amounts not less than the actual replacement cost of such
         property. The Landlord shall not be responsible for providing insurance
         of any kind on the Tenant's furniture and furnishings or its equipment,
         improvements or trade fixtures and the Tenant shall be solely liable to
         repair or replace the same in the event of damage or destruction to the
         Leased Premises.

     (b) Each policy of insurance required by this Section shall name the
     Landlord, VCU and any person or entity having an interest in the Project
     and designated by the Landlord or VCU as insured parties and shall provide
     that the insurer shall not cancel or change the terms of such insurance
     policy without first giving the Landlord, VCU and other insureds thirty
     (30) days' prior written notice thereof. The insurance policies shall be
     issued by an insurance company, licensed to do business in Virginia, and
     approved by the Landlord. Copies of the policies or the issuer's
     certificates of insurance shall be delivered to the Landlord, VCU and to
     all other insured parties on or before the Commencement Date and thereafter
     promptly upon request.

     (c) The Tenant shall not do or allow to be done in or about the Leased
     Premises anything which is prohibited under any policy of insurance carried
     by the Landlord or VCU. If Tenant's use or occupancy of the Leased Premises
     causes the premium for fire or other insurance carried by the Landlord or
     VCU to be higher than the premium otherwise payable for such insurance, the
     Tenant shall pay the difference as Additional Rent.

     (d) The Tenant shall at all times and at its expense, promptly comply with,
     or promptly cause to be complied with, all applicable laws, rules,
     regulations and other governmental requirements, now existing or hereafter
     enacted, to which the Tenant or the Leased Premises is subject.

                                      -9-
<PAGE>

11.  Landlord's Access to Leased Premises.  The Landlord shall have the right at
     ------------------------------------
     all reasonable times to enter the Leased Premises to perform routine
     maintenance, repairs and alterations, to inspect the Leased Premises and to
     show such property to prospective tenants, mortgagees or purchasers. If the
     Tenant is not present to open and permit entry to the Leased Premises at
     any time when for any reason entry there is necessary or permissible
     hereunder, the Landlord may use a master key to enter the Leased Premises.
     The Landlord may enter the Leased Premises at any time to make emergency
     repairs and may forcibly enter the Leased Premises in an emergency
     situation. Such entry shall not be deemed to constitute an eviction of the
     Tenant or to give the Tenant any right to abatement of rent for loss or
     interruption of the business of the Tenant.

12.  Surrender of Possession.  The Tenant shall, at the expiration or
     -----------------------
     termination of the term of this Lease, surrender possession of the Leased
     Premises peacefully and promptly in as good condition as at the
     commencement of its occupancy, ordinary wear and tear excepted. The Tenant
     shall surrender all keys used in connection with the Leased Premises.

13.  Tenant's Personal Property.
     --------------------------

     (a) All property of the Tenant kept or stored in the Leased Premises shall
     be kept or stored at the sole risk of the Tenant, and the Tenant shall hold
     the Landlord and VCU harmless from any liability for loss of or damage to
     such property.

     (b) The Tenant agrees to notify the Landlord immediately of any fire or
     other casualty or known defect in the Leased Premises, the Project and in
     the fixtures or equipment located therein.

     (c) The Tenant shall be responsible for and shall pay when due all
     municipal, city or state taxes assessed during the term of this Lease
     against any leasehold interest or personal property of any kind, owned by
     or placed in the Leased Premises by the Tenant.

14.  Rules and Regulations.  The rules and regulations attached to this Lease as
     ---------------------
     Exhibit C, as amended and supplemented from time to time as provided below,
     ---------
     are hereby made a part of this Lease (the "Rules and Regulations"), and
     Tenant shall be subject to all provisions thereof. The Landlord, with the
     approval of VCU, reserves the right to make reasonable amendments and
     supplements to the Rules and Regulations. The Landlord shall give the
     Tenant at least ten (10) days written notice prior to the implementation of
     any amendments or supplements.

     The Tenant shall be liable for the payment of all costs and expenses,
including reasonable attorneys' fees incurred by the Landlord in enforcing the
Rules and Regulations and other provisions of this Lease.

15.  Indemnification.
     ---------------
     (a) The Tenant agrees to indemnify and hold the Landlord and VCU harmless
     from all claims, actions, damages, liability and expense in connection with
     loss of life or personal injury to persons and damage to property arising
     in or about the Leased Premises, or the occupancy or use of the Leased
     Premises, or any part thereof, by the

                                      -10-
<PAGE>

     Tenant, or occasioned wholly or in part by any act or failure to act by the
     Tenant, its agents, contractors, employees or subtenants.

16.  Estoppel Certificate.  Upon request by the Landlord, the Tenant shall
     --------------------
     deliver to the Landlord, or to any party designated by the Landlord, a
     written statement in recordable form certifying: the commencement and
     termination dates of this Lease; that this Lease is or is not in full force
     and effect; that the Tenant has or has not accepted the Leased Premises and
     is or is not in complete possession thereof; that this Lease has not been
     modified or amended, or if it has, stating the specific modifications or
     amendments thereto; that all improvements to the Leased Premises to be made
     by the Landlord have been fully completed in accordance with the applicable
     plans and specifications or stating specifically any failure to complete
     such improvements; that, as of the date of certification, the Tenant has
     not paid Monthly Rent more than 30 days in advance (or stating the amount
     of rent paid more than 30 days in advance); that no proceedings are pending
     or threatened against Tenant before or by any court or administrative
     agency which, if adversely decided, would materially and adversely affect
     this Lease or the Tenant's ability to perform its obligations hereunder or,
     if any such proceedings are pending or threatened, specifying and
     describing such proceedings; and that there are no defaults under this
     Lease, nor defenses or offsets, or stating the specific defaults, defenses
     or offsets claimed by the Tenant. Such statement shall include any other
     certification reasonably requested.

17.  Attornment.  In the event of the exercise of any power of sale under the
     ----------
     provisions of any mortgage or deed of trust now or hereafter encumbering
     the Project, or a transfer of the Project in lieu thereof, the Tenant
     agrees that, if requested by the purchaser at such foreclosure sale or by
     the transferee, it shall attorn to the purchaser or transferee and it shall
     recognize such purchaser or transferee as the Landlord under the terms of
     this Lease and shall continue this Lease in full force and effect
     regardless of whether such mortgage or deed of trust was superior or
     subordinate to this Lease.

18.  Subordination.  This Lease is subject and subordinate to the lien and the
     -------------
     provisions of any and all mortgages, deeds of trust and other security
     instruments which may now or hereafter encumber or otherwise affect the
     Project, and to all renewals, replacements, extensions and modifications
     thereof. The foregoing subordination shall be self-operative and effected
     by execution of this Lease. Upon request by the Landlord, the Tenant agrees
     to confirm the subordination of its rights hereunder to any mortgage or
     deed of trust or any other security instrument resulting from any method of
     financing now or hereafter affecting the Project and to all advances made
     or hereafter to be made thereunder. Notwithstanding the foregoing, the
     beneficiary of any deed of trust on the Project may, at its option,
     subordinate at any time its deed of trust to this Lease by executing and
     recording a unilateral declaration to such effect.

19.  Assignment and Subletting.
     -------------------------

     The Tenant shall not mortgage or assign this Lease, in whole or in part,
nor sublet all or any part of the Leased Premises without the prior written
consent of the Landlord and VCU, which consent may be withheld, delayed or
conditioned in the sole and absolute discretion of

                                      -11-
<PAGE>

Landlord and VCU. This prohibition on assignment and subletting shall include a
prohibition against any assignment or subletting by operation of law. Any
consent given by the Landlord and VCU to any mortgage, assignment or subletting
by the Tenant shall not constitute a waiver of the requirement for such consent
to any subsequent mortgage, assignment or subletting, nor shall the Tenant be
released from performing any of the terms, covenants and conditions of this
Lease. If this Lease is assigned or the Leased Premises sublet, the Landlord may
collect Monthly Rent and Additional Rent and other costs from the assignee or
sublessee and apply the amount collected to Tenant's obligation for Monthly
Rent, Additional Rent and other costs due in accordance with the provisions of
this Lease.

20.  Damage or Destruction.
     ---------------------

     (a)  If the Leased Premises are damaged by fire or other casualty, but no
     portion thereof is thereby rendered untenantable for the purpose or use for
     which Tenant has leased the Leased Premises in Landlord's reasonable
     opinion, upon being so notified by Tenant by certified or registered mail,
     return receipt requested, the Landlord shall [except as provided in
     paragraph (ii) of Section 10(a)], at its expense, cause such damage to be
     repaired and the rent shall not be abated. If by reason of fire or other
     casualty, the Leased Premises are rendered untenantable in part for the
     purpose or use for which Tenant has leased the Leased Premises in
     Landlord's reasonable opinion, the Landlord shall [except as provided in
     paragraph (ii) of Section 10(a)], at its expense, subject to availability
     of insurance proceeds, cause such damage to be repaired, and the Monthly
     Rent shall be adjusted on a pro-rata basis for the period of such repair
     and restoration for that portion of the Leased Premises rendered
     untenantable. If the Leased Premises are damaged by fire or other casualty
     so as to render same untenantable for the purpose or use for which Tenant
     has leased same in Landlord's reasonable opinion, the Landlord shall
     [except as provided in paragraph (ii) of Section 10(a)]; at its expense,
     subject to availability of insurance proceeds, cause such damage to be
     repaired, and the Monthly Rent shall be abated in full for the period of
     such repair and restoration, provided, however, that if, within 60 days
     after the fire or other casualty, the Landlord gives the Tenant written
     notice that it has elected not to cause the Leased Premises to be repaired
     and restored, then this Lease shall terminate as of the date of the fire or
     other casualty.

     (b) If the Project is damaged by fire or other casualty with the result
     that its general use is impaired, then, notwithstanding that the Leased
     Premises may be undamaged, the Landlord shall have the right for ninety
     (90) days following the date of the fire or other casualty, to terminate
     this Lease by giving the Tenant 30 days' prior written notice of the
     termination.

     (c) Notwithstanding anything to the contrary in Paragraph 20(b) of this
     Lease, in the event there is an interruption in electrical, heating and
     cooling, telephone services and water ("Essential Building Services") which
     is not due in part to the negligence of the Tenant and as a direct result
     of such interruption Tenant is unable to occupy the Leased Premises for the
     purposes set forth in Paragraph 4 of this Lease then, the Base Rent and any
     Additional Rent payable to Landlord shall be abated from the third day
     after such interruption until such time as such services are reinstated or
     Tenant again occupies the

                                      -12-
<PAGE>

     Leased Premises. In the event said interruption of services extends for a
     period of more than thirty (30) days then Landlord agrees to work with
     Tenant in finding alternative space which Tenant can use until the building
     Services are restored.

21.  Eminent Domain. If all or part of the Leased Premises is taken or condemned
     ----------------
     by any authority or in the event of any purchase in lieu of any such taking
     or condemnation, this Lease shall terminate as of the date on which the
     Tenant is deprived of possession of the Leased Premises. Any award for the
     land and buildings of which the Leased Premises are a part and for damages
     to the residue, or any negotiated payment by private sale in lieu thereof,
     shall be the property of the Landlord, and the Tenant hereby assigns to the
     Landlord all its right, title and interest in and to any such award or
     payment. The Tenant shall bear the cost of removing its property from the
     Leased Premises.

22.  Environmental Hazards. Tenant will not on, about or under the Leased
     -----------------------
     Premises, handle, store, make, treat or dispose of any "Hazardous
     Materials" (defined below), except in accordance with all applicable
     federal, state and municipal laws and regulations (collectively, the
     "Environmental Laws") governing Hazardous Materials. "Hazardous Materials"
     as used herein shall include, without limitation, "hazardous substances" as
     defined in the Comprehensive Environmental Response, Compensation and
     Liability Act, 42 U.S.C. (S) 9601 et seq. ("CERCLA"); all chemicals,
     petroleum, crude oil or any fraction thereof, hydrocarbons, polychlorinated
     biphenyls (PCBs), asbestos, asbestos-containing materials and/or products,
     urea formaldehyde, or any substances which are classified as "hazardous" or
     "toxic" under CERCLA; hazardous waste as defined under the Solid Waste
     Disposal Act, as amended, 42 U.S.C. (S) 6901; air pollutants regulated
     under the Clean Air Act, as amended, 42 U.S.C. (S) 7401, et seq.;
     pollutants as defined under the Clean Water Act, as amended, 33 U.S.C. (S)
     125, et seq., any pesticide as defined by Federal Insecticide, Fungicide,
     and Rodenticide Act, as amended, 7 U.S.C. (S) 136, et seq., any hazardous
     chemical substance or mixture or imminently hazardous substance or mixture
     regulated by the Toxic Substances Control Act, as amended, 15 U.S.C. (S)
     2601, et seq.; any substance listed in the United States Department of
     Transportation Table at 45 CFR 172.101; any chemicals included in
     regulations promulgated under the above listed statutes; any explosives,
     radioactive material, and any chemical regulated by state statutes similar
     to the federal statutes listed above and regulations promulgated under such
     state statutes.

     During the term of this Lease, to the extent at any time required by the
Environmental Laws, Tenant shall remove any Hazardous Materials placed,
generated or stored by it on or about the Leased Premises, and Tenant shall
defend, indemnify and hold the Landlord and VCU, their officers, directors,
shareholders, partners and employees harmless from and against any and all
causes of action, suits, demand or judgments of any nature whatsoever, losses,
damages, penalties, expenses, fees, claims, costs (including, but not limited
to, attorneys' fees and costs of litigation, arising out of or in any manner
connected with the violation of any applicable federal, state or local
environmental law with respect to the Leased Premises; the handling, storage,
"release" or "threatened release" of or failure to remove, as required by this
Section, Hazardous Materials from the Leased Premises.

                                      -13-
<PAGE>

     Tenant represents and warrants that it will not install any underground
storage tank without specific, prior written approval from the Landlord and VCU.
Tenant will not store combustible or flammable materials on the Leased Premises
in violation of the Environmental Laws.

     Landlord represents and warrants that any handling, transportation,
storage, treatment or usage of hazardous or toxic substances that has occurred
on the Leased Premises or the Project to date has been in compliance with all
applicable federal, state and local laws, regulations and ordinances. Landlord
further represents and warrants that no leak, spill, release, discharge,
emission or disposal of hazardous or toxic substances has occurred on the Leased
Premises or the Project to date and that the soil vapor on or under the Leased
Premises or the Project are free of toxic or hazardous substances as of the date
that the term of this Lease commences.

23.  Default; Remedies upon Default.
     ------------------------------
     (a) Landlord Default: It shall be a material default and breach of this
         ----------------
     Lease by Landlord if Landlord fails to observe or perform any of the
     covenants, conditions or provisions of this Lease to be observed or
     performed by Landlord and such failure shall continue for a period of
     thirty (30) days after written notice thereof from Tenant to Landlord;
     provided, however, that if the nature of the Landlord's default is such
     that more than thirty (30) days are reasonably required for its cure, then
     Landlord shall not be deemed to be in default if Landlord commences such
     cure within such thirty (30) day period and thereafter diligently
     prosecutes such cure to completion. Upon the happening of a material
     default hereunder (beyond any applicable cure period), Tenant. may, at its
     option (but without being required to do so), immediately or at any time
     thereafter and without notice, perform the same for the account of Landlord
     and if Tenant makes any expenditures, or incurs any obligations for the
     payment of money in connection therewith, including but not limited to,
     reasonable attorneys' fees, such expenditure shall be paid by Landlord to
     Tenant within fifteen (15) days of rendition of any bill or statement to
     Landlord therefor. All rights given to Tenant in this Section shall be in
     addition to any other right or remedy of Tenant at law, in equity, or
     otherwise.

     (b) Tenant's Events of Default: Any one or more of the following events
         --------------------------
     shall constitute a default (a "Default") under this Lease:

         (i) Failure by the Tenant to pay any Monthly Rent, Additional Rent or
         other amount due under this Lease within five days after the date when
         due.

         (ii) Failure by the Tenant to observe or perform any covenant,
         condition or agreement on its part to be observed or performed
         hereunder or under the Rules and Regulations, other than as referred to
         in clause (i) above, which failure shall continue for a period of
         thirty (30) days after written notice of such failure is given by the
         Landlord to the Tenant.

         (iii) The commencement by Tenant, or the commencement against Tenant,
         of a case under federal bankruptcy law, as now or hereafter
         constituted, or under any other applicable federal or state bankruptcy,
         insolvency, moratorium or similar law.

                                      -14-
<PAGE>

     Tenant shall not be deemed to be in Default under this Section (b)(ii) if,
1) Tenant is not in default in the performance of any of the terms and
conditions of this Lease including the monetary and rental obligations provided
for herein at the time of filing for bankruptcy protection; and 2) Tenant can
demonstrate reasonable ability at the time of filing for bankruptcy protection
that Tenant can continue to meet all its rental obligations under this Lease and
compliance with all the other terms and conditions of this Lease.

      (c)  Remedies upon Default.
           ---------------------

           (i) Whenever any Default shall have occurred, the Landlord may take
           any one or more of the following actions:

               (a) The Landlord may immediately re-enter and take possession of
all or any part of the Leased Premises without terminating this Lease, exclude
the Tenant from possession of all or any part of the Leased Premises, and, for
the account of the Tenant, keep in force and effect any assignments or subleases
entered into with the consent of Landlord pursuant to Section 19 (or which
Landlord decides to acknowledge even if not consented to) which then are
outstanding and not in default and lease all or any part of the Leased Premises
which is not then so subleased or assigned to one or more parties, at a rental
rate and upon such terms and conditions as Landlord deems acceptable in its sole
discretion, in each case holding the Tenant liable for the difference between
the proceeds of the reletting (less costs of reletting including without
limitation brokerage fees, architect's fees, attorneys' fees and costs of
alterations and redecorating) and all Monthly Rent, Additional Rent and other
amounts due from Tenant under this Lease.

               (b) The Landlord may immediately terminate this Lease as to all
or any part of the Leased Premises and exclude the Tenant from possession of all
or any part of the Leased Premises.

                (c) The Landlord may immediately terminate this Lease and
declare all payments of Monthly Rent due from the date of termination through
the date that would otherwise have been the normal expiration of this Lease to
be immediately due and payable, discounted to present value as of the date of
payment at an annual rate equal to six percent per year.

               (d) The Landlord may exercise rights of self-help and/or take
whatever action at law or in equity may appear necessary or desirable to collect
the Monthly Rent, Additional Rent or other amounts then due and thereafter to
become due, or to enforce performance and observance of any obligation,
agreement or covenant of the Tenant under this Lease. No termination of this
Lease shall relieve Tenant from liability for payment of Monthly Rent,
Additional Rent and other amounts accrued to the date of termination.

         (ii) No re-entry or taking possession of the Leased Premises by the
         Landlord shall be construed as an election by the Landlord to terminate
         this Lease unless (i) written notice of such termination is given by
         the Landlord to the Tenant, or (ii) this Lease is terminated by an
         order or a decree of a court of competent jurisdiction. Notwithstanding
         any re-entry and taking of possession by the Landlord of all or any
         part of the Leased Premises without terminating this Lease,

                                      -15-
<PAGE>

         the Landlord may at any time thereafter elect to terminate this Lease
         for any previous Default by the Tenant. Upon any re-entry and taking
         possession of the Leased Premises by Landlord, or upon any termination
         of this Lease, any property of the Tenant may be removed by Landlord,
         without liability for loss of or damage to said property, and stored
         elsewhere at the risk of and at the expense of Tenant.

         (iii) Upon a Default, the Tenant shall on demand pay Landlord as
         Additional Rent all reasonable attorneys' fees, court costs and other
         reasonable expenses incurred by Landlord in the collection of Monthly
         Rent, Additional Rent and other amounts due under this lease and/or the
         enforcement of any other obligations of Tenant. Upon a Default, the
         Tenant shall on demand pay Landlord as Additional Rent all reasonable
         expenses incurred by the Landlord in attempting to cure the Default by
         the exercise of self-help.

         (iv) No delay or omission by the Landlord in exercising any right
         accruing upon a Default shall be construed to be a waiver of any such
         right, but any such right may be exercised from time to time as often
         as deemed expedient.

24.  Force Majeure.  If by reason of acts of God, strikes, lockouts or other
     -------------
     industrial disturbances; acts of public enemies; orders of any kind of the
     government of the United States or the Commonwealth of Virginia, or any
     civil or military authority; insurrections; riots; epidemics; landslides;
     lightning; earthquakes; fires; hurricanes; tornadoes; blizzards, or other
     storms; floods, washouts; droughts; arrests; restraint of government and
     people; civil disturbances; explosions; breakage or accident to machinery;
     partial or entire failure of utilities; or any cause or event not
     reasonably within the control of the Landlord, the Landlord is unable in
     whole or in part to carry out its agreements contained in this Lease, the
     Landlord shall not be deemed in Default during the continuance of such
     inability.

25.  Successors.  Subject to the provisions of this Lease prohibiting or
     ----------
     restricting the right of the Tenant to encumber, sublease or assign its
     interests under this Lease and the provisions of the Section headed
     "Subordination", this Lease shall be binding upon and inure to the benefit
     of the Landlord, VCU and the Tenant and their respective successors and
     assigns.

26.  Non-Waiver.  The failure of the Landlord, to enforce strict compliance with
     ----------
     any of the terms and conditions of this Lease shall not constitute or be
     construed as a waiver or relinquishment of the right to enforce strict
     compliance thereafter with the terms and conditions of this Lease. The
     payment of rent by the Tenant or the acceptance of rent by the Landlord,
     with knowledge of the breach of any term or condition of this Lease, shall
     not be deemed a waiver of such breach.

27.  Notices.  All notices required or permitted by this Lease shall be in
     -------
     writing and delivered or sent by registered or certified mail and addressed
     as follows:

     If to the Landlord:

          Virginia Biotechnology Research Park Authority

                                      -16-
<PAGE>

          800 East Leigh Street
          Richmond, Virginia 23219
          a: Executive Vice President

                   SIGNATURE PAGE

                   LEASE AGREEMENT

                   VIRGINIA BIOTECHNOLOGY RESEARCH PARK
                   AUTHORITY, a political subdivision of the
                   Commonwealth of Virginia

                   By: /s/ James B. Farinholtd, Jr.
                      ----------------------------
                   Name: James B. Farinholtd, Jr.
                   Title: Executive Vice President

                                      -17-
<PAGE>

                   SIGNATURE PAGE

                   LEASE AGREEMENT

                   INSMED PHARMACEUTICALS, INC., a Virginia
                   Corporation

                   By: /s/ Dr. Geoffrey Allan
                   ----------------------
                   Title: President

                                      -18-
<PAGE>

                                 SIGNATURE PAGE
                                LEASE AGREEMENT

     The undersigned joins in the execution of this Lease for the sole purpose
of releasing (but only during the term of this Lease) all of its right, title
and interest under the Master Lease in and to the Leased Premises hereby leased
to the Tenant.  The undersigned acknowledges that, as set forth in the Recitals,
it is not being released of its obligations under the Master Lease.

                                    COMMONWEALTH OF VIRGINIA, VIRGINIA
                                    COMMONWEALTH UNIVERSITY

                                    By:                           (Seal)
                                        -------------------------
                                    Name:
                                    Title:

                                      -19-
<PAGE>

                                 SIGNATURE PAGE
                                LEASE AGREEMENT

                                    CRESTAR

                                    By: /s/  Richard D. Dickinson    (Seal)
                                        -----------------------------
                                    Name: Richard D. Dickinson
                                    Title: Senior Vice President

                                      -20-
<PAGE>

                                LIST OF EXHIBITS

Exhibit A  --  Floor Plan

Exhibit B  --  Tenant Improvements

Exhibit C  --  Rules and Regulations

Exhibit D  --  In Leased Premises Support/Shared Access/Shared Use of Common
               Facilities and Equipment in the Virginia Biotechnology Center

Exhibit E  --  List of Chemicals Anticipated To Be Used

                                      -21-
<PAGE>

                                AMENDMENT NO. 1

THIS AMENDMENT amends and forms a part of that certain Deed of Lease dated March
24, 1997 (the "Lease") by and between the VIRGINIA BIOTECHNOLOGY RESEARCH PARK
AUTHORITY, LESSOR and INSMED PHARMACEUTICALS, INC., LESSEE.

Lessor and Lessee agree to the following modifications, additions and/or
deletions:

LESSEE wishes to lease from the LESSOR 1,780 square feet of rentable space
contiguous to its existing space known as Suite 206 in Biotech One (the
"Additional Space"). The initial term will commence December 15, 1997, and will
expire February 28, 1998. Thereafter, the Additional Space will be leased to
conform with the term outlined in the Lease. The LESSEE will pay a monthly rent
of $21.00 per square foot during the initial term for the Additional Space.
Thereafter, the rent for the Additional Space will be subject to a 2.5% annual
increase.

The remaining terms and conditions of the lease are hereby reaffirmed.

     WITNESS the following signatures and seals.

                              LESSOR:  VIRGINIA BIOTECHNOLOGY
                                       RESEARCH PARK AUTHORITY

                              By:    /s/ James B. Farinholtd, Jr.
                                 --------------------------------
                                        (Signature) (Title)

                              LESSEE:  INSMED PHARMACEUTICALS, INC.

                              By:    /s/ Geoffrey Allan
                                 --------------------------------
                                        (Signature) (Title)
<PAGE>

COMMONWEALTH OF VIRGINIA
CITY/COUNTY OF           Henrico                                  to-wit:
               --------------------------------------------------

     The foregoing Lease Amendment was acknowledged before me

     By   Geoffrey Allan   on the   21rst   day of   Nov.   1997 , in the
        ------------------        ---------        --------   ---

jurisdiction aforesaid.

     My commission expires:    11/30/99                     .
                            --------------------------------

                                                  /s/ Jennifer Klein
                                          -----------------------------------
                                                     Notary Public

COMMONWEALTH OF VIRGINIA
CITY/COUNTY OF           Henrico                                  to-wit:
               --------------------------------------------------

     The foregoing Lease Amendment was acknowledged before me

     By   James Farinholdt   on the   21rst   day of   Nov.
        --------------------        ---------        --------

1997  , in the jurisdiction aforesaid.
  ---

     My commission expires:    11/30/99                     .
                            --------------------------------

                                                  /s/ Jennifer Klein
                                          -----------------------------------
                                                     Notary Public

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