Document:

<PAGE>
                                                                    Exhibit 10.2

                          ENDOTHELIN LICENSE AGREEMENT

     THIS ENDOTHELIN LICENSE AGREEMENT (this "Agreement") is entered into as of
this 6th day of June, 2000 by and between TEXAS BIOTECHNOLOGY CORPORATION, a
Delaware corporation ("TBC"), in favor and for the benefit of and with ICOS-
TEXAS BIOTECHNOLOGY L.P., a Delaware limited partnership (the "Partnership"),
pursuant to the terms and conditions of that certain Agreement of Limited
Partnership of the Partnership, dated as of June 6, 2000 (the "Partnership
Agreement"), by and between TBC and ICOS-ET-LP LLC, a Washington limited
liability company, as limited partners, and TBC-ET, Inc., a Delaware
corporation, and ICOS-ET-GP LLC, a Washington limited liability company ("ICOS-
GP"), as general partners.

                                    RECITALS

     WHEREAS, the Partnership intends to engage in the research, development,
manufacture, production and sale of Endothelin Products (as defined in Article 1
below) for use in the Field (as defined in Article I below); and

     WHEREAS, in connection with the formation of the Partnership and the
granting of a limited partnership interest in the Partnership to TBC in
accordance with the Partnership Agreement, TBC is willing to contribute to the
Partnership a license to use the Background Technology (as defined in Article I
below) in the Field upon the terms set forth herein;

     NOW, THEREFORE, in consideration of the initial capital contribution to the
Partnership pursuant to the Partnership Agreement, TBC and the Partnership
hereby agree as follows:

                                I.  DEFINITIONS

     As used in this Agreement:

1.1  Affiliate

     The term Affiliate has the meaning as set forth in the Partnership
Agreement, except the Parties shall not be deemed to be Affiliates of each
other.

1.2  Background Technology

     The term Background Technology means the Patents and Technical Information.

1.3  Consultant's Letter Agreement

     The term Consultant's Letter Agreement means the letter agreement dated [ *
] to TBC pursuant to which TBC has engaged [ * ].

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
<PAGE>

1.4  Endothelin Agent

     The term Endothelin Agent means [ * ].

1.5  Endothelin Product

     The term Endothelin Product means [ * ].

1.6  Endothelin Receptor

     The term Endothelin Receptor means [ * ].

1.7  Field

     The term Field means [ * ].

1.8  [ * ]

1.9  [ * ] Agreement

     The term [ * ] Agreement means [ * ].

1.10  Party

      The term Party means TBC or the Partnership.

1.11  Patents

      The term Patents means those patents and patent applications set forth in
Attachment A  and any patents and patent applications owned or controlled by TBC
or any of its Affiliates as of the date of this Agreement that cover or relate
to the composition, use or method of making an Endothelin Receptor, Endothelin
Agent or Endothelin Product, including any renewal, division, continuation or
continuation in part of any such applications and any patents issuing thereon,
and any reissues, extensions, substitutions, confirmations, registrations,
revalidations, revisions, supplementary protection certificates and additions of
or to any such patents.

1.12  Technical Information

      The term Technical Information means any of the following that are owned
or controlled by TBC or any of its Affiliates: [ * ].

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -2-
<PAGE>

                     II.  LICENSE OF BACKGROUND TECHNOLOGY

2.1  License

     (a) Subject to the terms of this Agreement and the rights of [ * ] under
the [ * ] Agreement, TBC hereby grants to the Partnership [ * ] and license [ *
] to use the Patents solely within the Field to make, have made, use, offer for
sale, sell and import Endothelin Products in the Field or any invention claimed
in the Patents.  The foregoing license is fully paid up and royalty free.

     (b) Subject to the terms of this Agreement and the rights of [ * ] under
the [ * ] Agreement, TBC hereby grants to the Partnership an exclusive right and
license throughout the world to use the Technical Information in connection with
the discovery, research, development or commercialization of Endothelin
Receptors, Endothelin Agents or Endothelin Products.  The foregoing license is [
* ].  This license is subject to the right of TBC to use the Technical
Information for any purpose other than as it relates to Endothelin Receptors,
Endothelin Agents or Endothelin Products.

     (c) It is recognized and agreed that (i) some of the Background Technology
has been discovered or developed at [ * ].

2.2  Right to Sublicense

     TBC also hereby grants to the Partnership the right to grant sublicenses
within and limited to the scope of the rights and licenses granted to the
Partnership in Section 2.1.  The Partnership shall notify TBC of the identity of
each sublicensee to whom a sublicense is granted and provide TBC a true and
correct copy of such sublicense and any and all modifications, amendments, and
revisions.

2.3  Limitations

     No right or license is granted to the Partnership hereunder except as
expressly specified in Sections 2.1 and 2.2.

2.4  [ * ] Agreement

     The Partnership hereby is assigned and assumes all of TBC's rights and
obligations under the [ * ] Agreement associated with [ * ] (or its "Backup
Candidates" pursuant to Section 2.1(e) of the [ * ] Agreement) and [ * ] (as
defined in the [ * ] Agreement), except the Partnership does not assume and
shall not be responsible for any liabilities or obligations accruing from the
actions or inactions of TBC with respect to the [ * ] Agreement prior to the
date hereof.  The payments from [ * ] under Sections 5.1 and 5.2 of the [ * ]
Agreement shall be assigned to the Partnership as follows:

     (a)  [ * ]

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -3-
<PAGE>

     (b)  [ * ]

     (c)  [ * ]

     (d)  [ * ]

               III.  DISCLOSURE AND USE OF BACKGROUND TECHNOLOGY

3.1  Disclosure by TBC

     TBC shall promptly and fully disclose the Background Technology to the
Partnership and ICOS-GP (on behalf of the Partnership).  TBC shall provide the
Partnership with reasonable quantities of currently available materials
identified in items (b) and (c) of the definition of Technical Information.

3.2  Limitation

     Except as expressly authorized by this Agreement, as expressly required by
the [ * ] Agreement or by the written consent of the other party, during the
term of this Agreement and thereafter, each party shall maintain as
confidential, and not disclose or otherwise use, any confidential or proprietary
information received from the other party; provided, however, that the
Partnership may disclose and use the Background Technology in connection with
exercise of its license rights hereunder.  The foregoing obligations shall not
apply to any information:

          (a) which a receiving party can demonstrate by written records was
previously known to the party;

          (b) which is now public knowledge, or becomes public knowledge in the
future, other than through acts or omissions of the receiving party in violation
of the terms of this Agreement;

          (c) which is lawfully obtained by the receiving party from sources
independent of the other party who have a lawful right to disclose such
information; or

          (d) which must be disclosed pursuant to applicable laws or regulations
or court order, provided the receiving party attempts to obtain an appropriate
protective order for such disclosure and provides prompt notice to the other
party of the expected disclosure.

3.3  Survival

     The obligation of confidentiality imposed by the foregoing Section 3.2
shall survive termination of this Agreement for any reason whatsoever.

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -4-
<PAGE>

              IV.  PATENT, COPYRIGHT AND TRADE SECRET ENFORCEMENT

4.1  Enforcement

     The Partnership shall have the right to bring, defend and maintain, and TBC
shall have the right, but not the obligation, unless as an indispensable party,
to join in, any suit or action involving infringement of any patents or
copyrights, misappropriation of any trade secrets or interference with any other
intellectual property right included in the Background Technology licensed to
the Partnership in the Field pursuant to this Agreement.  Any settlement of such
action and/or suit shall only be entered into by the Partnership with the prior
written consent of TBC.  [ * ]

     The Partnership and TBC will cooperate to the extent necessary and provide
reasonable assistance in support of the defense of any suit or action involving
infringement of any patents, trademarks or copyrights, misappropriation or theft
of any trade secrets or interference with any other intellectual property right
included in Background Technology licensed to the Partnership pursuant to this
Agreement.

     In the event the Partnership fails or declines to take action to enforce
any such patent, copyright, trade secret or other intellectual property right
within [ * ] following receipt of notice and evidence of such infringement,
misappropriation or interference, [ * ].

4.2  Notice of Infringements

     Either Party hereto shall provide the other with reasonable notice of the
evidence and existence of third parties, who come to the attention of such Party
and who may be involved in activities which infringe or potentially infringe,
misappropriate or potentially misappropriate or interfere with patents,
copyrights or trade secrets concerning the Background Technology licensed to the
Partnership in the Field pursuant to this Agreement.

4.3  Defense of Infringement Claims

     The Partnership will undertake the defense of any actions brought by a
third party alleging that the sale of an Endothelin Product or other action of
the Partnership infringes a patent, trademark, copyright or other intellectual
property right of such third party.  [ * ]

              V.  PATENT APPLICATIONS AND COPYRIGHT REGISTRATIONS

5.1  Applications

     The Partnership shall have the right and obligation, at its expense, to
file, prosecute (including interference actions), maintain and defend the patent
applications or patents and copyright registrations or copyrights, if any,
covering the Background Technology for Endothelin Products.

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -5-
<PAGE>

     If the Partnership declines to file, prosecute or maintain any patent
application or patent covering the Background Technology, [ * ].

                        VI.  REPRESENTATION; DISCLAIMER

6.1  Representations

     TBC represents and warrants to the Partnership that:

          (a) TBC (i) has the corporate power and authority and the legal right
to enter into this Agreement and to perform its obligations hereunder and (ii)
has taken all necessary corporate action on its part to authorize the execution
and delivery of this Agreement and the performance of its obligations hereunder.

          (b) TBC has obtained all necessary consents, approvals and
authorizations of all governmental authorities and other third parties required
to be obtained in connection with its execution, delivery and performance of
this Agreement.

          (c) Notwithstanding anything to the contrary in this Agreement, TBC's
execution, delivery and performance of this Agreement (i) will not conflict with
or violate any requirement of applicable laws or regulations and (ii) will not
conflict with, violate or breach or constitute a default or require any consent
under any of its contractual obligations.

          (d) Other than the rights granted to [ * ] pursuant to the [ * ]
Agreement, TBC (i) has not granted any rights in, to or under the Background
Technology to any third party and (ii) has not entered into any agreements that
give any third party rights to acquire, own or possess any right or interest in
any Background Technology or other proprietary rights arising or resulting from
any research related thereto.

          (e) TBC has provided to ICOS, on behalf of the Partnership, a true and
complete copy of the [ * ] Agreement.  None of the terms of the [ * ] Agreement
have been amended, modified or waived and, with respect to [ * ], any "Backup
Candidates" thereto and the Endothelin Receptor Antagonist Program, will not be
amended, modified or waived without the prior written consent of the
Partnership.

          (f) TBC has provided to ICOS-GP, on behalf of the Partnership, a true
and complete copy of the Consultant's Letter Agreement except for redactions of
terms thereof that do not relate to the fees that are due thereunder with
respect to the [ * ] Agreement.  None of the terms of the Consultant's Letter
Agreement have been amended, modified or waived and, with respect to fees due on
payments under the [ * ] Agreement, will not be amended, modified or waived
without the prior written consent of the Partnership.

          (g) Attachment A contains a list of all patents issued and patent
applications filed on or before the date of this Agreement that are owned or
controlled by TBC or any of its Affiliates and that cover or relate to the
composition, use or method of making an Endothelin

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -6-
<PAGE>

Receptor, Endothelin Agent or Endothelin Product. All the inventors named in the
patent applications have assigned, or are under an obligation to assign, to TBC
all of their right, title and interest in the inventions claimed in the patent
applications.

          (h) TBC has not received any notice of a claim of infringement or
misappropriation of any alleged rights asserted by any third party in relation
to any Background Technology.

          (i) TBC is not aware of any patents or other proprietary rights of any
third party which would materially affect the Partnership's exercise of the
license rights granted to it hereunder.

6.2  Disclaimer of Warranties

     Except as provided in Section 6.1, TBC EXPRESSLY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, PATENTABILITY AND
NONINFRINGEMENT WITH RESPECT TO THE BACKGROUND TECHNOLOGY LICENSED HEREUNDER TO
THE PARTNERSHIP BY TBC.

                           VII.  TERM AND TERMINATION

7.1  Term

     This Agreement (including the license and rights granted under Sections 2.1
and 2.2) shall come into effect as of the date hereof and shall remain in full
force and effect until termination pursuant to Section 7.2.

7.2  Default

     In the event that the Partnership (the "Defaulting Party") shall default in
a material obligation hereunder and fail to remedy such default within sixty
(60) days after such default shall have been called to its attention by a notice
in writing from TBC, then TBC, at its option, may terminate its obligations to,
and the rights of, the Defaulting Party under the license to the Background
Technology granted herein upon ten (10) days' written notice to the Defaulting
Party, which termination shall be effective as of the occurrence of the event
giving rise to the option to terminate.

7.3  Continuing Obligations

     Notwithstanding the termination of a party's obligations to or the rights
of the Defaulting Party under this Agreement in accordance with the provisions
of Section  7.2, the provisions of Section  3.2, this Section 7.3 and 9.10 shall
survive such termination and continue in full force and effect for an indefinite
term, except to the extent the confidential technology or information

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -7-
<PAGE>

would not be deemed confidential pursuant to the Research and Development
Service Agreement by and among the Partnership, ICOS and TBC dated as of the
same date hereof.

                                 VIII.  NOTICE

     All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
mailed to the Party to whom notice is to be given, by telex or facsimile, and
confirmed by first class mail, registered or certified, return receipt
requested, postage prepaid, and properly addressed as follows (in which case
such notice shall be deemed to have been duly given on the third (3rd) day
following the date of such sending):

<TABLE>
<S>                                           <C>
TBC:                                        Texas Biotechnology Corporation
                                            7000 Fannin, 20th Floor
                                            Houston, TX 77030
                                            Attn:  President

Partnership:                                ICOS-ET-GP LLC, General Partner
                                            c/o ICOS Corporation
                                            22021 - 20th Avenue S.E.
                                            Bothell, WA 98021
                                            Attn:  Judith A. Woods, Esq.
                                                   Legal Department

With a copy to:                             TBC SUBSIDIARY, General Partner
                                            700 Fannin, 20th Floor
                                            Houston, TX 77030
                                            Attn:  President
</TABLE>

Any Party by giving notice to the others in the manner provided above may change
such Party's address for purposes of this Article VIII.

                               IX.  MISCELLANEOUS

9.1  Entire Agreement

     This Agreement, together with any other written agreements between the
Parties hereto referred to in the Partnership Agreement, sets forth the entire
agreement of the Parties with respect to the subject matter hereof and may not
be modified except by a writing signed by authorized representatives of the
Parties hereto.

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -8-
<PAGE>

9.2  Headings

     Article and Section headings and numbers in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

9.3  Execution in Counterparts

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

9.4  Force Majeure

     It is agreed that each of the Parties hereto is excused from performing
such acts as are required hereunder as may be prevented by or whose purpose is
frustrated by acts of God, governmental restrictions, wars, insurrections,
strikes, floods, work stoppages, lack of materials or any other condition beyond
the Party's reasonable control.  The Party so affected shall give notice to the
other Party in writing promptly and thereupon shall be excused from such of its
obligations hereunder as it is unable to perform on account of the force majeure
condition throughout the duration thereof plus a period of thirty (30) days.

9.5  Applicable Law

     This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the choice of law provisions of
the State of Delaware or any other jurisdiction.

9.6  Assignment on Written Consent

     This Agreement may not be assigned in whole or in part by TBC or the
Partnership, except with the prior written consent of the other Party; provided,
however, that the Partnership may sublicense its license rights hereunder and
may assign its rights or obligations in connection with a merger, consolidation
or reorganization of the Partnership or to a purchaser of all or substantially
all its assets and that, after termination of the Partnership Agreement for any
reason, this Agreement may be assigned in whole or in part by the Partnership.

     To the extent the foregoing provision in this Section 9.6 is unenforceable
in the event of bankruptcy or insolvency of TBC, no assignment of this Agreement
by TBC shall be permitted unless the assignee can demonstrate to the Partnership
the assignee's ability to perform all TBC's obligations under this Agreement,
including, without limitation, the financial and technical ability to (a)
enforce, defend and maintain patents, copyrights and trade secrets and provide
notices in accordance with Article IV and (b) prosecute and maintain in force
patent applications and copyright registration in accordance with Article V.

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -9-
<PAGE>

9.7  Severability

     In the event any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.  In such event, such invalid
provision or provisions shall be validly reformed to as nearly approximate the
intent of the Parties as possible and, if unreformable, shall be severed and
deleted from this Agreement.

9.8  No Waiver

     No failure or delay on the part of either Party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder or the remedies provided by law.

9.9  Trademarks and Trade Names

     TBC, by this Agreement, grants no rights to the Partnership in any
trademarks or trade names of TBC or of any of its respective subsidiaries or
affiliated companies.  Any such rights to be granted shall be documented in a
separate written agreement.

9.10 Indemnity

     The Partnership hereby (a) releases TBC from any obligation to defend,
indemnify or save the Partnership and its agents and employees harmless from and
(b) agrees to defend, indemnify and save TBC harmless from any and all costs,
expenses (including attorneys' fees), liabilities, damages and claims for any
injury or death to persons or damage to or destruction of property, or other
loss ("Losses"), arising out of or in connection with any product made, used,
offered for sale, sold, or imported by the Partnership or furnished pursuant to
any provision hereunder except that the Partnership shall have no obligation to
indemnify or defend TBC for or against Losses to the extent arising out of the
negligence or willful misconduct of TBC.

9.11 Other Agreements

     Any other provision of this Agreement notwithstanding, nothing in this
Agreement shall obligate TBC to disclose to the Partnership any information or
to make available to the Partnership any materials in violation of an obligation
of secrecy or a limitation of use imposed by a third party from whom such
information or materials shall have been received.

9.12 Attorneys' Fees and Costs

     In the event of any action at law or in equity between the Parties hereto
to enforce any of the provisions hereof, the unsuccessful Party to such
litigation shall pay to the successful Party all costs and expenses, including
actual attorneys' fees, incurred therein by such successful Party;

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -10-
<PAGE>

and if such successful Party shall recover judgment in any such action or
proceeding, such costs, expenses and attorneys' fees may be included in and as
part of such judgment. The successful Party shall be the Party who is entitled
to recover its costs of suit, whether or not the suit proceeds to final
judgment. A Party not entitled to recover its costs shall not recover attorneys'
fees.

9.13  Remedies

     No right, power or remedy herein conferred upon or reserved to a Party is
intended to be exclusive of any other right, power or remedy, and each and every
right, power and remedy of a Party pursuant to this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall, to the
extent permitted by law, be cumulative and concurrent and shall be in addition
to every other right, power or remedy pursuant to this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by a Party of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later exercise
by a Party of any or all such other rights, powers or remedies.

9.14  Binding Effect

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

9.15  Attachment

      Attachment A attached hereto and referred to herein is hereby incorporated
herein as though fully set forth.

9.16  Number and Gender

      Words in the singular shall include the plural, and words in a particular
gender shall include either or both additional genders, when the context in
which such words are used indicates that such is the intent.

9.17  Representations

      Each of the Parties hereto acknowledges and agrees (a) that no
representation or promise not expressly contained in this Agreement has been
made by the other Party hereto or by any of its agents, employees,
representatives or attorneys; (b) that this Agreement is not being entered into
on the basis of, or in reliance on, any promise or representation, expressed or
implied, covering the subject matter hereof, other than those which are set
forth expressly in this Agreement; and (c) that each has had the opportunity to
be represented by counsel of its own choice in this matter, including the
negotiations which preceded the execution of this Agreement.

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -11-
<PAGE>

9.18  Agreement to Perform Necessary Acts

      Each Party agrees to perform any further acts and execute and deliver any
and all further documents and/or instruments which may be reasonably necessary
to carry out the provisions of this Agreement and to carry out the business
purposes of the Partnership.

9.19  Rights in the Event of Bankruptcy

      All rights in the Background Technology granted under this Agreement to
the Partnership by TBC are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, a license of rights to "intellectual
property" as defined in Section 101 of the U.S. Bankruptcy Code. The
Partnership, as licensee of such rights under this Agreement, shall retain and
may fully exercise all of its rights and elections under the U.S. Bankruptcy
Code. In the event of the commencement of a bankruptcy proceeding by or against
TBC under the U.S. Bankruptcy Code, the Partnership shall be entitled to
complete access to (or a complete duplicate of, as appropriate) any Background
Technology.

     IN WITNESS WHEREOF, TBC and the Partnership executed this Agreement as of
the date first above written.

                              TEXAS BIOTECHNOLOGY CORPORATION

                              By:  David B. McWilliams
                                   -------------------
                              Its: President/CEO
                                   -------------

                              ICOS-TEXAS BIOTECHNOLOGY L.P.
                              By ICOS-ET-GP LLC, as General Partner

                              By:  Paul Clark
                                   ----------
                              Name:  Paul Clark
                                     ----------
                              Title:  Chairman & CEO
                                      --------------

                              By TBC-ET, Inc., as General Partner

                              By:  David B. McWilliams
                                   -------------------
                              Name:  David B. McWilliams
                                     -------------------
                              Title:  President
                                      ---------

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -12-
<PAGE>

                                  ATTACHMENT A

     [ * ]

[ * ] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      -13-<PAGE>
                                                                    Exhibit 10.3

                   RESEARCH AND DEVELOPMENT SERVICE AGREEMENT

     THIS RESEARCH AND DEVELOPMENT SERVICE AGREEMENT (this "Agreement") is
entered into as of the 6th day of June, 2000 by and among ICOS CORPORATION, a
Delaware corporation ("ICOS"), TEXAS BIOTECHNOLOGY CORPORATION, a Delaware
corporation ("TBC"), and ICOS-TEXAS BIOTECHNOLOGY L.P., a Delaware limited
partnership (the "Partnership").

                                   Recitals
                                   ========
     WHEREAS, the Partnership intends to develop a Research Program for the
purpose of researching and developing Endothelin Products for the [ * ];

     WHEREAS, the Partnership is interested in having TBC and ICOS perform
certain research and development services under the Research Program for the
Partnership; and

     WHEREAS, the Partnership, ICOS and TBC believe that each party can bring
significant and complementary strengths to the Research Program and wish to
proceed in accordance with the terms of this Agreement.

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

                                   ARTICLE 1
                                  DEFINITIONS

     Capitalized terms used herein shall have the following meanings:

     1.1  "Affiliate" has the meaning as set forth in the Partnership Agreement,
except the parties shall not be deemed to be Affiliates of each other.

     1.2  "Background Technology" has the meaning set forth in the Endothelin
License Agreement of even date herewith between TBC and the Partnership.

     1.3  "Development Plan" means a plan to be developed and revised from time
to time by the Product Team pursuant to Section 3.2 for the purpose of achieving
the goals of the Research Program.

     1.4  "Endothelin Agent" means [ * ].

     1.5  "Endothelin Project Inventions" has the meaning set forth in Section
7.1.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
<PAGE>

     1.6  "Endothelin Product" means [ * ].

     1.7  "Endothelin Receptor" means [ * ].

     1.8  "Field" means [ * ].

     1.9  "FTE" means a full-time equivalent person (calendar year or [ * ]/
calendar year or [ * ]/calendar quarter or [ * ]/calendar month) within each
party's respective research and development organizations for R & D Services
carried out by the employees of the parties (specifically excluding R & D
Services carried out by third parties including, without limitation, R & D
Services carried out by consultants, outside contractors and temporary
employees).  The FTE rate for R & D Services carried out under this Agreement
during the 2000 calendar year shall be [ * ].

     1.10  "ICOS Enabling Technology" means (a) any patent, patent application,
trade secret, know-how or other information that is necessary or useful to use,
make or sell an Endothelin Agent or Product that ICOS, in its sole discretion,
elects to include within the scope of the Research Program and that is owned or
controlled by ICOS or its Affiliates, with right to license (or sublicense) and
(b) any patent, patent application, trade secret, know-how or other information
that (i) is owned or controlled by ICOS or its Affiliates, with right to license
(or sublicense), (ii) was developed or discovered outside the Research Program
or not included in the Endothelin Project Inventions, (iii) was, in rendering R
& D Services, incorporated in the development of an Endothelin Agent or
Endothelin Product, including, without limitation, their use or method of
manufacture, and (iv) covers or relates to the composition, use or method of
making an Endothelin Agent or Product.

     1.11  "Partnership Agreement" means the Agreement of Limited Partnership of
ICOS-TEXAS BIOTECHNOLOGY L.P. among ICOS-ET-GP LLC, a Washington limited
liability company, and TBC-ET, Inc., a Delaware corporation, as general
partners, and ICOS-ET-LP LLC, a Washington limited liability company, and TBC,
as limited partners, dated as of the date hereof.

     1.12  "Partnership Technology" means (a) Background Technology and (b) any
technology (including, without limitation, any patent, patent application, trade
secret, know-how or other information) owned or controlled by the Partnership,
with right to license (or sublicense), including, without limitation, ICOS
Enabling Technology, TBC Enabling Technology and the Endothelin Project
Inventions.

     1.13  "Product Team" means the team consisting of ICOS and TBC personnel
assigned by ICOS and TBC to carry out the Research Program, as further described
in Section 3.1.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       2
<PAGE>

     1.14  "Product Team Leader" means such person mutually designated by ICOS
and TBC as the Product Team Leader as described in Section 3.1.  The Product
Team Leader shall be responsible for, among other things, coordinating the
activities of the Product Team.

     1.15  "R & D Services" means the services rendered and to be rendered by
ICOS and TBC for and on behalf of the Partnership pursuant to this Agreement
that are reasonably necessary to carry out the Research Program, except
accounting and similar administrative services.

     1.16  "Regulatory Approval" means all authorizations by the appropriate
governmental entity or entities necessary for commercial sale of any Endothelin
Product, including, without limitation, approval of labeling, price,
reimbursement and manufacturing.

     1.17  "Research Program" means the research and development program under
which ICOS, TBC and third parties may perform services for and on behalf of the
Partnership, as contemplated under this Agreement.  The primary goals of the
Research Program are generally described on Exhibit A to this Agreement, and the
details of how the parties will conduct the Research Program shall be set forth
in the Development Plan.

     1.18  "TBC Enabling Technology" means (a) any patent, patent application,
trade secret, know-how or other information that is necessary or useful to use,
make or sell an Endothelin Agent or Product that TBC, in its sole discretion,
elects to include within the scope of the Research Program and that is owned or
controlled by TBC or its Affiliates, with right to license (or sublicense) and
(b) any patent, patent application, trade secret, know-how or other information
that (i) is owned or controlled by TBC or its Affiliates, with right to license
(or sublicense), (ii) was developed or discovered outside the Research Program
or not included in the Endothelin Project Inventions, (iii) was, in rendering R
& D Services, incorporated in the development of an Endothelin Agent or
Endothelin Product, including, without limitation, their use or method of
manufacture, and (iv) covers or relates to the composition, use or method of
making an Endothelin Agent or Product.  TBC Enabling Technology does not include
Background Technology.

                                   ARTICLE 2
                               SCOPE OF SERVICES

     Consistent with the terms described herein, the Partnership wishes to
engage ICOS and TBC to provide R & D Services for and on behalf of the
Partnership, and ICOS and TBC agree to collaborate in rendering such R & D
Services to the Partnership.  ICOS and TBC shall each use diligent efforts in
carrying out the services it will provide to the Partnership under this
Agreement, shall cooperate with each other on matters related thereto, and shall
carry out all services in accordance with the Development Plan.  [ * ].

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       3
<PAGE>

                                   ARTICLE 3
                         PRODUCT TEAM AND RESEARCH PLAN

3.1  Product Team

     The parties agree that operation of the Research Program will be managed by
the Product Team, which will develop the Development Plan in accordance with
Section 3.2.  The Product Team will carry out the Development Plan as it deems
necessary; provided, however, that the Partnership shall be the ultimate
authority with respect to all matters and activities under this Agreement and,
therefore, to the extent it deems appropriate, it may at any time accept, reject
or modify any proposal of the Product Team for providing R & D Services as well
as, without limitation, discontinue or modify the Research Program, disband or
redirect the Product Team or terminate this Agreement.

     3.1.1  Composition of Product Team

            The Product Team shall consist of such number of TBC and ICOS
personnel as such parties reasonably deem necessary to carry out the R & D
Services in accordance with the Development Plan; provided, however, that ICOS
and TBC agree that each will, to the extent practicable, make good faith efforts
to minimize changes to the Product Team so as to promote continuity of certain
functional members.  ICOS and TBC shall jointly designate one member of the
Product Team as the Product Team Leader.  ICOS and TBC will have reasonable
access on an informal basis to the other's personnel assigned to the Product
Team.

     3.1.2  Meetings and Decisions of the Product Team

            Unless otherwise directed by the Partnership, the Product Team shall
meet (including meeting by teleconference) at least on a monthly basis to
discuss the status of the Research Program and matters related thereto.
Decisions of the Product Team shall be made by consensus regarding matters
related to R & D Services, including, without limitation, matters such as which
party (ICOS, TBC or a third party) should carry out a particular R & D Service
as contemplated under this Agreement and the Development Plan.  If the Product
Team fails to agree on a particular matter, such matter shall be referred to the
Partnership for resolution.

3.2  Development Plan

     Within thirty (30) days after the date of this Agreement, and no less
frequently than quarterly thereafter, the Product Team shall meet to formulate a
detailed plan for development projects to be performed by ICOS or TBC, or both,
during the course of the Development Plan.  The parties anticipate that the
Development Plan will include, without limitation:

          (a)  [ * ]

          (b)  [ * ]

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       4
<PAGE>

          (c)  [ * ]

     The Product Team shall make a copy of the Development Plan, as revised from
time to time, a part of this Agreement; provided, that such plan may be modified
or amended at any time by the Partnership.

3.3.  Reports

      In addition to the Development Plan, the Product Team shall provide to the
Partnership (a) quarterly status reports, which shall include, without
limitation, the progress to date and any other matters that the Partnership may
deem appropriate, (b) monthly status reports, which shall include, without
limitation, important events, personnel changes, learning points and other
matters that the Product Team may deem appropriate that occurred during the
month at issue, and (c) such other reports as requested by the Partnership.  In
addition to the foregoing, ICOS and TBC may each consult with the other from
time to time on the progress of the Research Program, and any ongoing
development and Research Programs being conducted thereunder, and shall permit
the other party to visit its laboratories to observe the development work, to
the extent reasonably required to coordinate and effectively conduct related
development work.

3.4  No Debarment

     ICOS and TBC each represent and warrant to the other that it will comply at
all times with the provisions of the Generic Drug Enforcement Act of 1992 and,
upon request, will certify in writing to the other party that neither such
party, its employees nor any person providing services on behalf of such party
in connection with the R & D Services contemplated by this Agreement has been
debarred under the provisions of such act.

                                   ARTICLE 4
                            PROJECT SERVICE FUNDING

4.1  FTE Funding, Reimbursement of Third Party Expenses

     4.1.1  FTE Funding

           The Partnership agrees to pay ICOS and/or TBC, as applicable, for R &
D Services rendered on behalf of the Partnership in accordance with the Research
Program and directed by the Product Team or as otherwise requested by the
Partnership.  Except as otherwise provided in this Article 4, payment by the
Partnership hereunder shall be based on the FTE rate set forth in Section 1.9.

     4.1.2  Reimbursement of Third Party Costs

            In the event that third parties are utilized with respect to the
Research Program, the Partnership shall only reimburse [ * ].

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       5
<PAGE>

            Except as set forth in this Section 4.1.2 or to the extent third
party costs are used in determining the FTE rate, ICOS and TBC [ * ] in
connection with R & D Services rendered hereunder. Notwithstanding the
foregoing, the parties hereby acknowledge that to the extent third party costs
are included in determining the FTE rate under this Agreement, such third party
cost shall not be reimbursable under this Section 4.1.2.

            With respect to ongoing third-party contracts previously established
by TBC, the Partnership shall promptly review such contracts and [ * ].  The
parties will seek to establish a reasonable basis for allocation of the costs
that accrue immediately before and after the date hereof and are not segregated
by the third party on an invoice.

     [ * ]

4.2  Monthly Report/Invoice

     Within [ * ] following the end of each calendar month, ICOS and TBC each
shall provide the Partnership with a report ("Invoice"), with a copy sent to the
other party for review, detailing any costs incurred as described in Section
4.1, together with the [ * ].  If an objection by a party with respect to an
Invoice is not raised within [ * ] of receipt thereof, such Invoice will be
deemed approved (such approval shall not be construed as a waiver of any audit
or other rights related thereto).  The parties agree to attempt to resolve all
objections amicably and as soon as possible after such objection is raised;
provided, however, that the Partnership will pay all undisputed amounts in
accordance with Section 4.3.  All approved Invoices will be paid by the
Partnership in accordance with Section 4.3.

4.3  Payments

     The Partnership shall make the payments due under this Article 4 on a
monthly basis due to ICOS and TBC, net fifteen (15) days after approval
(including a deemed approval) of an invoice as described in Section 4.2.

4.4  Capital Expenditures for Research Program Purposes

     ICOS and TBC each shall be [ * ].  Any deviation from this Section 4.4 must
be approved in writing by the Partnership.

4.5  Subcontracting Permitted

     The Partnership acknowledges and agrees that portions of the work involved
in the Research Program may be performed on behalf of the Partnership by third
parties hired by ICOS and/or TBC; provided that for any significant subcontract
(a) the Partnership shall have the right to approve the hiring of a third party
to handle such matter and the costs associated therewith and (b) the
subcontractor will first provide to the Partnership a written confidentiality
agreement and written assignment of all patent rights and know-how that such
subcontractor may develop by reason of work performed under this Agreement.
Further, each subcontractor, as applicable

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       6

<PAGE>
based on the services to be performed, shall be required to conduct such
services in accordance with current Good Manufacturing Practices ("cGMP"), Good
Laboratory Practices ("cGLP") and Good Clinical Practices ("cGCP").

                                   ARTICLE 5
                           RECORD-KEEPING AND AUDITS

5.1  Records Retention

     Each party shall record, to the extent practical, all information relating
to the Research Program in written form.  To the extent practical, such written
records shall be kept separately from written records documenting other research
and development of such party.  All such written records of each party shall be
maintained in a form sufficient to satisfy regulatory authorities.  Each party
shall require its employees and consultants to disclose any inventions relating
to the Research Program in writing promptly after conception.  Furthermore, the
parties, as applicable, shall keep complete and accurate records pertaining to
the R & D Services rendered by such party in sufficient detail to permit the
other parties to confirm such R & D Services.

     Except as the Partnership may otherwise require, records shall be
maintained for the following periods:

          (a) Accuracy of Billing.  For those records maintained for the sole
              -------------------
purpose of verifying the accuracy of any payment due hereunder, such records
shall be maintained for a [ * ] period following the year in which any such R &
D Services were rendered hereunder.

          (b) R&D Records.  For all records pertaining to information regarding
              -----------
R & D Services conducted hereunder, such records shall be maintained for a [ * ]
year period following the year in which any such R & D Services were made
hereunder, unless a longer period of retention is necessary to comply with any
applicable regulatory requirements.

          (c) Regulatory Filings.  For those records pertaining to regulatory
              ------------------
filings and other regulatory commitments (e.g., manufacturing tickets,
manufacturing procedures, etc.), such records shall be held for such period as
is mutually agreed upon between the parties in writing that is reasonably
necessary to comply with regulatory requirements.

5.2  General Audit Request

     Each of the parties shall have the right to request an audit of such
records (to the extent relevant to the issue at hand), at its own expense and on
an annual basis, to determine, with respect to any of the [ * ], the correctness
of any report or payment made under this Agreement.  If a party desires to audit
such records, it shall utilize an independent, certified public accountant of
the auditing party's choice to examine such records.  Such accountant shall be
instructed to provide the party desiring the audit a report on the findings of
the agreed upon procedures which verifies any previous report made or payment
submitted by the audited party during such period.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       7

<PAGE>

Any information received by a party pursuant to this Section 5.2 shall be deemed
to be confidential information hereunder.

     Upon expiration of [ * ] following the end of any calendar year, the audit
right hereunder shall expire with respect to such calendar year and the
calculation of amounts payable with respect to such calendar year shall be
binding and conclusive upon both parties, and each party shall be released from
any liability or accountability with respect to payments for such year.

5.3  Quality Assurance Audit Request

     Except as the parties may otherwise agree in writing, ICOS and TBC shall
each have the right to conduct reasonable quality assurance audits with respect
to all facilities, operations and laboratories where R & D Services are
conducted and to verify their conformance with applicable cGMP, cGLP and cGCP
and other regulatory requirements.  Such audits shall be conducted upon
reasonable notice during reasonable business hours.

5.4  Survival

     This Section 5 shall survive for [ * ] after termination of this Agreement.

                                   ARTICLE 6
                                   LICENSES

6.1  License From Partnership to ICOS

     The Partnership hereby grants to ICOS [ * ] license to use the Partnership
Technology but only to the extent useful or necessary to fulfill R & D Service
           --------
obligations under this Agreement.

6.2  License From Partnership to TBC

     The Partnership hereby grants to TBC [ * ] license to use the Partnership
Technology but only to the extent useful or necessary to fulfill R & D Services
           --------
obligations under this Agreement.

6.3  License From ICOS to Partnership

     ICOS hereby grants to the Partnership [ * ] license to use the ICOS
Enabling Technology for the sole purposes of developing, testing, making,
storing, using and offering for sale any Endothelin Products.

6.4  License From TBC to Partnership

     TBC hereby grants to the Partnership [ * ] license to use the TBC Enabling
Technology  for the sole purposes of developing, testing, making, storing, using
and offering for sale any Endothelin Products.  This license shall not be
construed as limiting the license agreement of even date herewith between TBC
and the Partnership.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       8

                                   ARTICLE 7
                             INTELLECTUAL PROPERTY

7.1  Ownership of Inventions

     All data, inventions and discoveries (including, without limitation, any
patent, patent application, trade secret, know-how or other information)
acquired or developed solely and/or jointly by employee(s) or agents of ICOS,
TBC or their Affiliates in the course of rendering R & D Services (the
"Endothelin Project Inventions") shall be the property of the Partnership.  Each
party hereby assigns to the Partnership such Endothelin Project Inventions and
shall cooperate with each other in pursuing intellectual property protection,
including patents, relating thereto, and in executing and delivering any
additional instruments required to assign, convey or transfer to the Partnership
its interest in Endothelin Project Inventions.

     Except as the parties may otherwise agree in writing, all data, inventions
and discoveries acquired or developed solely and/or jointly by employee(s) or
agents of ICOS, TBC or their Affiliates to the extent not related to Endothelin
                                                      ---
Agents during the course of rendering R & D Services ("Non-Endothelin Project
Inventions") shall be owned by the inventor as determined in accordance with the
United States law of inventorship.

     To the extent it is practical to do so, patent applications involving
Endothelin Project Inventions shall be separately defined and prosecuted so as
to solely relate to such Endothelin Project Invention.  In the event it is not
practical to do so, the parties shall cooperate with each other in completing
any patent application that relates to both Endothelin Project Inventions and
Non-Endothelin Project Inventions ("Co-Mingled Inventions").  In connection with
a Co-Mingled Invention, the Partnership and the owner(s) of the applicable Non-
Endothelin Project Invention shall equally share all costs incurred in
connection with preparing, filing, maintaining and prosecuting the patent
application and patent associated therewith.

7.2  Patent Filings Involving Endothelin Project Inventions And Other Inventions
     Owned by the Partnership

     At the direction of the Partnership, the Product Team shall establish, in
conjunction with appropriate legal advice, an overall strategy for filing and
prosecuting patent applications and otherwise protecting intellectual property
of the Partnership, including, without limitation, an appropriate publication
strategy as more fully described in Article 8 together with addressing other
pertinent matters that will maximize patent protection for the Endothelin Agents
and Endothelin Products.

     Unless the patent strategy established by the Product Team and approved by
the Partnership provides otherwise, or as the Partnership may otherwise
determine, the Partnership, through the Product Team, will prepare, file,
prosecute, maintain and defend patents and patent applications covering
Endothelin Project Inventions and other patents and patent applications owned or
controlled by the Partnership.  The Product Team will endeavor to ensure that
such

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                       9
<PAGE>

patent applications are filed before any public disclosure by either party
hereto in order to maintain the validity of patent applications filed outside of
the United States.  In the event that either ICOS and/or TBC prepare, file,
prosecute and/or maintain a particular patent application for an Endothelin
Project Invention or for other inventions owned or controlled by the
Partnership, at least [ * ] prior to the contemplated filing date, such filing
party shall submit to the Product Team a substantially completed draft of such
patent application and will, in good faith, take into account, with appropriate
advice of legal counsel, the Product Team's suggestions regarding such draft.
The Product Team will copy ICOS and/or TBC with any official actions and
submissions in such patents and patent applications.  The Partnership shall [ *
] under this Section 7.2 for Endothelin Project Inventions and other inventions
owned or controlled by the Partnership.

     Unless the Partnership determines otherwise, should the Partnership elect
not to file, prosecute, maintain or issue any patent application, or maintain a
patent issuing from any such patent application, for an Endothelin Project
Invention or any other patent that it may own or control in any particular
country, the Partnership will so notify ICOS and TBC of its intentions.  Under
such circumstances, ICOS and/or TBC (either individually or jointly) shall then
have the right to file, prosecute, maintain or issue any such patent or patent
application at its own expense and the Partnership shall grant to ICOS and/or
TBC (either individually or jointly, as the case may be) any necessary authority
to file, prosecute, issue and maintain such patent application or maintain such
patent in the name of ICOS and/or TBC (either individually or jointly, as the
case may be).  If ICOS and/or TBC elect to file, prosecute, maintain or issue
any such patent or patent application at its own expense, the Partnership shall
assign such patent or patent application to ICOS and/or TBC, and such patent or
patent application shall [ * ] notwithstanding any license agreement to the
contrary.  In the event that either ICOS or TBC is assigned various rights as
described in this Section 7.2, such assignee party shall grant the Partnership [
* ] license to practice any and all rights so assigned to use, make and sell
Endothelin Agents and Endothelin Products.

7.3  [ * ]

7.4  Notice of Certification

     Each party hereto shall immediately give notice to the other parties of any
certification filed under the U.S. Drug Price Competition and Patent Term
Restoration Act of 1984 claiming that a Partnership Patent is invalid or that
any infringement will not arise from the manufacture, use, import, offer for
sale or sale of any product by a third party.  [ * ]For this purpose, the
Partnership shall execute such legal papers necessary for the prosecution of
such suit as may be reasonably requested by the party bringing suit.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      10
<PAGE>

                                   ARTICLE 8
                                  PUBLICATIONS

     A publication strategy will be developed by the Product Team.  Publications
whether written and/or oral, including, without limitation, abstracts, posters
and manuscripts (collectively, the "Public Disclosures") must be submitted to
the Product Team for its approval prior to external dissemination thereof.  The
Product Team or its designee shall review each such proposed publication in
order to avoid the unauthorized disclosure of a party's confidential information
and to preserve the patentability of inventions and data package exclusivity
arising from the research and development performed in the course of this
Agreement, as well as to ensure compliance with the Partnership's publications
strategy.

                                   ARTICLE 9
                                INDEMNIFICATION

9.1  Indemnification by the Partnership

     Subject to Section 9.5, the Partnership agrees to indemnify, defend and
hold TBC and ICOS harmless from and against any losses, including product
liability, which arise from any claim, lawsuit or other action by a third party
arising out of the manufacture of an Endothelin Product, the breach by the
Partnership of its warranties or obligations under this Agreement, or the
negligence or willful misconduct of the Partnership, its employees or its
agents, except to the extent such losses result from (i) the breach by TBC
and/or ICOS of their respective warranties or obligations hereunder or (ii) the
negligence or willful misconduct of TBC and/or ICOS, their respective employees
or their respective agents.

9.2  Indemnification by TBC

     Subject to Section 9.5, TBC agrees to indemnify, defend and hold the
Partnership and ICOS harmless from and against any losses which arise from any
claim, lawsuit or other action by a third party arising out of the breach by TBC
of its warranties or obligations under this Agreement, or the negligence or
willful misconduct of TBC, its employees or its agents, except to the extent
such losses result from (i) the breach by the Partnership and/or ICOS of their
respective warranties or obligations hereunder or (ii) the negligence or willful
misconduct of the Partnership and/or ICOS, their respective employees or their
respective agents.

9.3  Indemnification by ICOS

     Subject to Section 9.5, ICOS agrees to indemnify, defend and hold the
Partnership and TBC harmless from and against any losses which arise from any
claim, lawsuit or other action by a third party arising out of the breach by
ICOS of its warranties or obligations under this Agreement, or the negligence or
willful misconduct of ICOS, its employees or its agents, except to the extent
such losses result from (i) the breach by the Partnership and/or TBC of their

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      11
<PAGE>

respective warranties or obligations hereunder or (ii) the negligence or willful
misconduct of the Partnership and/or TBC, their respective employees or their
respective agents.

9.4  Indemnification Procedures

     The party seeking indemnification hereunder ("Indemnified Party") shall
give written notice to the indemnifying party ("Indemnifying Party") of its
indemnification claims hereunder, specifying the amount and nature of the claim,
and giving the Indemnifying Party the right to contest any such claim
represented by counsel of its choice; if any such claim is made hereunder by the
Indemnified Party and such claim arises from the claims of a third party against
the Indemnified Party and the Indemnifying Party does not elect to undertake the
defense thereof by written notice within [ * ] after receipt of the original
notice from the Indemnified Party, the Indemnified Party shall be entitled to
indemnity pursuant to the terms of this Agreement to the extent of its payment
in respect of such claim.  To the extent that the Indemnifying Party undertakes
the defense of such claim in good faith by proceeding diligently at its expense,
and without materially impairing the financial conditions or operations of the
Indemnified Party, the Indemnified Party shall be entitled to indemnity
hereunder only if, and to the extent that, such defense is unsuccessful as
determined by a final judgment of a court of competent jurisdiction or is
settled with the consent of the Indemnifying Party.  The party defending a
third-party claim shall have the right to choose its own counsel.

9.5  Limitation of Liability

     No party shall be liable to another for indirect, incidental, consequential
or special damages, including, but not limited to, lost profits, arising from or
relating to any breach of this Agreement, regardless of any notice of the
possibility of such damages.

                                   ARTICLE 10
                       TERM AND TERMINATION OF AGREEMENT

10.1  Term

      This Agreement shall become effective on the Effective Date and shall
continue in effect until the Partnership is dissolved or this Agreement is
terminated earlier as described hereunder or by written agreement of the
parties.

10.2  Termination for Material Breach

      Either party shall have the right to terminate this Agreement after [ * ]
written notice to the other in the event the other is in material breach of this
Agreement, unless the other party cures the breach before the expiration of such
period of time.  Such notice shall set forth in reasonable detail the specifics
of the breach.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      12
<PAGE>

10.3  Voluntary Termination by the Partnership

      The Partnership may terminate this Agreement for any reason at any time,
and such termination shall be effective on [ * ] written notice to each party.
During such [ * ], each party shall appropriately commence wind down efforts
including reasonable termination of its efforts under the Research Program, and
the Partnership shall be responsible for costs incurred under the Research
Program for such period; but only to the extent that such costs are unavoidable
costs and expenditures, including necessary expenses associated with personnel,
non-cancelable commitments and cash outlays in connection with the Research
Program that cannot be avoided, including, without limitation, all equipment
ordered therefor which is non-cancelable or non-returnable, even if such costs
and expenditures are paid after such [ * ] period provided such costs and
expenses arise out of commitments incurred prior to termination.

10.4  Termination Upon Insolvency

      This Agreement may be terminated by a party hereto upon notice to the
other parties should a party (a) become insolvent or (b) file a petition under
any bankruptcy or insolvency law or have any such petition filed against it
which has not been stayed within [ * ] of such filing.

10.5  Partnership Ownership Change

      Except under circumstances that are described in Section 12.4 of the
Partnership Agreement (which shall be handled in accordance with the provisions
thereunder), either party shall have the right, but not the obligation, to
terminate this Agreement if ICOS-ET-GP LLC, ICOS-ET-LP LLC, TBC-ET, Inc. or TBC
ceases to be a Partner (as defined in the Partnership Agreement) of the
Partnership.  Termination under this Section 10.5 shall be effective upon [ * ]
written notice from the party that desires to exercise such termination rights
to the other party.

10.6  Survival

      In addition to the survival clause of Section 5.4, termination of this
Agreement shall not affect (a) any accrued rights or obligations of either party
or (b) the enforceability of the provisions in Sections 6.3, 6.4 and 10.2, as
well as the last sentence of Section 7.2.

                                   ARTICLE 11
                            MISCELLANEOUS PROVISIONS

11.1  Notices

      Any notice, request, instruction or other document to be given hereunder
to a party hereto shall be in writing, delivered in person, or mailed by
certified or registered mail, return receipt requested, or transmitted by
facsimile transmission with electronic confirmation of receipt to the
addressee's address or facsimile number set forth below (or such other address
or facsimile number as the party changing its address specifies in a notice to
the other parties):

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      13
<PAGE>

If to ICOS:                 ICOS Corporation
                            22021 - 20th Avenue S.E.
                            Bothell, WA 98021
                            Attention: President
                            Phone:     (425) 485-1900
                            Facsimile: (425) 485-1911

     with a copy to:        Perkins Coie LLP
                            1201 Third Avenue, Suite 4800
                            Seattle, WA 98101-3099
                            Attention: James R. Lisbakken, Esq.
                            Phone:     (206) 583-8888
                            Facsimile: (206) 583-8500

If to TBC:                  Texas Biotechnology Corporation
                            7000 Fannin, 20th Floor
                            Houston, TX 77030
                            Attention: President
                            Phone:     (713) 796-8822
                            Facsimile: (713) 796-8232

     with a copy to:        Porter & Hedges, L.L.P.
                            700 Louisiana, 35th Floor
                            Houston, TX 77002-2764
                            Attention: Robert G. Reedy, Esq.
                            Phone:     (713) 226-0674
                            Facsimile: (713) 226-0274

     Notices shall be deemed to have been given on the date of service, if
served personally on the party to whom notice is to be given, or on the first
day after transmission by facsimile transmission, if transmitted by facsimile as
set forth above, or on the fifth day after mailing, if mailed as set forth
above.

11.2  Waiver

      No waiver of any breach of the terms of this Agreement shall be effective
unless such waiver is in writing and signed by the party against whom such
waiver is claimed.  No waiver of any breach shall be deemed to be a waiver of
any other or subsequent breach.

11.3  Severability

      If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      14
<PAGE>

11.4  Governing Law

      This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the choice of law provisions of
the State of Delaware or any other jurisdiction.

11.5  Counterparts

      This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.

11.6  Limitation on Rights of Others

      This Agreement is entered into between the parties for the exclusive
benefit of the parties and their successors and permitted assigns.  This
Agreement is not intended for the benefit of any creditor of any party.

11.7  Entirety of Agreement

      This Agreement and its exhibits set forth the entire agreement and
understanding of the parties relating to the subject matter contained herein and
merges all prior discussions and agreements between them.  No party shall be
bound by any representation other than as expressly stated in this Agreement, or
by a written amendment to this Agreement signed by authorized representatives of
all parties.

11.8  Disclaimer of Agency

      This Agreement shall not constitute any party the legal representative or
agent of another, nor shall any party have the right or authority to assume,
create, or incur any third party liability or obligation of any kind, express or
implied, against or in the name of or on behalf of another, except as expressly
set forth in this Agreement.  Accordingly, it is understood and agreed that ICOS
and TBC shall each have the status of an independent contractor under this
Agreement.

11.9  Assignment

      Except as otherwise expressly provided herein, neither this Agreement nor
any interest hereunder shall be assignable by any party without the prior
written consent of the other; provided, however, that any party may assign this
Agreement to any wholly-owned subsidiary or to any successor by merger or sale
of substantially all of its business unit to which this Agreement relates in a
manner such that the assignor shall remain liable and responsible for the
performance and observance of all its duties and obligations hereunder.  This
Agreement shall be binding upon the parties' successors and permitted assignees.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      15
<PAGE>

11.10  Headings; Construction

       The headings contained in this Agreement have been added for convenience
only and shall not be construed as limiting.  This Agreement has been submitted
to the scrutiny of, and has been negotiated by, all parties hereto and their
counsel and shall be given a fair and reasonable interpretation in accordance
with the terms hereof, without consideration or weight being given to its having
been drafted by any party hereto or its counsel.

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      16
<PAGE>

11.11  Compliance with Laws

       Each party shall comply in all material respects with all federal, state,
local and foreign laws, statutes, rules and regulations applicable to the
parties and their respective activities under this Agreement.

11.12  Rights and Remedies

       The rights and remedies provided by this Agreement are cumulative, and
the use of any one right or remedy shall not preclude or waive the right to use
any or all other remedies. These rights and remedies are given in addition to
any other rights the parties may have by law, statute, ordinance or otherwise.

11.13  Attorneys' Fees

       In the event of a dispute between the parties arising out of this
Agreement that is arbitrated or litigated, the nonprevailing party shall pay the
reasonable costs and attorneys' fees of the prevailing party, including the
reasonable costs and attorneys' fees incurred in the appeal of any final or
interlocutory judgment.

11.14  Use of Trademarks

       Use of one party's trademarks by another party shall be pursuant to a
trademark license agreement in form and substance to be agreed upon by the
parties.

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

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      17
<PAGE>

                              ICOS CORPORATION

                              By: /s/ Paul Clark
                                 ---------------
                              Name: Paul Clark
                                   -----------
                              Title: Chairman & CEO
                                    ---------------

                              TEXAS BIOTECHNOLOGY CORPORATION

                              By: /s/ David B. McWilliams
                                 ------------------------
                              Name: David B. McWilliams
                                   --------------------
                              Title: President/CEO
                                    --------------

                              ICOS-TEXAS BIOTECHNOLOGY L.P.
                              By ICOS-ET-GP LLC, as General Partner

                              By: /s/ Paul Clark
                                 ---------------
                              Name: Paul Clark
                                   -----------
                              Title: Chairman & CEO
                                    ---------------

                              By TBC-ET, Inc., as General Partner

                              By: /s/ David B. McWilliams
                                 ------------------------
                              Name: David B. McWilliams
                                   --------------------
                              Title: President
                                    ----------

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      18
<PAGE>

                                   EXHIBIT A
                                RESEARCH PROGRAM

     The goals of the Research Program shall be as follows:

     [ * ]

[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.

                                      19

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