Document:

<PAGE>

                             ADVANCED MEDICINE, INC.

                              AMENDED AND RESTATED

                           INVESTORS' RIGHTS AGREEMENT

                                MARCH 21, 2000

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
1.  Registration Rights...........................................................................................1
         1.1  Definitions.........................................................................................1
         1.2  Request for Registration............................................................................3
         1.3  Company Registration................................................................................4
         1.4  Form S-3 Registration...............................................................................5
         1.5  Obligations of the Company..........................................................................6
         1.6  Information from Holder.............................................................................7
         1.7  Expenses of Registration............................................................................7
         1.8  Delay of Registration...............................................................................8
         1.9  Indemnification.....................................................................................8
         1.10  Reports Under Securities Exchange Act of 1934.....................................................10
         1.11  Assignment of Registration Rights.................................................................11
         1.12  "Market Stand-Off" Agreement......................................................................11
         1.13  Termination of Registration Rights................................................................11

2.  Covenants of the Company.....................................................................................12
         2.1  Delivery of Annual Financial Statements............................................................12
         2.2  Delivery of Other Financial Information............................................................12
         2.3  Inspection.........................................................................................12
         2.4  Termination of Information and Inspection Covenants................................................13
         2.5  Right of First Offer...............................................................................13
         2.6  Termination of Certain Covenants...................................................................14
         2.7  Proprietary Information Agreements.................................................................14

3.  Miscellaneous................................................................................................14
         3.1  Successors and Assigns.............................................................................14
         3.2  Governing Law......................................................................................14
         3.3  Counterparts.......................................................................................15
         3.4  Titles and Subtitles...............................................................................15
         3.5  Notices............................................................................................15
         3.6  Expenses...........................................................................................15
         3.7  Entire Agreement: Amendments and Waivers...........................................................15
         3.8  Severability.......................................................................................15
         3.9  Aggregation of Stock...............................................................................15
         3.10  Waiver of Right of First Offer....................................................................16
</TABLE>

                                          i
<PAGE>
                                                                Exhibit 10.8

                              AMENDED AND RESTATED
                           INVESTORS' RIGHTS AGREEMENT

          THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of
the 21st day of March, 2000, by and among Advanced Medicine, Inc., a Delaware
corporation (the "Company"), and the investors listed on the signature pages
hereto, each of which is herein referred to as an "Investor" and the holders of
Common Stock listed on SCHEDULE A, each of which is herein referred to as a
"Common Holder."

                                    RECITALS

          WHEREAS, certain of the Investors (the "Existing Investors") hold
shares of the Company's Series A Preferred Stock, Series B Preferred Stock
and/or Series C Preferred Stock and possess registration rights, information
rights, rights of first refusal and other rights pursuant to an Amended and
Restated Investors' Rights Agreement dated as of January 25, 1999, among the
Company, certain holders of Common Stock and such Existing Investors (the "Prior
Agreement"); and

          WHEREAS, the Existing Investors are holders of at least a majority of
the "Registrable Securities" of the Company (as defined in the Prior Agreement),
and desire to amend, supersede and replace the Prior Agreement and to accept the
rights created pursuant hereto in lieu of the rights granted to them under the
Prior Agreement; and

          WHEREAS, certain Investors are parties to the Series D Preferred Stock
Purchase Agreement of even date herewith among the Company and certain of the
Investors (the "Series D Agreement"), which provides that as a condition to the
closing of the sale of the Series D Preferred Stock, this Agreement must be
executed and delivered by such Investors, Existing Investors holding at least a
majority of the "Registrable Securities" of the Company (as defined in the Prior
Agreement) and the Company.

          NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Company and the Existing Investors hereby agree that the
Prior Agreement shall be amended, superseded and replaced in its entirety by
this Agreement, and the parties hereto further agree as follows:

          1.   REGISTRATION RIGHTS. The Company covenants and agrees as follows:

               1.1   DEFINITIONS. For purposes of this Section 1:

                     (a)   The term "Act" means the Securities Act of 1933,
as amended.

                     (b)   The term "Form S-3" means such form under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC

<PAGE>

that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.

                     (c)   The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.11 hereof; provided, however, that the Common
Holders shall not be deemed to be Holders for purposes of Section 1.2, 1.4
and 3.7.

                     (d)   The term "Initial Offering" means the Company's
first firm commitment underwritten public offering of its Common Stock under
the Act.

                     (e)   The term "Major Investor" means any Investor that
holds on the date hereof at least (i) 1,000,000 shares of Series A, Series B
or Series C Preferred Stock (or the Common Stock issued upon conversion
thereof, as adjusted for stock splits, stock dividends, combinations and
other recapitalizations) or (ii) 800,000 shares of Series D Preferred Stock
(or the Common Stock issued upon conversion thereof, as adjusted for stock
splits, stock dividends, combinations and other recapitalizations).

                     (f)   The term "1934 Act" means the Securities Exchange
Act of 1934, as amended.

                     (g)   The term "Preferred Stock" means the Company's
Series A, Series B, Series C and Series D Preferred Stock, each $.01 par
value.

                     (h)   The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and
the declaration or ordering of effectiveness of such registration statement
or document.

                     (i)   The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock (ii) the shares of Common Stock held by the Common Holders;
provided, however, that such shares of Common Stock shall not be deemed
Registrable Securities for the purposes of Section 1.2, 1.4 and 3.7 and (iii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the shares referenced in (i) and (ii) above, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction
in which his rights under this Section 1 are not assigned.

                     (j)   The number of shares of "Registrable Securities"
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities that are, Registrable
Securities.

                                   2
<PAGE>

                     (k)   The term "SEC" shall mean the Securities and
Exchange Commission.

               1.2   REQUEST FOR REGISTRATION.

                     (a)   Subject to the conditions of this Section 1.2, if
the Company shall receive at any time six (6) months after the effective date
of the Initial Offering, a written request from the Holders of fifty percent
(50%) or more of the Registrable Securities then outstanding (the "Initiating
Holders") that the Company file a registration statement under the Act
covering the registration of Registrable Securities, then the Company shall,
within twenty (20) days of the receipt thereof, give written notice of such
request to all Holders, and subject to the limitations of this Section 1.2,
use all reasonable efforts to effect, as soon as practicable, the
registration under the Act of all Registrable Securities that the Holders
request to be registered in a written request received by the Company within
twenty (20) days of the mailing of the Company's notice pursuant to this
Section 1.2(a).

                     (b)   If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the
written notice referred to in Section 1.2(a). In such event the right of any
Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority of the Holders (which
underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number
of securities underwritten (including Registrable Securities), then the
Company shall so advise all Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, and the number of shares that may
be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.

                     (c)   The Company shall not be required to effect a
registration pursuant to this Section 1.2:

                           (i)   in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
in effecting such registration, unless the Company is already subject to
service in such jurisdiction and except as may be required under the Act; or

                           (ii)  after the Company has effected one (1)
registration pursuant to this Section 1.2, and such registration has been
declared or ordered effective;

                                  3
<PAGE>

provided, however, beginning twelve (12) months following the effective date
of the Initial Offering, for so long as the Company does not satisfy the
eligibility requirements for utilization of a registration statement on Form
S-3, if the Company has, within the twelve (12) month period preceding the
date of such request, already effected two registrations for the Holders
pursuant to this Section 1.2; or

                           (iii) during the period starting with the date of the
filing of, and ending on a date one hundred eighty (180) days following the
effective date of, a Company-initiated registration subject to Section 1.3
below, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or

                           (iv)  if the Initiating Holders propose to dispose
of Registrable Securities that may be registered on Form S-3 pursuant to
Section 1.4 hereof; or

                           (v)   if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the Company's Chief Executive Officer or Chairman of
the Board stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of the
Initiating Holders, provided that such right to delay a request shall be
exercised by the Company not more than once in any twelve (12)-month period.

               1.3   COMPANY REGISTRATION.

                     (a)   If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public
offering of such securities (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration
relating to a corporate reorganization or other transaction under Rule 145 of
the Act, or a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities that are also being
registered), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.3(c), use all reasonable efforts to cause to be registered under
the Act all of the Registrable Securities that each such Holder has requested
to be registered.

                     (b)   RIGHT TO TERMINATE REGISTRATION. The Company shall
have the right to terminate or withdraw any registration initiated by it
under this Section 1.3 prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration. The expenses of such withdrawn registration shall be borne by
the Company in accordance with Section 1.7 hereof.

                                   4
<PAGE>

                     (c)   UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under this Section 1.3 to include any of
the Holders' securities in such underwriting unless they accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters) and
enter into an underwriting agreement in customary form with an underwriter or
underwriters selected by the Company, and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with
the success of the offering, then the Company shall be required to include in
the offering only that number of such securities, including Registrable
Securities, that the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling Holders according to the total amount
of securities entitled to be included therein owned by each selling Holder or
in such other proportions as shall mutually be agreed to by such selling
Holders). For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder that is a Holder of Registrable
Securities and that is a partnership or corporation, the partners, retired
partners and stockholders of such Holder, or the estates and family members
of any such partners and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single "selling Holder,"
and any pro rata reduction with respect to such "selling Holder" shall be
based upon the aggregate amount of Registrable Securities owned by all such
related entities and individuals.

               1.4   FORM S-3 REGISTRATION. In case the Company shall receive
from the Holders of at least ten percent (10%) of the Registrable Securities
a written request or requests that the Company effect a registration on Form
S-3 and any related qualification or compliance with respect to all or a part
of the Registrable Securities owned by such Holder or Holders, the Company
shall:

                     (a)   promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and

                     (b)   use all reasonable efforts to effect, as soon as
practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holders' Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holders joining in such request as are
specified in a written request given within fifteen (15) days after receipt
of such written notice from the Company, provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 1.4:

                           (i)   if Form S-3 is not available for such
offering by the Holders;

                                    5
<PAGE>

                           (ii)  if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000;

                           (iii) if the Company shall furnish to the Holders
a certificate signed by the Chief Executive Officer or Chairman of the Board
of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company
and its stockholders for such Form S-3 Registration to be effected at such
time, in which event the Company shall have the right to defer the filing of
the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
1.4; provided, however, that the Company shall not utilize this right more
than once in any twelve month period;

                           (iv)  if the Company has, within the twelve (12)
month period preceding the date of such request, already effected two
registrations on Form S-3 for the Holders pursuant to this Section 1.4; or

                           (v)   in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification
or compliance.

                     (c)   Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. Registrations effected pursuant to
this Section 1.4 shall not be counted as requests for registration effected
pursuant to Sections 1.2.

               1.5   OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:

                     (a)   prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for a
period of up to one hundred twenty (120) days or, if earlier, until the
distribution contemplated in the Registration Statement has been completed;

                     (b)   prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement;

                     (c)   furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act,

                                6
<PAGE>

and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them;

                     (d)   use all reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions;

                     (e)   in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement
(including, but not limited to, reasonable due diligence), in usual and
customary form, with the managing underwriter of such offering;

                     (f)   notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act or the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;

                     (g)   cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and

                     (h)   provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective
date of such registration.

               1.6   INFORMATION FROM HOLDER. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
this Section 1 with respect to the Registrable Securities of any selling
Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Holder's Registrable Securities.

               1.7   EXPENSES OF REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and
1.4, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company reasonable fees of one special counsel for the
selling Holders not to exceed $35,000 shall be borne by the Company.
Notwithstanding the foregoing, the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 or
Section 1.4 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses
pro rata based upon the number of Registrable Securities that were to be

                                7
<PAGE>

requested in the withdrawn registration), provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that
known to the Holders at the time of their request and have withdrawn the
request with reasonable promptness following disclosure by the Company of
such material adverse change, then the Holders shall not be required to pay
any of such expenses.

               1.8   DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.

               1.9   INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:

                     (a)   To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors
and stockholders of each Holder, legal counsel and accountants for each
Holder, any underwriter (as defined in the Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the 1934 Act, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Act, the 1934
Act or any state securities laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities laws
or any rule or regulation promulgated under the Act, the 1934 Act or any
state securities laws; and the Company will reimburse each such Holder,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.9(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation that occurs in reliance
upon and in conformity with written information furnished expressly for use
in connection with such registration by any such Holder, underwriter or
controlling person; provided further, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Holder or underwriter, or any person controlling such Holder
or underwriter, from whom the person asserting any such losses, claims,
damages or liabilities purchased shares in the offering, if a copy of the
prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) is provided to the Holder
but was not sent or given by or on behalf of such Holder or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written

                                    8
<PAGE>

confirmation of the sale of the shares to such person, and if the prospectus
(as so amended or supplemented) would have cured the defect giving rise to
such loss, claim, damage or liability.

                     (b)   To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person,
if any, who controls the Company within the meaning of the Act, legal counsel
and accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any
such underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Act, the 1934 Act or any state securities laws,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any person intended to be indemnified pursuant to this subsection
l.9(b), for any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this subsection l.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.9(b) exceed the net proceeds from the offering
received by such Holder.

                     (c)   Promptly after receipt by an indemnified party
under this Section 1.9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 1.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.9.

                     (d)   If the indemnification provided for in this
Section 1.9 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage or
expense referred to herein, then the indemnifying party, in

                                  9
<PAGE>

lieu of indemnifying such indemnified party hereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage
or expense, as well as any other relevant equitable considerations; provided,
however, that such contribution shall not exceed the net proceeds from the
offering received by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such statement or omission.

                     (e)   Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions, with the
consent of the holders of a majority of the Registrable Securities, the
provisions in the underwriting agreement shall control.

                     (f)   The obligations of the Company and Holders under
this Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

               1.10  REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:

                     (a)   make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the Initial Offering;

                     (b)   file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the 1934 Act;
and

                     (c)   furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC that permits the selling of any such securities without registration or
pursuant to such form.

                                 10
<PAGE>

               1.11  ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may
be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such securities that (i) is a subsidiary, parent,
partner, limited partner, retired partner or stockholder of a Holder, (ii) is
a Holder's family member or trust for the benefit of an individual Holder, or
(iii) after such assignment or transfer, holds at least 50,000 shares of
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations), provided: (a) the
Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
and (b) such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.12 below.

               1.12  "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that it will not, without the prior written consent of the managing
underwriter, during the period commencing on the date of the final prospectus
relating to the Company's initial public offering and ending on the date
specified by the Company and the managing underwriter (such period not to
exceed one hundred eighty (l80) days) (i) lend, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (whether such shares or any such securities are
then owned by the Holder or are thereafter acquired), or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing provisions of this Section 1.12 shall only be applicable to the
Holders if all non-selling officers and directors and greater than two (2%)
shareholders of the Company enter into similar agreements. The underwriters
in connection with the Company's initial public offering are intended third
party beneficiaries of this Section 1.12 and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.

         In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.

               1.13  TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the Initial Offering or, as to any Holder
holding two percent (2%) or less of the outstanding capital stock of the
Company, such earlier time at which all Registrable Securities held by such
Holder (and any affiliate of the Holder with whom such Holder must aggregate
its sales under Rule 144) can be sold in a single transaction without
registration in compliance with Rule 144 of the Act.

                                  11
<PAGE>

         2.    COVENANTS OF THE COMPANY.

               2.1   DELIVERY OF ANNUAL FINANCIAL STATEMENTS. The Company
shall deliver to each Investor as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a statement
of cash flows for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles ("GAAP"), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company.

               2.2   DELIVERY OF OTHER FINANCIAL INFORMATION. The Company
shall deliver to each Major Investor:

                     (a)   as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement, statement of
cash flows for such fiscal quarter and an unaudited balance sheet as of the
end of such fiscal quarter.

                     (b)   within thirty (30) days of the end of each month,
an unaudited income statement and statement of cash flows and balance sheet
for and as of the end of such month, in reasonable detail including
comparison figures;

                     (c)   as soon as practicable, but in any event at least
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, including balance
sheets, income statements and statements of cash flows for such months and,
as soon as prepared, any other budgets or revised budgets prepared by the
Company;

                     (d)   with respect to the financial statements called
for in subsections (a) and (b) of this Section 2.2, an instrument executed by
the Chief Financial Officer or President of the Company certifying that such
financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may
be required by GAAP) and fairly present the financial condition of the
Company and its results of operation for the period specified, subject to
year-end audit adjustment; and

                     (e)   such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time request,
provided, however, that the Company shall not be obligated under this
subsection (e) or any other subsection of Sections 2.1 and 2.2 to provide
information that it deems in good faith to be a trade secret or similar
confidential information.

               2.3   INSPECTION. The Company shall permit each Major
Investor, at such Major Investor's expense, to visit and inspect the
Company's properties, to examine its books of account and records and Board
minutes and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Major
Investor; provided, however, that the Company shall not be obligated pursuant
to this Section 2.3

                                  12
<PAGE>

to provide access to any information that the Board determines in good faith
to be a trade secret or similar confidential information.

               2.4   TERMINATION OF INFORMATION AND INSPECTION COVENANTS. The
covenants set forth in Sections 2.1, 2.2 and 2.3 shall terminate as to each
Investor and Major Investor and be of no further force or effect when the
sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the firm commitment underwritten offering of
its securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.

               2.5   RIGHT OF FIRST OFFER. Subject to the terms and
conditions specified in this Section 2.5, the Company hereby grants to each
Investor that holds on the date hereof at least 25,000 shares of Preferred
Stock (or Common Stock issued upon conversion thereof, as adjusted for stock
splits, stock dividends, combinations and other capitalizations) ("Minimum
Investor") a right of first offer with respect to future sales by the Company
of its Shares (as hereinafter defined). For purposes of this Section 2.5, a
Minimum Investor includes any general partners and affiliates of a Minimum
Investor. A Minimum Investor shall be entitled to apportion the right of
first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.

         Each time the Company proposes to offer any shares of, or securities
convertible into or exchangeable or exercisable for any shares of, any class
of its capital stock ("Shares"), the Company shall first make an offering of
such Shares to each Investor in accordance with the following provisions.

                     (a)   The Company shall deliver a notice in accordance
with Section 3.5 ("Notice") to the Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms upon which it proposes to offer such Shares.

                     (b)   By written notification received by the Company,
within twenty (20) calendar days after receipt of the Notice, the Investor
may elect to purchase or obtain, at the price and on the terms specified in
the Notice, up to that portion of such Shares that equals the proportion that
the number of shares of Common Stock issued and held, or issuable upon
conversion of the Preferred Stock then held, by such Investor bears to the
total number of shares of Preferred Stock of the Company then outstanding
(assuming full conversion and exercise of all securities convertible or
exercisable for shares of Preferred Stock).

                     (c)   If all Shares that Investors are entitled to
obtain pursuant to subsection 2.5(b) are not elected to be obtained as
provided in subsection 2.5(b) hereof, the Company may, during the ninety (90)
day period following the expiration of the period provided in subsection
2.5(b) hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more favorable
to the offeree than those specified in the Notice. If the Company does not
enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within ninety (90) days of

                                13
<PAGE>

the execution thereof, the right provided hereunder shall be deemed to be
revived and such Shares shall not be offered unless first reoffered to the
Investors in accordance herewith.

                     (d)   The right of first offer in this Section 2.5 shall
not be applicable to (i) the issuance or sale of shares of Common Stock (or
options therefor) to employees, directors and consultants for the primary
purpose of soliciting or retaining their services pursuant to a plan approved
by the Board; (ii) the issuance of up to 333,333 shares of Series D Preferred
Stock (appropriately adjusted for any stock split, dividend, combination or
other recapitalization), (iii) the issuance of securities pursuant to a bona
fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act, at an offering price of at least $10.00 per share
(appropriately adjusted for any stock split, dividend, combination or other
recapitalization) and resulting in proceeds to the Company of at least
$30,000,000 in the aggregate, (iv) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (v) the
issuance of securities in connection with a bona fide business acquisition of
or by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise or (vi) the issuance of stock, warrants or
other securities or rights to persons or entities with which the Company has
business relationships provided such issuances are for other than primarily
equity financing purposes and have been approved by the Board or (vii) the
issuance of any equity security, including any security convertible into or
exercisable for any equity security, that is not senior to the Company's
Preferred Stock with respect to dividends, liquidation, redemption or voting,
provided that such securities are issued to a person or entity that has a
research, development, clinical, regulatory, marketing, sales or other
operational or strategic relationship with this corporation.

               2.6   TERMINATION OF CERTAIN COVENANTS. The covenants set
forth in Section 2.5 shall terminate and be of no further force or effect
upon the consummation of the sale of securities pursuant to a bona fide,
firmly underwritten public offering of shares of common stock, registered
under the Act.

               2.7   PROPRIETARY INFORMATION AGREEMENTS. The Company
covenants that it will cause each employee and consultant of the Company to
execute a Proprietary Information and Inventions Agreement in the form
previously provided to the Investors.

         3.    MISCELLANEOUS.

               3.1   SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

               3.2   GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.

                                 14
<PAGE>

               3.3   COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

               3.4   TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

               3.5   NOTICES. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be
deemed effectively given upon personal delivery to the party to be notified
or upon delivery by confirmed facsimile transmission, one (1) day after given
to a nationally recognized overnight courier service, or five (5) days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties.

               3.6   EXPENSES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

               3.7   ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS. This Agreement
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and thereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities; provided, however, that in the event that such
amendment or waiver adversely affects the obligations and/or rights of the
Common Holders in a different manner than the other Holders, such amendment
or waiver shall also require the written consent of the holders of a majority
in interest of the Common Holders. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities, each future holder of all such Registrable
Securities, each Common Holder, each future Common Holder and the Company.

               3.8   SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.

               3.9   AGGREGATION OF STOCK. All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement, including, but not limited to, for purposes of
Sections 1.1(e), 1.3(c) and 1.11.

                                  15
<PAGE>

               3.10  WAIVER OF RIGHT OF FIRST OFFER. Each Existing Investor
hereby waives its right of first offer as set forth in the Prior Agreement
with respect to the sale of shares of Series D Preferred Shares pursuant to
the terms of the Series D Agreement. Such waiver shall be binding upon all
parties to the Prior Agreement.

                            16
<PAGE>

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

                                   ADVANCED MEDICINE, INC.

                                   By: /s/ James B. Tananbaum
                                       -----------------------------------
                                       James B. Tananbaum
                                       President

                                   COMMON HOLDERS:
                                   By:
                                       -----------------------------------
                                   Title:
                                         ---------------------------------
                                   By:
                                       -----------------------------------
                                   Title:
                                         ---------------------------------

                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

<PAGE>

                                   INVESTOR:

                                   ABS VENTURES AM L.L.C.
                                   By:  Calvert Capital III L.L.C., its
                                        Managing Member

                                   By: /s/ Richard Spalding
                                      -----------------------------------
                                      Name: Richard Spalding
                                      Title: Managing Member

                                      Address:
                                              ---------------------------

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

                                   ABS INVESTORS L.L.C.

                                   By: /s/ Richard Spalding
                                      -----------------------------------
                                      Name: Richard Spalding
                                      Title: Managing Member

                                      Address:
                                              ----------------------------

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

                                   ABS INVESTORS AM L.L.C.

                                   By:  Calvert Capital III L.L.C., its
                                        Managing Member

                                   By:  /s/ Richard Spalding
                                       -----------------------------------
                                       Name:  Richard Spalding
                                       Title:  Managing Member

                                       Address:
                                               ---------------------------

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

                                  PHARMA VISION 2000 AG

                                   By:  /s/ Peter Sjostand
                                       -----------------------------------
                                       Name:  Peter Sjostand
                                       Title:  Member of the Board

                                       Address:
                                               ---------------------------

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

                                  THE GOLDMAN SACHS GROUP

                                   By:  /s/ Richard Friedman
                                       -----------------------------------
                                       Name:  Richard Friedman
                                       Title:  Vice President

                                       Address:
                                               ---------------------------

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

<PAGE>

                                   SCHEDULE A

                                 COMMON HOLDERS

James Tananbaum
George Whitesides
John Griffin
Mathai Mammen
The Marianthi Foundation, Inc.
Andrew S. Vagelos
Randall H. Vagelos
Ellen T. Vagelos
Cynthia M. Vagelos Roberts
Cara Diana Roberts Trust Dated 9/2/94
Olivia Sophia Vagelos Trust Dated 9/2/94
Lydia Joan Roberts Trust Dated 10/26/95<PAGE>

                                                                 EXHIBIT 10.12

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                            ADVANCED MEDICINE, INC.,

                                    IRL, INC.

                                       AND

                       INCARA PHARMACEUTICALS CORPORATION

                            DATED: DECEMBER 17, 1999

<PAGE>
                                                                 EXECUTION COPY
                                                                 --------------

                                TABLE OF CONTENTS
                                -----------------

                                                                           Page

ARTICLE I  PURCHASE AND SALE                                                  1
         1.1  Description of Assets to Be Acquired                            1
         1.2  Instruments of Transfer                                         2

ARTICLE II  ASSUMPTION OF OBLIGATIONS                                         2
         2.1  Assumption of Certain Obligations                               2

ARTICLE III  PURCHASE PRICE                                                   3
         3.1  Consideration                                                   3
         3.2  Amount                                                          3
         3.3  Additional Consideration                                        3
         3.4  Allocation                                                      3

ARTICLE IV  REPRESENTATIONS AND WARRANTIES                                    3
         4.1  Representations of Parent and Buyer                             3
         4.2  Representations of Seller                                       4

ARTICLE V  CONDUCT OF BUSINESS AND TRANSACTIONS PRIOR TO THE
              CLOSING; ADDITIONAL AGREEMENTS                                 11
         5.1  Conduct of Business of Seller                                  11
         5.2  Access to Information                                          11
         5.3  Breach of Representations, Warranties,
                 Agreements and Covenants                                    11
         5.4  Consents                                                       11
         5.5  Best Efforts                                                   12
         5.6  Expenses                                                       12
         5.7  Bulk Sale                                                      12
         5.8  Sales and Transfer Taxes                                       12
         5.9  Covenants Against Disclosure                                   12
         5.10  Employment by Parent                                          13
         5.11  Merck Agreement                                               13
         5.12  Merck Chemical Entities                                       13
         5.13  No Shop                                                       13
         5.14  Operation of Business Subsequent to Closing                   14

ARTICLE VI  CLOSING AND CONDITIONS PRECEDENT                                 14
         6.1  Closing                                                        14
         6.2  Conditions of Obligations of Buyer and Parent                  14
         6.3  Conditions of Obligations of Seller                            15

ARTICLE VII  INDEMNIFICATION                                                 16
         7.1  Survival of Representations, Warranties and Agreements         16

<PAGE>

         7.2  Indemnification                                                16
         7.3  Procedure for Indemnification with Respect
                 to Third-Party Claims                                       17
         7.4  Procedure for Indemnification with Respect
                 to Non-Third Party Claims                                   18

ARTICLE VIII  TERMINATION                                                    18
         8.1  Termination                                                    18
         8.2  Effect of Termination                                          19

ARTICLE IX  MISCELLANEOUS PROVISIONS                                         20
         9.1  Notice                                                         20
         9.2  Entire Agreement                                               21
         9.3  Binding Effect; Assignment                                     21
         9.4  Captions                                                       21
         9.5  Waiver; Consent                                                21
         9.6  No Third-Party Beneficiaries                                   22
         9.7  Acknowledgements                                               22
         9.8  Counterparts                                                   22
         9.9  Severability                                                   22
         9.10  Remedies of Buyer                                             22
         9.11  Governing Law                                                 22

SCHEDULES

Schedule 4.1:     Buyer's Schedule of Exceptions
Schedule 4.2:     Seller's Schedule of Exceptions

Schedule A:       Real Property
Schedule B:       Real Property Leases
Schedule C:       Personal property
Schedule D:       Personal Property Leases
Schedule E:       Inventory
Schedule F:       Contracts

Schedule G:       Accounts Receivable, Deposits and Prepayments
Schedule H:       Proprietary Rights
Schedule I:       Assumed Obligations
Schedule J:       Allocation of Purchase Price
Schedule K:       Third Party Consents
Schedule L:       Employees to be Offered Employment with Parent
Schedule M:       Anticipated Budget
Schedule N:       Form of Opinion of Seller's Counsel

EXHIBITS

Exhibit A:        Form of Management Agreement
Exhibit B:        Form of Bill of Sale
Exhibit C:        Form of Patent Assignment

                                       4

<PAGE>

         THIS AGREEMENT is dated as of December 17, 1999 by and among Incara
Pharmaceuticals Corporation , a Delaware corporation ("Seller"), and Advanced
Medicine, Inc., a Delaware corporation ("Parent"), and IRL, Inc., a Delaware
corporation and wholly owned subsidiary of PARENT ("Buyer").

                                    ARTICLE I

                                PURCHASE AND SALE

         1.1      DESCRIPTION OF ASSETS TO BE ACQUIRED. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing (as
defined in Section 6.1), Seller agrees to convey, sell, transfer, assign and
deliver to Buyer, and Buyer shall purchase from Seller, all right, title and
interest of Seller in and to the assets, properties, rights of the business of
Incara Research Laboratories, Seller's anti-infective division (the "Business"),
of every kind, nature and description, personal, tangible and intangible, known
or unknown, wherever located, including, without limiting the generality of the
foregoing:

                  (a)      All interests in real property and improvements owned
or leased by Seller and used in connection with the Business, a list of all
known such ownership interests in real property and improvements being set forth
on SCHEDULE A, and a list of all known such leases in real property and
improvements being set forth on SCHEDULE B, along with all appurtenant rights,
easements and privileges appertaining or relating thereto, and all buildings,
fixtures and improvements located thereon and therein (the "Real Property");

                  (b)      All machinery, equipment, instruments, parts,
supplies, furniture, computer hardware and software and related materials,
automobiles and other vehicles, and other tangible personal property used in
connection with the Business which are owned or leased by Seller, and all
purchase or lease contracts therefor which provide for future delivery (the
"Personal Property"), a list of all known ownership interests in Personal
Property with a value equal to or in excess of Three Thousand Dollars ($3,000)
being set forth on SCHEDULE C and a list of all known leases in Personal
Property with an annual rental of Three Thousand Dollars ($3,000) or more being
set forth and described on SCHEDULE D;

                  (c)      All inventory of Seller, including laboratory and
business supplies, raw materials, work-in-process, chemical entities or
compounds and biological materials held or made in connection with the Business
(the "Inventory"), a general description of all such Inventory being set forth
on SCHEDULE E;

                  (d)      All agreements, contracts, licenses, permits,
consents and certificates of any regulatory, administrative or other
governmental agency or body issued to or held by Seller necessary or incidental
to the Business immediately prior to the Closing (to the extent the same are
transferable), whether oral or written, relating to the operation of Seller's
Business (the "Contracts"), a list of such items (excluding Contracts with a
value of less than Three Thousand Dollars ($3,000)) being set forth and
described on SCHEDULE F;

                  (e)      All cash, cash equivalents, accounts receivable,
notes receivable,

                                       1

<PAGE>

advances, prepaid expenses, taxes and deposits of the Business and all assets
of a similar nature, as set forth and described on SCHEDULE G;

                  (f)      All technology, proprietary programs, trade secrets,
proprietary rights, marks, patents, trademarks, names, tradenames, symbols,
service marks, logos and copyrights (including all registrations, applications,
reissues, renewals, continuations and extensions pertaining to any of the
foregoing), designs and drawings and licenses in respect thereof, used relating
to the Business (the "Proprietary Rights"), a list and description of all such
items being set forth on SCHEDULE H;

                  (g)      Originals or duplicate copies thereof of all books of
account, general ledgers, sales invoices, accounts payable and payroll records,
customer accounts and lists, drawings, files, papers and records relating to the
Business located in Cranbury, New Jersey and copies of the confidentiality
agreements relating to the Business located at Seller's facility in North
Carolina (the "Records");

                  (h)      All goodwill of the Business; and

                  (i)      Any and all other rights, titles, interests,
privileges and appurtenances of Seller of any nature in any way related to, or
used in connection with, the ownership or operation of the foregoing items, or
otherwise necessary for the conduct of the Business; provided, however, nothing
contained in this Article I is intended to include assets of Seller located at
Seller's headquarters in North Carolina used primarily to manage Seller's
ownership and operation of the Assets and Business (such as computer programs
for financial, payroll and administrative functions) and to monitor the
administrative operations of Seller in Cranbury, New Jersey.

                  All of the assets, properties, rights and business to be
conveyed, sold, transferred, assigned and delivered to Buyer pursuant to this
Section 1.1 are hereinafter collectively referred to as the "Assets."

         1.2      INSTRUMENTS OF TRANSFER. The sale, assignment, transfer,
conveyance and delivery of the Assets shall be made by such bills of sale,
patent assignments and other recordable instruments of assignment, transfer and
conveyance as Buyer shall reasonably request.

                                   ARTICLE II

                            ASSUMPTION OF OBLIGATIONS

         2.1      ASSUMPTION OF CERTAIN OBLIGATIONS. Buyer shall, pursuant to
this Agreement, assume only those obligations and liabilities associated with
the Assets that are specifically identified on SCHEDULE I hereto. Buyer shall
have no responsibility, liability or obligation arising out of this Agreement,
matured, unmatured, liquidated or unliquidated, fixed or contingent, or known or
unknown, unless it is identified on SCHEDULE I. Subject to Article VII hereof,
to the extent expressly assumed by Buyer hereby, Seller shall have no
responsibility, liability or

                                       2

<PAGE>

obligation after the Closing for the matters set forth on or related to
matters identified on SCHEDULE I.

                                  ARTICLE III

                                 PURCHASE PRICE

         3.1      CONSIDERATION. Upon the terms and subject to the conditions
contained in this Agreement, in consideration for the Assets and in full payment
therefor, Buyer will pay or PARENT will cause to pay the purchase price set
forth in Section 3.2.

         3.2      AMOUNT. The purchase price for the Assets shall be $11,000,000
(the "Purchase Price") payable by wire transfer to the Seller at the Closing.

         3.3      ADDITIONAL CONSIDERATION. As additional consideration, Buyer
shall pay or cause to be paid to Seller promptly upon, but in no event longer
than ten (10) days of, receipt of the full corresponding payments from Merck &
Co., Inc. ("Merck") under the Research Collaboration and License Agreement dated
as of June 30, 1997 between Seller and Merck (the "Merck Agreement") the
following:

                  (a)      $[*] in cash upon receipt of the full payment
from Merck due upon [*] under Section [*] of the Merck Agreement; and

                  (b)      $[*] in cash upon receipt of the full payment
from Merck under Section [*] of the Merck Agreement due upon [*] (as
defined in the Merck Agreement).

         3.4      ALLOCATION. The parties shall allocate the Purchase Price
among each of the Assets transferred hereunder for federal, state and local tax
purposes in accordance with SCHEDULE J hereto, which allocation shall be in
compliance with Section 1060 of the Internal Revenue Code and Regulations. The
parties agree that SCHEDULE J may be subject to post-closing adjustments in
accordance with appraisals conducted by independent third parties. Buyer will
confer with Seller regarding the results of these appraisals, and the parties
will mutually agree as to these adjustments (such approval to not be
unreasonably withheld). The parties will cooperate with each other in preparing
and filing or causing to be filed all federal, state and local tax returns in
accordance with such allocation.

                                  ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         4.1      REPRESENTATIONS OF PARENT AND BUYER. Except as otherwise set
forth in SCHEDULE 4.1 hereto, PARENT and Buyer, jointly and severally, hereby
represent to Seller that:

                  (a)      ORGANIZATION. Each of PARENT and Buyer is a
corporation duly

-----------------
[*] Indicates material that has been omitted and for which confidential
treatment has been requested. All such omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 406
promulgated under the Securities Act of 1933, as amended.

                                       3
<PAGE>

organized, validly existing and in good standing under the laws of Delaware.
All of the outstanding capital stock of Buyer is owned by PARENT.

                  (b)      AUTHORIZATION. Each of PARENT and Buyer has full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Each of PARENT and Buyer has taken all necessary and appropriate corporate
action with respect to the execution and delivery of this Agreement and this
Agreement constitutes its valid and binding obligation enforceable in accordance
with its terms except as limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights and
remedies generally.

                  (c)      COMPLIANCE WITH OTHER INSTRUMENTS. Its execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the compliance with the terms hereof and thereof by it do not, or as
of the Closing will not, conflict with or result in a breach of any terms of, or
constitute a default under, its Certificate of Incorporation or Bylaws, or any
material agreement, obligation or instrument to which it is a party or by which
it is bound.

                  (d)      LITIGATION. There is no claim, litigation,
investigation, inquiry, action, suit or proceeding, administrative or judicial,
pending or, to its best knowledge, threatened against either PARENT or Buyer, at
law or in equity, before any federal, state or local court or regulatory agency,
or other governmental authority, which might have a material adverse effect on
PARENT's or Buyer's ability to perform any of their respective obligations under
this Agreement.

                  (e)      CONSENTS. To the best of the knowledge of PARENT and
Buyer, no consent, approval, order or authorization of registration,
qualification, designation, declaration or filing with any federal, state, local
or provincial governmental authority or any third party is required by either of
them in connection with the consummation of the transactions contemplated
hereunder.

                  (f)      BROKER FEES. Neither PARENT nor Buyer is obligated to
pay any fees or expenses of any broker or finder in connection with the origin,
negotiation or execution of this Agreement or in connection with any of the
transactions contemplated hereby.

         4.2      REPRESENTATIONS OF SELLER. The representations and warranties
of Seller are modified to the extent of disclosures set forth in SCHEDULE 4.2
solely to the extent such disclosures specifically identify the relevant section
hereof. Subject to SCHEDULE 4.2, Seller hereby represents and warrants to PARENT
and Buyer that:

                  (a)      CORPORATE ORGANIZATION OF SELLER. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and authority to conduct
its business in the places where such business is now conducted.

                  (b)      AUTHORIZATION OF SELLER. Seller has full corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and thereunder and to

                                       4

<PAGE>

consummate the transactions contemplated hereby and thereby, including,
without limitation, the execution and delivery of this Agreement, general
conveyances, bills of sale, assignments, and other documents and instruments
evidencing the conveyance of the Assets or delivered in accordance with
Section 6.1 hereunder (the "Closing Documents"). Seller has taken all
necessary and appropriate corporate and stockholder action with respect to
the execution and delivery of this Agreement and the Closing Documents. This
Agreement constitutes a valid and binding obligation of Seller, enforceable
in accordance with its terms except as limited by applicable bankruptcy,
insolvency, moratorium, reorganization and other laws affecting creditors'
rights and remedies generally.

                  (c)      ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in SCHEDULE 4.2(c), since September 30, 1999 there has not been:

                           (i)      Any material adverse change in the financial
condition, results of operations or liabilities of the Business or the Assets,
or any occurrence, circumstance, or combination thereof which reasonably could
be expected to result in any such adverse change;

                           (ii)     Any material event, including, without
limitation, shortage of materials or supplies, fire, explosion, accident,
requisition or taking of property by any governmental agency, flood, drought,
earthquake or other natural event, riot, act of God or the public enemy, or
damage, destruction or other casualty, whether covered by insurance or not,
which has had an adverse affect on the Business or any of the Assets or any such
event which reasonably could be expected to have such an affect on the Business
or any of the Assets;

                           (iii)    Any transaction relating to or involving
Seller in connection with the Assets or the Business (other than the
transactions contemplated herein) which was entered into or carried out by
Seller other than in the ordinary and usual course of business;

                           (iv)     Any change made by Seller in its method of
operating the Business or its accounting practices relating thereto;

                           (v)      Any mortgage, pledge, lien, security
interest, hypothecation, charge or other encumbrance imposed or agreed to be
imposed on or with respect to any of the Assets other than liens arising with
respect to taxes not yet due and payable and such minor liens and encumbrances,
if any, which arise in the ordinary course of business and are not material in
nature or amount and do not detract from the value of any of the Assets or
impair the operations conducted thereon or any discharge or satisfaction
thereof;

                           (vi)     Any sale, lease or disposition of, or any
agreement to sell, lease or dispose of any of the Assets, other than sales,
leases or dispositions in the usual and ordinary course of business and
consistent with prior practice;

                           (vii)    Any modification, waiver, change, amendment,
release, rescission, accord and satisfaction or termination of, or with respect
to, any material term, condition or provision of any contract, agreement,
license or other instrument to which Seller is a party and relating to or
affecting the Business, any of the Assets, other than any satisfaction by

                                       5

<PAGE>

performance in accordance with the terms thereof in the usual and ordinary
course of business and consistent with prior practice;

                           (viii)   Any disposition, license or disclosure, or
any discussions related thereto, of any of Seller's proprietary information,
trade secrets, formula, processes, engineering data or technical know-how
necessary or incidental to the conduct of the Business; or

                           (ix)     Any other event or condition of any
character which materially adversely affects, or may reasonably be expected to
so affect, any of the Assets or the results of operations or financial condition
of the Business.

                  (d)      UNDISCLOSED LIABILITIES. There are no debts,
liabilities or obligations with respect to the Business or to which any of the
Assets are subject, liquidated, unliquidated, accrued, absolute, contingent or
otherwise except for debts, liabilities or obligations set forth on the
September 30, 1999 balance sheet of Seller (a copy of which is attached hereto
as SCHEDULE 4.2(d)) or liabilities incurred in the ordinary course of business
since September 30, 1999 in a manner consistent with past practice which would
not, individually or in the aggregate, materially adverse affect, or reasonably
be expected to so affect, any of the Assets or the results of operations or
financial condition of the Business.

                  (e)      TAXES. All taxes, including without limitation,
income, property, sales, use, franchise, added value, withholding, and social
security taxes, imposed by the United States, any state, municipality, other
local government or other subdivision or instrumentality of the United States,
or any foreign country or any state or other government thereof, or any other
taxing authority, that are due or payable by Seller with respect to the
Business, and all interest and penalties thereon, whether disputed or not, and
that would result in the imposition of a lien, claim or encumbrance on any of
the Assets or against Buyer or PARENT, other than taxes that are not yet due and
payable, have been paid in full, all tax returns required to be filed in
connection therewith have been accurately prepared and duly and timely filed and
all deposits required by law to be made by Seller with respect to employees'
withholding taxes have been duly made. Seller is not delinquent in the payment
of any foreign or domestic tax, assessment or governmental charge or deposits
that would result in the imposition of a lien, claim or encumbrance on any of
the Assets or against Buyer or PARENT, and Seller does not have a tax deficiency
or claim outstanding, proposed or assessed against it, and there is to the
knowledge of Seller no basis for any such deficiency or claim, that would result
in the imposition of any lien, claim or encumbrances on any of the Assets or
against Buyer or PARENT.

                  (f)      COMPLIANCE WITH LAW. Seller has complied and is in
compliance with all applicable federal, state and local laws, statutes,
licensing requirements, rules and regulations, and judicial or administrative
decisions applicable to the Business including without limitation all
environmental and export control laws, except where such failure to do so would
not materially adverse affect, or reasonably be expected to so affect, any of
the Assets or the results of operations or financial condition of the Business.
Seller has been granted any and all licenses, permits (temporary and otherwise),
authorization and approvals from federal, state, local and foreign government
regulatory bodies necessary to carry on the Business as currently conducted,

                                       6

<PAGE>

all of which are currently valid and in full force and effect, except where
the failure to possess such license, permit, authorization or approval would
not materially adverse affect, or reasonably be expected to so affect, any of
the Assets or the results of operations or financial condition of the
Business. To Seller's knowledge (without conducting a search of any court or
administrative docket), there is no order issued, investigation or proceeding
pending or threatened, or notice served with respect to any violation of any
law, ordinance, order, writ, decree, rule or regulation issued by any
federal, state, local or foreign court or governmental agency or
instrumentality applicable to the Business.

                  (g)      PROPRIETARY RIGHTS.

                           (i)      To the knowledge of Seller (but without
having conducted any patent or trademark search), Seller owns or is licensed or
otherwise has the full right to use the Proprietary Rights.

                           (ii)     SCHEDULE H contains, or explicitly
incorporates by reference to other schedules attached hereto, a true, correct
and complete list and brief description of (a) all patents and patent
applications, trademark registrations, service mark registrations and
applications therefor, trademarks and service marks, trade names, copyright
registrations and applications therefor, which are owned by Seller and which
relate to the Business and (b) all material agreements under which Seller is
licensed or authorized to use Proprietary Rights by others, or under which
others are licensed or authorized to use Proprietary Rights by Seller, except
for standard, commercially available computer software programs.

                           (iii)    All maintenance fees and any other fees for
patents or patent applications for patents referred to in SCHEDULE H have been
timely paid; all registrations of trademarks and copyrights referred to in
SCHEDULE H and grants of patents referred to in SCHEDULE H remain in full force
and effect; to the knowledge of Seller, Seller has the right to use all
Proprietary Rights and has the right to use all Proprietary Rights in accordance
with the respective agreements under which such rights are granted; to the
knowledge of Seller, no person or entity is infringing upon the Proprietary
Rights; Seller has received no notice that any claims or litigation are
asserted, pending or to the knowledge of Seller threatened by any person or
entity contesting the right of Seller to use, or the validity of effectiveness
of or title to, the Proprietary Rights or challenging or questioning the
validity or effectiveness of any license or agreement pertaining thereto or
asserting the misuse thereof, and, to the knowledge of Seller, no valid basis
exists for any such claim; to the knowledge of Seller, neither use of the
Proprietary Rights by Seller nor the conduct of the Business as now conducted or
as presently proposed to be conducted infringes on the proprietary rights of any
person or entity or violates any license or other agreement applicable thereto
to which Seller is a party; all of the licenses and other agreements referred to
in subsection 4.2(g)(ii)(b) above are in full force and effect and constitute
legal, valid and binding obligations of the respective parties thereto; there
currently are not any defaults thereunder by Seller or, to the knowledge of
Seller, by any other party, and no event has occurred which (whether with or
without notice, lapse of time, or the happening or occurrence of any other
event) would constitute a default thereunder by Seller or, to the knowledge of
Seller, by any other party; and the validity and effectiveness of all such
licenses and other agreements

                                       7

<PAGE>

and the current terms thereof will not be adversely affected by the
transactions contemplated by this Agreement.

                  (h)      Seller has taken reasonable measures to protect the
Proprietary Rights from use by any other person or entity in the countries in
which Seller has filed for patent protection, including without limitation,
reasonable measures to ensure the secrecy of trade secrets and written
agreements with all employees with respect to confidentiality and rights to
inventions.

                  (i)      TITLE. Seller has good and marketable title, or a
valid leasehold, to the Assets, free and clear of all mortgages, pledges,
liens, encumbrances, security interests, charges, equities, clouds and
restrictions of any nature. By virtue of the deliveries made at the Closing,
Buyer will obtain good and marketable title to all of the Assets owned by
Seller, free and clear of all easements, mortgages, pledges, liens,
encumbrances, security interests, charges, equities, clouds and restrictions
of any nature whatsoever.

                  (j)      RESTRICTIVE DOCUMENTS OR ORDERS. Seller is not a
party to or bound under any agreement, contract, order, judgment or decree, or
any similar restriction not of general application which materially adversely
affects, or reasonably could be expected to materially adversely affect the
consummation of the transactions contemplated by this Agreement.

                  (k)      CONTRACTS AND COMMITMENTS. SCHEDULE F contains a
complete list of all of the Contracts required to be listed pursuant to Section
1.1(d). Seller is not in default nor has there occurred an event or condition
which, with the passage of time or giving of notice (or both), would constitute
a default with respect to the payment or performance of any obligation
thereunder; and no claim of such a default has been asserted and to Seller's
knowledge there is no basis or alleged basis upon which such a claim could be
made.

                  (l)      LITIGATION. There is no claim, litigation, action,
suit or proceeding, administrative or judicial, pending or, to Seller's
knowledge (without having conducted any search of any local, state or federal
docket), threatened against Seller involving any of the Assets, at law or in
equity, before any federal, state, local or foreign court or regulatory agency,
or other governmental or arbitral authority, including, without limitation, any
unfair labor practice or grievance proceedings or otherwise, which could have a
material adverse effect on (i) the consummation of the transactions contemplated
by this Agreement or (ii) any of the Assets. To Seller's knowledge (without
having conducted any search of any local, state or federal docket), there is no
basis or alleged basis upon which such claim, litigation, action, suit or
proceeding could be brought or initiated.

                  (m)      NO CONFLICT OR DEFAULT. Neither the execution and
delivery of this Agreement, nor compliance with the terms and provisions hereof,
including without limitation, the consummation of the transactions contemplated
hereby, will violate any statute, regulation or ordinance of any governmental
authority, or conflict with or result in the breach of any term, condition or
provision of the Certificate of Incorporation or Bylaws of Seller or of any
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which Seller is a party or by which it or any of the
Assets are or may be bound, or constitute a

                                       8

<PAGE>

default (or an event which, with the lapse of time or the giving of notice,
or both, would constitute a default) thereunder, or result in the creation or
imposition of any lien, charge or encumbrance, or restriction of any nature
whatsoever with respect to any of the Assets, or give to others any interest
or rights, including rights of termination, acceleration or cancellation in
or with respect to any of the Assets.

                  (n)      THIRD PARTY CONSENTS. No consent, approval, or
authorization of any third party on the part of Seller is required in connection
with the consummation of the transactions contemplated hereunder other than as
set forth in SCHEDULE K.

                  (o)      PROPRIETARY INFORMATION AGREEMENT. Except as set
forth on SCHEDULE 4.2, each employee and consultant to Seller has executed
either an Employee Agreement or a Confidential Information Agreement in
substantially the form previously provided to PARENT and Buyer.

                  (p)      EMPLOYEE PLANS; LABOR ISSUES; EMPLOYEE COMPENSATION.
With respect to any pension, retirement, profit sharing, savings, bonus,
incentive, deferred compensation, group health insurance or group life insurance
plan or obligation, employee welfare benefit plan, or to any collective
bargaining agreement or other agreement, written or oral, with any trade or
labor union, employees' association or similar organization to which Seller is a
party and, if any, which is subject to ERISA, Seller has in all material
respects prepared in good faith and timely filed all governmental reports and
has properly and timely posted or distributed all notices and reports to
employees required to be filed, posted or distributed with respect to such plan.
There are no labor or EEO complaints pending or to the knowledge of Seller
threatened between Seller and any of its employees that could materially
adversely affect the Assets or condition, financial or otherwise, operation or
prospects of the Business; no employees of Seller are represented, or to the
knowledge of Seller have ever been represented, by any labor union or other
collective bargaining unit, and Seller is not aware of any attempts to be so
represented. Except as set forth on SCHEDULE L, Seller is not a party to or
bound by any currently effective employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement
or other employee compensation agreement with the employees of Seller identified
on SCHEDULE L.

                  (q)      ENVIRONMENTAL MATTERS. Except in compliance with any
Environmental Law (as defined below) or pursuant to a valid permit, no Hazardous
Material (as defined below) has been released into the environment or deposited,
discharged, released, placed or disposed of at, on or near any premises now or,
to the knowledge of Seller, previously owned or occupied by Seller in connection
with its ownership or operation of the Business (the "Premises"), nor have any
of the Premises been used at any time by any person as a landfill, garbage or
trash dump or toxic waste dump, or a waste disposal site, or for the handling,
treatment, storage or disposal of any solid waste or Hazardous Material as
defined under applicable federal, state or local laws, including without
limitation, any Environmental Laws. For the purposes of this Agreement,
"Hazardous Material" means and includes petroleum, petroleum by-products,
natural or synthetic gas products and/or any hazardous substance or material,
waste, pollutant or contParentnant, defined as such in (or for the purposes of)
any of the Environmental Laws. "Environmental

                                       9

<PAGE>

Laws" means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Toxic Substances Control Act, the Clean Air Act, the Clean Water
Act, any "Superfund" or "Superlien" law, or any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree, regulating,
relating to or imposing liability or standards of conduct concerning, any
petroleum, petroleum by-products, natural or synthetic gas products and/or
any hazardous substances or materials, toxic or dangerous waste, substances
or materials, pollutant or contParentnant, as may now or at any time
hereafter be in effect.

                  (r)      BROKERS' AND FINDERS' FEES. Seller is not obligated
to pay any fees or expenses of any broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transactions contemplated hereby.

                  (s)      FINANCIAL STATEMENTS. Seller has previously furnished
PARENT and Buyer with a complete copy of Seller's unaudited balance sheet as of
September 30, 1999 and Seller's unaudited statements of operations, changes in
stockholders' equity and cash flows for the fiscal year then ended. The balance
sheet fairly represents the Seller's financial position as of its date and the
other statements fairly present the results of operations, changes in
stockholders' equity and cash flows, as the case may be, of Seller for the
period indicated, in each case in accordance with generally accepted accounting
principles except for the absence of descriptive footnotes. The projections of
Seller provided to Buyer (a copy of which is attached hereto as SCHEDULE 4.2(s))
were prepared in good faith and Seller believes that there is a reasonable basis
for such projections based on the conduct of the Business by Seller prior to the
Closing.

                  (t)      SOLVENCY; FAIRNESS. Immediately prior to the Closing
Date and after giving effect to the transactions contemplated hereby: (i) the
aggregate value of all of the tangible and intangible assets and properties of
Seller, at a fair valuation, will be greater than the total amount of its
liabilities or claims, including contingent claims, and the aggregate present
fair saleable value of its tangible and intangible assets will be greater than
the amount that will be required to pay its probable liability on its debts,
including contingent liabilities, as they become absolute and matured; and (ii)
the Seller will have (and will have no reason to believe that it will not have
thereafter) sufficient capital for the conduct of its businesses and, after
diligent inquiry and review, sufficient assets to pay its debts as they become
due. Seller has obtained, or prior to the Closing will obtain, a fairness
opinion issued by U.S. Bancorp Piper Jaffray in form and substance customary in
transactions of this nature.

                  (u)      ASSETS. The Assets include all assets, properties and
rights of Seller used in connection with the ownership and operation of the
Business or otherwise necessary for the conduct of the Business as presently
conducted.

                  (v)      YEAR 2000 COMPLIANCE. To Seller's knowledge, all of
Seller's computer systems, including without limitation, its accounting systems,
relating to its operation and ownership of the Assets and the Business will
record, store, process and calculate and present dates falling on and after
January 1, 2000, and will calculate any information dependent on or relating to
such dates in the same manner and with the same functionality, data integrity
and

                                      10

<PAGE>

performance as such systems record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
on or relating to such dates.

                  (w)      COMPLETE COPIES OF MATERIALS. Seller has delivered or
made available to PARENT and Buyer true and complete copies of each document
which has been requested by PARENT or Buyer, including, without limitation, the
Contracts set forth on SCHEDULE F.

                  (x)      COMPLETE DISCLOSURE. No representation or warranty by
Seller in this Agreement, and no exhibit, schedule, statement, certificate or
other writing furnished to Buyer or PARENT pursuant to this Agreement, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein and
therein not misleading.

                                   ARTICLE V

           CONDUCT OF BUSINESS AND TRANSACTIONS PRIOR TO THE CLOSING;
                              ADDITIONAL AGREEMENTS

         5.1      CONDUCT OF BUSINESS OF SELLER. During the period from the date
hereof and continuing until the earlier of the termination of this Agreement or
the Closing, Seller shall carry on the Business in the usual, regular and
ordinary course in substantially the same manner as conducted prior to the date
of this Agreement and, to the extent consistent with such Business, use its best
efforts to the end that none of the Assets shall be impaired at the Closing.
Seller shall promptly notify Buyer and PARENT of any material event or
occurrence not in the ordinary course of business of Seller, and any event that
could reasonably be expected to have a material and adverse effect on any of the
Assets.

         5.2      ACCESS TO INFORMATION. Seller shall afford Buyer, PARENT and
their respective accountants, counsel and other representatives, reasonable
access during normal business hours during the period from the date of this
Agreement until the earlier of the Closing or the termination of this Agreement
to (i) all properties, books, contracts, commitments and records, and (ii) all
other information concerning the business, properties and personnel as may
reasonably be requested, provided that any information provided pursuant hereto
or any investigation by each party hereto shall not affect such party's right to
rely on the representations, warranties, agreements and covenants made by the
other party herein.

         5.3      BREACH OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS. Each of Buyer, PARENT and Seller shall use its respective best
efforts to not take, or fail to take, any action that from the date hereof
through the Closing would cause or constitute a breach of any of its respective
representations, warranties, agreements and covenants set forth in this
Agreement. In the event of, and promptly after becoming aware of, the actual,
pending or threatened occurrence of any event that would cause or constitute
such a breach or inaccuracy, each party shall give detailed notice thereof to
the other parties and shall use its best efforts to prevent or promptly remedy
such breach or inaccuracy.

         5.4      CONSENTS. Each of Buyer, PARENT and Seller shall promptly
apply for or

                                      11

<PAGE>

otherwise seek and use its best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the transactions
contemplated hereby.

         5.5      BEST EFFORTS. If applicable, each of Buyer, PARENT and Seller
shall use best efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement. Each party to this Agreement shall execute and deliver to any other
party upon reasonable request any legal instrument, document of title, or any
other document which may be necessary to carry out the provisions of this
agreement or any judgment, order or decree which may be entered by the probate
court in accordance herewith. After the Closing, Seller and Buyer shall execute
and deliver such other certificates, agreements, conveyances, records, and other
documents, and take such other action, as may be reasonably requested by the
other party in order to consummate the agreements and obligations contemplated
hereby.

         5.6      EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, including fees of any
finders or brokers or investment bankers, attorneys and accountants retained by
such party, shall be paid by the party incurring such expense.

         5.7      BULK SALE. The parties specifically waive compliance under all
laws relating to the sale of property and/or assets in bulk, including Article 6
of the Uniform Commercial Code. In lieu thereof, Seller shall indemnify and hold
Buyer and PARENT harmless as hereinafter provided in Article VII.

         5.8      SALES AND TRANSFER TAXES. Seller will pay all sales and
transfer taxes associated with this Agreement and the transactions contemplated
hereby.

         5.9      COVENANTS AGAINST DISCLOSURE. Seller shall not (a) disclose to
any person, association, firm, corporation or other entity (other than Buyer or
PARENT or those designated in writing by Buyer or PARENT) in any manner,
directly or indirectly, any confidential information or data relevant to: (i)
the operation of the Business, whether of a technical or commercial nature or
(ii) the Assets or (b) use, or permit or assist, by acquiescence or otherwise,
any person, association, firm, corporation or other entity (other than Buyer or
PARENT) to use, directly or indirectly, any such information or data in any
manner which reasonably would be deemed to be competitive with the operation of
the Business or the business of Buyer or PARENT as it relates to the Business,
excepting only use of such information or data as is at the time generally known
to the public and which did not become generally known through any breach of any
provision of this Section by Seller. Seller shall take reasonable precautions to
keep such information confidential. Seller shall consult with PARENT before
issuing any press release or otherwise making any public statement or making any
other public disclosure (whether or not in response to an inquiry) regarding the
terms of this Agreement, the transactions contemplated hereby or the identity of
PARENT or Buyer, and shall not issue any such press release or make any such
statement or disclosure without the prior written approval of PARENT, except
solely to the extent Seller is advised by counsel that such press release,
statement or disclosure is required to comply with applicable law.

                                      12

<PAGE>

         5.10     EMPLOYMENT BY PARENT. Seller shall use its best efforts to
assist PARENT in employing those employees of Seller identified on SCHEDULE L,
and PARENT agrees to offer employment to such employees (upon terms and
conditions substantially similar to that offered to similarly situated employees
of PARENT) upon their termination with Seller at the Closing Date. Seller and
PARENT shall cooperate with respect to the transition of employees in order to
minimize any severance obligation of Seller which would otherwise be due and
payable in connection with a termination of employment. Seller shall be
responsible for, and indemnify Buyer and PARENT against, any severance liability
or similar obligation to such employees arising out of the severance provisions
contained in such employees' present employment arrangements with Seller.

         5.11     Merck Agreement. Buyer agrees that it will not [*] without
the prior written consent of Seller, which consent may be withheld for any
reason or no reason.

         5.12     Merck Chemical Entities. Seller shall use its best
efforts [*].

         5.13     NO SHOP. From the date hereof until the earlier to occur of
the Closing Date or December 31, 1999, neither Seller nor any representative or
affiliate of Seller will (A) enter into any agreement regarding the acquisition,
use or license of the Assets, or (B) solicit or encourage (including by way of
furnishing information) any inquiries or the making of any proposal that may
reasonably be expected to lead to any agreement to acquire, license or use the
Assets (each, an "Acquisition Proposal"); PROVIDED, HOWEVER, that nothing
contained in this Agreement shall prevent Seller or its Board of Directors, to
the extent such Board of Directors determines, in good faith, based upon and
consistent with advice received in consultation with outside legal counsel, that
such Board of Directors' fiduciary duties under applicable law, if any, require
it to do so, from furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition Proposal by such
person or entity to the stockholders of the Company if and only to the extent
that the Board of Directors believes in its good faith reasonable judgment
(based upon and consistent with advice received in consultation with independent
financial and legal advisors) that such Acquisition Proposal is reasonably
capable of being completed on the terms proposed and, after taking into account
the strategic benefits anticipated to be derived from the transactions
contemplated hereby and the long-term prospects of the Company following the
transactions contemplated hereby, would, if consummated, result in a transaction
more favorable over the long term from a financial point of view than the
transactions contemplated hereby (a "Superior Proposal") and the Board of
Directors determines in good faith, after consultation with, and based upon and
consistent with advice received from, outside legal counsel, that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law, if any. Seller will immediately notify PARENT
of any Acquisition Proposal.

-----------------
[*] Indicates material that has been omitted and for which confidential
treatment has been requested. All such omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 406
promulgated under the Securities Act of 1933, as amended.

                                      13

<PAGE>

         5.14     OPERATION OF BUSINESS SUBSEQUENT TO CLOSING. Seller shall,
subsequent to Closing, operate and manage the Business on behalf of PARENT and
Buyer through January 31, 2000 in a manner consistent with past practice and in
the ordinary course pursuant to the form of Management Agreement attached hereto
as EXHIBIT A (the "Management Agreement"). Subject to the limitations of this
Section 5.14 and the Management Agreement, Seller shall advance normal and
customary expenses related to the operation of the Business on behalf of PARENT
and Buyer during such period. Seller, PARENT and Buyer have prepared a budget of
anticipated Business expenses for such period, a copy of which is attached
hereto as SCHEDULE M. PARENT and Buyer shall, within five (5) business days of
receipt of the actual amounts expensed by Seller, reimburse Seller for any and
all such amounts expended by Seller. Seller shall promptly in advance of any
expenditure notify PARENT and Buyer in writing to the extent that expenses
expected for the post-closing management period specified in this Section 5.14
are not generally consistent with SCHEDULE M. All expenses and liabilities of
any kind related to the Business which are for the period on or after the
Closing will be the responsibility of PARENT and Buyer. This reconciliation will
be completed in accordance with the accrual basis of accounting in accordance
with generally accepted accounting principles ("GAAP"). Any invoices for
expenses incurred both prior to and after the Closing will be prorated, with
Seller responsible for expenses relating to the period prior to the Closing and
Buyer and PARENT responsible for expenses relating to the period on and after
the Closing.

                                  ARTICLE VI

                        CLOSING AND CONDITIONS PRECEDENT

         6.1      CLOSING. The transactions contemplated by this Agreement shall
close and all deliveries shall be made (the "Closing") no later than 1:00 p.m.
Eastern Standard Time on December 27, 1999 at the offices of Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, 1000 Winter Street, Suite 1100,
Waltham, MA 02451, or at such other place or date as may be agreed upon by the
parties (the "Closing Date").

         6.2      CONDITIONS OF OBLIGATIONS OF BUYER AND PARENT. The obligations
of Buyer and PARENT to effect the transactions contemplated hereby are also
subject to the satisfaction of the following conditions, unless waived by Buyer
and PARENT:

                  (a)      REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in this Agreement and the Side Letter (as
defined below) shall be true and correct as of the Closing, and Buyer and PARENT
shall have received a certificate signed by the chief executive officer and the
chief financial officer of Seller to such effect.

                  (b)      PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall
have performed all conditions, obligations and covenants required to be
performed by it under this Agreement prior to the Closing, and Buyer and PARENT
shall have received a certificate signed by the chief executive officer and the
chief financial officer of Seller to such effect.

                  (c)      CONSENTS; APPROVALS AND ASSIGNMENTS. Buyer and PARENT
shall have received duly executed copies of all third-party consents, approvals
and assignments

                                      14

<PAGE>

contemplated by this Agreement and necessary to transfer all of Seller's
interest in the Assets, in form and substance reasonably satisfactory to
Buyer and PARENT, except where the failure to obtain such consents, approvals
or assignments would not have a material adverse effect on the Assets or the
Business.

                  (d)      BILL OF SALE. Seller shall have executed and
delivered a Bill of Sale in substantially the form attached hereto as EXHIBIT B
transferring to Buyer title to the Assets.

                  (e)      PATENT ASSIGNMENTS. Seller shall have executed and
delivered a Patent Assignment in substantially the form attached hereto as
EXHIBIT C transferring to Buyer all patents identified on SCHEDULE H as owned by
Seller.

                  (f)      CONSULTING AGREEMENTS. PARENT shall have entered into
a Consulting Agreement with each of Dr. Daniel Kahne and Dr. Suzanne Walker.

                  (g)      MANAGEMENT AGREEMENT. Seller shall have executed and
delivered the Management Agreement in substantially the form attached hereto as
EXHIBIT A.

                  (h)      OPINION OF COUNSEL. Seller shall have delivered to
Buyer an opinion of Wyrick Robbins Yates & Ponton LLP, counsel for Seller,
addressed to Buyer and dated the Closing Date, in form and substance as set
forth in SCHEDULE N hereto.

                  (i)      NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the Assets, financial information or financial
projections from that represented to PARENT by Seller as of December 3, 1999.

                  (j)      SIDE LETTER. Seller shall have delivered to Buyer a
letter (the "Side Letter") setting forth as of the Closing a complete
[*], to the best of Seller's knowledge, of all [*].

         6.3      CONDITIONS OF OBLIGATIONS OF SELLER. The obligations of Seller
to effect the transactions contemplated hereby are also subject to the
satisfaction of the following conditions, unless waived by Seller:

                  (a)      REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer and PARENT set forth in this Agreement shall be true and
correct as of the Closing Date, and Seller shall have received a certificate
signed by the chief executive officer and chief financial officer of Buyer and
PARENT to such effect.

                  (b)      PERFORMANCE OF OBLIGATIONS OF BUYER AND PARENT. Buyer
and PARENT shall have performed all conditions, obligations and covenants
required to be performed by them under this Agreement prior to the Closing, and
Seller shall have received a certificate signed by the chief executive officer
and the chief financial officer of Buyer and PARENT to such effect.

                  (c)      OPINION OF COUNSEL. Seller shall have received an
opinion of Wyrick

-----------------
[*] Indicates material that has been omitted and for which confidential
treatment has been requested. All such omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 406
promulgated under the Securities Act of 1933, as amended.

                                      15

<PAGE>

Robbins Yates & Ponton LLP, counsel for Seller, addressed to Seller's Board
of Directors and dated the Closing Date, confirming that the consent of
Seller's shareholders is not required for the consummation of the
transactions contemplated hereby.

                                  ARTICLE VII

                                 INDEMNIFICATION

         7.1      SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation conducted at any time with regard thereto
by or on behalf of either party, all representations, warranties, covenants
and agreements of each party in this Agreement and the Side Letter shall
survive the execution, delivery and performance of this Agreement. All
representations and warranties of each party set forth in this Agreement and
the Side Letter shall be deemed to have been made by such party at and as of
the Closing. The obligation of indemnity provided herein with respect to all
of Buyer and PARENTs' representations and warranties set forth in Section 4.1
and such representations and warranties shall terminate two years after the
Closing. The obligations of indemnity provided herein with respect to the
representations and warranties of Seller set forth in Section 4.2 and the
Side Letter and such representations and warranties shall terminate two years
after the Closing. Notwithstanding the foregoing, the obligations of the
parties pursuant to Section 5.9 shall survive the Closing or termination of
this Agreement pursuant to Article VIII indefinitely.

         7.2      INDEMNIFICATION.

                  (a)      Buyer and PARENT hereby agree, jointly and
severally, to indemnify and hold harmless Seller from and against any and all
losses, liabilities, damages, demands, claims, suits, actions, judgments or
causes of action, assessments, costs and expenses, including, without
limitation, interest, penalties, attorneys' fees, any and all expenses
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred or suffered by
Seller, directly or indirectly, as a result of or arising from any inaccuracy
in or breach or nonfulfillment of any of the representations, warranties,
covenants or agreements made by Buyer or PARENT in this Agreement or any
facts or circumstances constituting such an inaccuracy, breach or
non-fulfillment ("Buyer Indemnifiable Claims"). Notwithstanding anything to
the contrary contained herein, Buyer and PARENT shall have no obligation to
indemnify Seller for one or more breaches of representations, warranties,
covenants or agreements pursuant to this Article 7 until the aggregate amount
of Buyer Indemnifiable Claims exceeds $100,000.00 (the "Buyer Threshold"),
and thereafter, only to the extent such claims exceed the Buyer Threshold.

                  (b)      Seller hereby agrees to indemnify and hold harmless
Buyer and PARENT against any and all Damages asserted against, resulting to,
imposed upon, or incurred or suffered by Buyer or PARENT , directly or
indirectly, as a result of or arising from any of the following ("Seller
Indemnifiable Claims" and together with Buyer Indemnifiable Claims, the
"Indemnifiable Claims"):

                                      16

<PAGE>

                           (i)      Any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants or
agreements made by Seller in this Agreement and the Side Letter or any facts or
circumstances constituting such an inaccuracy, breach or nonfulfillment; or

                           (ii)     Any liability of Seller imposed or attempted
to be imposed upon PARENT, or upon Buyer as transferee of the Assets or the
Business, or otherwise, except to the extent such liability is expressly assumed
by Buyer pursuant to Section 2.1; or

                           (iii)    Any claim by creditors of Seller against
Buyer or PARENT arising out of or based upon the failure of a party hereto to
notify creditors or take other actions to comply with applicable state bulk
sales or bulk transfer laws except to the extent such claim relates to a
liability or obligation expressly assumed by Buyer pursuant to Section 2.1.

                           (iv)     Notwithstanding anything to the contrary
contained herein, Seller shall have no obligation to indemnify Buyer or
PARENT for one or more breaches of representations, warranties, covenants or
agreements pursuant to this Article 7 until the aggregate amount of Seller
Indemnifiable Claims exceeds $100,000.00 (the "Seller Threshold"), and
thereafter, only to the extent such claims exceed the Seller Threshold.

                           (v)      Notwithstanding anything to the contrary
contained herein, Seller's indemnification obligations under this Article VII
shall not exceed the Purchase Price.

         7.3      PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD-PARTY
                  CLAIMS.

                  (a)      If Buyer, PARENT or Seller determines to seek
indemnification under this Article VII with respect to Indemnifiable Claims (the
party seeking such indemnification hereinafter referred to as the "Indemnified
Party" and the party against whom such indemnification is sought hereinafter
referred to as the "Indemnifying Party") resulting from the assertion of
liability by third parties, the Indemnified Party shall give notice to the
Indemnifying Party within 30 days of the Indemnified Party becoming aware of any
such Indemnifiable Claim or of facts upon which any such Indemnifiable Claim
will be based; the notice shall set forth such material information with respect
thereto as is then reasonably available to the Indemnified Party. In case any
such liability is asserted against the Indemnified Party, and the Indemnified
Party notifies the Indemnifying Party thereof, the Indemnifying Party will be
entitled, if it so elects by written notice delivered to the Indemnified Party
within 20 days after receiving the Indemnified Party's notice, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified Party.
Notwithstanding the foregoing, (i) the Indemnified Party shall also have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless the
Indemnified Party shall reasonably determine that there is a conflict of
interest between the Indemnified Party and the Indemnifying Party with respect
to such Indemnifiable Claim, in which case the fees and expenses of such counsel
will be borne by the Indemnifying Party and (ii) the rights of the Indemnified
Party to be indemnified hereunder in respect of Indemnifiable Claims resulting
from the assertion of liability by third parties shall not be adversely affected
by its failure to give notice pursuant to the foregoing unless, and, if so, only
to the extent that, the Indemnifying Party is materially

                                      17

<PAGE>

prejudiced thereby. With respect to any assertion of liability by a third
party that results in an Indemnifiable Claim, the parties hereto shall make
available to each other all relevant information in their possession material
to any such assertion.

                  (b)      In the event that the Indemnifying Party, within 20
days after receipt of the aforesaid notice of an Indemnifiable Claim, fails to
assume the defense of the Indemnified Party against such Indemnifiable Claim,
the Indemnified Party shall have the right to undertake the defense, compromise
or settlement of such action on behalf of and for the account and risk of the
Indemnifying Party.

                  (c)      Notwithstanding anything in this Section to the
contrary, (i) if there is a reasonable probability that an Indemnifiable Claim
may materially and adversely affect the Indemnified Party, other than as a
result of money damages or other money payments, the Indemnified Party shall
have the right to participate in such defense, compromise or settlement and the
Indemnifying Party shall not, without the Indemnified Party's written consent
(which consent shall not be unreasonably withheld), settle or compromise any
Indemnifiable Claim or consent to entry of any judgment in respect thereof
unless such settlement, compromise or consent includes as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party a
release from all liability in respect of such Indemnifiable Claim.

         7.4      PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO NON-THIRD PARTY
CLAIMS. In the event that the Indemnified Party asserts the existence of a claim
giving rise to Damages (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Indemnifying
Party. Such written notice shall state that it is being given pursuant to this
Section 7.4, specify the nature and amount of the claim asserted and indicate
the date on which such assertion shall be deemed accepted and the amount of the
claim deemed a valid claim (such date to be established in accordance with the
next sentence). If the Indemnifying Party, within 60 days after the mailing of
notice by the Indemnified Party, shall not give written notice to the
Indemnified Party announcing its intent to contest such assertion of the
Indemnified Party, such assertion shall be deemed accepted and the amount of
claim shall be deemed a valid claim. In the event, however, that the
Indemnifying Party contests the assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. In the event that
litigation shall arise with respect to any such claim, the prevailing party
shall be entitled to reimbursement of costs and expenses incurred in connection
with such litigation including attorney fees.

                                 ARTICLE VIII

                                  TERMINATION

         8.1      TERMINATION. This Agreement may be terminated prior to the
                  Closing:

                  (a)      upon the mutual agreement of the parties hereto;

                  (b)      by either (i) Buyer or PARENT or (ii) Seller, in
either case if the Closing shall not have occurred on or before December 31,
1999; PROVIDED, HOWEVER, that the right to

                                      18

<PAGE>

terminate this Agreement under this clause (b) shall not be available to any
party whose breach of this Agreement, or whose action or failure to act, has
been the cause of, or resulted in, the failure of the Closing to occur on or
before such date;

                  (c)      by either (i) Buyer or PARENT or (ii) Seller, in
either case if there shall been any material breach of any representation,
warranty, covenant or agreement, on the part of, respectively, (x) Seller or
(y) Buyer or PARENT (provided that the right to terminate this Agreement
pursuant to this Section 8.1(c) shall not be available to a party where such
party is at that time in breach in any material respect of this Agreement);

                  (d)      by either Buyer or PARENT, upon the discovery by
either Buyer or PARENT that the Assets, financial information of Seller or
financial projections of Seller are different in any material respect from that
which was represented to PARENT by Seller as of December 3, 1999;

                  (e)      by Seller, if Buyer or PARENT proposes in writing a
material change in the terms and conditions set forth herein that has not been
made as a result of a corresponding material change in the Assets, financial
information of Seller or financial projections of Seller as represented to
PARENT by Seller as of December 3, 1999; or

                  (f)      by Seller, if the Board of Directors of Seller,
following receipt of an Superior Proposal, changes or modifies its approval of
this Agreement or the transactions contemplated hereby in the event such Board
of Directors determines, in good faith, based upon and consistent with advice
received in consultation with outside legal counsel, that such Board of
Directors' fiduciary duties to stockholders under applicable law, if any,
require it to do so; PROVIDED that in the event Seller desires to terminate this
Agreement pursuant to this Section 8.1(f), Seller shall (i) provide Buyer with
three (3) days' prior written notice of its intent to so terminate, which notice
shall contain all of the terms and conditions of the Superior Proposal, and (ii)
pay Buyer the fee required under Section 8.2(b).

         8.2      EFFECT OF TERMINATION. Upon termination of this Agreement:

                  (a)      If the termination is by Seller pursuant to Section
8.1(e), PARENT shall (i) pay Seller $1,000,000.00 in cash within five (5)
business days of notice by Seller and (ii) provide to Seller an unsecured line
of credit in the amount of $1,000,000.00 on terms and conditions customarily
offered by commercial lending institutions. Such line to terminate and be repaid
in full on the earlier of (A) consummation by Seller of a corporate or financial
transaction with another entity; or (B) June 30, 2000.

                  (b)      If the termination is by Seller pursuant to Section
8.1(f), Seller shall pay Buyer $3,000,000.00 in cash within five (5) business
days of the date of termination or the closing of the transactions pursuant to
the Superior Proposal, whichever is earlier.

                  (c)      Each party hereto agrees and acknowledges that upon a
breach of this Agreement, the non-breaching party shall be entitled to all
remedies conferred by law or equity upon such party, and the exercise by a party
of any one remedy will not preclude the exercise of

                                      19

<PAGE>

any other remedy. Buyer and PARENT agree and acknowledge that the payments
set forth in Section 8.2(a) will be deemed cumulative with and not exclusive
of any other remedy set forth in this Agreement.

                                  ARTICLE IX

                            MISCELLANEOUS PROVISIONS

         9.1      NOTICE. All notices and other communications hereunder shall
be in writing and shall be deemed given (a) on the same day if delivered
personally, (b) three (3) business days after being mailed by registered or
certified mail (return receipt requested), or (c) on the same day if sent by
facsimile, confirmation received, to the parties at the following addresses and
facsimile numbers (or at such other address or number for a party as shall be
specified by like notice):

                           If to Buyer or PARENT, to:

                           IRL, Inc.
                           280 Utah Avenue
                           South San Francisco, CA 94080
                           Attention:  President
                           Telephone No.:  650-808-6000
                           Facsimile No.:  650-808-6095

                           and

                           Advanced Medicine, Inc.
                           280 Utah Avenue
                           South San Francisco, CA  94080
                           Attention: Senior Vice President and General Counsel
                           Telephone No.: 650-808-6000
                           Facsimile No.:  650-808-6095

                           and after February 1, 2000 to each of the above
                           parties at:

                           901 Gateway Boulevard
                           South San Francisco, CA 94080
                           Attention:  President
                           Telephone No.:  650-808-6000
                           Facsimile No.:  650-808-6095

                           with copy to:

                           Gunderson Dettmer Stough Villeneuve
                           Franklin & Hachigian, LLP
                           1000 Winter Street

                                      20

<PAGE>

                           Suite 1100
                           Waltham, MA 02451
                           Attention:  Jay Hachigian
                           Telephone No.:  781-890-8800
                           Facsimile No.:  781-622-1622

                           If to Seller:

                           Incara Pharmaceuticals Corporation
                           P.O. Box 14287
                           3200 East Highway 54
                           Cape Fear Building
                           Suite 300
                           Research Triangle Park, NC 27709
                           Attention:  President and Chief Executive Officer
                           Telephone No.:  919-558-8688
                           Facsimile No.:  919-554-1245

                           with copy to:

                           Wyrick Robbins Yates & Ponton LLP
                           4101 Lake Boone Trail
                           Suite 300
                           Raleigh, N.C. 27607
                           Attention:  Larry E. Robbins
                           Telephone:  919-781-4000
                           Facsimile:  919-781-4865

         9.2      ENTIRE AGREEMENT. This Agreement, the exhibits and schedules
hereto, and the documents referred to herein embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and shall supersede all prior and contemporaneous agreements and understandings,
oral or written, relative to said subject matter.

         9.3      BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon Seller, its successors and assigns, and Buyer and PARENT and their
respective successors and assigns.

         9.4      CAPTIONS. The Article and Section headings of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement in construing or interpreting any provision hereof.

         9.5      WAIVER; CONSENT. This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given or consented
thereto.

                                      21

<PAGE>

Except to the extent that a party hereto may have otherwise agreed in
writing, no waiver by that party of any condition of this Agreement or breach
by the other party of any of its obligations or representations hereunder or
thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or
representation by the other party, nor shall any forbearance by the first
party to seek a remedy for any noncompliance or breach by the other party be
deemed to be a waiver by the first party of its rights and remedies with
respect to such noncompliance or breach.

         9.6      NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided for in this Agreement, nothing herein, expressed or implied, is
intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any rights, remedies
or other benefits under or by reason of this Agreement.

         9.7      ACKNOWLEDGEMENTS. Each party executing this Agreement
acknowledges that such party has read this Agreement thoroughly, and understands
the legal effect of each provision hereof, and that such party has executed this
Agreement freely and voluntarily, without duress or undue influence. Each party
acknowledges such party's right to make an independent determination of all
matters set forth herein, and such party's right to consult with an independent
attorney prior to executing this Agreement.

         9.8      COUNTERPARTS. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.

         9.9      SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be modified
or excluded from this Agreement to the minimum extent necessary so that the
balance of the Agreement shall remain in full force and effect and enforceable.
The parties also agree to use best efforts to amend the Agreement so that its
effect remains as close as possible to the original intent of the parties.

         9.10     REMEDIES OF BUYER AND PARENT. Seller agrees that the Assets
are unique and not otherwise readily available to Buyer. Accordingly, Seller
acknowledges that, in addition to all other remedies to which Buyer and PARENT
are entitled, Buyer and PARENT shall have the right to enforce the terms of this
Agreement by a decree of specific performance.

         9.11     GOVERNING LAW. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of Delaware,
as applied to contracts entered into and to be performed solely within the
state, solely between residents of the state.

                                      22

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.

                                  BUYER:

                                  IRL, INC.

                                  By:        /s/ James B. Tananbaum
                                  Name:      James B. Tananbaum
                                  Title:     President

                                  PARENT:

                                  ADVANCED MEDICINE, INC.

                                  By:        /s/ James B. Tananbaum
                                  Name:      James B. Tananbaum
                                  Title:     President and Chief Executive
                                             Officer

                                  SELLER:

                                  INCARA PHARMACEUTICALS CORPORATION

                                  By:        /s/ Clayton I. Duncan
                                  Name:      Clayton I. Duncan
                                  Title:     President and Chief Executive
                                             Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]