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                                                                     EXHIBIT 4.5

                     DEVELOPMENT AND LICENSE AGREEMENT/1//
                                                       -
 This Development and License Agreement ("Agreement") is made by and between CAT
and Knoll.

                                   RECITALS

 On August 25, 1993, Knoll and CAT entered into an agreement (the "Initial
Agreement") directed to a collaborative development program aimed at isolating
human neutralizing antibodies to certain human antigens, beginning with TNF, and
pursuant to which Knoll took an exclusive, worldwide license to various patents
and know-how in the Exclusive Field relating to phage-antibody technology.

 CAT and Knoll, desiring to continue and further define their collaboration,
have agreed to and do hereby substitute this Agreement for the Initial
Agreement, which is hereby expressly terminated, both as of the Effective Date,
and agree to continue the collaboration and the license on the terms and
conditions set out in this Agreement.

                                   ARTICLE 1
                                  DEFINITIONS

1.00 As used throughout this Agreement, the following initially capitalized
terms shall have the meanings ascribed to them in Sections 1.01 through 1.41.

1.1 "Affiliate(s)" means a corporation or any other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the designated party.

1.2 "Antibodies" mean antibody molecules or fragments or derivatives thereof,
identified, produced or derived under the Research Program binding to the
Antigen(s).

1.3 "Antigen(s)" means TNF or IL-12 or both as indicated by the context in which
it is used in this Agreement.

1.4 "BASF" means BASF Aktiengesellschaft, a corporation organized under the
laws of the Federal Republic of Germany, and having a place of business at
Ludwigshafen, Germany.

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/1//[***] indicates that text has been deleted, which is subject to a
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confidential treatment request. This text has been filed with the SEC on a
supplemental basis.

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1 .5 [***]

1.6  "CAT" means Cambridge Antibody Technology, Ltd., an English corporation
having its registered office at The Science Park, Melbourn, Cambridgeshire SG8
6JJ, Great Britain.

1.7  "CAT Know-How" means all unpatented information, whether or not patentable,
relating to materials, methods, processes, techniques and data, including
Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to CAT or its Affiliates, or
developed independently by CAT or its Affiliates, or received by CAT or its
Affiliates from a third party and not from Knoll, its Affiliates or a
Collaborator or its Affiliates, at any time during the Term of this Agreement
and which CAT is free to transfer or disclose without violating contractual
obligations to any third party.

1.8  "Collaborator" means the party or parties designated by Knoll pursuant to
Article 2 of this Agreement.

1.9  "Collaborator Know-How" means all unpatented information, whether or not
patentable, relating to materials, methods, processes, techniques and data,
including Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to Collaborator or its Affiliates,
or developed independently by Collaborator or its Affiliates or received by
Collaborator or its Affiliates from a third party and not from CAT or its
Affiliates or Knoll or its Affiliates, at any time during the Term of this
Agreement and which Collaborator is free to transfer or disclose without
violating contractual obligations to any third party.

1.10 "Drug(s)" means a drug which is made, isolated and/or developed by Knoll
and/or its Affiliates wholly or partly using the Antibodies or derived from the
Antibodies.

1.11 "Effective Date" means April 1, 1995.

1.12 "Exclusive Field" means the isolation, development, manufacture, use and
sale of Antibodies (excluding [***] and any antibody that binds to a receptor
that does not function as an agonist and that does not neutralize the action of
the ligand on the receptor) for human in vivo use.

1.13 "FDA" means the United States Food and Drug Administration or any
successor United States governmental agency or any other foreign governmental
agency performing similar regulatory functions with respect to pharmaceutical
products.

1.14 "First Commercial Sale" means the first sale or other disposition for
value of the Products, in a final dosage form packaged for the ultimate
consumer, to an independent third party following regulatory approval. The term
"First Commercial Sale" shall not include sales and disposals for experimental
purposes or for purposes of clinically or otherwise testing any Product.

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1.15   "IL- 12" means human IL- 12 and human IL- 12 receptors.

1.16   "Improvement Patent(s)" means any patent or application, including any
United States and foreign counterpart applications, continuing, divisional,
reissue, re-examination and substitute application relating to any Invention,
including any patents and patent applications first disclosing one or more
Antibodies or a Product or a Drug.

1.17   "Initial Agreement" shall have the meaning set forth above in the
Recitals.

1.18   "Initial Date" means August 25, 1993.

1.19   "Invention(s)" means any invention, discovery or development which
relates to the development, manufacture, use or sale of the Antibodies or a
Product or Drug, whether or not patentable, and which is made during the term of
this Agreement, whether solely or jointly by CAT, Knoll or its Affiliates, or a
Collaborator, made during or within one (1) year after and arising out of the
Research Program.

1.20   "Knoll" means Knoll Aktiengesellschaft, a corporation organized under the
laws of the Federal Republic of Germany, which is a wholly owned subsidiary of
BASF, and which has a place of business at Knollstrabe 50,6700l Ludwigshafen on
Rhine, Germany.

1.21   "Knoll Know-How" means all unpatented information, whether or not
patentable, relating to materials, methods, processes, techniques and data,
including Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to Knoll or its Affiliates, or
developed independently by Knoll or its Affiliates or received by Knoll or its
Affiliates from a third party and not from CAT or its Affiliates or a
Collaborator or its Affiliates, at any time during the Term of this Agreement
and which Knoll is free to transfer or disclose without violating contractual
obligations to any third party.

1.22   "Know-How" means CAT Know-How, Collaborator Know-How and Knoll Know-How.

1.23   [***]

1.24   "MRC" means the Medical Research Council of 20 Park Crescent, London WIN
4AL.

1.25   "MRC-Knoll-Agreement" means the agreement between MRC and Knoll, dated as
of June 29, 1993, pursuant to which MRC licensed the MRC-Patents to Knoll; a
copy of which is attached as Schedule III to this Agreement.
                             ------------

1.26   "MRC-Patents" means [***].

1.27   "NDA" means a New Drug Application, or other application for the approval
to market Product, which is submitted to the FDA.

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1.28   "Net Sales" means the amounts invoiced on the sales of Product by Knoll,
its sublicensees and Affiliates to independent, unrelated third parties in bona
fide arms length transactions, less the following deductions properly documented
actually allowed and taken by such third parties and not otherwise recovered by
or reimbursed by Knoll, its Affiliates or sublicensees:

          (1)  trade, cash and quantity discounts, including charge backs;

          (2)  taxes on sales (such as sales or use taxes) to the extent added
       to the sales price and set forth separately as such in the total amount
       invoiced;

          (3)  freight, insurance and other transportation charges to the extent
       added to the sales prices and set forth separately as such in the total
       amount invoiced;

          (4)  amounts repaid or credited by reason of rejections, defects or
       returns, or because of retroactive price reductions, or due to
       governmental laws or regulations requiring rebates;

          (5)  import duties; and means further the amount of fair market value
       of all other consideration received by Knoll, or its sublicensees or
       Affiliates in respect of the Product, whether such consideration is in
       cash, payments in kind, exchange or other forms; but does not mean sales
       of the Product between or among Knoll and its sublicensees and/or
       Affiliates;

          (6)  except in the course of research, including pre-clinical
       experiments and clinical studies, and in potential programs of
       humanitarian or compassionate supply of Product, Knoll does not intend to
       supply unrelated third parties with Product other than by sales of such
       Products. However, should Knoll's intentions in that regard change, Knoll
       will enter discussions with CAT concerning appropriate compensation to
       CAT for any sales thereby lost.

1.29   [***]

1.30   "Patents" means PCT applications WO 90/5144 (Winter 2) except as
pertaining to [***], as published on May 17, 1990, and WO 92/1047 (McCafferty),
the patents when granted, including any patents which derive from the Patents
and any divisions, renewals, continuations, continuations-in-part, extensions or
reissues.

1.31   "PLA" means a Product License Application, or other application approving
the marketing of Product, which is submitted to the FDA.

1.32   "Product(s)" means any pharmaceutical composition containing one or more
Antibodies.

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1.33 "Proprietary Information" means any information, data, manufacturing
procedures, Regulatory Data, Know-How, samples and materials, which is/are not
publicly known or publicly available and which is/are disclosed by CAT,
Collaborator, Knoll, or Knoll's Affiliates or sublicensees, to one another
pursuant to this Agreement, as well as all data and results obtained in the
course of the Research Program.

1.34 "Regulatory Data" means the medical, toxicological, pharmacological,
clinical and other data relating to Product which is necessary to, required for,
or included in any governmental regulatory filing to obtain or maintain
regulatory approval to market the Product, including postapproval reports,
filing and submissions.

1.35 "Research Program" shall have the meaning set forth in Article 2 with
respect to the research and development done with respect to each Target.

1.36 "Target(s)" shall mean the Antigen(s) for which CAT and Knoll have agreed
to conduct a collaborative Research Program pursuant to Article 2 of this
Agreement.

1.37 "Target- 1" shall mean TNF.

1.38 "Target-2" shall mean IL-12.

1.39 "Target-X" where "X" is an integer selected from "3, 4, 5 and 6"
corresponding to each subsequent Antigen designated pursuant to Article 18 of
this Agreement.

1.40 "Term" means the term of this Agreement under Article 16.

1.41 "TNF" shall mean human tumor necrosis factor-(a) (TNF-a).

                                   ARTICLE 2
                               RESEARCH PROGRAM

2.00 CAT and Knoll will conduct collaborative research and development with
respect to Target-1, Target-2 and each Target designated pursuant to Article 18,
with the research and development for each such designated Target being set
forth in Schedule 1 to this Agreement, as amended from time to time to reflect
         ----------
mutually agreed changes or the inclusion of newly designated Targets; the
research and development program directed to each such Target being referred to
as a "Research Program".

1.42 Each Research Program will be funded by Knoll, in accordance with the
provisions of Article 3 below.

1.43 Both parties will report to each other on the progress of each Research
Program regularly, at least once per month and in writing every three (3) months
and at the conclusion of each Research Program.

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1.44 CAT will disclose to Knoll all information concerning Antibodies and
information relating to selection, derivation and assays relating to Antibodies
developed under the Research Program and shall, upon request, provide Knoll or
its designee with samples of any materials produced under the Research Program.

1.45 Knoll may for any particular Target, designate, subject to the prior
approval of CAT which shall not unreasonably be withheld, a third party to
participate in the Research Program for that specified Target along with Knoll
and CAT, provided that such party agrees to be bound by the terms of this
Agreement with respect to the specific Target, including the confidentiality
provisions hereof, and that, subject to Section 20.01, Knoll remains responsible
for the funding of the Research Program in accordance with the provisions of
Article 3 of this Agreement, such party being known as a "Collaborator."

                                   ARTICLE 3
                                    FUNDING

3.00 Knoll will pay CAT a non-refundable fee to fund the Research Program for
each Target of [***] within thirty days of the Initial Date for Target-l, by
September 15, 1995 for Target-2, and for each subsequent Target, within thirty
(30) days of agreement to proceed with a Research Program for such Target.

1.46 In addition to the payment to be made pursuant to Section 3.00, Knoll will
pay CAT milestone payments within thirty (30) days of CAT achieving each of the
CAT Technical Milestones 1-3 identified in Schedule II to this Agreement for
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each Target. Payments are to be made as follows with the amounts below
applicable to Target-l and increased for subsequent Targets as set forth in
Section 18.00(d):

          (1) [***] upon achievement of CAT Technical Milestone 1;

          (2) [***] upon achievement of CAT Technical Milestone 2; and

          (3) [***] upon achievement of CAT Technical Milestone 3;

provided, however, that Knoll and CAT agree that any of the CAT Technical
Milestones l-3 may be subdivided, whereupon the total payment due for a
subdivided milestone will then be divided among its submilestones and each such
increment of the total will become due upon achievement of the technical goal
required by the submilestone to which the payment relates.

1.47 Knoll may, in addition to the payments to be made pursuant to Sections
3.00, 3.01 and 3.03, make the following payments to CAT with respect to the
Target of each Research Program (the amounts set forth below being applicable to
Target-1 and being increased for subsequent Targets as set forth in Section
18.00(d)) or be subject at CAT's option to convert the exclusive license granted

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by this Agreement with respect to such Target to a non-exclusive license, all
other terms being the same:

                  (1) [***] 30 days of achievement of CAT Technical Milestone 4
         or twelve (12) months after the achievement of CAT Technical Milestone
         3, whichever is earlier;

                  (2) [***] within thirty (30) days of initiating the first
         human clinical studies for the first Product for such Target, or [***]
         achievement of CAT Milestone 4, whichever is earlier; and

                  (3) [***] within thirty (30) days of Knoll's receipt of formal
         PLA approval for the first Product for such Target in any given country
         other than the United States of America, or [***] of the IND filing in
         the United States for that Product, whichever is earlier;

 provided, however, that Knoll and CAT agree that CAT Technical Milestone 4 may
 be subdivided, whereupon the total payment due for this subdivided milestone
 will then be divided among the submilestones and each such increment of the
 total will become due upon achievement of the technical goal required by the
 submilestone to which the payment relates; and provided further that if Knoll
 notifies CAT on or before the date that any payment to be made pursuant to this
 paragraph 3.02 is due that the payment will not be made, then CAT must give
 notice of its intent to exercise its option, with respect to a specific Target,
 [***] of such notification [***] with respect to such Target.

 1.48 Knoll will, in addition to the payments to be made pursuant to the
 foregoing, make the following payments to CAT with respect to the Target of
 each Research Program:

                  (1) [***] within thirty (30) days of the start of Phase III
         clinical studies of the first Product for such Target;

                  (2) [***] within thirty (30) days of Knolls' receipt of formal
         PLA approval in the United States of America for the first Product for
         such Target, said payment to be reimbursable as follows: Knoll shall be
         entitled to deduct [***] due to CAT for such Product until Knoll has
         recovered the full [***].

                                   ARTICLE 4
                          GRANTS and RESERVED RIGHTS

4.00 CAT grants to Knoll and its Affiliates a world-wide exclusive license under
the Patents and CAT Know-How in the Exclusive Field to manufacture and have
manufactured, use and have used, sell and have sold the Antibodies, Product(s)
and Drug(s), including the right to sublicense Collaborator(s) and any third
party which has agreed to cooperate with Knoll, its Affiliates or
Collaborator(s), in any country or countries or regions, to develop, obtain
regulatory approval for, manufacture, or market, Antibodies, Product(s) or
Drug(s) for the benefit of Knoll, its Affiliates or Collaborator(s).

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1.49 CAT shall not license or grant any rights under the Patents or CAT
Know-How within the Exclusive Field to any third party during the term of this
Agreement.

1.50 Knoll grants an Antigen-based sublicense in the Exclusive Field to CAT
under the [***] Patent for the duration of each Research Program, to the extent
necessary and for the sole benefit of Knoll, to permit CAT to conduct its
activities under each such Research Program, on the terms set out in Schedule
                                                                     --------
IV to this Agreement.
--

1.51 CAT grants to Knoll and its Affiliates title to all Inventions,
Improvement Patent(s), and to all Antibodies and other chemical and biological
materials required to produce such Antibodies, which are conceived, developed,
discovered, generated or first reduced to practice, as the case may be, during
the Term of this Agreement, or within one (1) year thereafter, whether by CAT or
its Affiliates alone, or by Knoll or its Affiliates alone, or jointly, and which
are derived from the Research Program. Inventions and Improvement Patents shall
be assigned to Knoll and BASF jointly; provided that where any such Inventions
or Improvement Patents are made by CAT or its Affiliates and by Collaborator or
its Affiliates, with or without Knoll or its Affiliates, such Inventions or
Improvement Patents shall be assigned by CAT as shall be agreed between Knoll
and Collaborator.

1.52 Knoll grants to CAT for the duration of each Research Program, the right
to use Knoll Know-How for the sole benefit of Knoll and for the sole purpose of
conducting the defined activities under such Research Program; provided,
however, that subject to Knoll's prior written approval, CAT may use Knoll's
regulatory Data in furtherance of CAT's development of products outside the
Exclusive Field.

1.53 CAT agrees that for each Collaborator designated by Knoll, CAT shall, if
so requested by such Collaborator, use its best efforts to secure the grant of
a license from MRC to Collaborator under the MRC-Patents on terms equivalent to
those granted by MRC to Knoll.

1.54 Knoll Know-How shall remain the exclusive property of Knoll and
Collaborator Know-How shall remain the exclusive property of Collaborator,
except as Knoll and Collaborator may agree between them, and no right or
license, express or implied, is granted to CAT under Knoll Know-How by Knoll or
under Collaborator Know-How by Collaborator except as is expressly set forth
herein.

                                   ARTICLE 5
                                   ROYALTIES

5.00 Knoll shall pay to CAT royalty payments based upon the combined Net
Sales of Product(s) by Knoll and its Affiliates and sublicensees as
follows:
     [***] the amount of combined Net Sales of up to [***] in a given year;

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       [***] of the amount of the combined Net Sales from [***] to [***] in a
given year;

       [***] of the amount of combined Net Sales of over [***] in a given
year.

1.55   Sales of Product by Affiliates and sublicensees shall be deemed for the
purpose of this Agreement to be sales by Knoll and royalty payments shall be
made accordingly by Knoll.

1.56   Royalties paid to third parties, other than to MRC under the MRC-Patents,
to license rights needed by Knoll, its Affiliates or permitted sublicensees, to
practice or to have practiced the technology claimed in the Patents, will be
borne [***], provided, however, that the royalty payable to CAT pursuant to
Section 5.00 shall no be reduced below [***] of Net Sales in any year for which
a royalty is owed to CAT. The [***] royalty to be paid to MRC under the
MRC-Patents shall be paid directly by Knoll to MRC and shall be directly offset
against the [***] royalties due to CAT pursuant to Section 5.00.

                                   ARTICLE 6
                                   PAYMENTS

6.00   Knoll shall make payments to CAT with respect to the sale of Product by
Knoll, its sublicensees and its Affiliates, on a country-by-country basis,
commencing six months after the First Commercial Sale and to continue every six
months thereafter. Such payments shall be due ninety (90) days after the close
of each six month period.

1.57   Each payment or credit shall be accompanied by a report setting forth the
calculations of the amounts to be paid or credited on a country-by-country
basis.

1.58   If, in any country, any third party tries to obtain a compulsory license
or rights pursuant to governmental authority to market a Product, CAT agrees to
cooperate with Knoll at Knoll's expense to the extent legally permissible, and
Knoll shall use reasonable and legal efforts to oppose the grant of such license
or rights and to obtain the highest royalty or payment rate possible.

1.59   All payments shall be in United States dollars, except those mentioned in
Article 3.

1.60   Payments due on Net Sales made in currency other than United States
dollars shall first be calculated in the foreign currency and then converted to
United States dollars on the basis of the monthly average exchange rate for the
preceding six (6) months in effect for the purchase of United States dollars
with such foreign currency as set forth in the Wall Street Journal (or
                                               -------------------
comparable publication if not quoted in the Wall Street Journal) with respect to
                                            -------------------
the currency of the country of origin of such payment on the last business day
of the payment computation period for which the payment is being made.

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1.61   Knoll shall maintain true and complete books of account for a period of
six (6) years containing an accurate record of all data necessary for the proper
computation of payments due from it or charges made by it under this Agreement.

1.62   Upon request by CAT, knoll agrees to make such books of account
available, upon reasonable notice and a reasonable times, for inspection by an
independent Certified Public Accounting firm which is acceptable to both
parties. Such inspection may take place at any time within two years after the
date of payment or charges to which they relate (but not more than once in each
calendar year) for the sole purpose of verifying the amount of such payments or
charges and the accuracy of such books of account.

1.63   Information furnished as a result of any such examination shall be
limited to a written statement by such certified public accountants to the
effect that they have reviewed the books of account of the party being audited
and that:

          (1)  the amounts of the payments due or charges made under this
       Agreement are in conformity with such books of account and the applicable
       provisions of this Agreement; or

          (2)  adjustments are required and setting forth those adjustments.

1.64   The fees and expenses of the audit shall be borne by CAT, unless a net
discrepancy of more than [***] in Knoll's favor is discovered. If any such audit
shows any underpayment or overpayment, a correcting payment or credit,
respectively, shall be made within thirty (30) days after receipt of the written
statement of the audit.

1.65   Any income or other tax that Knoll, its Affiliates or sublicensees are
required by law to withhold and pay on behalf of CAT with respect to Royalties
paid to CAT under this Agreement shall be deducted from said Royalties prior to
remittance to CAT; provided however, that in regard to any such tax so deducted,
Knoll, its affiliates or sublicensees shall give or cause to be given to CAT
such assistance as may reasonably be necessary to enable CAT to claim exemption
therefrom or credit therefor, and in each case shall furnish CAT proper evidence
of such taxes paid on its behalf.

1.66   For royalty payments to a foreign company value added tax has to be
applied in the Federal Republic of Germany and has to be withheld by Knoll.
According to a special statutory provision this withholding can be avoided, if
CAT's invoices to Knoll's reports don't show value added tax. To take advantage
of such provisions CAT will invoice net payments without VAT and Knoll's reports
of statements will not include VAT.

                                   ARTICLE 7
                                   LIABILITY

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7.00   Knoll shall be responsible for handling all product performance claims
related to the use of any Product and/or Drug which claim CAT has promptly
forwarded to Knoll. Knoll, its Affiliates and sublicensees hereby agree to
indemnify, defend and hold CAT harmless from all damages, losses, claims of
damages or losses, any and all related costs and expenses, including but not
limited to reasonable attorney's fees and court costs, incurred by CAT in
connection with any such claim (except in any circumstance where such liability
or damage is found to be the direct result of gross negligence or any fraudulent
conduct by CAT) provided that CAT shall give Knoll prompt written notice of any
such claim and full and complete authority, information and assistance, at
Knoll's expense, for the defense thereof, including any settlements or appeals
related thereto, and provided further, such claim is not based upon the willful
or negligent acts or omissions of CAT.

1.67   Knoll agrees to pay directly for such damages, losses, claims of damages
or losses, any and all related expenses pursuant to Section 7.00. In no event
shall Knoll reduce its payments due CAT, pursuant to Articles 3 and 5 in this
Agreement, as a result of Knoll incurring costs or expenses due to the operation
of this Article 7.

                                   ARTICLE 8
                                    DAMAGES

8.00   Notwithstanding anything to the contrary set forth herein, except with
respect to a breach of any obligation under Article 9 below, in no event shall
either party have any liability for or responsibility to the other party for any
incidental or consequential damages based upon this Agreement or either party's
performance hereunder.

                                   ARTICLE 9
                                CONFIDENTIALITY

9.00   The receiving party will retain all of the Proprietary Information in
confidence during the term of this Agreement and for a period of five (5) years
after termination of this Agreement and will not, without the prior written
permission of the other party or pursuant to Article 10 hereof, disclose it to
third parties, or use it for any purpose other than in accordance with the terms
of this Agreement, except:

       (a)    as provided for in Section 9.02 hereof; or with respect to:

       (b)    such of the Proprietary Information which is or becomes a part of
              the public domain through no act or omission by the receiving
              party, or the officers, employees, professional advisors or other
              representatives of the receiving party or Affiliate thereof; or

       (c)    such of the Proprietary Information which was in the receiving
              party's possession, as shown by written records, prior to the
              disclosure thereof to the receiving party; or

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       (d)    such of the Proprietary Information which is also received from a
              third party having a right to disclose said Proprietary
              Information and received free of any obligations not to disclose
              or use said Proprietary Information.

1.68   For the purposes of the provisions of this Article 9, Proprietary
Information supplied by one party to the other party pursuant to this Agreement
shall not be deemed to be in public domain or in the possession of receiving
party merely because it is embraced by general disclosures in the public domain
or in the prior possession of receiving party. In addition, any combination of
features shall not be deemed to be within the foregoing exceptions merely
because individual features are in the public domain or in the possession of
receiving party, but only if the combination is in the public domain or in the
possession of receiving party.

1.69   The receiving party shall have the right to communicate the Proprietary
Information or any part thereof to such employees and consultants of receiving
party who are required by their duties to have knowledge thereof, on the
conditions that each such employee or consultant shall be informed that such
information is Proprietary Information subject to this Agreement, and shall be
under an obligation of confidentiality with respect to Proprietary Information
received from the receiving party.

1.70   Each party shall have the right to disclose to others Proprietary
Information, to the extent such disclosure is reasonably necessary, in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with governmental regulations, conducting preclinical or clinical trials, or
seeking approval from or complying with the FDA, provided that if a party is
required to make any non-confidential disclosure of the other party's
Proprietary Information, the disclosing party will give reasonable advance
notice to the other party of such disclosure requirement, and will use
reasonable efforts to secure confidential treatment of such Proprietary
Information required to be disclosed.

1.71   CAT specifically agrees to maintain the confidentiality of Antibodies and
to refrain from providing any samples thereof to any third party.

                                  ARTICLE 10
                                 PUBLICATIONS

10.00  The parties agree that any proposed publications (including, but not
limited to abstracts, posters and the like) or public disclosure on the research
conducted under this Agreement shall be submitted to the other party at least
thirty (30) days prior to submission to a journal or other third party. A
proposed submission or disclosure shall be reviewed promptly; however, where
necessary, submission of disclosure may be delayed for an additional ninety (90)
days following the initial thirty day period for the purposes of preparing
related patent applications and for deleting particularly sensitive Proprietary
Information from said proposed disclosure if in the reasonable judgment of the
other party such patent applications are considered necessary and disclosure
would jeopardize potential protection.

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                                  ARTICLE 11
                                 GOVERNING LAW

11.00 This Agreement shall be governed by and construed in accordance with the
law of England.

                                  ARTICLE 12
                                 INFRINGEMENT

12.00 If a third party in any country where the Product is being imported,
manufactured, used, or sold, notifies any of the parties, their Affiliates or
licensees that such activity infringes or is alleged to infringe any issued
patent either assigned to or licensed to such third party, then:

      (a) the party so notified shall promptly notify the other
          parties in writing; and

      (b) within thirty (30) days of receipt of notice of the alleged
          infringement, CAT will notify Knoll that it will either:

          (i) indemnify Knoll and its Affiliates against any and all awards,
          judgments and settlements which require Knoll or its Affiliates to pay
          money to such third party and that it will defend the action at its
          sole expense, or

          (ii) grant Knoll the right to defend, in its sole discretion, the
          action and allow Knoll to take as a credit, on an ongoing basis during
          the action, one half the cost of its external legal expenses and any
          damages which may be awarded, against the royalties due to CAT from
          Net Sales in the countries in which the claim of infringement is made,
          up to a maximum credit of [***] of such Net Sales. Such credit may not
          be taken by Knoll where the action involves a claim or right of a
          third party based upon activities such as packaging of the Product or
          improvements to the Product which are beyond the scope of the
          technology described in the Patents.

1.72  In the event Knoll or its Collaborators must pay royalties or license fees
to third parties under one or more claims of one or more patents to enable Knoll
or its Collaborators to utilize or have utilized the inventions of the Patents,
[***] shall be credited to Knoll's royalty obligations to CAT for sales in that
country where the patents exist. However, Knoll's royalty obligation to CAT on
Net Sales in any given country shall not be reduced below [***]by operation of
the offset of this Section 12.01. This offset shall not include royalties or
license fees which are beyond the scope of the technology described in the
Patents, for example fees paid to third parties for delivery systems.

1.73  (1) In the event that Knoll shall learn of the infringement of any of the
Patents within the Exclusive Field, Knoll shall promptly notify CAT thereof in
writing and shall provide CAT with any evidence possessed by Knoll of such
infringement.

                                       13
<PAGE>

                  (1)  During the Term of this Agreement, Knoll shall have the
      sole right, but no obligation to bring any suit or action for infringement
      of the Patents within the Exclusive Field. If Knoll finds it necessary or
      desirable to join CAT in such suit or action, CAT shall execute all papers
      and perform such other acts as may be reasonably required to do so and
      Knoll shall pay to CAT its reasonable expenses (including attorney's fees)
      and any award of damages against CAT in any suit or action. CAT may, at
      its option, join as a party to such suit and at its expense, be
      represented by counsel of its choice. Unless Knoll and CAT otherwise
      agree, any amount recovered in any such action, whether by judgment or
      settlement, after payment to CAT of its reasonable expenses (including
      attorney's fees) shall be paid to or retained by Knoll. However, to the
      extent that damages are assessed and actually awarded and paid to Knoll
      for lost sales, Knoll shall pay CAT a royalty on such adjudicated lost
      sales at the royalty rate which would have otherwise applied to those
      sales had they been made by Knoll.

                  (2)  In the event Knoll fails to take action within 90 days of
      learning of such infringement, CAT shall the sole right, but no
      obligation, to bring, defend and maintain any appropriate suit or action
      involving infringement of such a patent by manufacture, use or sale of the
      Product. If CAT finds it necessary to join Knoll in such suit or action,
      Knoll shall execute all papers and perform such other acts as may be
      reasonably required. Knoll may, at its option, join as a party in such
      suit and, at its expense, be represented by counsel of its choice. Unless
      Knoll and CAT otherwise agree, any amount recovered in any such action or
      suit, whether by judgement or settlement, after payment to Knoll or its
      reasonable expenses (including attorney's fees), shall be paid to or
      retained by CAT.

                  (3)  Each party agrees to cooperate with the other in any
      legal action to enforce the Patents, including litigation proceedings.

1.74  Each party shall cooperate with the other party, to the extent reasonably
requested, in any legal action brought by or against the other party or both of
them or against their Affiliates or sublicensees in connection with the making,
using or selling of Product(s).

1.75  Each party agrees that it will use its best efforts whenever a protective
order is to be entered with a court of competent jurisdiction, to have the order
permit at least one patent counsel from each party (which, in the case of Knoll,
shall be an attorney employed by Knoll or its Affiliates) access to information
provided under the protective order without restriction.

1.76  Neither party shall settle any claim or suit in any manner that may
adversely affect any patent of the other party or that would require any payment
or grant of a license or other rights by such party without the prior written
approval of the other party.

                                  ARTICLE 13
                              DISPUTE RESOLUTION

                                       14
<PAGE>

13.00  The parties shall use all commercially reasonable efforts to solve any
disputes which may arise under this Agreement (including without limitation,
mediation and arbitration) before having recourse to litigation.

                                  ARTICLE 14
                                  WARRANTIES

14.00  CAT warrants:

            (1)  that it has the right to grant the license specified in this
       Agreement;

            (2)  that to the best of its actual knowledge as of the Effective
       Date, all relevant patents and patent applications in relation to the
       Patents are set out in Schedule V to this Agreement;
                              ----------

            (3)  that to the best of its actual knowledge as of the Effective
       Date, CAT is not aware of any third party challenge to the validity of
       the Patents except for those set forth in Schedule VI;
                                                 -----------

            (4)  that CAT will use all commercially reasonable efforts to
       perform the Research Programs.

14.01  Knoll warrants:

            (5)  that it has all necessary authority to enter into this
       Agreement and to supply to CAT the materials and expertise referred to in
       Schedule I;
       ----------

            (6)  that it will use all commercially reasonable efforts to meet
       the Knoll Milestones set out in Schedule I to this Agreement, to develop
                                       ----------
       marketable Products of good merchantable quality and to bring those
       Products to market within the time usually taken to bring products of a
       similar nature to market and to satisfy market demand for those products.

1.77   CAT gives no warranty, express or implied, that the technology covered by
the Patents will work when applied to any particular purpose.

                                  ARTICLE 15
                                    NOTICES

15.00  All notices or other communications required or permitted to be given by
either party under this Agreement shall be in writing and shall, unless
otherwise specifically set forth herein, be sufficiently given by either party
when deposited in the mail, registered or certified, postage prepaid, or by
telefacsimile, and addressed as hereinafter set forth or to such other addressee
and/or address as or shall subsequently be designated by either party by notice
given in accordance with this section.

                                       15
<PAGE>

To Knoll:

               Knoll AG
               Knollstrasse 50
               67001 Ludwigshafen on Rhine
               Attn: Legal Department

       with copy to:

               BASF Bioresearch Corp.
               100 Research Drive
               Worcester, MA 01605-4314
               Attn: President

To CAT:

               Cambridge Antibody Technology Ltd.
               The Science Park
               Melbourn, Cambridgeshire SG8 6JJ
               Attn: Chief Operating Officer

1.78   Either party may change the address or the recipient to which notice is
to be provided by written notice pursuant to Section 15.00.

                                  ARTICLE 16
                             TERM AND TERMINATION

16.00  Unless and until earlier terminated as provided in paragraphs 16.01 and
16.02, this Agreement shall commence on the Initial Date and shall continue
until the last to expire of the Patents or the expiry of fifteen years from the
date of First Commercial Sale of a Product by Knoll or its Affiliates or
sublicensees (whichever is the later).

1.79   If either party breaches or defaults in the performance or observance of
any of its material obligations under this Agreement, and such breach or default
is not cured within one hundred twenty (120) days after receipt by such party
of a written notice from the non-breaching party specifying the breach or
default (or such longer period as is reasonably necessary if the breach is of
such nature that it cannot be reasonably cured within one hundred twenty (120)
days, then the non-breaching party shall have the right to terminate this
Agreement upon an additional sixty (60) days written notice to the breaching or
defaulting party.

1.80   Either party may terminate this Agreement by written notice to the other
party in the event the other party shall have become insolvent or bankrupt, or
shall have made an assignment for the

                                       16
<PAGE>

benefit of its creditors, or there shall have been appointed a trustee or
receiver of the other party or for all or a substantial part of its property, or
any case or proceeding shall have been commenced or other action taken by or
against the other party in bankruptcy or seeking reorganization, liquidation
(other than for the purpose of reconstruction or amalgamation), dissolution,
winding-up, arrangement, composition or readjustment of its deeds or any other
relief under any bankruptcy, insolvency, reorganization or other similar act,
and any such event shall have continued for ninety (90) days undismissed and
undischarged.

1.81  If CAT has not achieved CAT Milestone 3 with respect to Target-1 within
two and one-half years from the Initial Date, Knoll may terminate this Agreement
upon (60) days notice with respect to Target-1; and if CAT has not achieved CAT
Milestone 3 with respect to Target-2 within two and one-half years from the
Effective Date, Knoll may terminate this Agreement upon sixty (60) days notice
with respect to Target-2 or may terminate completely if the Agreement has been
terminated with respect to Target-1 and Target-2 as set forth in this Section
16.03 and an additional Target has not been selected by such date.

1.82  In the event that Knoll is unable to license on commercially reasonable
terms any third party patent rights which would be infringed by the manufacture,
use or sale of the Antibodies, Product(s) or Drug, then Knoll shall have the
option, upon [***] notice to CAT, to terminate the Research Program with respect
to the Target so affected.

1.83  Termination of this Agreement is to be without prejudice to rights of
either party which have accrued and are due prior to termination.

                                  ARTICLE 17
                 IMPROVEMENT PATENTS AND INTELLECTUAL PROPERTY

1700  Each party shall promptly notify the other party upon receiving a
disclosure of an Invention which might lead to an Improvement Patent. Knoll will
assume responsibility for filing Improvement Patents in all countries. All
expenses incurred by Knoll in applying for patent protection relating to
inventions contemplated under this Agreement shall be borne by Knoll.

1.84  Knoll shall decide whether to file patent applications on Inventions
developed during the term of this Agreement.

1.85  CAT shall assist Knoll, at Knoll's expense, in the filing of Improvement
Patents.

1.86  Knoll will pursue and assume full responsibility, and bear the costs for
obtaining authorizations, including, but not limited to an NDA and PLA or other
similar governmental approval, to market the Product.

1.87  In the event that Knoll decides to abandon or no longer maintain any
Improvement Patent, then subject to any pre-existing obligations which Knoll may
have to any third party with respect to

                                       17
<PAGE>

such Improvement Patent, Knoll will offer the rights to such Improvement Patent
to CAT at nominal cost. CAT shall bear all further costs in connection with
prosecuting and maintaining such Improvement Patent.

1.88  Knoll shall be responsible, with the full and timely cooperation of CAT at
Knoll's expense (which shall include the execution of any documents which may be
required from time to time), for preparing, filing and prosecuting patent
applications in such countries as Knoll, in its sole discretion, may elect and
shall be responsible for the payment of all fees, including maintenance fees.

                                  ARTICLE 18
                  ADDITIONAL PROGRAMS & AREAS OF EXCLUSIVITY

1800  CAT agrees to conduct additional Research Programs directed to Targets in
addition to Target-1 and Target-2 on behalf of Knoll and at Knoll's election, on
terms specified in this Agreement, adding the new Target(s) to the definition of
the Antigen in Section 1.03 and throughout this Agreement, and defining a
Research Program for each such Target pursuant to Section 2.00, with the
following limitations:

          (1)  As of the Effective Date, CAT agrees to reserve [***] and an
      additional target to be named by Knoll within [***] of the Effective
      Date, and their receptors as a pool of exclusive Knoll targets. CAT agrees
      to refrain from collaborating with, or granting any rights to, any third
      party with respect to any exclusive target unless or until Knoll's period
      of exclusivity terminates pursuant to Section 18.00(c) or (d). CAT grants
      the right to Knoll AG to replace these targets within ten (10) months of
      the Effective Date by a letter to CAT as provided under Article 15. CAT
      has the right to reject these replacement targets as specified under
      Article 18.00(b) but will allow Knoll to designate a new target until an
      agreement has been reached for both exclusive targets.

          (2)  Each time Knoll initiates an additional Research Program with CAT
      under this Article, Knoll may specify one additional target pair
      comprising a designated cytokine and its receptor to be subject to a Knoll
      right of first refusal, to a maximum combined total of six (6) exclusive
      Knoll targets and right-of-first-refusal targets. However, CAT shall have
      the right to reject a proposed new right of first refusal target pair if
      within two weeks of the date of said proposal [***]. Alternatively, to
      the extent required by confidentiality issues, the written evidence may be
      submitted to a mutually acceptable neutral third party for confirmation.
      In the case of any target rejection by CAT, Knoll shall have ninety (90)
      days from the date of the rejection to propose a substitute new right
      first refusal target pair. CAT agrees to refrain from collaborating with,
      or granting any rights to, any third party with respect to any target
      which is subject to a Knoll right of first refusal unless CAT has first
      provided Knoll with [***]. Knoll shall have the right to initiate such
      additional Knoll Research Program with CAT with respect to such target by
      providing CAT with written notification within [***] from its receipt of
      CAT's written notice of third party interest.

                                       18
<PAGE>

                  (3) Knoll's right to initiate each subsequent Research Program
         hereunder shall terminate [***] after Milestone 4 of the then current
         Research Program is met.

                  (4) Royalty payments and other terms will be as specified
         herein except that the set of milestone payments with respect to
         Target-2 through Target-6 shall be increased from the milestone
         payments specified herein for Target-1 by [***] for every twelve month
         period between the Initial Date and the initiation of the Research
         Program directed to such subsequent Target.

                  (5) In the event that Knoll, in the exercise of its business
         discretion, decides that the pursuit of an existing Target is no longer
         of commercial interest, Knoll may submit for CAT's approval a
         substitute Target, said approval not to be unreasonably withheld.

                                  ARTICLE 19
                                 FORCE MAJEURE

19.00 Neither party to this Agreement shall be liable for failure or delay in
the performance of any of its obligations hereunder, if such failure or delay is
due to causes beyond its reasonable control, including, without limitation, acts
of God, earthquakes, fires, strikes, acts of war, or intervention of any
governmental authority, but any such delay or failure shall be remedied by such
party as soon as reasonably possible after the removal of the cause of such
failure or delay.

                                  ARTICLE 20
                             WAIVER AND ASSIGNMENT

20.00 The right of either party at any time to require strict performance by the
other party hereto of all the terms and conditions hereof shall not in any way
be affected or impaired by prior waiver, forbearance or course of dealing.

1.89  This Agreement shall not be assigned by either party without the prior
written consent of the other party, such consent not to be unreasonably
withheld, except that either party may assign this Agreement, in whole or in
part, to an Affiliate of such party or to the successor (including the surviving
company in any consolidation, reorganization or merger) or assignee of all or
substantially all of its business to which this Agreement pertains, and except
that Knoll may assign its rights and obligations hereunder with respect to any
specific Target for which it has designated a Collaborator, to such
Collaborator.

1.90  This Agreement shall be binding upon any permitted assignee of either
party.

                                  ARTICLE 21
                                 MISCELLANEOUS

                                       19
<PAGE>

21.00 If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, it shall be modified, if possible,
to the minimum extent necessary to make it valid and enforceable or, if such
modification is not possible, it shall be stricken and the remaining provisions
shall remain in full force and effect; provided, however, that if a provision
is stricken as to materially affect the economic benefits of this Agreement,
the party adversely affected may terminate this Agreement upon sixty days prior
written notice to the other party.

1.9 1 The headings set forth at the beginning of the various Articles and
Sections of this Agreement are for reference and convenience and shall not
affect the meanings of the provisions of this Agreement.

1.92 Neither party shall have the right to disclose to third parties the terms
and conditions of this Agreement without the express written consent of the
other party, except as may be required by applicable law. If a party decides to
make an announcement it believes to be required by law with respect to this
Agreement, it will give the other party such notice as is reasonably
practicable and an opportunity to comment upon the announcement.

1.93 Neither party shall originate any publicity, news release or public
announcement, written or oral, whether to the public or the press, stockholders
or otherwise, referring to the terms of this Agreement, including its
existence, the subject matter to which it relates, the performance under it or
any of its existence, the subject matter to which it relates, the performance
under it or any of its specific terms and conditions without prior approval by
the other party, except as required by law. A copy of such announcement shall
be provided to the other party for comment before it is made public.

1.94 Nothing contained in this Agreement shall be construed as conferring any
right to use in advertising, or other promotional activities, any name, trade
name, trademark, or other designation of either party thereto.

1.95 The provisions of Articles 7 and 9 shall survive the termination for any
reason of this Agreement.

1.96 The obligation to make payments under Article 3 of this Agreement with
respect to any period prior to its termination shall survive the termination of
this Agreement.

1.97 Prior to the execution of this Agreement, the parties have had numerous
discussions, conversations and negotiations, and have generated correspondence,
writings and other memoranda with respect to the subject matter of this
Agreement; notwithstanding which, this Agreement (including its Exhibits) is
intended to define the full extent of the parties respective agreements,
arrangements and obligations with respect to the subject matter hereof, and each
party represents that it is not relying on any such other discussions,
conversations, negotiations, correspondence, writings and memoranda in executing
and delivering this Agreement or performing its respective obligations
hereunder.

                                       20
<PAGE>

1.98 This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and which together shall constitute one and the same
instrument.

                                       21
<PAGE>

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

         Knoll AG                                 Cambridge Antibody
                                                  Technology Ltd.

         /Prof. Schlick/(s)                       /P.B. Harper/(s)
          ---------------------------              ---------------

         /ppa. Kahlstorff/(s)
          ---------------------------              -------------------------

                                       22
<PAGE>

                                  Schedule I

                      Research Program for IL- 12 Project

                                       23
<PAGE>

                                  Schedule II
                                  -----------

                      IL- 12 Project Technical Milestones
                      -----------------------------------

[***]

                                       24
<PAGE>

                                 Schedule III

          [*** - 18 pages subject to confidential treatment request]

                                       25
<PAGE>

                                  Schedule IV

                                     [***]

                                       26
<PAGE>

                                  Schedule V

                               ARTICLE 14.01(B)

[***]

                                       27
<PAGE>

                                  Schedule VI
                                  -----------

EPO 368 684Bl (Winter 2) - Opposition filed by Morphosys GmbH.

                                       28<PAGE>

                                                                     EXHIBIT 4.6

                     Development and License Agreement/1/
                                                       -

                            Dated February 28, 1999
                                    Between

                                   Knoll AG

                                      And

                         Cambridge Antibody Technology

_________________________

/1/  [***] indicates text deleted, which is subject to a confidential treatment
 -
request. This text has been filed with the SEC on a supplemental basis.
<PAGE>

                       DEVELOPMENT AND LICENSE AGREEMENT

This Development and License Agreement (the "Agreement") is made this 28th day
of February __, 1999 ("Effective Date") by and between Cambridge Antibody
Technology, Ltd., ("CAT") an English corporation having its registered office at
The Science Park, Melbourn, Cambridgeshire SG8 6JJ, United Kingdom and Knoll
Aktiengesellschaft, ("Knoll") a corporation organized under the laws of the
Federal Republic of Germany, which is a wholly owned subsidiary of BASF AG, and
which has a place of business at KnollstraBe 50, 67061 Ludwigshafen on Rhine,
Germany.

WHEREAS, Knoll and CAT entered into a Development and License Agreement dated
April 1, 1995 (the "Prior Agreement") pursuant to which CAT is to conduct
collaborative research and development for the production of antibodies to
Target-1 (TNF) and Target-2 (IL-12); and

WHEREAS, the Prior Agreement granted Knoll the option to have CAT conduct
research on four additional targets; and

WHEREAS, Knoll and CAT agree that the Prior Agreement shall remain in full force
and effect solely as to the terms and conditions that relate specifically to
Target-1 (TNF) and Target-2 (IL-12); and

WHEREAS, Knoll and CAT agree that this Agreement shall replace the Prior
Agreement as to the terms and conditions under which collaborative research
shall be conducted for Target-3 (IL-18) and may be conducted for potential
targets (Target-4, Target-5 and Target-6).

NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement, the Parties agree as follows:

                                   ARTICLE 1
                                  DEFINITIONS

1.00  As used throughout this Agreement, the following initial capitalized terms
shall have the meanings ascribed to them in Sections 1.01 through 1.39.

1.1   "Affiliate(s)" means a corporation or any other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the designated party.

1.2   "Antibodies" mean antibody molecules or fragments or derivatives thereof,
identified, produced or derived under the Research Program binding to the
Antigen(s).

1.3   "Antigen(s)" means IL-18.
<PAGE>

1.4   "BASF" means BASF Aktiengesellschaft, a corporation organized under the
laws of the Federal Republic of Germany, and having a place of business at
Ludwigshafen, Germany.

1.5   "Boss Patent" means US Patent 4,816,397 and any other US or foreign
patents or patent applications sharing priority applications therewith,
including the "Boss Patent Rights" as defined in the MRC Agreement attached
hereto as Schedule III.
          ------------

1.6   "CAT" means Cambridge Antibody Technology, Ltd., an English corporation
having its registered office at The Science Park, Melbourn, Cambridgeshire SG8
6JJ, United Kingdom.

1.7   "CAT Know-How" means all unpatented information, whether or not
patentable, relating to materials, methods, processes, techniques and data,
including Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to CAT or its Affiliates, or
developed independently by CAT or its Affiliates, or received by CAT or its
Affiliates from a third party and not from Knoll, its Affiliates or a
Collaborator or its Affiliates, at any time during the Term of this Agreement
and which CAT is free to transfer or disclose without violating contractual
obligations to any third party.

1.8   "Collaborator" means the party or parties designated by Knoll pursuant to
Article 2 of this Agreement.

1.9   "Collaborator Know-How" means all unpatented information, whether or not
patentable, relating to materials, methods, processes, techniques and data,
including Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to Collaborator or its Affiliates,
or developed independently by Collaborator or its Affiliates or received by
Collaborator or its Affiliates from a third party and not from CAT or its
Affiliates or Knoll or its Affiliates, at any time during the Term of this
Agreement and which Collaborator is free to transfer or disclose without
violating contractual obligations to any third party.

1.10  "Drug(s)" means a drug, which is made, isolated and/or developed by Knoll
and/or its Affiliates wholly or partly using the Antibodies or derived from the
Antibodies.

1.11  "Effective Date" means February ___, 1999.

1.12  "Exclusive Field" means the isolation, development, manufacture, use and
sale of Antibodies (excluding any antibody that binds to a receptor and that
does not neutralize the action of the ligand on the receptor) for human in vivo
use.

1.13  "FDA" means the United States Food and Drug Administration or any
successor United States governmental agency or any other foreign governmental
agency performing similar regulatory functions with respect to pharmaceutical
products.

1.14  "Field" means the generation of Antibodies directed against human IL-18.

                                       2
<PAGE>

1.15  "First Commercial Sale" means the first sale or other disposition for
value of the Products, in a final dosage form packaged for the ultimate
consumer, to an independent third party following regulatory approval.  The term
"First Commercial Sale" shall not include sales and disposals for experimental
purposes or for purposes of clinically or otherwise testing any Product.

1.16  "IL-18" means the human protein currently identified as Interleukin-18,
previously termed IGIF (interferon gamma inducing factor).

1.17  "Improvement Patent(s)" means any patent or application, including any
United States and foreign counterpart applications, continuing, divisional,
reissue, re-examination and substitute application relating to any Invention,
including any patents and patent applications first disclosing one or more
Antibodies or a Product or a Drug.

1.18  "Invention(s)" means any invention, discovery or development which relates
to the development, manufacture, use or sale of the Antibodies or a Product or
Drug, whether or not patentable, and which is made during the term of this
Agreement, whether solely or jointly by CAT, Knoll or its Affiliates, or a
Collaborator, during or within one (1) year after and arising out of the
Research Program.

1.19  "Knoll" means Knoll Aktiengesellschaft, a corporation organized under the
laws of the Federal Republic of Germany, which is a wholly owned subsidiary of
BASF, and which has a place of business at KnollstraBe 50, 67061 Ludwigshafen on
Rhine, Germany.

1.20  "Knoll Know-How" means all unpatented information, whether or not
patentable, relating to materials, methods, processes, techniques and data,
including Regulatory Data, for the development, manufacture, use or sale of the
Antibodies, Product or Drug, which is known to Knoll or its Affiliates, or
developed independently by Knoll or its Affiliates or received by Knoll or its
Affiliates from a third party and not from CAT or its Affiliates or a
Collaborator or its Affiliates, at any time during the Term of this Agreement
and which Knoll is free to transfer or disclose without violating contractual
obligations to any third party.

1.21  "Know-How" means CAT Know-How, Collaborator Know-How and Knoll Know-How.

1.22  "MRC" means the Medical Research Council of 20 Park Crescent, London W1N
4AL.

1.23  "MRC-Knoll-Agreement" means the agreement between MRC and Knoll, dated as
of June 29, 1993, pursuant to which MRC licensed the MRC-Patents to Knoll; a
copy of which is attached as Schedule III to this Agreement.
                             ------------

1.24  "MRC-Patents" means [***].

                                       3
<PAGE>

1.25  "NDA" means a New Drug Application, or other application for the approval
to market Product, which is submitted to the FDA.

1.26  "Net Sales" means the amounts invoiced on the sales of Product by Knoll,
its sublicensees and Affiliates to independent, unrelated third parties in bona
fide arms length transactions, less the following deductions properly documented
actually allowed and taken by such third parties and not otherwise recovered by
or reimbursed by Knoll, its Affiliates or sublicensees:

      (1)  trade, cash and quantity discounts, including charge backs;

      (2)  taxes on sales (such as sales or use taxes) to the extent added to
      the sales price and set forth separately as such in the total amount
      invoiced;

      (3)  freight, insurance and other transportation charges to the extent
      added to the sales prices and set forth separately as such in the total
      amount invoiced;

      (4)  amounts repaid or credited by reason of rejections, defects or
      returns, or because of retroactive price reductions, or due to
      governmental laws or regulations requiring rebates;

      (5)  import duties;

      and means further the amount of fair market value of all other
      consideration received by Knoll, or its sublicensees or Affiliates in
      respect of the Product, whether such consideration is in cash, payments in
      kind, exchange or other forms; but does not mean sales of the Product
      between or among Knoll and its sublicensees and/or Affiliates;

      (6)  except in the course of research, including pre-clinical experiments
      and clinical studies, and in potential programs of humanitarian or
      compassionate supply of Product, Knoll does not intend to supply unrelated
      third parties with Product other than by sales of such Products. However,
      should Knoll's intentions in that regard change, Knoll will enter
      discussions with CAT concerning appropriate compensation to CAT for any
      sales thereby lost.

1.27  [***].

1.28  "Patents" mean PCT applications WO 90/5144 (Winter 2) except as pertaining
to single variable domains as described in claims No. 32 - 40, as published on
May 17, 1990, and WO 92/1047 (McCafferty), the patents when granted, including
any patents which derive from the Patents and any divisions, renewals,
continuations, continuations-in-part, extensions or reissues.

1.29  "BLA" means a Biologic License Application, or other application approving
the marketing of Product, which is submitted to the FDA.

                                       4
<PAGE>

1.30  "Prior Agreement" has the meaning set forth above in the Recitals.

1.31  "Product(s)" means any pharmaceutical composition containing one or more
Antibodies.

1.32  "Proprietary Information" means any information, data, manufacturing
procedures, Regulatory Data, Know-How, samples and materials, which is/are not
publicly known or publicly available and which is/are disclosed by CAT,
Collaborator, Knoll, or Knoll's Affiliates or sublicensees, to one another
pursuant to this Agreement, as well as all data and results obtained in the
course of the Research Program.

1.33  "Regulatory Data" means the medical, toxicological, pharmacological,
clinical and other data relating to Product which is necessary to, required for,
or included in any governmental regulatory filing to obtain or maintain
regulatory approval to market the Product, including postapproval reports,
filing and submissions.

1.34  "Research Program" shall have the meaning set forth in Article 2 with
respect to the research and development done with respect to each Target.

1.35  "Research Program Start Date" shall have the meaning set forth in Article
2 with respect to the start date of the Research Program for each Target.

1.36  "Target(s)" shall mean the Antigen(s) for which CAT and Knoll have agreed
to conduct a collaborative Research Program pursuant to Article 2 of this
Agreement.

1.37  "Target-3" shall mean IL-18.

1.38  "Target-X" where "X" is an integer selected from "4, 5, and 6"
corresponding to each subsequent Antigen designated pursuant to Article 18 of
the Agreement.

1.39  "Term" means the term of this Agreement under Article 16.

                                   ARTICLE 2
                               RESEARCH PROGRAM

2.00  CAT and Knoll will conduct collaborative research and development with
respect to Target-3 and each Target designated pursuant to Article 18, with the
research and development for Target 3 being set forth in Schedule I to this
                                                         ----------
Agreement, as amended from time to time to reflect mutually agreed changes or
the inclusion of newly designated Targets; the research and development program
directed to each such Target being referred to as a "Research Program".  The
start date to begin the Research Program shall be mutually agreed upon by the
parties ("Research Program Start Date").

                                       5
<PAGE>

1.40  Each party shall find its own costs of the Research Program subject to the
provisions of Article 3 below.

1.41  Both parties will report to each other on the progress of each Research
Program regularly, at least once per month and in writing every three (3) months
and at the conclusion of each Research Program:

1.42  CAT will disclose to Knoll all information concerning Antibodies and
information relating to selection, derivation and assays relating to Antibodies
developed under the Research Program.  CAT shall, upon request, provide Knoll or
its Affiliates, Collaborators, sublicensees, or consultants with samples of any
materials produced under the Research Program, provided that prior to the
transfer of such samples, Knoll's collaborators, sublicensees, or consultants
shall execute Knoll's standard material transfer agreement.

1.43  Knoll may for any particular Target, designate, subject to the prior
approval of CAT which shall no unreasonably be withheld, a third party to
participate in the Research Program for that specific Target along with Knoll
and CAT, provided that such party agrees to be bound by the terms of this
Agreement with respect to the specific Target, including the confidentiality
provisions hereof, and that, subject to Section 20.01, Knoll remains responsible
for the funding of the Research Program in accordance with the provisions of
this Agreement, such party being known as a "Collaborator".

                                   ARTICLE 3
                                    FUNDING

3.00  No amount shall be due from Knoll to CAT to fund the Research Program for
Target-3 and for each subsequent Target.  Knoll shall pay [***] upon the
exercise of the Option granted under Section 4.00 of this Agreement.

1.44  Knoll will, in addition to the payments to be made pursuant to Sections
3.00 and 3.02 of this Agreement, make the following payments to CAT with respect
to the Target of each Research Program:

      (1)  provided that Knoll exercises its Option prior to achievement of CAT
      Technical Milestone 4 [***] within 30 days of achievement of Milestone 4
      [***] after achievement of CAT Technical Milestone 3 whichever is earlier;
      and

      (2)  [***] within thirty (30) days of initiating the first human clinical
      studies for the first Product for such Targets or [***] of achievement of
      CAT Milestone 4, whichever is earlier and

                                       6
<PAGE>

      (3)  [***] within thirty (30) days of Knoll's receipt of formal BLA
      approval for the first Product for such Targets in any given country other
      than the United States of America, or within nine years of the IND filing
      in the United States for that Product, whichever is earlier.

1.45  Knoll will, in addition to the payments to be made pursuant to the
foregoing, make the following payments to CAT with respect to the Target of each
Research Program:

      (1)  [***] within thirty (30) days of the start of the Phase III clinical
      studies of the first Product for Target-3;

      (2)  [***] within thirty (30) days of Knoll's receipt of formal BLA
      approval in the United States of America for the first Product for such
      Target, said payment to be reimbursable as follows: Knoll shall be
      entitled to deduct [***] due to CAT for [***] until Knoll has recovered
      [***].

                                   ARTICLE 4
                          GRANTS and RESERVED RIGHTS

4.00  CAT grants to Knoll and its Affiliates an option (the "Option") to a
world-wide exclusive license under the Patents and CAT Know-How in the Exclusive
Field to manufacture and have manufactured, use and have used, sell and have
sold the Antibodies, Product(s) and Drug(s), including the right to sublicense
Collaborator(s) and any third party which has agreed to cooperate with Knoll,
its Affiliates or Collaborator(s), in any country or countries or regions, to
develop, obtain regulatory approval for, manufacture, or market, Antibodies,
Product(s) or Drug(s) for the benefit of Knoll, its Affiliates or
Collaborator(s).

1.46  As to each specific Target, Knoll shall have the right to exercise its
Option after Milestone  3 or Milestone 4 within the period stated below.
Milestones 3 and 4 will be considered complete (the "Completion", "Complete(s)"
or "Completed") when (1) CAT submits those items containing the attributes
listed under the heading "Content" ("CAT Deliverables") by the Timeframe stated
on Schedule II and (2) such CAT Deliverables are subsequently confirmed by Knoll
to conform to those attributes listed on Schedule II ("Confirm(s)").  Knoll
shall have a period of [***] from receipt of CAT Deliverables to Confirm such
CAT Deliverables.

As to each specific Target, Knoll shall have the right to exercise its Option
after the Completion of either Milestone 3 or Milestone 4 as follows:

      1.   Knoll's election to exercise its Option shall be considered, for
      purposes of Section 5.00, to have been made following Milestone 3 if it is
      made before the later of: (1) [***] after the receipt of [***] which are
      later Confirmed to be Complete or (2) prior to receiving [***].

                                       7
<PAGE>

      2.   Knoll shall have a period of [***] after the Completion of Milestone
      4 to exercise its Option under the terms of Milestone 4.

As to each specific Target, Knoll will inform CAT within the [***] time period
as to whether Milestones 3 and 4 have been Completed.  If CAT Completes
Milestone  4 for a specific Target and Knoll does not exercise the Option for
such Target within [***] of Completion of Milestone 4, than Knoll shall refrain
from subsequent development in the Field for such Target for a period of [***].

As to each specific Target, if Knoll exercises its Option to such Target, then
Knoll shall not develop Antibodies to such Target with any third parties.  In
the event that CAT does not Complete Milestone 3 or Milestone 4 for a specific
Target, then Knoll may, at Knoll's sole discretion, pursue research and
development in the Field independent of CAT.

1.47  In the event that Knoll does not exercise its Option to an exclusive
license for Target-3, or any subsequent Target, under the provisions of Section
4.01 of this Agreement, [***].  Moreover Knoll shall use reasonable efforts
[***], to assist CAT in any discussions aimed at [***].

1.48  CAT shall not license or grant any rights under the Patents or CAT Know-
How within the Exclusive Field to any third party during the term of this
Agreement.

1.49  Knoll grants an [***] sublicense in the Exclusive Field to CAT under the
[***] for the duration of each Research Program, to the extent necessary and for
the sole benefit of Knoll, to permit CAT to conduct its activities under each
such Research Program, on the terms set out in Schedule IV to this Agreement.
                                               -----------

1.50  If Knoll exercises its Option, then CAT grants to Knoll and its Affiliates
title to all Inventions, Improvement Patent(s), and to all Antibodies and other
chemical and biological materials required to produce such Antibodies, which are
conceived, developed, discovered, generated or first reduced to practice, as the
case may be, during the Term of this Agreement, or within one (1) year
thereafter, whether by CAT or its Affiliates alone, or by Knoll or its
Affiliates alone, or jointly, and which are derived from the Research Program.
Inventions and Improvement Patents shall be assigned to Knoll and BASF jointly;
provided that where any such Inventions or Improvement Patents are made by CAT
or its Affiliates and by Collaborator or its Affiliates, with or without Knoll
or its Affiliates, such Inventions or Improvement Patents shall be assigned by
CAT as shall be agreed between Knoll and Collaborator.

1.51  Knoll grants to CAT for the duration of each Research Program, the right
to use Knoll Know-How for the sole benefit of Knoll and for the sole purpose of
conducting the defined activities under such Research Program; provided,
however, that subject to Knoll's prior written approval,  CAT may use Knoll's
Regulatory Data in furtherance of CAT's development of products outside the
Exclusive Field.

                                       8
<PAGE>

1.52  CAT agrees that for each Collaborator designated by Knoll, CAT shall, if
so requested by such Collaborator, use its best efforts to secure the grant of a
license from MRC to Collaborator under the MRC-Patents on terms equivalent to
those granted by MRC to Knoll.

1.53  Knoll Know-How shall remain the exclusive property of Knoll and
Collaborator Know-How shall remain the exclusive property of Collaborator,
except as Knoll and Collaborator may agree between them, and no right or
license, express or implied, is granted to CAT under Knoll Know-How by Knoll or
under Collaborator Know-How by Collaborator except as is expressly set forth
herein.

                                   ARTICLE 5
                                   ROYALTIES

5.00  If Knoll exercises its Option, pursuant to the provisions of Section 4.01
of this Agreement, after the successful Completion of Milestone 3, then Knoll
shall pay to CAT royalty payments based upon the combined Net Sales of
Product(s) by Knoll and its Affiliates and sublicensees as follows:

      (1)  [***] of the amount of combined Net Sales of up to [***] in a given
      year;

      (2)  [***] of the amount of the combined Net Sales [***] in a given year;

      (3)  [***] of the amount of combined Net Sales of over [***] in a given
      year;

      (4)  Each of the above stated royalty percentages shall be increased by
      [***], if Knoll exercises the Option after [***].

5.01  Sales of Product by Affiliates and sublicensees shall be deemed for the
purpose of this Agreement to be sales by Knoll and royalty payments shall be
made accordingly by Knoll.

1.54  Royalties paid to third parties, other than to [***], to license rights
needed by Knoll, its Affiliates or permitted sublicensees, to practice or to
have practiced the technology claimed in the Patents will be borne [***],
provided, however, that the royalty payable to CAT pursuant to Section 5.00
shall not be reduced below [***] of Net Sales or [***] of Net Sales if an
increased royalty payment is due under Section 5.00d in any year for which a
royalty is owed to CAT.  The [***] royalty to be paid to [***] shall be paid
directly by Knoll to [***] and shall be directly offset against royalties due to
CAT pursuant to Section 5.00.

                                   ARTICLE 6
                                   PAYMENTS

                                       9
<PAGE>

6.00  Knoll shall make payments to CAT with respect to the sale of Product by
Knoll, its sublicensees and its Affiliates, on a country-by-country basis,
commencing six months after the First Commercial Sale and to continue every six
months thereafter.  Such payments shall be due ninety (90) days after the close
of each six months period.

1.55  Each payment or credit shall be accompanied by a report setting forth the
calculations of the amounts to be paid or credited on a country-by-country
basis.

1.56  If, in any country, any third party tries to obtain a compulsory license
or rights pursuant to governmental authority to market a Product, CAT agrees to
cooperate with Knoll at Knoll's expense to the extent legally permissible, and
Knoll shall use reasonable and legal efforts to oppose the grant of such license
or rights and to obtain the highest royalty or payment rate possible.

1.57  All payments shall be in United States dollars, except those mentioned in
Article 3.

1.58  Payments due on Net Sales made in currency other than United States
dollars shall first be calculated in the foreign currency and then converted to
United States dollars on the basis of the monthly average exchange rate for the
preceding six (6) months in effect for the purchase of United States dollars
with such foreign currency as set forth in the Wall Street Journal (or
comparable publication if not quoted in the Wall Street Journal) with respect to
the currency of the country of origin of such payment on the last business day
of the payment computation period for which the payment is being made.

1.59  Knoll shall maintain true and complete books of account for a period of
six (6) years containing an accurate record of all data necessary for the proper
computation of payments due from it or charges made by it under this Agreement.

1.60  Upon request by CAT, Knoll agrees to make such books of account available,
upon reasonable notice and at reasonable times, for inspection by an independent
Certified Public Accounting firm which is acceptable to both parties.  Such
inspection may take place at any time within two years after the date of payment
or charges to which they relate (but not more than once in each calendar year)
for the sole purpose of verifying the amount of such payments or charges and the
accuracy of such books of account.

1.61  Information furnished as a result of any such examination shall be limited
to a written statement by such certified public accountants to the effect that
they have reviewed the books of account of the party being audited and that:

      (1)  the amounts of the payments due or charges made under this Agreement
      are in conformity with such books of account and the applicable provisions
      of this Agreement; or

      (2)  adjustments are required and setting forth those adjustments.

                                      10
<PAGE>

1.62  The fees and expenses of the audit shall be borne by CAT, unless a net
discrepancy of more than [***] in Knoll=s favor is discovered.  If any such
audit shows any underpayment or overpayment, a correcting payment or credit,
respectively, shall be made within thirty (30) days after receipt of the written
statement of the audit.

1.63  Any income or other tax that Knoll, its Affiliates or sublicensees are
required by law to withhold and pay on behalf of CAT with respect to Royalties
paid to CAT under this Agreements shall be deducted from said Royalties prior to
remittance to CAT; provided, however, that in regard to any such tax so
deducted, Knoll, its affiliates or sublicensees shall give or cause to be given
to CAT such assistance as may reasonably be necessary to enable CAT to claim
exemption therefrom or credit therefor, and in each case shall furnish CAT
proper evidence of such taxes paid on its behalf.

1.64  For royalty payments to a foreign company value added tax has to be
applied in the Federal Republic of Germany and has to be withheld by Knoll.
According to a special statutory provision this withholding can be avoided, if
CAT's invoices of Knoll's reports do not show value added tax.  To take
advantage of such provisions CAT will invoice net payments without VAT and
Knoll's reports of statements will not include VAT.

1.65  In the event that during the term of this Agreement Sterling should, in
connection with the European Monetary Union, be replaced as the sole lawful
currency of the United Kingdom by a new lawful European currency (e.g. EURO) all
rights and obligations denominated in Pound Sterling shall be converted into the
new lawful currency according to the laws and regulations then applicable in The
United Kingdom.

                                   ARTICLE 7
                                   LIABILITY

7.00  Knoll shall be responsible for handling all product performance claims
related to the use of any Product and/or Drug which claim CAT has promptly
forwarded to Knoll.  Knoll, its Affiliates and sublicensees hereby agree to
indemnify, defend and hold CAT harmless from all damages, losses, claims of
damages or losses, any and all related costs and expenses, including but not
limited to reasonable attorney's fees and court costs, incurred by CAT in
connection with any such claim (except in any circumstance where such liability
or damage is found to be the direct result of gross negligence or any fraudulent
conduct by CAT) provided that CAT shall give Knoll prompt written notice of any
such claim and full and complete authority, information and assistance, at
Knoll's expense, for the defense thereof, including any settlements or appeals
related thereto, and provided further, such claim is not based upon the willful
or negligent acts or omissions of CAT.

1.66  Knoll agrees to pay directly for such damages, losses, claims of damages
or losses, any and all related expenses pursuant to Section 7.00.  In no event
shall Knoll reduce its payments due CAT,
<PAGE>

pursuant to Articles 3 and 5 in this Agreement, as a result of Knoll incurring
costs or expenses due to the operation of this Article 7.

                                   ARTICLE 8
                                    DAMAGES

8.00  Notwithstanding anything to the contrary set forth herein, except with
respect to a breach of any obligation under Article 9 below, in no event shall
either party have any liability for or responsibility to the other party for any
incidental or consequential damages based upon this Agreement or either party's
performance hereunder.

                                   ARTICLE 9
                                CONFIDENTIALITY

9.00  The receiving party will retain all of the Proprietary Information in
confidence during the term of this Agreement and for a period of five (5) years
after termination of this Agreement and will not, without the prior written
permission of the other party or pursuant to Article 10 hereof, disclose it to
third parties, or use it for any purpose other than in accordance with the terms
of this Agreement, except:

      (1) as provided for in Section 9.02 hereof; or with respect to:

      (2) such of the Proprietary Information which is or becomes a part of the
      public domain through no act or omission by the receiving party, or the
      officers, employees, professional advisors or other representatives of the
      receiving party or Affiliate thereof; or

      (3) such of the Proprietary Information which was in the receiving party's
      possession, as shown by written records, prior to the disclosure thereof
      to the receiving party; or

      (4) such of the Proprietary Information which is also received from a
      third party having a right to disclose said Proprietary Information and
      received free of any obligations not to disclose or use said Proprietary
      Information.

9.01  For the purposes of the provisions of this Article 9, Proprietary
Information supplied by one party to the other party pursuant to this Agreement
shall not be deemed to be in the public domain or in the possession of receiving
party merely because it is embraced by general disclosures in the public domain
or in the prior possession of receiving party.  In addition, any combination of
features shall not be deemed to be within the foregoing exceptions merely
because individual features are in the public domain or in the possession of
receiving party, but only if the combination is in the public domain or in the
possession of receiving party.

                                       12
<PAGE>

1.67  The receiving party shall have the right to communicate the Proprietary
Information or any part thereof to such employees, Collaborators, Affiliates or
consultants of receiving party who are required by their duties to have
knowledge thereof, on the conditions that each such employee or consultant shall
be informed that such information is Proprietary Information subject to this
Agreement, and shall be under an obligation of confidentiality with respect to
Proprietary Information received from the receiving party.

1.68  Each party shall have the right to disclose to others Proprietary
Information, to the extent such disclosure is reasonably necessary, in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with governmental regulations, conducting preclinical or clinical trials, or
seeking approval from or complying with the FDA, provided that if a party is
required to make any non-confidential disclosure of the other party's
Proprietary Information, the disclosing party will give reasonable advance
notice to the other party of such disclosure requirement, and will use
reasonable efforts to secure confidential treatment of such Proprietary
Information required to be disclosed.

      Notwithstanding the above, all publicity, press releases and other
announcements relating to this Agreement or the transactions contemplated hereby
shall be reviewed in advanced by, and subject to the approval of, both parties;
provided, however, that either party may disclose the terms of this Agreement
insofar as required to comply with applicable securities laws, provided that in
the case of such securities disclosures the disclosing party will make
reasonable efforts to notify the other party in advance of such disclosure and
cooperates to minimize the scope and content of such disclosure.

1.69  CAT specifically agrees to maintain the confidentiality of Antibodies and
to refrain from providing any samples thereof to any third party.  If Knoll
exercises its option, then CAT and Knoll shall mutually agree as to the type of
information CAT shall be entitled to receive and disclose about any Antibodies.

                                  ARTICLE 10
                                 PUBLICATIONS

10.00 The parties agree that any proposed publications (including, but not
limited to abstracts, posters and the like) or public disclosure on the research
conducted under this Agreement shall be submitted to the other party at least
thirty (30) days prior to submission to a journal or other third party.  A
proposed submission or disclosure shall be reviewed promptly; however, where
necessary, submission of disclosure may be delayed for an additional ninety (90)
days following the initial thirty day period for the purposes for preparing
related patent applications and for deleting particularly sensitive Proprietary
Information from said proposed disclosure if in the reasonable judgment of the
other party such patent applications are considered necessary and disclosure
would jeopardize potential protection.

                                       13
<PAGE>

                                  ARTICLE 11
                                 GOVERNING LAW

11.00 This Agreement shall be governed by and construed in accordance with the
law of England.

                                  ARTICLE 12
                                 INFRINGEMENT

12.00 If a third party in any country where the Product is being imported,
manufactured, used, or sold, notifies any of the parties, their Affiliates or
licensees that such activity infringes or is alleged to infringe any issued
patent either assigned to or licensed to such third party, then:

      (1) the party so notified shall promptly notify the other parties in
      writing; and

      (2) within thirty (30) days of receipt of notice of the alleged
      infringement, CAT will notify Knoll that it will either:

          (1) indemnify Knoll and its Affiliates against any and all awards,
          judgments and settlements which require Knoll or its Affiliates to pay
          money to such third party and that it will defend the action at its
          sole expense, or

          (2) grant Knoll the right to defend, in its sole discretion, the
          action and allow Knoll to take as a credit, on an ongoing basis during
          the action, one half the cost of its external legal expenses and any
          damages which may be awarded, against the royalties due to CAT from
          Net Sales in the countries in which the claim of infringement is made,
          up to a maximum credit of [***]. Such credit may not be taken by Knoll
          where the action involves a claim or right of a third party based upon
          activities such as packaging of the Product or improvements to the
          Product which are beyond the scope of the technology described in the
          Patents.

12.01 In the event Knoll or its Collaborators must pay royalties or license
fees to third parties under one or more claims of one or more patents to enable
Knoll or its Collaborators to utilize or have utilized the inventions of the
Patents, [***] shall be credited to Knoll's royalty obligations to CAT for sales
in that country where the patents exist.  However, Knoll's royalty obligation to
CAT on Net Sales in any given country shall not be reduced, by operation of the
offset of this Section 12.01, below the minimum royalty rate, determined under
the provisions of Section 5.02, multiplied by Net Sales in such country.  This
offset shall not include royalties or license fees which are beyond the scope of
the technology described in the Patents, for example fees paid to third parties
for delivery systems.

                                       14
<PAGE>

1.70 (a) In the event that Knoll shall learn of the infringement of any of the
Patents within the Exclusive Field, Knoll shall promptly notify CAT thereof in
writing and shall provide CAT with any evidence possessed by Knoll of such
infringement.

     (b) During the Term of this Agreement, Knoll shall have the sole right, but
     no obligation to bring any suit or action for infringement of the Patents
     within the Exclusive Field.  If Knoll finds it necessary or desirable to
     join CAT in such suit or action, CAT shall execute all papers and perform
     such other acts as may be reasonably required to do so and Knoll shall pay
     CAT its reasonable expenses (including attorney's fees) and any award of
     damages against CAT in any suit or action.  CAT may, at its option, join as
     a party to such suit and at its expense, be represented by counsel of its
     choice.  Unless Knoll and CAT otherwise agree, any amount recovered in any
     such action, whether by judgment or settlement, after payment to CAT of its
     reasonable expenses (including attorney's fees) shall be paid to or
     retained by Knoll.  However, to the extent that damages are assessed and
     actually awarded and paid to Knoll for lost sales, Knoll shall pay CAT a
     royalty on such adjudicated lost sales at the royalty rate which would have
     otherwise applied to those sales had they been made by Knoll.

     (c) In the event Knoll fails to take action within 90 days of learning of
     such infringement, CAT shall have the sole right, but no obligation, to
     bring, defend and maintain any appropriate suit or action involving
     infringement of such a patent by manufacture, use or sale of the Product.
     If CAT finds it necessary to join Knoll in such suit or action, Knoll shall
     execute all papers and perform such other acts as may be reasonably
     required.  Knoll may, at its option, join as a party in such suit and, at
     its expense, be represented by counsel of its choice.  Unless Knoll and CAT
     otherwise agree, any amount recovered in any such action or suit, whether
     by judgement or settlement, after payment to Knoll of its reasonable
     expenses (including attorney's fees), shall be paid to or retained by CAT.

     (d) Each party agrees to cooperate with the other in any legal action to
     enforce the Patents, including litigation proceedings.

1.71 Each party shall cooperate with the other party, to the extent reasonably
requested, in any legal action brought by or against the other party or both of
them or against their Affiliates or sublicensees in connection with the making,
using or selling of Product(s).

1.72 Each party agrees that it will use its best efforts whenever a protective
order is to be entered with a court of competent jurisdiction, to have the order
permit at least one patent counsel from each party (which, in the case of Knoll,
shall be an attorney employed by Knoll or its Affiliates) access to information
provided under the protective order without restriction.

1.73 Neither party shall settle any claim or suit in any manner that may
adversely affect any patent of the other party or that would require any payment
or grant of a license or other rights by such party without the prior written
approval of the other party.

                                       15
<PAGE>

                                  ARTICLE 13
                              DISPUTE RESOLUTION

13.00 The parties shall use all commercially reasonable efforts to solve any
disputes which may arise under this Agreement (including without limitation,
mediation and arbitration) before having recourse to litigation.

                                  ARTICLE 14
                                  WARRANTIES

14.00 CAT warrants:

      (1) that it has the right to grant the license specified in this
      Agreement;

      (2) that to the best of its actual knowledge as of the Effective Date, all
      relevant patents and patent applications in relation to the Patents are
      set out in Schedule V to this Agreement;
                 ----------

      (3) that to the best of its actual knowledge as of the Effective Date, CAT
      is not aware of any third party challenge to the validity of the Patents
      except for those set forth in Schedule VI;
                                    -----------

      (4) that CAT will use all commercially reasonable efforts to perform the
      Research Programs.

14.1  Knoll warrants:

      (5) that it has all necessary authority to enter into this Agreement and
      to supply to CAT the materials and expertise referred to in Schedule I;

      (6) that it will use all commercially reasonable efforts to meet the Knoll
      Milestones set out in Schedule I to this Agreement, to develop marketable
                            ----------
      Products of good merchantable quality and to bring those Products to
      market within the time usually taken to bring products of a similar nature
      to market and to satisfy market demand for those Products.

      (7) that Knoll has an exclusive and irrevocable option to acquire an
      exclusive, worldwide, milestone-bearing and royalty-bearing license, with
      the right to sublicense, to Hayashibara Biochemical Laboratories' patent
      applications directed to monoclonal antibodies corresponding to patent
      applications EP692,536 and EP712,931 including any continuation
      applications, continuation-in-part applications and divisional
      applications and any reissue, reexamination or extensions of such patents
      issuing therefrom and any foreign

                                       16
<PAGE>

      patent applications relating thereto to make, use, import, lease and sell
      products for all human indications.

1.74  CAT gives no warranty, express or implied, that the technology covered by
the Patents will work when applied to any particular purpose.

                                  ARTICLE 15
                                    NOTICES

15.00 All notices or other communications required or permitted to be given by
either party under this Agreement shall be in writing and shall, unless
otherwise specifically set forth herein, be sufficiently given by either party
when deposited in the mail, registered or certified, postage prepaid, or by
telefacsimile, and addressed as hereinafter set forth or to such other addressee
and/or address as or shall subsequently be designated by either party by notice
given in accordance with this Section.

      To Knoll:     Knoll AG
                    KnollstraBe 50
                    67061 Ludwigshafen on Rhine
                    Attn: Legal Department

      with copy to: BASF Bioresearch Corp.
                    100 Research Drive
                    Worcester, MA 01605-4314
                    Attn: President

      To CAT:       Cambridge Antibody Technology Ltd.
                    The Science Part
                    Melbourn, Cambridgeshire SG8 6JJ
                    Attn: Company Secretary

1.75  Either party may change the address or the recipient to which notice is to
be provided by written notice pursuant to Section 15.00.

                                  ARTICLE 16
                             TERM AND TERMINATION

16.00 Unless and until earlier terminated as provided in paragraphs 16.01 and
16.02, this Agreement shall commence on the Initial Date and shall continue
until the last to expire of the Patents, which are necessary to make, use or
sell a Product(s) or th expiry of fifteen years from the date of First
Commercial Sale of a Product by Knoll or its Affiliates or sublicensees
(whichever is the later).

                                       17
<PAGE>

1.76  If either party breaches or defaults in the performance or observance of
any its material obligations under this Agreement, and such breach or default is
not cured within one hundred twenty (120) days after receipt by such party of a
written notice from the non-breaching party specifying the breach or default (or
such longer period as is reasonably necessary if the breach is of such a nature
that it cannot be reasonably cured within one hundred twenty (120) days, then
the non-breaching party shall have the right to terminate this Agreement upon an
additional sixty (60) days written notice to the breaching or defaulting party.

1.77  Either party may terminate this Agreement by written notice to the other
party in the event the other party shall have become insolvent or bankrupt, or
shall have made an assignment for the benefit of its creditors, or there shall
have been appointed a trustee or receiver of the other party or for all or a
substantial part of its property, or any case or proceeding shall have been
commenced or other action taken by or against the other party in bankruptcy or
seeking reorganization, liquidation (other than for the purpose of
reconstruction or amalgamation), dissolution, winding-up, arrangement,
composition or readjustment of its deeds or any other relief under any
bankruptcy, insolvency, reorganization or other similar act, and any such event
shall have continued for ninety (90) days undismissed and undischarged.

1.78  Knoll may terminate this Agreement with respect to Target-3 or any
subsequent Target if CAT has not achieved CAT Milestone 3 or CAT Milestone 4
within the time frames established at Schedule II.  Termination on a Target
under this Section shall not terminate CAT's ongoing obligations with respect to
any ongoing Target nor shall it terminate Knoll's rights under Section 18.00(c).

1.79  In the event that Knoll is unable to license on commercially reasonable
terms any third party patent rights which would be infringed by the manufacture,
use or sale of the Antibodies, Product(s) or Drug, then Knoll shall have the
option, upon [***] notice to CAT, to terminate the Research Program with respect
to the Target so affected.

1.80  Termination of this Agreement is to be without prejudice to rights of
either party which have accrued and are due prior to termination.

                                  ARTICLE 17
                 IMPROVEMENT PATENTS AND INTELLECTUAL PROPERTY

17.00 Each party shall promptly notify the other party upon receiving a
disclosure of an Invention which might lead to an Improvement Patent.  Knoll
will assume responsibility for filing Improvement Patents in all countries.  All
expenses incurred by Knoll in applying for patent protection relating to
Inventions contemplated under this Agreement shall be borne by Knoll.

                                       18
<PAGE>

1.81  Knoll shall decide whether to file patent applications on Inventions
developed during the term of this Agreement.

1.82  CAT shall assist Knoll, at Knoll's expense, in the filing of Improvement
Patents.

1.83  Knoll will pursue and assume full responsibility, and bear the costs for
obtaining authorizations, including, but not limited to an NDA and BLA or other
similar governmental approval, to market the Product.

1.84  In the event that Knoll decides to abandon or no longer maintain any
Improvement Patent, or Knoll does not exercise its Option under 4.01, then
subject to any pre-existing obligations which Knoll may have to any third party
with respect to such Improvement Patent, Knoll will offer the rights to such
Improvement Patent to CAT at nominal cost subject to the provisions of Section
4.02.  CAT shall bear all further costs in connection with prosecuting and
maintaining such Improvement Patent.

1.85  Knoll shall be responsible, with the full and timely cooperation of CAT at
Knoll's expense (which shall include the execution of any documents which may be
required from time to time), for preparing, filing and prosecuting patent
applications in such countries as Knoll, in its sole discretion, may elect and
shall be responsible for the payment of all fees, including maintenance fees.

                                  ARTICLE 18
                  ADDITIONAL PROGRAMS & AREAS OF EXCLUSIVITY

18.00 CAT agrees to conduct additional Research Programs directed to Targets in
addition to Target-3 on behalf of Knoll and at Knoll's election, on terms
specified in this Agreement, adding the new Target(s) to the definition of the
Antigen in Section 1.03 and adding the new Target(s) to the definition of Field
in Section 1.14 throughout this Agreement, and defining a Research Program for
each such Target pursuant to Section 2.00, with the following limitations:

      (1) As of the Effective Date, CAT agrees to reserve two additional targets
      to be named by Knoll within ten (10) months of the Effective Date, and
      their receptors as a pool of exclusive Knoll targets. CAT agrees to
      refrain from collaborating with, or granting any rights to, any third
      party with respect to any exclusive target unless or until Knoll's period
      of exclusivity terminates pursuant to Section 18.00(c) or (d). CAT grants
      the right to Knoll AG to replace these targets within [***] of the
      Effective Date by a letter to CAT as provided under Article 15. CAT has
      the right to reject these replacement targets as specified under Article
      18.00 (b) but will allow Knoll to designate a new target until an
      agreement has been reached for both exclusive targets.

      (2) Each time Knoll initiates an additional Research Program with CAT
      under this Article, Knoll may specify one additional target pair
      comprising a designated cytokine and its receptor to be subject to a Knoll
      right of first refusal, to a maximum combined total of six (6)

                                       19
<PAGE>

      exclusive Knoll targets and right-of-first-refusal targets. However, CAT
      shall have the right to reject a proposed new right of first refusal
      target pair if within two weeks of the date of said proposal. [***]. CAT
      agrees to refrain from collaborating with, or granting any rights to, any
      third party with respect to any target which is subject to a Knoll right
      of first refusal unless CAT has first provided Knoll with [***]. Knoll
      shall have the right to initiate such additional Knoll Research Program
      with CAT with respect to such target by providing CAT with written
      notification within [***] from its receipt of CAT's written notice of
      third party interest.

      (3) Knoll's right to initiate each subsequent Research Program hereunder
      shall terminate [***]. In the event that Knoll terminates this agreement
      with respect to a Target under the provisions of Section 16.03, then Knoll
      shall have [***] from such termination date to initiate a subsequent
      Research Program.

      (4) Royalty payments, milestone payments and other terms for Target-3,
      Target-4, Target-5 and Target-6 will be as specified herein. Royalty
      payments, Milestone payments and other terms for Target-1 and Target-2
      will be as specified in the Prior Agreement. The set of milestone payments
      with respect to Target-4 through Target-6 shall be increased from the
      milestone payments specified herein for Target-3 by [***] for each
      subsequent twelve month period between the Effective Date and the
      initiation of the Research Program directed to such subsequent Target.

                                  ARTICLE 19
                                 FORCE MAJEURE

19.00 Neither party to this Agreement shall be liable for failure or delay in
the performance of any of its obligations hereunder, if such failure or delay is
due to causes beyond its reasonable control, including, without limitation, acts
of God, earthquakes, fires, strikes, acts of war, or intervention of any
governmental authority, but any such delay or failure shall be remedied by such
party as soon as reasonably possible after the removal of the cause of such
failure or delay.

                                  ARTICLE 20
                             WAIVER AND ASSIGNMENT

20.00 The right of either party at any time to require strict performance by
other party hereto of all the terms and conditions hereof shall not in any way
be affected or impaired by prior waiver, forbearance or course of dealing.

1.86  This Agreement shall not be assigned by either party without the prior
written consent of the other party, such consent not be unreasonably withheld,
except that either party may assign this Agreement, in whole or in part, to an
Affiliate of such party or to the successor (including the

                                       20
<PAGE>

surviving company in any consolidation, reorganization or merger) or assignee of
all or substantially all of its business to which this Agreement pertains, and
except that Knoll may assign its rights and obligations hereunder with respect
to any specific Target for which it has designated a Collaborator, to such
Collaborator.

1.87  This Agreement shall be binding upon any permitted assignee of either
party.

                                  ARTICLE 21
                                 MISCELLANEOUS

21.00 If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, it shall be modified, if possible,
to the minimum extent necessary to make it valid and enforceable or, if such
modification is not possible, it shall be stricken and the remaining provisions
shall remain in full force and effect; provided, however, that if a provision is
stricken as to materially affect the economic benefits of Agreement, the party
adversely affected may terminate this Agreement upon sixty days prior written
notice to the other party.

1.88  The headings set forth at the beginning of the various Articles and
Sections of this Agreement are for reference and convenience and shall not
affect the meanings of the provisions of this Agreement.

1.89  Neither party shall have the right to disclose to third parties the terms
and conditions of this Agreement without the express written consent of the
other party, except as may be required by applicable law.  If a party decides to
make an announcement it believes to be required by law with respect to this
Agreement, it will give the other party such notice as is reasonably practicable
and an opportunity to comment upon the announcement.

1.90  Neither party shall originate any publicity, news release or public
announcement, written or oral, whether to the public or the press, stockholders
or otherwise, referring to the terms of this Agreement, including its existence,
the subject matter to which it relates, the performance under it or any of its
existence, the subject matter to which it relates, the performance under it or
any of its specific terms and conditions without prior approval by the other
party, except as required by law.  A copy of such announcement shall be provided
to the other party for comment before it is made public.

1.91  Nothing contained in this Agreement shall be construed as conferring any
right to use in advertising, or other promotional activities, any name, trade
name, trademark, or other designation of either party thereto.

1.92  The provisions of Articles 7 and 9 shall survive the termination for any
reason of this Agreement.

                                       21
<PAGE>

1.93  The obligation to make payments under Article 3 of this Agreement with
respect to any period prior to its termination shall survive the termination of
this Agreement.

1.94  Prior to the execution of this Agreement, the parties have had numerous
discussions, conversations and negotiations, and have generated correspondence,
writings and other memoranda with respect to the subject matter of this
Agreement; notwithstanding which, this Agreement (including its Exhibits) is
intended to define the full extent of the parties respective agreements,
arrangements and obligations with respect to the subject matter hereof, and each
party represents that it is not relying on any such other discussions,
conversations, negotiations, correspondence, writings and memoranda in executing
and delivering this Agreement or performing its respective obligations
hereunder.

1.95  This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and which together shall constitute one and the same
instrument.

                                       22
<PAGE>

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

Knoll AG                                   Cambridge Antibody
                                           Technology Ltd.

BY:  /s/ Prof. Schlick /s/ Dr. Biesalski   BY: /s/ Dr. David Chiswell
NAME: ___________________________________  NAME: ______________________________
TITLE: __________________________________  TITLE: Chief Executive Officer _____

                                      23

<PAGE>

                                  Schedule I
                                 Research Plan

[***]
<PAGE>

                                  Schedule II

-------------------------------------------------------------------------------
      Milestone                    Content                  Timeframe*
-------------------------------------------------------------------------------

[***]
<PAGE>

                                                                      March 1993

                                 SCHEDULE III

[***-- Seven pages redacted]
<PAGE>

                                  SCHEDULE IV

                        Sublicence to Neuberger Patent

Between

Knoll AG, a German Corporation having a place of business at KnollstraBe 50,
6700 Ludwigshafer Rhina, Federal Republic of Germany (hereinafter "Knoll")

and

Cambridge Antibody Technology Limited, an English corporation having a place of
business at The Science Park, Melbourn, Cambridgeshire SG8 6EJ, Great Britain
(hereinafter "CAT")

RECITAL

By an agreement dated June 29, 1993, the Medical Research Council granted to
Knoll a sub-licence to the Neuberger Patent Rights as hereinafter defined with
the power further to sublicence the Neuberger Patent Rights

IT IS AGREED

1.   The Neuberger Patent Rights are those rights set out in the Annex to this
     sub-licence agreement.

2.   Knoll grants to CAT a sublicence to the Neuberger Patent Rights in the
     Exclusive Field, as that expression is defined in a Development and Licence
     Agreement (the "Head Agreement") dated (                       ) between
     the parties to permit CAT to conduct its activities under the Research
     Program (as defined in the Head Agreement) in relation to human tumour
     necrosis factor-(c) (TNF-a)

Ludwigshafen, August 25th, 1993              Melbourn,

Knoll AG                          ppa.       Cambridge Antibody Technology Ltd.

Prof. Schlick                     Kahlstorff

                                       2
<PAGE>

                                  Schedule V
                                    Patents

Inventor:      Winter et al (Winter2)

Number:        EP 0 368 684 B1

Inventor:      McCafferty et al

Number:        PCT/GB91/01134, EP 0 589 877B1

Inventor:      Mullis et al

Number:        US 4,683,202

Inventor:      Huse, Sorge and/or Lerner

Number:        WO90/14443; WO90/14424; WO90/14430

Inventor:      Ladner

Number:        WO88/06630

Inventor:      Ladner and Guterman

Number:        WO90/03809

Inventor:      Dower and Cwirla

Number:        PCT/US91/02989

Inventor:      Wigler

                                      3
<PAGE>

Number:          WO91/10737

Inventor:        Neuberger and Rabbitts

Number:          GB 2177 096A

Inventor:        Bird et al

Number:          US 4,704,692

Inventor:        Houston et al

Number:          US 5,091,513

Inventor:        Boss et al

Number:          US 4,816,397

Inventor:        Cabilly et al

Number:          US 4,816,567

Inventor:        Pluckthun and Skerra

Number:          EP 0 324162

Inventor:        Lei et al

Number:          WO 89/06283

Inventor:        Winter et al

Number:          PCT/GB92/00883; WO92/20781

                                      4
<PAGE>

Inventor:        Hoogenboom et al

Number:          PCT/GB92/01755

Inventor:        Griffiths et al

Number:          PCT/GB92/02240

Inventor:        Embleton et al

Number:          PCT/GB92/01483; WO93/03151

Inventor:        Winter et al

Number:          PCT/GB93/00605

Inventor:        Kang et al

Number:          PCT/US92/03091; WO92/18619

Inventor:        Jespers et al

Number:          PCT/GB94/01422

Inventor:        Griffiths et al

Number:          PCT/GB94/02662

Inventor:        Griffiths et al

Number:          US CIP 08/307,619

                                       5

<PAGE>

Inventor:        Garrard et al

Number:          PCT/US91/09133

Inventor:        Huse

Number:          PCT/US91/07149

Inventor:        Robinson et al

Number:          EP 0 247 091 B1; EP 0 371 998 B1
                 EP 0 550 400 A2

Inventor:        Ballivet and Kauffman

Number:          EP 0 229 046 B1

Inventor:        Barbas et al

Number:          PCT/US94/01234

Inventor:        Krebber et al

Number:          EP 0 614 989 A1

Inventor:        Dillon and Rosen

Number:          EP 0 557 897 A1

Inventor:        Breitling et al

Number:          PCT/GB92/01524

                                      6
<PAGE>

Inventor:        Osbourn et al

Number:          PCT/GB97/01835

                                       7
<PAGE>

                                  Schedule VI
                            3/rd/ Party Opposition

EP 0 368 684B1 (Winter 2) - - Opposition filed by Morphosys GmbH.

EP 0 589 877B1 (McCafferty et al)  Opposition filed by Morphosys GmbH,
                                        BioInvent Therapeutic AB,
                                        Pharmacia & Upjohn, Dyax Corp.

In the Winter 2 application in the US, the USPO has declared an interference
with application filed by Huse, Sorge and/or Lerner.  Winter is the senior
party.

                                       8

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