Document:

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                                                                   Exhibit 10.15

                                                                  EXECUTION COPY

                          STRATEGIC ALLIANCE AGREEMENT

                          Dated as of February 22, 2001

                                 by and between

                              ALTUS BIOLOGICS INC.

                                       and

                  CYSTIC FIBROSIS FOUNDATION THERAPEUTICS, INC.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        1

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
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<S>                                                                         <C>
ARTICLE I. DEFINITIONS...................................................     1
   1.1     USE OF DEFINED TERMS..........................................     7
   1.2     ACCOUNTING TERMS..............................................     7
   1.3     SECTIONS, EXHIBITS AND SCHEDULES..............................     7
   1.4     MISCELLANEOUS TERMS...........................................     7
ARTICLE II. ALLIANCE AND THE ALLIANCE GRANT FUNDING......................     7
   2.1     THE ALLIANCE..................................................     7
   2.2     MANAGEMENT OF THE ALLIANCE....................................     8
   2.3     OBLIGATIONS OF THE COMPANY....................................    10
   2.4     OBLIGATIONS OF CFFTI..........................................    12
   2.5     FUNDINGS......................................................    13
   2.6     LICENSE FEE...................................................    14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............    14
   3.1     ORGANIZATION..................................................    14
   3.2     AUTHORITY.....................................................    15
   3.3     CAPITALIZATION................................................    15
   3.4     NO CONFLICT...................................................    16
   3.5     FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES; INDEBTEDNESS...    16
   3.6     LITIGATION....................................................    17
   3.7     INTELLECTUAL PROPERTY.........................................    17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CFFTI......................    18
   4.1     ORGANIZATION; AUTHORIZATION; NO CONFLICT......................    18
   4.2     INVESTMENT REPRESENTATIONS....................................    19
   4.3     CFFTI'S ACKNOWLEDGMENT AS TO INFORMATION......................    19
   4.4     LITIGATION....................................................    19
ARTICLE V. LICENSES......................................................    20
   5.1     CFFTI LICENSE.................................................    20
   5.2     COMPANY SUBLICENSE............................................    21
   5.3     JOINT LICENSE.................................................    21
   5.4     RETAINED RIGHTS OF THE COMPANY................................    21
   5.5     PROSECUTION; ENCUMBRANCES; OTHER MATTERS......................    21
   5.6     FURTHER ASSURANCES............................................    22
ARTICLE VI. EVENTS OF DEFAULT............................................    22
   6.1     COMPANY DEFAULT...............................................    22
   6.2     CONSEQUENCES OF A COMPANY DEFAULT.............................    23
   6.3     CFFTI DEFAULT.................................................    23
   6.4     CONSEQUENCES OF A CFFTI DEFAULT...............................    24
ARTICLE VII. CONFIDENTIALITY; PUBLICATIONS; PUBLICITY....................    25
   7.1     CONFIDENTIALITY...............................................    25
   7.2     PUBLIC ANNOUNCEMENTS..........................................    25
   7.3     PUBLICATIONS..................................................    25
ARTICLE VIII. INDEMNIFICATION AND INSURANCE..............................    26
   8.1     CFFTI INDEMNIFICATION.........................................    26
   8.2     COMPANY INDEMNIFICATION.......................................    26
   8.3     PROCEDURE.....................................................    26
ARTICLE IX. CONDITIONS PRECEDENT.........................................    27
   9.1     CONDITIONS TO OBLIGATIONS OF THE COMPANY AT THE INITIAL GRANT
              FUNDING....................................................    27
</TABLE>

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        1

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<TABLE>
<S>                                                                         <C>
   9.2     CONDITIONS TO OBLIGATIONS OF CFFTI AT THE INITIAL ALLIANCE
              GRANT FUNDING..............................................    28
ARTICLE X. TERMINATION...................................................    29
   10.1    CFFTI RIGHT TO TERMINATE......................................    29
   10.2    COMPANY'S RIGHT TO TERMINATE..................................    30
   10.3    OTHER TERMINATIONS OF AGREEMENT...............................    30
   10.4    CONSEQUENCES OF TERMINATION...................................    30
ARTICLE XI. MISCELLANEOUS................................................    31
   11.1    NOTICES.......................................................    31
   11.2    CAPTIONS......................................................    32
   11.3    EXPENSES......................................................    32
   11.4    NO WAIVER.....................................................    32
   11.5    SEVERABILITY; INTEGRATED TRANSACTION..........................    32
   11.6    ENTIRE AGREEMENT..............................................    32
   11.7    AMENDMENT.....................................................    32
   11.8    LIMITATION ON ASSIGNMENT......................................    32
   11.9    GOVERNING LAW.................................................    32
   11.10   ARBITRATION...................................................    32
   11.11   COUNTERPARTS..................................................    33
   11.12   FORCE MAJEURE.................................................    34
   11.13   INDEPENDENT CONTRACTORS.......................................    34
   11.14   FURTHER ASSURANCES............................................    34
   11.15   SURVIVAL......................................................    34
</TABLE>

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        2

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                                                                  EXECUTION COPY

                          STRATEGIC ALLIANCE AGREEMENT

     This STRATEGIC ALLIANCE AGREEMENT, is made as of February 22, 2001
("Agreement"), by and between Altus Biologics Inc, a Massachusetts corporation
(the "Company"), and Cystic Fibrosis Foundation Therapeutics, Inc., a Maryland
corporation ("CFFTI" and collectively, with the Company, the "Parties," and each
a "Party").

     WHEREAS, CFFTI has, as one of its principal objectives, the development of
therapies that will improve the quality of life for patients suffering from
cystic fibrosis and has developed an extensive network of medical providers,
researchers, and patients who participate in this effort, and the Company
possesses certain skills and technology which can aid in this objective; and

     WHEREAS, the Company and CFFTI wish to collaborate with respect to the
farther development, testing, and marketing of a new drug developed by the
Company to treat pancreatic insufficiency in cystic fibrosis patients in North
America, based on technology developed by the Company and using the expertise
and contacts of CFFTI including CFFTI's Therapeutic Development Network; and

     WHEREAS, the Company and CFFTI desire that CFFTI provide grant funding to
an aggregate total of Twenty Five Million Dollars ($25,000,000) to fund the
Company's development and marketing of TheraCLEC Total(TM) to treat pancreatic
insufficiency in cystic fibrosis patients in North America, on the terms and
subject to the conditions set forth in this Agreement; and

     WHEREAS, the Company desires to issue to CFFTI, and CFFTI desires that the
Company issue it, warrants to acquire up to four hundred thousand (400,000)
shares of the Company's common stock, par value $.0l per share (the "Common
Stock"), on the terms and subject to the conditions set forth in this Agreement;
and

     NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and undertakings hereunder and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     As used in this Agreement, the following terms have the meanings set forth
below.

     "AAA" shall have the meaning set forth in Section 11.10 hereof.

     "Affiliate" shall mean any Person that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with any other Person and, for purposes of this Agreement, control shall include
the power to elect a majority of the board of directors.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        1

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     "Deadlock Event" shall mean a failure of the ASC to reach agreement on a
Material ASC Matter within the period set forth in Section 2.2 (d) hereof.

     "Development Activities" shall mean activities related to the development
and marketing of the Products in North America, which shall include research,
development, animal tests, clinical trials and other testing, seeking applicable
approvals of governmental bodies and others, manufacturing, marketing,
promotion, sales, and distribution activities and any other act or acts required
or reasonably necessary to obtain FDA approval for the marketing and
distribution of the Products to treat pancreatic insufficiency in cystic
fibrosis patients or to otherwise market and sell the Products in compliance
with any applicable Law for such treatment, in each case in North America.

     "Encumbrance" shall mean any security agreement, properly filed financing
statement, mortgage, lien (statutory or otherwise), or other consignment or
bailment given for security purposes, or other title retention agreement, with
respect to any material asset of such Person, or, in the case of intellectual
property rights, any license materially affecting such rights, whether direct,
indirect, accrued or contingent, except for transfer restrictions imposed by the
Securities Act, the Securities Exchange Act of 1934, as amended, and/or state
securities Laws.

     "Entity" shall mean any corporation, partnership, limited liability
company, joint venture, trust, association, unincorporated organization, group
or other corporate or non-corporate entity.

     "Fair Market Value" of any shares of Common Stock issued or issuable upon
exercise of the Warrants shall mean the fair market value of such shares on the
date of determination, which shall be determined as follows:

          (a) if the Common Stock is listed on any domestic securities exchange
or quoted in the NASDAQ System or the over-the-counter market, the average of
the closing prices of the sales of shares of Common Stock on all securities
exchanges on which Common Stock may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges, or, if on any day shares of
Common Stock are not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York City time, or, if
on any day shares of Common Stock are not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, as applicable, averaged
over the 20 consecutive trading days prior to the date of determination;
provided however that notwithstanding the foregoing, the Fair Market Value of
the shares of Common Stock issued or issuable upon exercise of the Warrants
shall be reduced if and to the extent that a block sale of all of such shares is
reasonably likely, in the good faith judgment of a registered broker-dealer who
is affiliated with a reputable, nationally recognized brokerage house (and who
is independent, that is, has to interest in the contemplated block sale and is
not the regular broker-dealer for either CFFTI or the Company), to depress the
trading price of shares of Common Stock and the Fair Market Value of the shares
of Common Stock issued or issuable upon exercise of the Warrants; and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        2

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          (b) if at any time the Common Stock is not listed on any domestic
securities exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, then the Fair Market Value of the shares of Common
Stock issued of issuable upon exercise of the Warrants shall be determined by an
Independent Appraiser (taking into account, among such other factors as
appraisers commonly consider, the lack of a public market for such shares, the
minority nature and size of stake of such shares, general market conditions and
market conditions in the private equity markets related to the Company's
business, and any pending bona fide written offer to buy the Shares that CFFTI
has received from an unrelated third party) who shall determine and report to
the Company and CFFTI the fair market value of the Common Stock not later than
30 days after the date such Independent Appraiser is selected. The Independent
Appraiser shall be selected jointly by the Company and CFFTI not later than five
days after the Appraisal Date; provided however that if the Company and CFFTI
cannot agree on the selection of such an Independent Appraiser within such
period, then the Independent Appraiser will be selected by the Company's
auditors not later than eight days after the Approval Date.

     "FDA" means the United States Food and Drug Administration, or any
successor thereto.

     "Financial Statements" shall have the meaning set forth in Section 3.5
hereof.

     "GAAP" shall mean generally accepted accounting principles of the United
States of America.

     "Grace Period" shall mean with respect to a specified Milestone Achievement
Date, the number of days that lapsed between such specified Milestone
Achievement Date and the immediately preceding Milestone Achievement Date,
multiplied by [**].

     "Grant" shall mean $25,000,000 to be funded by CFFTI subject to the
conditions and in accordance with the terms of this Agreement.

     "Improvements" means all developments to, enhancements in, and new versions
or improvements of the intellectual Property, whether or not patentable, which
are invented, developed, discovered or otherwise acquired by or for the Company
as a result of the Development Activities hereunder,

     "Independent Appraiser" shall mean one of the nationally recognized
accounting firms that regularly engages or has significant experience in the
valuation of companies similar to the Company, which has not been engaged by
either the Company or CFFTI at any time during the three year period immediately
prior to the date on which the Independent Appraiser is selected pursuant to
this Agreement.

     "Initial Alliance Grant Funding" shall have the meaning set forth in
Section 2.5(a) hereof.

     "Initial Alliance Grant Funding Date" shall mean the date on which the
Initial Grant Funding Amount is paid by CFFTI to the Company.

     "Initial Grant Funding Amount" shall have the meaning set forth in Section
2.5(a) herof.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        3

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     "Intellectual Property" shall mean all, patents, patent applications,
rights acquired through patent licenses, Trademarks, trade secrets, software,
copyrights, copyright applications, inventions, technologies, know-how,
formulae, processes, all other intellectual property and applications for any of
the foregoing, owned, leased, licensed, used or held for use, directly or
indirectly, by, on behalf of or for the account of the Company and all
proprietary rights to such Intellectual Property, which are used or useful for
the manufacture, use or sale of the Products owned, leased, licensed used or
held for use, directly or indirectly, by, on behalf of or for the account of the
Company.

     "Joint License Event" shall have the meaning set forth in Section 5.3
hereof.

     "Judgment" shall mean any unsatisfied judgment, decree, or order of any
governmental body having competent jurisdiction.

     "Law" shall mean any statute, ordinance, code, rule, regulation or order
enacted, adopted, or promulgated, by any governmental body.

     "License Fee" shall have the meaning set forth in Section 2.6 hereof.

     "Licensed Products" shall have the meaning set forth in Section 5.1 hereof.

     "Material ASC Matter" means a determination by the ASC as to whether a
specified Milestone has been met, or as to whether a Technical Failure has
occurred, or as to whether the Milestone Grant Funding Plan should be amended
pursuant to Section 2.2(b)(i) hereof.

     "Milestone" shall mean a milestone set forth in the Milestone Grant Funding
Plan and which has a corresponding Milestone Achievement Date and Grant Funding
Amount, each of which is set forth in the Milestone Grant Funding Plan opposite
such milestone, as amended from time to time by the ASC. For purposes of the
Milestone Grant Funding Plan, the achievement of a Milestone shall include the
transmittal of data resulting from Development Activities related to the said
Milestone.

     "Milestone Achievement Date" shall mean [******************] specified in
the Milestone Grant Funding Plan on which a related Milestone is to be
completed, as amended from time to time by the ASC.

     "Milestone Grant Funding Plan" shall mean the Milestone Grant Funding Plan
attached hereto as Exhibit 1.1, as the same shall be amended and modified from
time to time pursuant to approval of the ASC in accordance with Section 2.2
hereof.

     "Net Sales" shall mean [**************************************************]
in arm's length sales to unrelated third parties, less the following amounts
incurred in the ordinary course of business with respect to such sale to the
extent separately included in the invoice for the Product as part of the gross
invoiced sales price:

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        4

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          (c) trade, cash and quantity discounts or rebates [*******************
****];

          (d) credits or allowances given or made for rejection of or return of,
and for uncollectible amounts on, previously sold Products or for retroactive
price reductions [**************************************************************
**];

          (e) charges for insurance, freight and other transportation costs
[******************************] of Product; and

          (f) sales, transfer and other excise taxes levied on the sale or
delivery of a Product (including any tax such as a value added or similar tax or
government charge) borne by the seller thereof, [*******************************
************************].

     "Party" and "Parties" shall have the meaning set forth in the preamble of
this Agreement.

     "Person" shall mean any individual, Entity or governmental body.

     "Phase IIb Milestone Date" shall mean the last day of the quarter specified
in the Milestone Grant Funding Plan within which Phase IIb is to be completed
and all [**********] associated with the Phase IIb transmitted by the Company to
CFFTI in accordance with the Milestone Grant Funding Plan.

     "Products" shall mean the pharmaceutical products developed by or on behalf
of the Company, currently identified by the Company as "TheraCLEC Total(TM)",
and any derivatives thereof, which contain the [***********************] and
either or both of the [***************************], and [*****], and which are,
in either case, designed to treat pancreatic insufficiency in cystic fibrosis
patients.

     "Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.

     "Registration Rights Agreement" shall have the meaning set forth in Section
2.3(c) hereof.

     "Regular Rate" shall mean the rate announced by Fleet Bank from time to
time as its prime rate of interest plus [**************].

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Shares" shall mean the shares of Common Stock issued or issuable upon
exercise of the Warrants.

     "TDN" shall have the meaning set forth in Section 2.4(d) hereof.

     "Team Leader" shall have the meaning set forth in Section 2.2(a) hereof.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        5

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          "Technical Failure" means that (a) none of the Products
[************************************] as determined by the ASC, (b) the
Products' toxicity levels exceed FDA standards and cannot be corrected within a
scientifically reasonable period of time as determined by the ASC, or (c) the
ASC has reasonably determined that, [*******************************************
**************] developed or marketed.

          "Trademarks" shall mean all trademarks, trademark applications, brand
names, and trade names used, owned or licensed by the Company that are used or
intended to be used in association with the Products.

          "Unresolved Deadlock Event" shall mean a Deadlock Event that is not
resolved after completion of the resolution procedures set forth in Section
2.2(d) hereof.

          "Warrants" shall have the meaning set forth in Section 2.3(b) hereof.

          "Work Plan" shall mean the work plan attached hereto as Exhibit 1.2,
as the same shall be amended and modified from time to time in accordance with
Section 2.2 hereof.

          1.1 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
The use of either gender shall be applicable to both genders.

          1.2 Accounting Terms. All accounting terms not otherwise defined in
this Agreement shall be construed in conformity with GAAP.

          1.3 Sections, Exhibits and Schedules. References in this Agreement to
Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of and
to this Agreement. The Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.

          1.4 Miscellaneous Terms. The term "or" shall not be exclusive. The
terms "herein," "hereof," "hereto," "hereunder" and other terms similar to such
terms shall refer to this Agreement as a whole and not merely to the specific
article, section, paragraph or clause where such terms may appear. The term
"including" shall mean including, but not limited to unless such qualification
already appears.

                                   ARTICLE II

                     ALLIANCE AND THE ALLIANCE GRANT FUNDING

          2.1 The Alliance.

(1) Formation of the Alliance. The Parties hereto hereby agree to associate
themselves for the purpose of collaborating on the development, testing,
manufacturing, marketing, and promoting of the Products for use in North America
with respect to the treatment of pancreatic insufficiency in cystic fibrosis
patients (the "Alliance"). The Alliance shall be conducted,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        6

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operated and administered in accordance with the terms of this Agreement, and no
separate or jointly owned corporate or other entity or entities shall be
established for the purpose of conducting or administering the joint efforts and
endeavors of the Parties hereunder.

               (2) Relationship of the Parties. The Parties hereto understand
and agree that the Alliance is limited to the development, testing, and
marketing of the Products for use in North America with respect to the treatment
of pancreatic insufficiency in cystic fibrosis patients and to the activities,
rights and obligations as set forth in this Agreement. Nothing in this Agreement
shall be construed to create or imply a general partnership, limited partnership
or other legal entity between the Parties, to make either Party the agent of the
other for any purpose, to alter, amend, supersede or vitiate any other
arrangements between the Parties with respect to any subject matters not covered
hereunder, to give either Party the right to bind the other, to create any
duties or obligations between the Parties except as expressly set forth in or
arising from this Agreement, or to, grant any direct or implied licenses or any
other right other than as expressly set forth herein.

               (3) Ethical Conduct. In carrying out its responsibilities under
this Agreement, each Party agrees that, in all material respects, its activities
will be conducted in compliance with all applicable Laws, including the U.S.
Food, Drug and Cosmetic Act and the regulations promulgated pursuant thereto or
any equivalent applicable Laws pertaining to the subject matter of such Act in
other jurisdictions. Neither Party will engage the services of any Person
debarred by any relevant governmental body from conducting or participating in
any of the activities to be conducted under this Agreement.

     2.2 Management of the Alliance.

          (a) Membership on the ASC. The Parties shall establish an alliance
steering committee (the "ASC") consisting of [**] members, [***] of whom shall
be appointed (and may be removed by the Company and whose expenses shall be
borne by the Company, and [***] of whom shall be appointed by (and may be
removed) by CFFTI and whose expenses shall be borne by CFFTI. Each of the
members of the ASC shall be required to enter into a confidentiality agreement
reasonably acceptable to the Company and CFFTI in connection with their
appointment to the ASC. The Company and CFFTI shall each appoint one of its
members on the ASC as its "Team Leader". The goal of the ASC shall be to
facilitate the Company's development of the Products, its regulatory approval,
and the commercial launch of the Products.

          (b) Duties of the ASC. The ASC shall have responsibility for the
following activities:

(i) determining whether Milestones have been met in accordance with the
Milestone Grant Funding Plan; provided that, in the event the Company does not
satisfy a specified Milestone by the associated
[************************************************] associated therewith, other
than [********************], the ASC may reasonably amend the Milestone
Achievement Date, upon a reasonable showing by the Company that A)
[***********************************************] and B) the Company has
exercised and will continue to exercise good faith, reasonable efforts to
achieve said Milestones and has made and will continue to apply appropriate
resources to such efforts;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        7

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          (ii) determining whether a Technical Failure has occurred;

          (iii) reviewing and approving the Work Plan and the Milestone Grant
Funding Plan and recommending and approving all amendments thereto; provided
that the ASC shall cause the Milestone Grant Funding Plan to be amended to take
into account any Grace Periods afforded the Company or CFFTI hereunder and any
period during which funding by CFFTI was deferred pursuant to the provisions of
Section 2.5(b); and provided further that if any Milestone Achievement is
amended by the ASC, all future Milestone Achievement Dates and Funding Amounts
shall be adjusted to reflect the said amendments;

          (iv) ensuring that Development Activities are monitored in accordance
with legal and regulatory requirements; and

          (v) making recommendations regarding the following matters: clinical
trials, the acquisition and use of resources including the application for
necessary approvals from governmental bodies, patent applications or
controversies, and priorities among the various Development Activities.

          (c) Meetings; Voting. The ASC shall meet in connection with each
Milestone Achievement Date and as needed to determine whether the related
Milestone has been achieved, but in any event no fewer than [**] times per year,
at the place and in the manner determined jointly by the Team Leaders. All
decisions of the ASC shall be made by the affirmative vote of the members
appointed by the Company (who shall each be entitled to cast one vote) and the
members appointed by CFFTI (who shall each be entitled to cast one vote), and
the ASC may act so long as at least two members appointed by the Company and two
members appointed by CFFTI are present at a meeting or execute a written
consent, in lieu thereof. Decisions of the ASC are binding on the Parties and
may be made at (i) a regularly scheduled meeting (including via teleconference
or video conference) or (ii) at a special meeting called by the Team Leaders or
(iii) by written consent of at least two members appointed by the Company and
two members appointed by CFFTI. Persons other than members of the ASC may be
present at meetings of the ASC (and their expenses shall be borne by the Party
requesting such Person's presence) if [************************] or the ASC
determines that it is necessary or appropriate and, if requested by either
Party, provided such Person or Persons agree to execute appropriate
confidentiality agreements in a form agreed upon by the Parties prior to
attendance at such meeting.

          (d) Deadlock Events. In the event that the ASC is unable to agree with
respect to any Material ASC Matter within [*******************], then on the
[********************] a Deadlock Event shall be deemed to have occurred, and
the determination of the said Material ASC Matter will be accelerated
[*************************************]. If the [*********************] cannot
reach resolution within [***************], then each Party will [************
***************] (who shall not be [*******************************************]
of such Party or a member of the ASC) to meet and negotiate in good faith to
reach a fair and reasonable resolution to the controversy. If such board members
cannot reach resolution within [***************], then the Parties shall
promptly participate in mediation before an impartial mediator certified by the
AAA and mutually agreeable to the Parties. Such mediation shall take place at a
location

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        8

<PAGE>

agreed upon by the Parties, and if they do not agree, the first such mediation
shall take place in Washington, D.C., and the second such mediation shall take
place in Boston, Massachusetts and thereafter the locations shall continue to
alternate. The expenses of such mediator shall be shared by the Parties equally.
Any decision made pursuant to this Section shall be binding on the Parties. If
no decision is reached [***************] after mediation has occurred, then such
Deadlock Event shall continue and be deemed an Unresolved Deadlock Event for
purposes of this Agreement.

          (i) If a Deadlock Event occurs then CFFTI [*************************]
CFFTI Funding Amount that [*******************] during the period in which the
resolution procedures set forth in Section 2.2(d) are occurring with respect to
the related Deadlock Event, and the Company [**********************************]
Development Activities in support thereof;

          (ii) If an Unresolved Deadlock Event occurs and
[**********************] Development Activities, this Agreement shall be
terminated as set out in Section 10.3.

          (iii) If an Unresolved Deadlock Event occurs, and the Company
determines to proceed thereafter with Development Activities, then CFFTI
[***************************] CFFTI Funding Amount that
[**************************] the end of the applicable Grace Period after the
effective date of the Unresolved Deadlock Event, which shall be determined
[******************] between the Milestone Achievement Date of the next
Milestone to be achieved and the Milestone Achievement Date of the last
Milestone that was achieved according to the ASC, at which time such CFFTI
Funding Amount [**********************], provided however, thereafter, after a
Milestone has been achieved, the CFFTI Funding Amount shall be due
[**************] after receipt of an invoice from the Company and CFFTI shall
promptly pay such amounts, or be in default under Section 6.3.

          (iv) If an Unresolved Deadlock Event occurs and CFFTI determines to
proceed thereafter with funding of Development Activities, then the Company
[************************] if it does not achieve the said Milestone within the
applicable Grace Period, determined by [***************] between the Milestone
Achievement Date of the next Milestone to be achieved and the Milestone
Achievement Date of the last Milestone that was achieved according to the ASC,
provided CFFTI [********************************] under the Milestone Grant
Funding Plan.

          (e) Minutes. The ASC shall keep minutes of its deliberations that
record in reasonable detail all actions recommended or taken. Drafts of the
minutes shall be delivered to each of the Team Leaders within a reasonable time
not to exceed fifteen business days after the meeting. The Party hosting the
meeting or a member of the ASC designated by the Team Leaders as secretary of
such meeting, as applicable, shall be responsible for the preparation and
circulation of the draft minutes. Draft minutes may be edited by the Team
Leaders and shall be issued in final form within a reasonable time not to exceed
[********] days after the meeting only with their approval and agreement as
evidenced by their signatures on the minutes.

     2.3 Obligations of the Company. Subject to the terms and conditions of this
Agreement, the Company shall:

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                        9

<PAGE>

          (a) authorize the execution and delivery of this Agreement, the
Warrants and the Registration Rights Agreement, and the performance of its
obligations hereunder and thereunder;

          (b) upon execution of this Agreement, issue and deliver to CFFTI
warrants to acquire an aggregate of four hundred thousand (400,000) shares of
Common Stock in the form of Warrant 5-A ("Warrant A") and Warrant 5-B ("Warrant
B"), attached hereto as Exhibit 2.3(b)(i) and (ii) respectively (together the
"Warrants");

          (c) execute and deliver to CFFTI the Registration Rights Agreement in
the form attached hereto as Exhibit 2.3(c) (the "Registration Rights
Agreement");

          (d) grant to CFFTI the licenses set forth in Article V herein below;

          (e) control and be primarily responsible for the conduct of the
Development Activities, engage in Development Activities at all times during the
term of this Agreement and, without limiting the foregoing, use
[**********************] (i) to develop the Products and bring the Products to
market in North America [**********************], and in any event in accordance
with the Milestone Grant Funding Plan and the Work Plan, (ii) to obtain all
necessary approvals of applicable governmental bodies for the marketing and
distribution of the Products in North America, and (iii) market and distribute
the Products in North America after such approvals are obtained. Development
Activities will be conducted by the Company, or the Company will cause its
subcontractor to conduct Development Activities, in accordance with accepted
ethical principles and regulatory requirements in facilities selected by the
Company which are reasonable and adequate for the conduct of Development
Activities;

          (f) use the Grant funds received hereunder to fund Development
Activities, and to the extent that additional resources and funding in excess of
the Grant amounts funded by the CFFTI under this Agreement are required for the
Company to satisfy the next succeeding Milestone set forth on the Milestone
Grant Funding Plan, the Company shall provide all such additional resources and
funds, and together with the invoice to be delivered pursuant to Section 2.5(b)
in connection with the funding of the Grant next following a Milestone
Achievement Date, the Company will provide the ASC with a summary of the
Company's plans for funding or providing resources equivalent to the amount set
forth on the Milestone Grant Funding Plan under the heading "Company Funding
Amount", on a [*******] basis during the period from the date of such Milestone
Achievement Date until the next occurring Milestone Achievement Date;

          (g) provide the ASC with a written report within [*********] following
the end of each fiscal quarter, documenting in reasonable detail the Development
Activities conducted by the Company during such quarter, and indicating (i)
whether any Milestone identified on the Milestone Grant Funding Plan has been
achieved during such quarter, (ii) any material deviation from the schedule of
work shown in the Work Plan, and (iii) the Company's analysis as to whether the
next succeeding Milestone is likely to be satisfied by the related Milestone
Achievement Date or, if not, by the end of the related Grace Period, and if not,
the identified reason or reasons for the anticipated delay;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       10

<PAGE>

          (h) consult from time to time with the ASC, CFFTI, and the TDN
concerning the Development Activities and use the TDN, at the sole expense of
the Company (which expense may be satisfied using the Grant funding to be
provided by CFFTI hereunder), in conducting clinical trials needed in connection
with the Development Activities and the Products;

          (i) pay the License Fees to CFFTI as set out in Section 2.6 or the
royalties provided in Section 10.1(c) hereinbelow if applicable;

          (j) keep records of amounts expended on Development Activities that
are complete and accurate in all material respects, and permit CFFTI, with
reasonable written notice to the Company, to cause an independent, certified
public accountant reasonably acceptable to the Company to audit such records not
more than [************] at the place or places of business where such records
are customarily kept at a mutually convenient time and subject to execution by
the accountant of a reasonable confidentiality agreement acceptable to the
Company, in order to verify the reasonable accuracy of the reports of amounts
spent in respect of Development Activities; provided that CFFTI
[**********************] of such audit unless such audit discloses that the
Company has materially misstated the amount(s) expended on Development
Activities, in which event, the Company [****************************] of such
audit;

          (k) permit the members of the ASC appointed by CFFTI, upon reasonable
notice and at reasonable intervals and during normal business hours, to confer
with the financial, legal, technical, scientific and accounting representatives
of the Company and be furnished all relevant documents, records and other
information concerning the Products and the Development Activities that such
persons, with the consent or approval of the ASC, may reasonably request;

          (l) participate in the ASC [****************]; and

          (m) prior to the initial public offering of the Company's Common
Stock, deliver to CFFTI (i) as soon as practicable after the end of each fiscal
year of the Company, and in any event on or within [*********************] days
thereafter, an unaudited balance sheet of the Company as of the end of such year
and unaudited statements of income and stockholders' equity for such year; and
(ii) as soon as practicable after the end of each fiscal quarter (except the
last fiscal quarter of each fiscal year), and in any event on or before or
within [************] days thereafter, an unaudited balance sheet of the Company
as of the end of such quarter, and an unaudited statement of income for each
quarter and for the current fiscal year to date, and, if available, audited
statements and any other financial statements or reports provided generally to
holders of the Company's securities in the ordinary course of business.

     2.4 Obligations of CFFTI. Subject to the terms and conditions of this
Agreement, CFFTI shall:

          (a) authorize the execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrants and the performance of its
obligations hereunder and thereunder, and obtain the authorization and approval
of any Affiliate that will provide funds to be used in the Grant;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       11

<PAGE>

          (b) effective as of December 31, 2000 commit to provide the Grant and
thereafter provide non-refundable grant funding to the Company in accordance
with Section 2.5 in the total amount of twenty five million dollars
($25,000,000) to support the development and testing of the Products;

          (c) use [*********************] to cause the Company to be provided
with the names of prospective patients and medical providers who may participate
in the development of the Products and in clinical testing;

          (d) provide the Company with reasonable access to its Therapeutic
Development Network of medical providers, patients, researchers, and others who
are involved in the care and treatment of cystic fibrosis patients ("TDN") and
use reasonable efforts to promote the involvement of TDN in the development and
testing of the Products, in each case in a manner and consistent with the
recommendation of the ASC;

          (e) grant to the Company the sublicense set forth in Article V;

          (f) participate in the ASC [****************]; and

          (g) provide reasonable assistance and cooperation requested by the
Company in support of the expeditious development, testing, regulatory approval
and market launch of the Products, in a manner and consistent with the
recommendation of the ASC in support of Development Activities.

     2.5 Fundings.

          (a) Upon satisfaction (or waiver) of the conditions thereto set forth
in this Agreement, the closing of the issuance of the Warrants and the first
payment of the Grant (the "Initial Alliance Grant Funding") shall take place at
the offices of Swidler Berlin Shereff Friedman, LLP, 3000 K Street, NW,
Washington, DC 20007, on February 20, 2001 or at such other place and date as
the Parties may agree in writing, but in no event later than February 22, 2001.
At the Initial Alliance Grant Funding, the Parties shall deliver the documents
and agreements they are required to deliver pursuant to Article IX hereof CFFTI
shall pay [*****************************************************] of the Grant
by wire transfer of immediately available funds to the account specified in
Schedule 2.5(a) (the "Initial Grant Funding Amount"), and the Parties shall
deliver such other documents, agreements and certificates as a Party may
reasonably request in connection with the Initial Alliance Grant Funding.

          (b) Subject to the terms and conditions of this Agreement, CFFTI shall
make additional Grant payments to the Company within [*********] after receipt
of an invoice from the Company therefore delivered in accordance with the
Milestone Grant Funding Plan (but in no event shall CFFTI be required to make a
Grant payment prior to [************************************] specified on the
Milestone Grant Funding Plan) by paying the specified CFFTI Funding Amount by
wire transfer of immediately available funds to the account specified in
Schedule 2.5(a) attached hereto provided that no Technical Failure shall have
occurred as of the date of such payment; and provided, further:

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       12

<PAGE>

          (i) If CFFTI has paid the Initial Grant Funding Amount and each of the
CFFTI Funding Amounts previously invoiced and due in accordance with the terms
hereof, and the Company [***************************************************
***********], then CFFTI will not be obligated to [***************************]
of the Grant or any further CFFTI Funding Amounts that would otherwise be due
pursuant to invoices provided by the Company in accordance with the Milestone
Grant Funding Plan until [************************], at which time CFFTI's
obligation to make [*******] payments of the CFFTI Funding Amounts shall resume
in accordance with the Milestone Grant Funding Plan as revised to reflect the
extension of time, provided CFFTI shall not be relieved of paying any amounts on
the Milestone Grant Funding Plan;

          (ii) If a Company Default [****************] then CFFTI shall not be
obligated to fund any CFFTI Funding Amount that would otherwise be due; and

          (iii) With respect to each CFFTI Funding Amount due immediately
following a Milestone Achievement Date, the invoice related to such CFFTI
Funding Amount shall be accompanied by a certificate on behalf of the Company
stating that the previous related Milestone has been achieved.

2.6 License Fee. On the date on which the Company obtains approval from the FDA
to market and distribute the Products in North America (the "Approval Date"),
the Company shall be obligated to pay to CFFTI an amount in cash in United
States dollars equal to the amount by which [***************************]
exceeds the [********************************] (such excess is referred to
herein as the "License Fee") and upon payment in full of the License Fee, the
license granted to CFFTI under Section 5.1 and all sublicenses thereunder shall
terminate, and CFFTI shall be obligated to transmit to the Company all products
and information and promotional or marketing materials and data relating to the
Products that are in the possession of CFFTI or any sublicensees of CFFTI other
than the Company. The License Fee shall be paid as follows: (i) [*********]
after the Approval Date, the Company shall pay by wire transfer of immediately
available funds to an account designated in writing by CFFTI an amount equal to
the greater of (a) [********] or (b) [******************] of the License Fee,
whichever is higher, and (ii) [******************************], the Company
shall pay by wire transfer of immediately available funds to an account
designated in writing by CFFTI an amount equal to the greater of (a) [********]
or (b) [******************] of the License Fee, whichever is higher (plus
interest accrued through such date on [***] of the License Fee) until the
License Fee (plus all accrued interest thereon) has been paid in full. Interest
on the outstanding balance of the License Fee shall be
[******************************] on the outstanding balance of the License Fee
at [************]. If a Company Default occurs following the Approval Date, the
entire unpaid License Fee shall become immediately due and payable without any
action of CFFTI, and the Company shall immediately pay such amount to CFFTI, and
such overdue amounts shall bear interest at a rate equal to
[********************************].

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       13

<PAGE>

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     As a material inducement to CFFTI to enter into this Agreement and to
consummate the transactions contemplated herein, the Company represents and
warrants to CFFTI as follows:

     3.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good corporate standing under the Laws of the Commonwealth of
Massachusetts. The Company has full corporate power and authority to own and
lease its Properties and carry on its Business and is duly qualified, registered
or licensed as a foreign corporation to do business and is in good standing in
each jurisdiction in which the ownership or leasing of its Properties or the
character of its operations makes such qualification, registration or licensing
necessary except where the failure to be so qualified registered or licensed
would not have a material adverse effect on the Business of the Company. The
Company has previously delivered to CFFTI true, correct and complete copies of
its Charter Documents, as amended to date and as currently in effect.

     3.2 Authority. The Company has the corporate right, power and authority to
carry on the Business and to execute and deliver this Agreement, the Warrants
and each of the other Company Closing Documents required to be executed and
delivered at the Initial Alliance Grant Funding and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and each of the other Company Closing Documents required to be
executed at the Initial Alliance Grant Funding and the consummation of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement, any of the other Company Closing Documents required to
be executed at the Initial Alliance Grant Funding or the consummation of the
transactions contemplated by this Agreement. This Agreement and each of the
other Company Closing Documents required to be executed at the Initial Alliance
Grant Funding have been duly and validly executed by the Company and constitute
legal, valid and binding obligations of the Company, enforceable against the
Company except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights.

     3.3 Capitalization.

          (a) Immediately prior to the Initial Alliance Grant Funding, (i) the
authorized capital of the Company consist of 15,000,000 shares of Common Stock
and 537,500 shares of Preferred Stock, of which 2,836,787 of Common Stock,
450,000 shares of Redeemable Preferred Stock and 87,500 shares of Convertible
Preferred Stock are issued and outstanding. The Company holds no shares of
capital stock of the Company in its treasury. The Company has reserved 3,000,000
shares of Common Stock for issuance under option plans. All of the issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       14

<PAGE>

          (b) From the date hereof, until such time as the Warrants is
exercised, the Company will have authorized and reserved a sufficient number of
shares of Common Stock for issuance upon exercise of the Warrants.

          (c) Except as set forth on Schedule 3.3(c), upon issuance to CFFTI in
accordance with the terms of the Warrants, the Shares will be duly authorized,
validly issued, fully paid, and non-assessable and will be free and clear of any
Encumbrances, preemptive rights, restrictions on use, voting or transfer rights
created by or through the Company other than as set forth in this Agreement, the
Warrants, or the Charter Documents or that arise or exist as a result of Law.

          (d) Except as set forth on Schedule 3.3(d), there are (i) no
outstanding rights, conversion rights, agreements, commitments or preemptive or
other similar rights of any kind relating to the issuance, sale, purchase,
redemption, voting or transfer of any shares of capital stock or other
securities of the Company to which the Company is a party, and (ii) no
outstanding registration rights or voting rights agreements to which the Company
is a party. The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

          (e) Assuming the truth and accuracy in all respects of CFFTI's
representations and warranties set forth in the Investor's Representation Letter
and in Sections 4.2 and 4.3 below as of the date of the Initial. Alliance Grant
Funding, and assuming the truth and accuracy in all respects of CFFTI's
representations and warranties set forth in the Investor's Representation Letter
and in Sections 4.2 and 4.3 below as of the date of issuance of the Shares by
the Company to CFFTI pursuant to the Warrants, the issuance of the Warrants and
the Warrant Shares to CFFTI, are or will be, as the case may be, exempt from the
registration requirements of the Securities Act and the securities laws of the
Commonwealth of Massachusetts and the State of Maryland as such Laws are in
effect as of the date hereof.

     3.4 No Conflict. Except as set forth on Schedule 3.4, neither the execution
and delivery of this Agreement or the Company Closing Documents nor the
consummation of the transactions contemplated hereby and thereby will (a)
violate any provision of the Charter Documents of the Company, (b) violate, be
in conflict with, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, result in the termination
of, accelerate or excuse the performance required by any Person of any of its
obligations under, cause the acceleration of the maturity of any material amount
of debt or material obligation pursuant to or result in the creation or
imposition of any material Encumbrance upon any property of the Company under,
any material contract to which the Company is a party or by which any of its
property is bound or subject such that any such occurrence will have a material
adverse effect on the Company, or (c) subject to compliance with applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and except for compliance with federal and state
securities laws which are separately addressed in Section 3.3(e) above, violate
in any material manner any Material Law or Judgment applicable to the Company or
its Properties.

     3.5 Financial Statements; Undisclosed Liabilities; Indebtedness.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       15

<PAGE>

          (a) The Company's Confidential Offering Memorandum dated [**********]
(the "PPM") contains copies of the audited balance sheets of the Company for the
year ended December 31, 1999 and the related audited statements of operations,
statements of stockholder's equity and statements of cash flows, together with
any related notes thereto, for the year ended December 31, 1999 and (ii) the
unaudited balance sheet of the Company as of September 30, 2000 for the nine
months ended September 30, 2000 (collectively, the "Financial Statements"). Each
of the Financial Statements fairly present in all material respects, as the case
may be, the financial condition, assets and liabilities of the Company as of
date thereof or the Company's results of operations and changes in the Company's
financial position for the period set forth therein. Each of the Financial
Statements was prepared in accordance with GAAP consistently applied during the
relevant period, except as otherwise set forth in the notes thereto and subject,
in the case of the unaudited Financial Statements, to normal and recurring
year-end adjustments and the omission of footnotes.

          (b) Except as disclosed in Schedule 3.5(d), as of the date hereof the
Company has not incurred any material liabilities or material obligations of any
nature, whether or not accrued, absolute, contingent or otherwise, other than
liabilities adequately provided or reserved for in the Financial Statements or
disclosed in any related notes thereto.

          (c) Since September 30, 2000, there has been no material adverse
change in the Business of the Company, or any damage or impairment to, or
destruction or loss, sale, assignment, transfer, lapse or Encumbrance of any
Intellectual Property (whether or not covered by insurance) that could
reasonably be expected to have a material adverse effect on the Development
Activities.

     3.6 Litigation. There is no litigation, arbitration, claim, action, suit,
governmental or other proceeding (formal or informal) to which the Company is a
party or to the knowledge of the Company, investigation pending or, threatened
against or affecting the Company, its Business or the Intellectual Property that
could reasonably be expected to have a material adverse effect on the
Development Activities or that could reasonably be expected to affect in a
material adverse manner the ability of the Company to comply in all material
respects with its obligations under this Agreement.

     3.7 Intellectual Property.

          (a) Trademarks. Schedule 3.7(a) sets forth as of the date hereof an
accurate, correct and complete list of all United States trademarks, trademark
applications, trademark registrations, brand names, and trade names owned or
licensed by the Company that relate to the Products (the "Trademarks") and no
other Person has been granted by the Company (or to the knowledge of the
Company, has been granted by any other Person) any rights, or has any interest,
in such. The Company owns and possesses all right, title and interest, or holds
a valid license, in and to the Trademarks. No claim has been asserted or, to the
knowledge of the Company, threatened by any Person regarding the use or
licensing by the Company of the Trademarks. To the knowledge of the Company, its
use of the Trademarks does not violate or infringe, and has not in the past
violated or infringed, in each ease in any material manner the rights of any
Person and no material claims have been asserted by the Company against any
other Person claiming infringement of its Trademarks.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       16

<PAGE>

          (b) Patents and Know-how. Schedule 3.7(b) sets forth as of the date
hereof an accurate, correct and complete list of patents and patent applications
owned or licensed by the Company that are reasonably necessary to the
development, testing or use of the Products (the "Patent Rights"). The Company
owns and possesses all right, title and interest, or holds a valid license, in
and to the Patent Rights. No claim has been asserted or, to the knowledge of the
Company, threatened by any Person regarding the use or licensing by the Company
of the Patent Rights. To the knowledge of the Company, its use of the Patent
Rights does not violate or infringe, and has not in the past violated or
infringed, in each case in any material manner the rights of any Person and no
material claims have been asserted by the Company against any other Person
claiming infringement of the Patent Rights.

          (c) All rights and licenses to the Intellectual Property and
Improvements that are reasonably necessary or useful for making, using or
selling the Products have been licensed to CFFTI pursuant to Section 5.1
hereunder.

          (d) Other than as set forth in (a) (b) and (c) hereinabove, the
Company makes no representations or warranties with respect to the Intellectual
Properly. Without limiting the generality of the foregoing, the Company does not
warrant the results of the Development Activities or that the Patent Rights or
Intellectual Property will be fit for a particular purpose or merchantable or
will not violate or infringe the rights of any third parties.

     3.8 No Brokers, Finders or Investment Bankers. Neither the Company nor to
its knowledge any of its executive officers or directors has employed any broker
or finder or investment banker or incurred any liability which remains
unsatisfied for any brokerage or finder's fees or commissions or similar
payments in connection with this Agreement or the transactions contemplated by
this Agreement for which CFFTI could become liable.

     3.9 Subsidiaries. Other than Altus Biocatalysis, Inc., a Delaware
corporation ("Altus Biocatalysis"), the Company has no subsidiaries. Altus
Biocatalysis was incorporated as a wholly owned subsidiary of the Company. Altus
Biocatalysis is not currently engaged in and has never been engaged in any
business nor does it own any assets or property.

     3.10 Compliance with Law. The Company has conducted its Business in all
material respects in compliance with applicable.

     3.11 Assets. To the Company's knowledge, the Company owns or has a valid
right to use all material Property that is used by the Company to conduct its
business as presently conducted except where the failure to own or have a valid
right to use would not have a material adverse effect on the Business of the
Company.

     3.12 Affiliates. Except for contracts and transactions with [*******
**************************] or its officers or directors described in the PPM or
listed on Schedule 3.3(d) or 3.5(b) and for employment or employment related
benefits, the Company is not party to any material contracts with any
Affiliates.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       17

<PAGE>

                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF CFFTI

     As a material inducement to the Company to enter into this Agreement and to
consummate the transactions contemplated herein, CFFTI represents and warrants
to the Company as follows:

     4.1 Organization; Authorization; No Conflict. CFFTI is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Maryland. CFFTI is an Affiliate of the Cystic Fibrosis Foundation ("CFF").
CFFTI has full corporate, right, power and authority to execute and deliver this
Agreement, the Registration Rights Agreement, and the Warrants and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrants and the
consummation of the transactions contemplated hereby and thereby and the
acceptance of the Warrants have been duly and validly authorized by all
necessary corporate action on the part of CFFTI and the CFF and no other
proceedings are necessary on the part of CFFTI or the CFF to authorize this
Agreement, the Registration Rights Agreement, or the Warrants or the
consummation of the transactions contemplated by this Agreement, the Warrants or
the Registration Rights Agreement. This Agreement, the Registration Rights
Agreement and the Warrants and have been duly and validly executed by CFFTI and
constitute the legal, valid and binding obligations of CFFTI enforceable against
CFFTI in accordance with their respective terms. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the
Warrants by CFFTI and the consummation of the transactions contemplated hereby
and thereby do not and will not (a) require the consent of any Person that has
not been obtained; (b) violate any provision of the Charter Documents of CFFTI;
(c) violate, conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate or excuse the performance required by any Person
of any of its obligations under, cause the acceleration of the maturity of any
material amount of debt or material obligation pursuant to or result in the
creation or imposition of any material Encumbrance upon any Property of CFFTI
under, any material contract to which CFFTI is a party or by which it or its
Property is bound or subject such that any such occurrence will have a material
adverse effect on CFFTI or violate in any material manner any material Law or
any Judgment applicable to CFFTI or its Properties. CFFTI has previously
provided to the Company true, correct and complete copies of its Charter
Documents, as amended to date and as currently in effect.

     4.2 Investment Representations. CFFTI is acquiring the Warrants and the
Shares for its own account, for investment, and not with a view to, or for sale
in connection with, the distribution thereof or of any interest therein. CFFTI
is an accredited investor as such term is defined in Rule 501(a) of the
Regulation D promulgated under the Securities Act. Without limiting the
foregoing, CFFTI has adequate net worth and means of providing for its current
needs and contingencies and is able to sustain a complete loss of the investment
in the Company as contemplated by this Agreement and in the Warrants, has no
need for liquidity in such investment and its illiquid investments are not
excessive given its liabilities, current needs, net worth and business. CFFTI
was not formed for the purpose of acquiring the Warrants or the Shares. CFFTI
has sufficient knowledge and experience in financial and business matters to be

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       18

<PAGE>

capable of evaluating the merits and risks of an investment in the Company as
contemplated by this Agreement and the investment represented by the Warrants
and the Shares, and CFFTI has evaluated the merits and risks of the investment
in the Company as contemplated by this Agreement and investment represented by
Warrants and the Shares. CFFTI understands that the offer and sale of the
Warrants and the Shares has not been and will not be registered under the
Securities Act, that the Warrants and the Shares have not been and will not be
registered under applicable state securities Laws and that the Warrants and the
Shares may not be sold or otherwise disposed of unless registered under the
Securities Act and applicable state securities Laws or disposed of pursuant to
an exemption thereto.

     4.3 CFFTI's Acknowledgment as to Information. CFFTI has received from the
Company such information as CFFTI has deemed necessary and relevant in
connection with the transactions contemplated by this Agreement, the Warrants,
and the Warrant Shares and CFFTI has had the opportunity to ask questions of and
receive answers from persons acting on behalf of the Company necessary to verify
the information so obtained.

     4.4 Litigation. There is no litigation, arbitration, claim, action, suit,
governmental or other proceeding (formal or informal), to which CFFTI or CFF is
a party or to the knowledge of CFFTI, investigation pending or, threatened
against or affecting CFFTI or CFF, the business of CFFTI as currently conducted
or as proposed to be conducted in the future and the operations, and assets of
CFFTI or CFF that could reasonably be expected to have a material adverse effect
on the funding of the Grant or that could reasonably be expected to affect in a
material adverse manner the ability of CFFTI to comply in all material respects
with its obligations under this Agreement.

     4.5 No Brokers, Finders or Investment Bankers. Neither CFFTI nor to its
knowledge any of its Affiliates, executive officers or directors has employed
any broker or finder or investment banker or incurred any liability which
remains unsatisfied for any brokerage or finder's fees or commissions or similar
payments in connection with this Agreement or the transactions contemplated by
this Agreement for which CFFTI could become liable.

                                    ARTICLE V

                                    LICENSES

     5.1 CFFTI License.

          (a) Grant of License to CFFTI. Subject to all the terms and conditions
of this Agreement, the Company hereby confers upon CFFTI an exclusive,
[*************************] license to practice and use the Intellectual
Property and all Improvements thereon in order to make, use, or sell the
Products (the "Licensed Products"), for all uses and in all applications and
indications within North America, and except as provided in Section 5.2, the
Company shall not use the Licensed Products within North America for any
purpose. The license granted in this Section 5.1 includes [*****************
***********************************************************************] within
North America, subject to the conditions on CFFTI's license under Section 5.1 of
this Agreement and retained rights of the Company under Section 5.4 of this
Agreement. To the extent that the

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       19

<PAGE>

Licensed Products includes copyrights in software and other documentation, CFFTI
shall have the right to make, retain and use such copies of the software and
documentation as are reasonably necessary to exercise its rights hereunder.

          (b) Conditions of License. As a material condition of the license
granted in this Section 5.1, CFFTI shall, and shall require any of its
sublicensees to provide the Company with copies of any clinical data that the
Company does not already have, which results from testing, use or sale of the
Products in North America, within [********] of the receipt of such data by
CFFTI or its sublicensee, and throughout the term of this license, the Company
shall provide CFFTI with [******************************], use, or sale of the
Products outside of North America, and in North America, if the sublicense
granted under Section 5.2 is in effect, within sixty days of the preparation or
receipt of such data by the Company or its sublicensee.

          (c) Termination of License. The license granted in this Section 5.1
shall terminate on the first to occur of (i) [********************************
*************], (ii) [***************************************] (iii) the date on
which CFFTI terminates this Agreement under Section 10.1(c), (iv) the date on
which a [****************************], (v) the date on which the Patties
mutually agree not to proceed with Development Activities following the
occurrence of an Unresolved Deadlock Event, or (vi) upon the occurrence of a
[*************************] with respect to [***].

     5.2 Company Sublicense. Subject to all the terms and conditions of this
Agreement, CFFTI, hereby confers upon the Company an exclusive
[********************] sublicense of equal scope to the license in Section 5.1
hereinabove, to make, use, or sell the Licensed Products for
[*******************************] within North America [*************]. The
sublicense granted in this Section 5.2 shall terminate on the first to occur of
(a) [******] on which the [****************************] terminates, or (b) the
date of a [*************]. Any sublicense granted hereunder shall be restricted
by the restrictions and conditions of this Company sublicense.

     5.3 Joint License. Subject to the terms and conditions of this Agreement,
each of CFFTI and the Company agree that upon termination of the license and
sublicense granted pursuant to Sections 5.1 and 5.2, respectively, because of a
Technical Failure or because the Parties mutually agree following the occurrence
of an Unresolved Deadlock Event not to proceed with Development Activities (a
"Joint License Event"), the Licensed Products shall be licensed jointly, and
hereby is exclusively licensed jointly, to each of CFFTI and the Company
[**************************************************] within North America. All
actions and decisions with respect to the Licensed Products following a Joint
License Event shall be made [******************************], and in the event
that the Licensed Products is sublicensed, sold, or otherwise transferred for
value by mutual agreement of the Parties, all proceeds received or receivable in
such transaction shall be allocated and distributed as follows:

          (a) First, [******************] has received an amount in cash and/or
cash equivalents equal to [********************************************] as of
the date of such Joint License Event (the "Funded Grant Amount");

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       20

<PAGE>

          (b) Second, [**************************] has received an amount in
cash and/or cash equivalents equal to [*****************************************
*********] during the term of this Agreement for the Products and Development
Activities as of the date of such Joint License Event;

          (c) Third, [****************] has received an amount in cash and/or
cash equivalents equal to (i) [**********************], less (ii) [***********
****************] as of the date of the initial disbursements under this Section
5.3(c) and (B) [*********************], and

          (d) Fourth, all remaining proceeds shall be distributed to the
[*****].

     5.4 Retained Rights of the Company. Notwithstanding the grant of any
license to CFFTI under Section 5.1 or 5.3, or the termination of the Sublicense
granted to the Company under Section 5.2, the Company shall retain all rights,
title, licenses and interest in and to the Intellectual Property and
Improvements outside of CFFTI's license to the Licensed Products for North
America. or the Joint License, respectively, if either of such licenses is in
effect, and the Company shall retain the right to use the Licensed Products and
all data relating to or arising from the Licensed Products for all uses and in
all applications and indications, provided that any products resulting therefrom
shrill be distributed or sold by the Company solely outside of North America,
and the Company shall retain the rights to use Trademarks for products and
purposes unrelated to the Licensed Products.

     5.5 Prosecution; Encumbrances; Other Matters. Until the sublicense granted
pursuant to Section 5.2 terminates, (a) the Company shall pursue, prosecute and
maintain any Intellectual Property protections, including registrations, with
respect to the Licensed Products in the United States [*******************
*****************************], (b) the Company shall not create, permit or
suffer to exist, and will defend the Licensed Products against and take such
other action as is reasonably necessary to remove any Encumbrance on the
Licensed Products created by or through the Company (other than any Encumbrances
created by this Agreement or disclosed to CFFTI in Schedule 5.5 hereto), or
created in the ordinary course of business of the Company; (c) the Company shall
be required to make [*********] payments with respect to the Licensed Products
(including without limitation, payments in respect of licenses, regulatory
filings and applications, taxes, royalties and other sums that may become due in
respect of the Licensed Products), and (d) CFFTI may, but shall not be required
to, take any steps CFFTI reasonably deems necessary or appropriate to preserve
any Licensed Products or any rights against third parties to any of the Licensed
Products, at any time when the Company has failed to do so, provided CFFTI has
first provided the Company with written notice of the action CFFTI reasonably
deems necessary or appropriate to preserve any Licensed Products or any rights
against third parties to any of the Licensed Products, and [**************], or
such earlier time as is necessary in order that CFFTI rights are not prejudiced
by delay the Company has not taken the said action or a reasonable alternative
course of action, and the [************************************************],
all documented, reasonable expenses incurred in connection therewith. Until the
license granted pursuant to Section 5.1 terminates CFFTI shall not create,
permit or suffer to exist, and will defend the Licensed Products against and
take such other action as is necessary to remove any Encumbrance on the

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       21

<PAGE>

Licensed Products created by or through CFFTI other than the Encumbrances
created by this Article V or in the ordinary course of business of CFFTI.

     5.6 Further Assurances. Each of the Parties shall give, execute, deliver,
file and/or record such notices, instruments, documents, agreements or other
papers that may be necessary or desirable (in the reasonable judgment of the
other Party) to create, preserve, perfect or validate the license, sublicense
and, if applicable, joint license granted pursuant hereto or to enable each of
the Parties to exercise and enforce its respective rights under this Article V.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

     6.1 Company Default. For purposes of this Agreement, a "Company Default"
shall occur upon any of the following events:

          (a) specified Milestone to have been satisfied by a specified
Milestone Achievement Date (as amended from time to time by the ASC pursuant to
Section 2.2(b)(i) hereinafter) is not satisfied other than [******
****************************************************************************].
A Company Default will not occur if after the Company's failure to satisfy a
Milestone by the end of the applicable Grace Period, this Agreement has not been
terminated pursuant to and in accordance with its terms and [******
********************************************] with respect to the specified
Milestone;

          (b) an Unresolved Deadlock Event shall have occurred, and, provided
that no Technical Failure then exists and the Parties have not agreed in writing
to terminate this Agreement, thereafter the Company determines not to proceed
with Development Activities;

          (c) any material default by the Company in the performance of any of
its covenants or agreements in this Agreement that is not cured within
[*************] after written notice from CFFTI of the same (it shall be a
material default under this section if the license purported to be granted by
Section 5.1 shall fail to be exclusive or otherwise in full force or effect in
all material respects (other than in accordance with the terms of this
Agreement));

          (d) a case or proceeding under the bankruptcy Laws of the United
States of America now or hereafter in effect is filed against the Company or all
or substantially all its Property and such petition or application is not
dismissed within [******] after the date of its filing or the Company shall file
any answer admitting or not contesting such petition or application; or

          (e) a case or proceeding under the bankruptcy Laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
Law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by the Company for all or substantially all of its Property.

     6.2 Consequences of a Company Default. Upon the occurrence of a Company
Default, and at any time thereafter unless and until such Company Default has
been waived by

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       22

<PAGE>

CFFTI or cured to the reasonable satisfaction of CFFTI, CFFTI may terminate the
sublicense in Section 5.2 immediately, and CFFTI may take any such action as
CFFTI may have been afforded expressly hereunder or under any other contract or
agreement at any time and exercise such other rights as CFFTI may have pursuant
to applicable Laws, including without limitation a legal action seeking damages
pursuant to the arbitration provisions set forth in Section 11.10.
Notwithstanding a Company Default, CFFTI shall retain all rights to the
Warrants, and all licenses in and to Licensed Products in North America granted
pursuant to Section 5.1 hereunder, subject to the conditions set out in Section
5.1 and the Company's retained rights as set out in Section 5.4 hereunder.

     6.3 CFFTI Default. For purposes of this Agreement, a "CFFTI Default" shall
occur upon any of the following events:

          (a) CFFTI shall fail to make any Grant payment on the date due after
giving effect to the provisions of Section 2.5(b);

          (b) any other material default by CFFTI in the performance of any of
its covenants or agreements in this Agreement that is not cured within
[*************] after notice from the Company of the same (it shall be a
material default under this section if the sublicense purported to be granted by
Section 5.2 shall fail to be exclusive or otherwise in full force or effect in
all material respects (other than in accordance with the terms of this
Agreement));

          (c) a case or proceeding under the bankruptcy Laws of the United
States of America now or hereafter in effect is filed against CFFTI or all or
substantially all its Property and such petition or application is not dismissed
within [******] after the date of its filing or CFFTI shall file any answer
admitting or not contesting such petition or application; or

          (d) a case or proceeding under the bankruptcy Laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
Law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by the Company for all or substantially all of its Property.

     6.4 Consequences of a CFFTI Default. Upon the occurrence of a CFFTI Default
and at any time thereafter unless and until such CFFTI Default has been waived
by the Company or cured to the reasonable satisfaction of the Company, (i) the
license granted by the Company pursuant to Section 5.1 hereunder shall
immediately terminate and the Company may, in its sole discretion, assume or
terminate any sublicenses granted thereunder by CFFTI, (ii) all rights to
[***************************************************************************
******] shall terminate immediately, and (iii) the Company may take any such
other action that the Company may have been afforded expressly hereunder or
under any other contract or agreement at any time and exercise such other rights
as the Company may have pursuant to applicable Law, including without
limitation, a legal action seeking damages pursuant to the arbitration
provisions set forth in Section 11.10 hereof.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       23

<PAGE>

                                   ARTICLE VII

                    CONFIDENTIALITY; PUBLICATIONS ; PUBLICITY

     7.1 Confidentiality. Each of the Parties hereto acknowledges that it may
have access to materials and information of the other Party that is
confidential, and that certain data, results, plans, and information arising
from and relating to the Development Activities and the Products may be
confidential (the "Confidential Material"). Each Party receiving Confidential
Material agrees to keep confidential the Confidential Material and all
information therein, and agrees to treat the same with the same degree of
protection it would afford to its own Confidential Material, and shall require
its employees, agents and representatives to do so, and neither Party shall use
or disclose the Confidential Material or the information therein in any way or
for any purposes other than as is reasonably necessary to accomplish the
purposes of this Agreement. Notwithstanding the foregoing, the term Confidential
Material does not include information that (a) is or becomes publicly available
other than through breach of this provision, (b) is already known to a Party at
the time of disclosure or is independently developed by a Party without
reference to the Confidential Material as demonstrated by business records, (c)
is received by a Party from a third party not under a duty of confidentiality to
the other Party. Each of the Parties agrees to take reasonable precautions to
safeguard the Confidential Material from disclosure to anyone other than
appropriate employees, officers, directors, partners and representatives,
including auditors and attorneys, of such Party, which Persons shall be advised
of the confidential nature of the material. In the event that a Party or any of
its representatives receives a request or demand to disclose all or any part of
the Confidential Material under the terms of a subpoena or order issued by a
court of competent jurisdiction or otherwise, the receiving Party shall notify
the other Party of the existence, terms and circumstances surrounding such
request or demand so that the other Party may seek a protective order or other
appropriate relief or remedy or waive compliance with the terms hereof and if,
in the opinion of receiving Party's counsel, disclosure by receiving Party of
all or any part of the Confidential Material is required by Law, the receiving
Party shall notify the other Party of the proposed disclosure, and disclose only
such Confidential Material which is required by Law (in the reasonable opinion
of the disclosing Party's counsel) to be disclosed.

     7.2 Public Announcements. The Company and CFFTI shall consult with, and
obtain the prior approval of the other, which shall not be unreasonably withheld
or delayed, before issuing any press release or otherwise making any public
statements with respect to the Product, CFFTI or the transactions contemplated
hereby. Notwithstanding the foregoing, this Section 7.2 shall not preclude any
Party from issuing such press releases, making such other public statements or
making such filings with or applications to governmental bodies with respect to
the transactions contemplated hereby, as such Party in, good faith believes to
be required under applicable Law; provided that reasonable prior notice of the
content thereof and of the basis for such belief shall be provided to the other
Party.

     7.3 Publications. Subject to Sections 7.1 and 7.2, in the event the Parties
hereto wish to publish any research papers relating to the Product or the
Development Activities, representatives of the Parties may be co-authors of such
papers, subject to customary scientific practices; provided however, each
Party's contribution to the research described in such papers will be
acknowledged in all such papers, regardless of authorship. To afford each of the
Parties

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       24

<PAGE>

an opportunity to determine that no Confidential Material of such Party is
disclosed in any proposed publications, whether written or oral (including
without limitation, presentations to a journal or editor or other written
materials, abstracts, presentations to a seminar, meeting or other third party
or any other oral disclosure or abstract) and that patent filings or other
Intellectual Property Rights will not be jeopardized, and to keep each Party
informed of upcoming disclosures, each Party will provide the other with an
advance copy of any proposed publication or abstract relating to the Products at
least [**************] prior to submission of such manuscript or [**************
**] prior to presentation if such publication is to be made orally. At the
non-publishing Party's request, the publishing Party will delay submitting such
manuscripts and will cooperate by making any such redactions or revisions to the
proposed publications that will allow the non-publishing Party to take such
steps it deems necessary to file patent applications or otherwise protect its
Confidential Material and Intellectual Property Rights.

                                  ARTICLE VIII

                          INDEMNIFICATION AND INSURANCE

     8.1 CFFTI Indemnification. CFFTI agrees to defend, indemnify and hold the
Company and its Affiliates and their respective directors, officers, employees,
agents and shareholders, harmless from and against any losses, costs, claims,
liabilities or expenses (including reasonable attorney's fees and expenses of
litigation) claimed by Persons not covered by this indemnification arising out
of or in connection with the research and development, manufacture, use,
promotion, marketing, sale or other distribution of the Products by CFFTI or its
Affiliates or licensees if the sublicense granted pursuant to Section 5.2 is
terminated pursuant to Section 5.2(b), except to the extent that such claims
result from the negligence or willful misconduct of the Company or its
Affiliates and any of their respective officers, directors, employees or agents.

     8.2 Company Indemnification. The Company agrees to defend, indemnify and
hold CFFTI and its Affiliates and their respective directors, officers,
employees and agents, harmless from and against any losses, costs, claims,
liabilities or expense (including reasonable attorney's fees and expenses of
litigation) claimed by Persons not covered by this indemnification arising out
of or in connection with the research and development, manufacture, use,
promotion, marketing, sale, or other distribution of the Products by the Company
or its Affiliates, except to the extent that such claims result from the
negligence or willful misconduct of CFFTI or its Affiliates and any of their
respective officers, directors, employees or agents, it being the intent of the
Parties that the Company be the developer and study sponsor of the Products and
that CFFTI shall have no legal or other obligations to any Person in respect of
the development or use of the Products unless and until the sublicense granted
pursuant to Section 5.2 is terminated pursuant to Section 5.2(b).

     8.3 Procedure. The Parties agree to promptly notify each other of any claim
or liability subject to this Article 8. The indemnifying Party will have the
right to [*****] the defense thereof with counsel of its choice; provided
however, that the indemnified Party will have the right to retain
[*************] at its own expense for any reason. The indemnified party will
cooperate with the indemnifying Party and its legal representatives in the
investigation

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       25

<PAGE>

of any action, claim or liability covered by this Article 8. The indemnified
Party will not, except at its own cost, voluntarily make any payment or incur
any expense with respect to any claim or suit or settle any indemnified action,
claim or liability covered by this Article 8 without the prior written consent
of the indemnifying Party.

     8.4 Insurance. The Parties will maintain insurance with financially sound
and reputable insurance companies or associations in such amounts and covering
such risks as are usually carried by companies engaged in a similar business and
owning similar Properties in the same general geographical areas in which the
respective Parties operate.

                                   ARTICLE IX

                              CONDITIONS PRECEDENT

     9.1 Conditions to Obligations of the Company at the Initial Grant Funding.
The obligation of the Company to consummate the transactions which pursuant to
the terms hereof shall be effected at the Initial Alliance Grant Funding is
subject to the satisfaction or waiver at the Initial Alliance Grant Funding of
the conditions set forth below. The benefit of these conditions is for the
Company only and may be waived in writing by the Company at any time in its sole
discretion.

          (a) Accuracy of Representations and Warranties of CFFTI. Each of the
representations and warranties of CFFTI contained herein shall be true and
correct in all material respects at and as of the Initial Alliance Grant Funding
Date.

          (b) Performance by CFFTI. At or before the Initial Alliance Grant
Funding, CFFTI shall have performed, satisfied and complied with, in all
material respects, all covenants, agreements and conditions required to be
performed by it under this Agreement at or before the Initial Alliance Grant
Funding.

          (c) Deliveries by CFFTI at the Initial Alliance Grant Funding. At or
before the Initial Alliance Grant Funding, CFFTI will deliver, or cause to be
delivered, to the Company, against delivery of a certificate representing the
Warrants duly registered in the name of CFFTI,

          (i) the Initial Grant Funding Amount in accordance with Section
2.5(a);

          (ii) a copy of the Registration Rights Agreement duly executed by
CFFTI;

          (iii) a copy of the warrants duly executed by CFFTI;

          (iv) a copy of the Certificate of Incorporation of CFFTI, certified by
the Secretary of State of Maryland not more than thirty (30) days prior to the
Initial Alliance Grant Funding Date;

          (v) a certificate, dated as of the Initial Alliance Grant Funding
Date, executed by the Secretary of CFFTI and certifying (A) that the Certificate
of Incorporation of CFFTI has not been amended since the date of the certified
copy of such Certificate of Incorporation delivered pursuant to (iv) above; (B)
that attached thereto are (x) true, complete and correct

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       26

<PAGE>

copies of the by-laws of CFFTI, as in full force and effect on the Initial
Alliance Grant Funding Date and (y) true, complete and correct copies of the
resolutions of the Board of Directors of CFFTI authoring the execution, delivery
and performance of this Agreement, the Registration Rights Agreement, the
Warrants and the transactions contemplated by this Agreement and by such other
agreements, which resolutions were duly adopted, are in full force and effect
and have not been rescinded or amended as of the Initial Alliance Grant Funding
Date; and (C) as to the incumbency and specimen signatures of officers of CFFTI
who shall have executed instruments, agreements and other documents in
connection with the transactions contemplated by this Agreement;

          (vi) a certificate, dated as of the Initial Alliance Grant Funding
Date, executed by the Secretary of the CFFTI and certifying (i) true, complete
and correct copies of the resolutions of the Board of Directors of CFFTI
authorizing the execution, delivery and performance by CFFTI of this Agreement,
the Registration Rights Agreement, the Warrants and the transactions
contemplated by this Agreement and by such other agreements and evidencing the
commitment of CFF to lend assistance to CFFTI in the performance of CFFTI's
obligation under the Agreement including a commitment to fund CFFTI in a manner
sufficient to enable CFFTI to perform its payment obligations under this
Agreement and (ii) the Affiliate relationship between CFF and CFFTI, which
resolutions were duly adopted, are in full force and effect and have not been
rescinded or amended as of the Initial Alliance Grant Funding Date;

          (vii) an opinion of counsel to CFFTI in form and substance reasonably
satisfactory to the Company dated as of the Initial Alliance Grant Funding Date;
and

          (viii) and the Investor's Representation Letter dated as of the
Initial Alliance Grant Funding Date (in the form of Exhibit 9.1 hereto) duly
executed by CFFTI.

     9.2 Conditions to Obligations of CFFTI at the Initial Alliance Grant
Funding. The obligation of CFFTI to consummate the transactions which pursuant
to the terms hereof shall be effected at the Initial Alliance Grant Funding is
subject to the satisfaction or waiver at or as of the Initial Alliance Grant
Funding of the conditions set forth below. The benefit of these conditions is
for CFFTI only and may be waived in writing by CFFTI at any time in its sole
discretion.

          (a) Accuracy of Representations and Warranties of the Company. Each of
the representations and warranties of the Company contained herein shall be true
and correct in all material respects at and as of the Initial Alliance Grant
Funding Date.

          (b) Performance by the Company. At or before the Initial Alliance
Grant Funding, the Company shall have performed, satisfied and complied with, in
all material respects, all covenants, agreements and conditions required to be
performed by it under this Agreement at or before the Initial Alliance Grant
Funding.

          (c) Registration Rights Agreement. The Company and CFFTI shall have
entered into a registration rights agreement in form and substance as set forth
in Exhibit 8.3(d) attached hereto (the "Registration Rights Agreement"), and
such Registration Agreement shall be in full force and effect as of the Initial
Alliance Grant Funding.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       27

<PAGE>

          (d) Warrants. The Company and CFFTI shall have executed and the
Company shall deliver the Warrants to CFFTI and such Warrants shall be in full
force and effect as of the Initial Grant Alliance Funding.

          (e) Documents and Deliveries by the Company at the Initial Alliance
Grant Funding. At or before the Initial Alliance Grant Funding, the Company
shall have delivered to CFFTI each of the following:

          (i) a certificate, dated as of the Initial Alliance Grant Funding
Date, executed the President of the Company, certifying that (A) the
representations and warranties of the Company set forth in this Agreement are
true and correct as of the Initial Alliance Grant Funding Date, and (B) the
Company has performed and complied with all agreements, covenants and conditions
contained in this Agreement required to be performed and complied with by it at
or prior to the Initial Alliance Grant Funding;

          (ii) a copy of the Certificate of Incorporation of the Company,
certified by the Secretary of State of the Commonwealth of Massachusetts not
more than thirty (30) days prior to the Initial Alliance Grant Funding Date;

          (iii) a certificate, dated as of the Initial Alliance Grant Funding
Date, executed by the Assistant Clerk of the Company and certifying (A) that the
Certificate of Incorporation of the Company has not been amended since the date
of the certified copy of such Certificate of Incorporation delivered pursuant to
(ii) above; (B) that attached thereto are (x) true, complete and correct copies
of the by-laws of the Company, as in full force and effect on the Initial
Alliance Grant Funding Date and (y) true, complete and correct copies of the
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, each of the other Company Closing
Documents and the transactions contemplated by this Agreement, which resolutions
were duly adopted, are in full force and effect and have not been rescinded or
amended as of the Initial Alliance Grant Funding Date; and (C) as to the
incumbency and specimen signatures of officers of the Company who shall have
executed instruments, agreements and other documents in connection with the
transactions contemplated by this Agreement; and

          (iv) an opinion of counsel to the Company in form and substance
reasonably satisfactory to CFFTI dated, as of the Initial Alliance Grant Funding
Date.

                                    ARTICLE X

                                   TERMINATION

     10.1 CFFTI Right to Terminate. Notwithstanding anything to the contrary set
forth in this Agreement, subject to Section 10.4, CFFTI's obligations under this
Agreement (including without limitation its obligations to fund the Grant or any
particular CFFTI Funding Amount) may be terminated by CFFTI by written notice to
the Company as follows:

          (a) if all the conditions to the Initial Alliance Grant Funding shall
not have occurred or been waived by February 22, 2001; and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       28

<PAGE>

          (b) at any time upon the occurrence of a Company Default that has not
been cured by the Company or waived by CFFTI; provided however that upon the
occurrence of a Bankruptcy Event of Default with respect to the Company, CFFTI's
obligation to fund the Grant and any particular CFFTI Funding Amount hereunder
shall terminate immediately without any further action of CFFTI.

          (c) within [**************] after the Phase IIb Milestone Date, CFFTI
may terminate this Agreement in its sole discretion without cause by sending a
written notice of termination to the Company. Such termination shall not be
deemed a CFFTI Default provided that: (i) CFFTI pays the Company within
[**************] of the date of such notice, an amount that is the [************
********************************************] Warrant B and in the form attached
hereto as Exhibit 2.3(b)(ii) as of the date of such termination, or (ii) the
Parties agree in writing to a reasonable alternative course of action. Upon such
termination, CFFTI's license under Section 5.1 and rights to License Fees will
terminate immediately, provided however, after the Approval Date, in the event
of sales of the Products, the Company will pay royalties
[**********************************************] to CFFTI, by paying to CFFTI
[****************] of Net Sales, provided, however, if the Company sells or
distributes the Products through [***********************************], the
Company will pay CFFTI [*****************] of any royalties on Net Sales
received therefrom by the Company, in either case pursuant to a payment schedule
to be agreed upon by the Parties. Each payment made by the Company to CFFTI
hereunder shall be accompanied by a written report summarizing the data used to
calculate the amounts paid, including the amount of Net Sales and supporting
information reasonably necessary to determine royalties due.

     10.2 Company's Right to Terminate. Notwithstanding anything to the contrary
set forth in this Agreement, subject to Section 10.4, the Company's obligations
under this Agreement may be terminated by the Company by written notice to CFFTI
as follows:

          (a) upon the occurrence of a CFFTI Default that has not been cured by
CFFTI or waived by the Company provided however, that upon the occurrence of a
Bankruptcy Event of Default with respect to CFFTI this Agreement and the license
under Section 5.1 shall immediately terminate without any further action of the
Company.

     10.3 Other Terminations of Agreement. Notwithstanding anything to the
contrary set forth in this Agreement but subject to Section 10.4 hereinbelow:

          (a) The Company and CFFTI may terminate this Agreement by mutual
written consent (whether after an Unresolved Deadlock Event shall have occurred
the Parties determine not to proceed with Development Activities or otherwise);

          (b) This Agreement shall automatically terminate and have no further
force and effect upon the occurrence of a Technical Failure.

     10.4 Consequences of Termination. In the event of a termination pursuant to
Section 10.1, 10.2 or 10.3, this Agreement shall terminate in its entirety and
be of no further force or effect; provided however that the provisions of
Articles VII, VIII (other than Section 8.4), and this Section 10.4 shall survive
any such termination; and provided further that in the event of a

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       29

<PAGE>

termination pursuant to Section 10.1(b), Article V and Article VI (with respect
to the consequences of such termination) and Section 11.10 (with respect to the
consequences of such termination) shall also survive such termination; and
provided further that in the event of a termination pursuant to Section 10.1(c),
Section 10.1(c) shall survive any such termination and provided further that in
the event of a termination pursuant to Section 10.2, Article VI (with respect to
the consequences of such termination) and Section 11.10 (with respect to the
consequences of such termination) shall also survive such termination; and
provided further that in the event of a termination pursuant to Section 103(b)
or if after an Unresolved Deadlock Event shall have occurred the Parties
determine not to proceed with Development Activities, Article V shall survive
such termination.

                                   ARTICLE XI

                                  MISCELLANEOUS

     11.1 Notices. Any notice, request, information or other document to be
given under this Agreement to any Party by any other Party shall be in writing
and delivered personally, sent by registered or certified mail, postage prepaid,
delivered by a nationally recognized overnight courier service or transmitted by
facsimile machine to such Party at the following addresses or facsimile numbers
(or at such other address or facsimile numbers that a Party may specify by like
notice):

     If to the Company, to:

          Altus Biologics Inc.
          625 Putnam Avenue
          Cambridge, MA 10239
          Attention: Peter Lanciano, President
          Telephone No.: (617) 577-6488
          Telecopier No.: (617) 577-6502

     with a copy to:

          Mintz Levin Cohn Ferris Glovsky and Popeo, PC
          One Financial Center
          Boston, Massachusetts 02111
          Attention: Kim E. Rosenfield
          Telephone No.: (617) 832-6098
          Telecopier No.: (617) 542-2241

     If to CFFTI:

          Cystic Fibrosis Foundation Therapeutics, Inc.
          6931 Arlington Road
          Bethesda, MD 20814
          Attention: Dr. Robert Beall, President
          Telephone No.: (301) 907-2541
          Telecopier No.: (301) 907-2699

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       30

<PAGE>

     with a copy to:

          Swidler Berlin Shereff Friedman, LLP
          3000 K Street, N.W., Suite 300
          Washington, DC 20007
          Attention: Kenneth I. Schaner, Esq.
          Telephone No.: (202) 424-7518
          Telecopier No.: (202) 424-7643

     11.2 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.

     11.3 Expenses. Except as otherwise provided herein, each Party agrees to
pay all costs incurred by it in connection with the negotiation, execution and
closing of any of the transactions contemplated by this Agreement, including
without limitation, all out-of-pocket costs, accounting fees and legal fees.

     11.4 No Waiver. The failure of a Party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that Party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.

     11.5 Severability; Integrated Transaction. In the event any one or more
provisions of this Agreement is held to be invalid or unenforceable in any
respect, in whole or in part, such illegality or unenforceability shall not
affect the validity or enforceability of the other provisions hereof and such
other provisions shall remain in full force and effect, unaffected by such
invalidity or unenforceability; provided however that the Parties intend that
the transactions contemplated by this Agreement be treated as one integrated
transaction and that this Agreement not be subdivided for any purpose into
separately assignable agreements.

     11.6 Entire Agreement. This Agreement contains the entire agreement between
the Parties hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the Parties related to
such matters.

     11.7 Amendment. Except as otherwise provided herein with respect to the
Work Plan and the Milestone Grant Funding Plan attached hereto, this Agreement
may not be amended or modified except by a written instrument signed by the
Parties.

     11.8 Limitation on Assignment. The terms, representations, warranties and
covenants contained in this Agreement shall be binding upon, and shall inure to
the benefit of, and be enforceable by, the Company and CFFTI and their
respective successors, transferees and permitted assigns. This Agreement will
not be assignable by either Party to any third party without the prior written
consent of the other Party; except that either Party may assign this Agreement
without such consent to an Affiliate of such Party provided that,
notwithstanding such assignment, the assigning Party shall retain its
obligations pursuant to this Agreement. Without limiting the foregoing, CFFTI
acknowledges that the Company intends to enter into a migratory merger for the
purpose of changing the Company's jurisdiction of incorporation from
Massachusetts to Delaware and consents to such migratory merger.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       31

<PAGE>

     11.9 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the Commonwealth of Massachusetts, without
giving effect to the principles of conflict of laws thereof.

     11.10 Arbitration. The Parties recognize the disputes as to certain matters
may from time to time arise during the term of this Agreement other than matters
within the purview of the ASC as set out in Section 2.2 which relate to either
Party's rights and/or obligations hereunder. It is the objective of the Parties
to establish procedures to facilitate the resolution of such disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resorting to arbitration or litigation; except as set forth herein below. The
Parties agree that prior to any arbitration concerning this Agreement, they will
pursue the same dispute resolution procedures set out in Section 2.2, whereby
disputes will be elevated first to a member of CFFTI's senior management and the
Company's president or CEO, who will meet and attempt in good faith to resolve
any disputes concerning this Agreement, and thereafter any unresolved disputes
will be elevated to members of the Parties' respective Boards of Directors, and
thereafter, any unresolved disputes will be referred to mediation. Thereafter,
in the event a dispute other than matters within the purview of the ASC as set
out in Section 2.2 shall remain unresolved, within thirty (30) days of a formal
request by either Party to the other, any Party may, by written notice to the
other, have such dispute referred for final and binding arbitration to be
conducted in Washington, D.C. if the arbitration is requested by the Company, or
in Boston, Massachusetts if the arbitration is requested by CFFTI, unless the
Parties agree otherwise on a location. The arbitration will be conducted under
the then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three (3) arbitrators who are knowledgeable in the
subject matter that is at issue in the dispute. One arbitrator will be selected
by CFFTI and one arbitrator will be selected by the Company and the third
arbitrator will be appointed by the AAA. In conducting the arbitration, the
arbitrators will determine what discovery will be permitted, consistent with the
goal of limiting the cost and time which the Parties must expend for discovery
(and provided that the arbitrators will permit such discovery they deem
necessary to permit an equitable resolution of the dispute) and will be able to
decree any and all relief of an equitable nature, including but not limited to
such relief as a temporary restraining order, a preliminary injunction, a
permanent injunction, or specific performance. The arbitrators will also be able
to award actual or general damages (taking into account the agreements of the
Parties contained herein) and attorney's fees and expenses and other reasonable
costs incurred in by the prevailing Party in such arbitration, and shall give
effect to any liquidated damages provisions contained herein in making such
award. The arbitrators will not award any other form of damage (e.g.,
consequential, punitive or exemplary damages). During the course of the
arbitration neither Party may fail to perform its obligations under this
Agreement. The Parties will share equally the arbitrator's fees and expenses
pending the resolution of the arbitration unless the arbitrators require the
non-prevailing Party to bear all or any portion of the costs of the prevailing
Party. The decision of the arbitrators will be final and binding and may be
enforced by the Party in whose favor it runs in any court of competent
jurisdiction at the option of such Party. Notwithstanding anything to the
contrary in this Section 11.10, either Party may seek immediate injunctive or
other interim relief from any court of competent jurisdiction with respect to
any breach of Article V or Article VII hereof, or otherwise to enforce and
protect the patent rights, copyrights, trademarks, or other intellectual
property rights owned or controlled by such Party. In no event will a demand for
arbitration be made after

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       32

<PAGE>

the date when the institution of a legal or equitable proceeding based on such
claim, dispute or other matter in question would be barred by the applicable
statute of limitations.

     11.11 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute a
single agreement. Facsimile transmissions of any executed original document
and/or retransmission of any executed facsimile transmission shall be deemed to
be the same as the delivery of an executed original.

     11.12 Force Majeure. Neither Party will be liable to the other for failure
or delay in the performance of any of its obligations under this Agreement for
the time and to the extent such failure or delay is caused by earthquake, riot,
civil commotion, war, hostilities between nations, Law, Judgment embargo, action
by the governmental body, act of God, storm, fire, accident, labor dispute or
strike, sabotage, explosion, or other similar or different contingencies, in
each case, beyond the reasonable control of the respective Party.

     11.13 Independent Contractors. The relationship between the Parties will be
that of independent contracting parties and nothing in this Agreement will be
construed to create any other relationship between CFFTI and the Company. Except
as expressly provided herein, no Party will have the right, power or authority
to assume, create or incur any expense, liability or obligation, express or
implied, on behalf of any of the other Parties.

     11.14 Further Assurances. At any time and from time to time, upon the
written request of CFFTI and at the sole expense of the Company, the Company
will promptly and duly execute and deliver any and all such further instruments,
documents and agreements and take such further actions as CFFTI may reasonably
require in order for CFFTI to obtain the full benefits of this Agreement
excluding any filings or actions required under the Hart Scott Rodino Act of
1974, as amended, in connection with the licenses provided under Article V or
the exercise of the Warrants and excluding any filings or actions required to
register the Warrants or the Shares under the Securities Act other than any such
filings or actions as are required pursuant to the terms of the Registration
Rights Agreement. At any time and from time to time, upon the written request of
the Company and at the sole expense of CFFTI, CFFTI will promptly and duly
execute and deliver any and all such further instruments, documents and
agreements and take such further actions as the Company may reasonably require
in order for the Company to obtain the full benefits of this Agreement and the
Warrants.

     11.15 Survival. The representations or warranties of the Company and CFFTI
contained herein, or in other instruments or agreements delivered or to be
delivered at or prior to the Initial Alliance Grant Funding shall survive the
Initial Alliance Grant Funding and in the event of a material default thereof
the non-breaching Party may exercise such rights as it may have pursuant to
applicable Law, including without limitation, a legal action seeking damages
pursuant to the arbitration provisions set forth in Section 11.10 hereof.

                                  [END OF PAGE]

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       33

<PAGE>

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

                                        ALTUS BIOLOGICS INC.

                                        By: /s/ Peter Lanciano
                                            ------------------------------------
                                            Peter Lanciano
                                            President

                                        CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
                                        INC.

                                        By:
                                            ------------------------------------
                                            Dr. Robert Beall
                                            President

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       34

<PAGE>

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

                                        ALTUS BIOLOGICS INC.

                                        By:
                                            ------------------------------------
                                            Peter Lanciano
                                            President

                                        CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
                                        INC.

                                        By: /s/ Dr. Robert Beall
                                            ------------------------------------
                                            Dr. Robert Beall
                                            President

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       35

<PAGE>

                                   EXHIBIT 1.1
                          MILESTONE GRANT FUNDING PLAN

<TABLE>
<CAPTION>
                                                                                         CFFTI               COMPANY
                                                                           TOTAL        FUNDING              FUNDING
     YEAR                                               QTR                COSTS        AMOUNT               AMOUNT
--------------                                         -----               -----        -------              -------
<S>                                                    <C>                 <C>          <C>                  <C>
2001                                                   [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
   M1 [***]                                            [***]               [***]         [***]                [***]
   M2 [***]                                            [***]               [***]         [***]                [***]
2002                                                   [***]               [***]         [***]                [***]
   M3 [***]                                            [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
   M4 [***]                                            [***]               [***]         [***]                [***]
2003  M5 [***]                                         [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
2004  [***]                                            [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
                                                       [***]               [***]         [***]                [***]
   M7 [***]                                            [***]               [***]         [***]                [***]
TOTAL                                                                      [***]         [***]                [***]
</TABLE>

Note: [***]

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                   EXHIBIT 1.2
                                    WORK PLAN

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
                                                 (2001)                          (2002)
                                                 ------------------------------- -------------------------------
ID  Task Name                            (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--  ------------------------------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
1   Research Work                        -----------------------------------------------------------------------
2     1(st) generation R&D               --------------------------
3           [***]                        -------
4           [***]                             ------
5           [***]                           ----
6           [***]                             -----
7           [***]                                          ---------
8     2(nd) generation R&D                    ---------------------------------
9           [***]                              ----------------------------
10          [***]                                 ---------------------------
11          [***]                                   --------------------------
12    Support Manufacturing & Regulatory                                      ----------------------------------
13          [***]                                                             ----------------------------------
14  Development                          -----------------------------------------------------------------------
15    [***]                                          -----------------------------------------------------------
16          [***]                                    ---
17          [***]                                            ---------------------------------------------------
18          [***]                                                    -------------------------------------------
19    Analytical Development             -----------------------------------------------------------------------
20          [***] [***]                  -----------
21                [***]                  -------
22                [***]                           ----
23                [***]                        ---
24                [***]                          -
25          [***] [***] [***]                  --------------
26                [***]                          ------------
<CAPTION>
                                         (2003)                          (2004)
                                         ------------------------------- -------------------------------
ID  Task Name                            (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--  ------------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
1   Research Work                        -------------------------------
2     1(st) generation R&D
3           [***]
4           [***]
5           [***]
6           [***]
7           [***]
8     2(nd) generation R&D
9           [***]
10          [***]
11          [***]
12    Support Manufacturing & Regulatory -------------------------------
13          [***]                        -------------------------------
14  Development                          -------------------------------
15    [***]                              -------------------
16          [***]
17          [***]                        ------
18          [***]                        -------------------------------
19    Analytical Development             -------------------------------
20          [***] [***]
21                [***]
22                [***]
23                [***]
24                [***]
25          [***] [***] [***]
26                [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
                                                 (2001)                          (2002)
                                                 ------------------------------- -------------------------------
ID  Task Name                            (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--  ------------------------------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
27          [***]                                -------
28          [***]                                  ---------
29    [***]                                                  ------------------------
30          [***]                                             ------------
31          [***] [***]                                                    ----------
32    [***]                                                  ----------------
33          [***]                                             -------
34          [***]                                                   -------
35          [***]                                                     ----
36          [***]                                                      ----
37    [***] [***]                                                           -----------------
38          [***]                                                            --------------
39          [***]                                                             ----------
40          [***]                                                                -----------
41    [***]
42          [***]
43          [***]
44   Support Manufacturing & Regulatory
45          [***]
46  Process Development & Manufacturing      -------------------------------------------------------------------
47    Process Development - [***]            -----------------------------------------------
48          [***]                             ----------------
49          [***]                                  --------
50          [***]                                    --------
51          [***]                                                            ---------------
52          [***]                                                             --------
<CAPTION>
                                         (2003)                          (2004)
                                         ------------------------------- -------------------------------
ID  Task Name                            (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--  ------------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
27          [***]
28          [***]
29    [***]
30          [***]
31          [***] [***]
32    [***]
33          [***]
34          [***]
35          [***]
36          [***]
37    [***] [***]
38          [***]
39          [***]
40          [***]
41    [***]                                 ----------------------------
42          [***]                            ---------
43          [***]                                        ---------------
44   Support Manufacturing & Regulatory
45          [***]
46  Process Development & Manufacturing  -------------------------------
47    Process Development - [***]
48          [***]
49          [***]
50          [***]
51          [***]
52          [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>

<TABLE>
<CAPTION>
                                             (2001)                          (2002)
                                             ------------------------------- -------------------------------
ID  Task Name                        (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
53         [***]                                                           --------
54     [***]                             -------------------------------------------------------------------
55         [***]                          -----------------
56         [***] Technical Transfer                        -------
57         [***] Technical Transfer                        -------
58         [***] Transfer                                  -------
59         [***]                                                  ------------------------------------------
60         [***]                                                  ------------------------------------------
61     [***]                                                                    ----------------------------
62         [***] [***] [***]                                                     ---------------------------
63  Non-Clinical Testing             -----------------------------------------------------------------------
64     [***]                         -------
65     [***]                                  --------------------------------------------------------------
66         [***] [***]                        -------------
67         [***]                              ----------
68         [***]                                           ---------
69         [***]                                                  ------
70         [***]                                                          ----------
71         [***]                                                          ----------------------------------

<CAPTION>
                                     (2003)                          (2004)
                                     ------------------------------- -------------------------------
ID  Task Name                        (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
53         [***]
54     [***]                         -------------------------------
55         [***]
56         [***] Technical Transfer
57         [***] Technical Transfer
58         [***] Transfer
59         [***]                     --------------------
60         [***]                     -------------------------------
61     [***]                         -------------------------------
62         [***] [***] [***]         -------------------------------
63  Non-Clinical Testing             ------------
64     [***]
65     [***]
66         [***] [***]
67         [***]
68         [***]
69         [***]
70         [***]
71         [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
                                             (2001)                          (2002)
                                             ------------------------------- -------------------------------
ID  Task Name                        (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
72     [***] Formulation                                              --------------------------------------
73         [***]                                                       ----
74         [***]                                                       --------
75         [***]                                                           ---------
76         [***]                                                                   --------
77         [***]                                                                           -------
78         [***]                                                                           -----------------
79  FDA Coordination                 -----------------------------------------------------------------------
80     [***]                         --
81     [***]                         -------
82     [***]                                 --
83     [***]                                    -------------
84     [***]                                                 --
85     [***]                                                 ----------
86     [***]                                                             --
87     [***]                                                                          --
88     [***]                                                           -------------------------------------
89     [***]
90  Clinical Studies                              ----------------------------------------------------------
91     [***]                                      ----------------------------------------------------------
92         [***]                                    -------------------------------------------------------
93         [***]                                                  ------------------------------------------
94         [***]                                                      -----
95         [***]                                                             -----------------
96         [***]                                                                             --------------
97         [***]                                                                                       -----

<CAPTION>
                                     (2003)                          (2004)
                                     ------------------------------- -------------------------------
ID  Task Name                        (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
72     [***] Formulation             ------------
73         [***]
74         [***]
75         [***]
76         [***]
77         [***]
78         [***]                     ------------
79  FDA Coordination                 -------------------------------
80     [***]
81     [***]
82     [***]
83     [***]
84     [***]
85     [***]
86     [***]
87     [***]
88     [***]                         -------------------------------
89     [***]
90  Clinical Studies                 -------------------------------
91     [***]                         -------------------------------
92         [***]
93         [***]                     -------------------------------
94         [***]
95         [***]
96         [***]
97         [***]                     ----------------------
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
                                             (2001)                          (2002)
                                             ------------------------------- -------------------------------
ID  Task Name                        (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
98         [***]                                                                                       -----
99         [***]                                                                                       -----
100    [***] Product                                                                 -----------------------
101        [***]                                                                      ----------------------
102        [***]
103 Sales and Marketing                                         --------------------------------------------
104    [***]                                                    --------------------------------------------
105    [***]                                                                 -------------------------------

<CAPTION>
                                     (2003)                          (2004)
                                     ------------------------------- -------------------------------
ID  Task Name                        (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4) (Qtr 1) (Qtr 2) (Qtr 3) (Qtr 4)
--- -------------------------------  ------- ------- ------- ------- ------- ------- ------- -------
<S> <C>                              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
98         [***]                     --------------------
99         [***]                     -------------------------------
100    [***] Product                 ----------------------------
101        [***]                     --
102        [***]                         ----------------------
103 Sales and Marketing              -------------------------------
104    [***]
105    [***]                         -------------------------------
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>

     This First Amendment to Strategic Alliance Agreement, is made as of
September 26, 2001 (this "First Amendment Agreement"), by and between Altus
Biologics Inc., a Delaware corporation (the "Company"), and Cystic Fibrosis
Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI" and collectively,
with the Company, the "Parties," and each a "Party"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to them
in the Strategic Alliance Agreement dated as of February 22, 2001 (the
"Agreement").

     WHEREAS, CFFTI and the Company's predecessor, Altus Biologics Inc., a
Massachusetts corporation ("Altus Massachusetts"), were parties to the
Agreement;

     WHEREAS, Altus Massachusetts was merged with and into the Company for the
purpose of reincorporating Altus Massachusetts as a Delaware corporation, and as
a result of such migratory merger, to which CFFTI had previously consented
pursuant to Section 11.8 of the Agreement, the Company succeeded to all of the
rights and obligations of Altus Massachusetts under the Agreement and the
related Warrants (Nos. W-5A and W-5B) and Registration Rights Agreement, each
dated February 22, 2001, between CFFTI and Altus Massachusetts, to the same
extent as if the Company were the original party thereto;

     WHEREAS, the Company is pursuing a financing transaction whereby it intends
to raise working capital through the issuance of Series B Convertible Preferred
Stock (the "Series B Stock"), and the prospective purchasers of the Series B
Stock (the "Series B Investors") require certain amendments to the Agreement as
a condition to their investment in the Company; and

     WHEREAS, the Parties desire to amend the Agreement hereby and provide for
the cancellation of the Registration Rights Agreement and inclusion of CFFTI as
a party to the new registration rights agreement to be entered into by the
Company and the purchasers of the Series B Stock;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:

     1. AMENDMENTS.

          1.1 New Definitions. In Article I of the Agreement, the following new
definitions are added to the definitions list in the appropriate alphabetical
order:

               "Base Exercise Price" shall have the meaning assigned to such
term in Section 2.8 below.

               "Call Option" shall have the meaning assigned to such term in
Section 2.8 below.

               "Combined Net Sales" shall mean the gross invoiced sales price of
any Products and Other Products sold by the Company, its Affiliates or its
sublicensees [**********************************************], less the
following amounts incurred

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       36

<PAGE>

in the ordinary course of business with respect to such sales to the extent
separately included in the invoice for the Products and Other Products as part
of the gross invoiced sales price:

          (a) trade, cash and quantity discounts or rebates [*******************
***];

          (b) credits or allowances given or made for rejection of or return of,
and for uncollectible amounts on, previously sold Products or Other Products or
for retroactive price reductions [**********************************************
*************];

          (c) charges for insurance, freight, and other transportation costs
[**************************] of Products and Other Products; and

          (d) sales, transfer and other excise taxes levied on the sale or
delivery of Products or Other Products (including any tax such as a value added
or similar tax or government charge) borne by the seller thereof, [*************
**********************************].

     "First Amendment Agreement" shall mean the First Amendment to the Agreement
dated as of September 26, 2001 by and between the Company and CFFTI.

     "Other Products" shall mean pharmaceutical products developed by or on
behalf of the Company, currently identified by the Company as "TheraCLEC
Total(TM)", and any derivatives thereof, which contain the [********************
****], and either or both of the [***************************************], and
which are, in either case, designed to treat any other indication other than
[***********************************].

     "Other Product Development Activities" shall mean activities related to the
development and marketing of the Other Products, which shall include research,
development, animal tests, clinical trials and other testing, seeking applicable
approvals of governmental bodies and others, manufacturing, marketing,
promotion, sales, and distribution activities, and any other act or acts
required or reasonably necessary to obtain the necessary approvals for the
marketing and distribution of Other Products or to otherwise market and sell the
Other Products in compliance with any applicable Law.

     "Success Fee" shall mean, as of the date of determination, the sum of (i)
the [******************************************] during the period from the
effective date of the Agreement through such date of determination,
[****************************************] and (ii) the [**********************
********************************************************************************
**************************************] with respect to each incremental CFFTI
Funding Amount comprising the cumulative CFFTI Funding Amount from and after the
date CFFTI actually funds each such incremental CFFTI Funding Amount; provided,
however, that the Success Fee shall not exceed [******************************
***].

     "Warrant C" shall mean the Company's warrant to acquire an aggregate of two
hundred thousand (200,000) shares of Common Stock in the form of Warrant 5-C
issued and delivered to CFFTI pursuant to the First Amendment Agreement.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       37

<PAGE>

     1.2 Amendment of Certain Definitions. In Article I of the Agreement, the
following definitions are amended as indicated:

          (a) The definition of "Approval Date" is deleted in its entirety and
the following new definition is inserted in lieu thereof:

     "Approval Date" shall mean (i) in the case of Products that are regulated
as drugs by the FDA, the earlier of the date on which the Company receives from
the FDA an approvable letter under 21 CFR Section 314.110 or an approval letter
under 21 CFR Section 314.105, or (ii) in the case of Products that are regulated
as biologics by the FDA, the earlier of the date on which the Company receives
from the FDA an approval letter or biologics license under 21 CFR Section 601.4.

          (e) The definition of "Common Stock" is deleted in its entirety and
the following new definition is inserted in lieu thereof:

     "Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Company, as authorized pursuant to Article FOURTH of the Amended
and Restated Certificate of Incorporation of the Company to be filed with the
Secretary of State of the State of Delaware and made effective as of the date of
the initial closing of the issuance of Series B Stock.

          (f) The term "Company" shall have the meaning set forth in the
preamble of the First Amendment Agreement.

          (g) The definition of "Warrants" is deleted in its entirety and the
following new definition is inserted in lieu thereof:

     "Warrants" shall mean, collectively, Warrant A, Warrant B and Warrant C.

     1.3 Section 2.3(b) of the Agreement is amended by deleting the text
"(together the "Warrants")" appearing at the end of such Section.

     1.4 Section 2.3 of the Agreement is amended to add clause (n) at the end
thereof which shall read in its entirety as follows:

          (n) following the Approval Date until exercise by the Company of the
Call Option and payment in full of all amounts due in respect thereof, control
and be primarily responsible for the conduct of the Other Product Development
Activities, and use good faith, commercially reasonable efforts, consistent with
the Company's business plan, to develop the Other Products and bring the Other
Products to market in [**********************] as soon as reasonably
practicable, including obtaining all necessary approvals of applicable
governmental bodies for the marketing and distribution of the Other Products in
[**********************]. Other Product Development Activities will be conducted
by the Company, or the Company will cause its subcontractor(s) to conduct Other
Product Development Activities, in accordance with accepted ethical principles
and regulatory requirements in facilities selected by the Company which are
reasonable and adequate for the conduct of Other Product Development Activities.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       38

<PAGE>

     1.5 Section 2.6 of the Agreement is deleted in its entirety and the
following new Section 2.6 is inserted in lieu thereof:

     "2.6 License Fee

          (a) On the Approval Date, the Company shall be obligated to pay to
CFFTI an amount in cash in United States dollars equal to the amount by which
the Succecs Fee exceeds the Fair Market Value of the Shares as of the Approval
Date (such excess is referred to herein as the "License Fee").

          (h) The License Fee shall be paid as follows: (i) [*********] after
the Approval Date, the Company shall pay by wire transfer of immediately
available funds to an account designated in writing by CFFTI an amount equal to
the greater of (A) [********] or (B) [***********************] of the License
Fee, whichever is higher, and (ii) [*****************] of such date, the Company
shall pay by wire transfer of immediately available funds to an account
designated in writing by CFFTI an amount equal to the greater of (A) [********]
or (B) [***********************] of the License Fee, whichever is higher
[*****************************************************************] until the
License Fee (plus all accrued interest thereon) has been paid in full. Interest
on the outstanding balance of the License Fee shall be compounded annually and
accrue on the outstanding balance of the License Fee at the Regular Rate. If a
Company Default occurs following the Approval Date, the entire unpaid License
Fee shall become immediately due and payable without any action of CFFTI, and
the Company shall immediately pay such amount to CFFTI, and such overdue amounts
shall bear interest at a rate equal to the Regular Rate plus [***************]."

          (i) The license granted to CFFTI under Section 5.1 and all sublicenses
thereunder shall terminate upon either the exercise by the Company of the Call
Option and payment in full of all amounts due in respect thereof or, if later,
upon payment in full of the License Fee. Upon such termination, CFFTI shall
promptly transmit to the Company all products and information and promotional or
marketing materials and data relating to the Products or Other Products that are
in the possession of CFFTI or any sublicensees of CFFTI other than the Company.

     1.6 The following new Section 2.7 is added to the Agreement:

     "2.7 Royalties on Combined Net Sales. After the Approval Date (or, if the
Approval Date has not occurred but the Company is selling Other Products) and
until exercise of the Call Option, and provided (a) CFFTI has not exercised its
right to terminate under Section 10.1 and (b) CFFTI has funded the full amount
of the Grant in accordance with the terms of this Agreement, the Company will
pay royalties to CFFTI in the amount of [******************************] of
Combined Net Sales until the later of either (x) [******************************
************] of any United States patent covering the Products or Other
Products, including patents granted after the date of the First Amendment
Agreement, or (y) [******************************************] of the United
States patents that [*********************************************************]
(which are

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       39

<PAGE>

Patent No. [*******]; Patent No. [*******]; Patent No. [*******]; Patent No.
[*******]; Patent No. [*******]; and Patent No. [********]. Royalties under this
Section 2.7 shall be payable on a [*******] basis within [**************]
following the end of each [**************] for which royalties are due. Each
payment made by the Company to CFFTI under this Section 2.7 shall be accompanied
by a written report summarizing the data used to calculate the amounts paid,
including the amount of Combined Net Sales worldwide on a country by country
basis and supporting information reasonably necessary to determine the amount of
royalties due under this Section 2.7. Upon the written request of CFFTI, and no
more frequently than [***] in any calendar year, the Company shall permit an
independent certified public accountant selected by CFFTI to have access during
normal business hours to such records of the Company as may be reasonably
necessary to verify the accuracy of royalties payable and reports made
hereunder. If such audit reveals that any additional royalty was required during
the audited period, such royalty shall be paid promptly to CFFTI. The fees
charged by such accountant shall be paid by CFFTI, unless the audit discloses
that the royalties for the audited period are deficient by more than
[***************], in which case the Company shall pay the
[**************************] charged by the independent certified public
accountant."

     1.7 The following new Section 2.8 is added to the Agreement:

     "2.8 Call Option. On and after the Approval Date, the Company shall have
the right and option to purchase (the "Call Option") the royalty stream
described in Section 2.7 above from CFFTI at an exercise price determined as
follows:

          (a) On or prior to the [****************] after the Approval Date, the
exercise price shall be [************]: the sum of: (1) the [*********], and (2)
the amount, if any, [**********************************************************
**********], and (3) [******************************************************],
discounted back to the Approval Date at an annual discount rate equal to
[***************] (such amount the "Base Exercise Price");

          (j) From and after the [*****************] day after the Approval Date
through the third anniversary of the Approval Date, the exercise price shall be
the sum of: (X) the [**************] and (Y) a premium amount equal to
[**********************************]; and

          (k) From and after the third anniversary of the Approval Date, the
exercise price shall be the sum of: (X) the [*****************] and (Y) a
premium amount equal to the [**********************************], where the
[****************************************************] for each year (or
partial year) that has elapsed since the third anniversary of the Approval Date.

     By way of example, if the Approval Date is April 12, 2004 and the exercise
of the Call Option occurs on July 20, 2009, a date five years and three months
after the Approval Date, the Applicable Percentage would be
[******************].

     2. MISCELLANEOUS. Except as amended hereby, the Agreement remains in full
force and effect and all references contained in the Agreement to "this
Agreement" shall be deemed to

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       40

<PAGE>

include this First Amendment Agreement. This First Amendment Agreement may be
executed in one or more counterparts, including via facsimile, each of which
shall be deemed an original. This First Amendment Agreement may not be amended
except by a written agreement executed by each of the Parties.

     3. WARRANT C. Upon execution of this Agreement, the Company shall issue and
deliver to CFFTI a warrant to acquire an aggregate of two hundred thousand
(200,000) shares of Common Stock substantially in the form of Exhibit A attached
hereto.

     4. REGISTRATION RIGHTS AGREEMENT. The Company and CFFTI agree that the
Registration Rights Agreement is terminated. The Company shall cause CFFTI to be
included as a party to that certain Investor Rights Agreement of even date
herewith by and between the Company, Vertex Pharmaceuticals Incorporated and the
Series B Investors, such Agreement to be substantially in the form previously
provided to CFFTI as modified in the manner requested by CFFTI and otherwise in
form and substance satisfactory to CFFTI. All of the 600,000 shares of common
stock issuable in respect of the three warrants issued to CFFTI (Warrant 5A
dated February 22, 2001, Warrant 513 dated February 22, 2001 and Warrant 5C of
even date herewith) shall be included as Registrable Shares (as defined in such
Agreement) under such Agreement.

     5. EXPENSES. The Company shall pay and indemnify CFFTI against the
reasonable fees and expenses (including legal fees and expenses) incurred by
CFFTI in connection with the negotiation and execution of this First Amendment
Agreement and the documents and agreements referred to herein. Such amount shall
be paid within five (5) days after CFFTI provides the Company with the full
amount of such fees and expenses.

     6. ENTIRE AGREEMENT. This First Amendment Agreement, together with the
Agreement, contain the entire agreement between the Parties hereto with respect
to the matters contemplated herein and therein and supersedes all prior
agreements or understandings among the Parties related to such matters.

     IN WITNESS WHEREOF, the Parties have caused this First Amendment to
Strategic Alliance Agreement to be executed by their respective duly authorized
representatives.

                                         ALTUS BIOLOGICS L,NC.

                                         By: /s/ Peter Lanciano
                                             -----------------------------------
                                             Peter Lanciano
                                             President and CEO

                                         CYSTIC FIBROSIS FOUNDATION
                                         THERAPEUTICS, INC.

                                         By:
                                             -----------------------------------

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       41

<PAGE>

                                         Name: Robert J. Beall, Ph.D.
                                         Title: President & CEO

IN WITNESS WHEREOF. the Parties have caused this First Amendment to Strategic
Alliance Agreement to be executed by their respective duly authorized
representatives.

                                         ALTUS BIOLOGICS L,NC.

                                         By:
                                             -----------------------------------
                                             Peter Lanciano
                                             President and CEO

                                         CYSTIC FIBROSIS FOUNDATION
                                         THERAPEUTICS, INC.

                                         By: /s/ Robert J. Beall, Ph.D.
                                             -----------------------------------
                                         Name: Robert J. Beall, Ph.D.
                                         Title: President & CEO

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       42

<PAGE>

                                    EXHIBIT A

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR (B) THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.

--------------------------------------------------------------------------------
Warrant No. W-5C                                                        200,000
Shares

                                     WARRANT
                       To Purchase Shares of Common Stock
                                       of
                              ALTUS BIOLOGICS INC.
                            Dated September 26, 2001

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

      WHEREAS, pursuant to and in connection with that certain First Amendment
to Strategic Alliance Agreement, is made as of September 26, 2001 by and between
Altus Biologics Inc., a Delaware corporation (the "Company"), and Cystic
Fibrosis Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI"), the
Company desires to provide CFFTI an opportunity to obtain an additional equity
interest in the Company through the acquisition of shares of its Common Stock,
$.01 par value per share ("Common Stock"), upon the exercise of a warrant with
respect thereto;

      NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
certifies and agrees as follows:

         This Warrant dated as of September 26, 2001 (the "Issuance Date")
certifies that, for value received, CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
INC. (the "Holder"), is entitled, subject to the terms and conditions set forth
herein, to purchase from the Company a number of shares equal to Two Hundred
Thousand (200,000) (the "Warrant Shares") of the fully paid and non-assessable
Common Stock of the Company, at a price of $.01 (one cent) per share (the
"Exercise Price"), such number of Warrant Shares and Exercise Price subject to
adjustment as provided herein. This Warrant shall be fully vested as of the
Issuance Date. Subject to the terms and conditions set forth herein, this
Warrant may be exercised immediately at any time on or after September 26, 2001
and before September 26, 2011 (the "Expiration Date") and shall be void
thereafter.

      1. EXERCISE OF WARRANT.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            1.1. PROCEDURE. The Holder or any person or entity to whom the
Holder has assigned its rights under this Warrant or transferred all or a
portion of this Warrant (collectively referred to as the "Warrantholder") may
exercise this Warrant, at any time or from time to time, after the date on which
this Warrant may first be exercised pursuant to the terms of the immediately
preceding paragraph and prior to the Expiration Date, on any business day, by
surrendering the Warrant, accompanied by a written notice in the form attached
hereto (the "Exercise Notice"), to the Company at the address designated in
Section 8.4 hereof, exercising the Warrant and specifying the total number of
Warrant Shares the Warrantholder will purchase pursuant to such exercise. This
Warrant may be exercised in whole or in part as to any or all of the Warrant
Shares. A certificate or certificates for the Warrant Shares purchased upon
exercise of this Warrant and, in the event of a partial exercise of this
Warrant, a new Warrant of like tenor representing the balance of the Warrant
Shares purchasable hereunder, shall be delivered by the Company to the
Warrantholder not later than ten days after payment is made for the Warrant
Shares purchased upon exercise. No fractions of a share of Common Stock will be
issued upon the exercise of this Warrant, but if a fractional share would be
issuable upon exercise, the Company will pay in cash the fair market value
thereof as determined under Section 1.2 below.

            1.2. NET EXERCISE FORMULA. The Warrantholder may exercise the
Warrant either (i) by paying to the Company, by cash or check, an amount equal
to the aggregate Exercise Price of the Warrant Shares being purchased, or (ii)
by electing to receive Warrant Shares equal to the value (as determined below)
of this Warrant by surrender of the Warrant together with notice of such
election, in which event the Company shall issue to the Warrantholder a number
of Warrant Shares computed using the following formula:

                              X = Y(A-B)
                                  -----
                                    A

Where:            X = the number of Warrant Shares to be issued to the
Warrantholder.

      Y = the number of Warrant Shares under this Warrant (or such lesser
number of Shares as the Warrantholder elects to purchase, in the case of a
partial exercise).

                  A = the fair market value of one share of Common Stock on the
date of exercise.

                  B = the Exercise Price.

      As used herein, the fair market value of the Common Stock shall be deemed
to be the mean between the highest and lowest quoted selling prices as reported
in The Wall Street Journal on the last trading day preceding the date of
determination on the primary securities exchange where the Common Stock of the
Company is traded or if not traded on a securities exchange, then on The Nasdaq
Stock Market, or if there were no sales on the applicable date, on the next
preceding date within a reasonable period (as determined

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

in the sole discretion of the Board of Directors of the Company (the "Board of
Directors")) on which there were sales. In the event that there were no sales in
such a market within a reasonable period, the fair market value shall be as
determined in good faith by the Board of Directors. In the event the
Warrantholder disagrees with the fair market value determined by the Board of
Directors, the Company and the Warrantholder shall negotiate in good faith and
use their best efforts to agree upon the selection of an independent appraiser,
who will have 30 days in which to determine the fair market value of the Common
Stock, and whose determination will be final and binding on all parties
concerned. If no individual appraiser can be agreed upon, each party shall
select an appraiser and the two selected appraisers shall select a third to
serve as the independent appraiser for purposes of determining fair market
value. All costs of the independent appraiser shall be borne equally by the
Company and the Warrantholder.

      2. RECORD HOLDER. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided in Section 1.2 above and the person entitled to receive the
Warrant Shares of Common Stock issuable upon such exercise or conversion shall
be treated for all purposes as the holder of such Warrant Shares of record as of
the close of business on such date.

      3. PAYMENT OF TAXES. The Company shall pay all taxes and other
governmental charges (other than income taxes) that may be imposed in respect of
the issue of the Warrant Shares or any portion thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for the Warrant Shares or any
portion thereof in any name other than that of the registered holder of the
Warrant surrendered in connection with the purchase of such shares, and in such
case the Company shall not be required to issue or deliver any certificate until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.

      4. TRANSFER AND EXCHANGE.

            4.1. TRANSFER. Subject to the terms hereof, including, without
limitation, Sections 5.1 and 5.3, the Warrant and all rights thereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its office designated in Section 8.4 hereof by the registered
holder hereof in person or by duly authorized attorney, upon surrender of the
Warrant properly endorsed; provided, however, that this Warrant may not be
transferred in part unless such transfer is to a transferee who pursuant to such
transfer receives the right to purchase at least 75,000 shares of Common Stock.
Upon any partial transfer, the Company will issue and deliver to such holder a
new warrant or warrants with respect to the Warrant Shares not so transferred.
Each taker and holder of the Warrant, by taking or holding the same, consents
and agrees that the Warrant when endorsed in blank shall be deemed negotiable,
and that when the Warrant shall have been so endorsed, the holder may be treated
by the Company and all other persons dealing with the Warrant as the absolute
owner of such Warrant for any purpose and as the person entitled to exercise the
rights represented

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

thereby, or to the transfer on the books of the Company, any notice to the
contrary notwithstanding; but until such transfer on such books, the Company may
treat the registered holder of the Warrant as the owner for all purposes. The
term "Warrant" as used herein shall include the Warrant and, any warrants
delivered in substitution or exchange therefor as provided herein.

            4.2. EXCHANGE. The Warrant is exchangeable for a warrant or warrants
for the same aggregate number of Warrant Shares, each new Warrant to represent
the right to purchase such number of Warrant Shares as the holder shall
designate at the time of such exchange. The Warrant may be subdivided, at the
Warrantholder's option, into several warrants to purchase the Warrant Shares
(collectively, also referred to as the "Warrant"). Such subdivision may be
accomplished in accordance with the provisions of this Section 4.

      5. TRANSFER OF SECURITIES.

            5.1. RESTRICTIONS ON TRANSFER. Neither the Warrant nor any of the
Warrant Shares shall be transferable except upon the conditions specified in
this Section 5.1, which conditions are intended to insure compliance with
applicable provisions of the 1933 Act.

                  5.1.1. Unless and until otherwise permitted by this Section
5.1, the Warrant and each certificate or other document evidencing any of the
Warrant Shares shall be endorsed with the legend substantially in the following
form:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR (B) THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.

                  5.1.2. Neither the Warrant nor any of the Warrant Shares shall
be transferred and the Company shall not be required to register any such
transfer, unless and until one of the following events shall have occurred:

                        (a) the Company shall have received an opinion of
counsel reasonably acceptable to the Company and its counsel, stating that the
contemplated transfer is exempt from registration under the 1933 Act as then in
effect, and the Rules and Regulations of the Commission thereunder. Within ten
days after delivery to the Company and its counsel of such an opinion, the
Company either shall deliver to the proposed transferor a statement to the
effect that such opinion is not satisfactory in the reasonable opinion of its
counsel (and shall specify the legal analysis

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

supporting any such conclusion) or shall authorize the Company's transfer agent
to make the requested transfer;

                        (b) the Company shall have been furnished with a letter
from the Commission in response to a written request in form and substance
acceptable to counsel for the Company setting forth all of the facts and
circumstances surrounding the contemplated transfer, stating that the Commission
will take no action with regard to the contemplated transfer; or

                        (c) (i) the Warrant or the Warrant Shares, as the case
may be, have been registered pursuant to a registration statement filed by or on
behalf of the Company, (ii) such registration statement has been declared
effective by the Commission under the 1933 Act and is not subject to any stop
order, and (iii) the Company has not sent a notice to the Warrantholder
requesting that sales under such registration statement and the related
prospectus should be halted until such time as the Company has corrected or
updated such registration statement and the related prospectus.

The restrictions on transfer imposed by Section 5.1 shall cease and terminate as
to the Warrant or the Warrant Shares, as the case may be, when (i) such
securities shall have been effectively registered under the 1933 Act and sold by
the holder thereof in accordance with such registration, or (ii) an acceptable
opinion as described in Section 5.1.2(a) or a "no action" letter described in
Section 5.1.2(b) states that future transfers of such securities by the
transferor or the contemplated transferee would be exempt from registration
under the 1933 Act. When the restrictions on transfer contained in this Section
5.1 have terminated as provided above, the holder of the securities as to which
such restrictions shall have terminated or the transferee of such holder shall
be entitled to receive from the Company, at the expense of the Company, a new
Warrant or a new share certificate, as the case.may be, not bearing the legend
set forth in Section 5.1.1 hereof.

            5.2. COOPERATION. The Company shall cooperate in supplying such
information as may be reasonably requested by the Warrantholder to complete and
file any information reporting forms presently or subsequently required by the
Commission as a condition to the availability of an exemption, presently
existing or subsequently adopted, from the 1933 Act for the sale of the Warrant
or Warrant Shares, which is expressly understood not to include the completion
or filing of any registration statements or other forms used to register such
securities for sale under the 1933 Act or any state's securities laws.

            5.3. PERMITTED TRANSFERS. Subject to Section 5.1 above and subject
to all applicable laws and rules, the Warrantholder may transfer this Warrant
and any Warrant Shares purchased hereunder.

      6. ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price in
effect from time to time and the number of Warrant Shares shall be subject to
adjustment in certain cases as set forth in this Section 6.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            6.1. SUBDIVISION OR COMBINATION. In the event the outstanding Common
Stock shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding Common Stock shall be combined into a smaller number of shares of
Common Stock, the Exercise Price shall simultaneously with the effectiveness of
such combination, be proportionately increased and the number of Warrant Shares
proportionately reduced. For the purpose of this Section 6, a distribution or
series of distributions of Common Stock to holders of Common Stock in which the
number of shares distributed is ten percent (10%) or more of the number of
shares of Common Stock upon which the distribution is to be made shall be deemed
to be a subdivision of Common Stock.

            6.2. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.

            6.2.1. In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time receivable on
the exercise of the Warrant) after the Issuance Date, or in case, after such
date, the Company (or any such other corporation) shall consolidate with or
merge into another corporation or convey all or substantially all of its assets
to another corporation, then and in each such case the Warrantholder, upon
exercise of the Warrant as provided in Section 1 hereof at any time after the
consummation of such reorganization, consolidation, merger or conveyance, shall
be entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise of the Warrant prior to such consummation, the
stock or other securities or property to which the Warrantholder would have been
entitled upon such consummation if the Warrantholder had exercised or converted
the Warrant immediately prior thereto (and such stock or securities shall be
deemed to be "Warrant Shares" for the purpose of this Warrant); in each such
case, the terms of this Warrant, including the exercise provisions of Section 1,
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of the Warrant after such consummation.

            6.2.2. The Company shall not effect any consolidation, merger or
conveyance of all or substantially all of its assets unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation into or for the
securities of which the previously outstanding stock of the Company shall be
changed in connection with such consolidation or merger, or the corporation
purchasing such assets, as the case may be, shall assume by written instrument,
in form and substance reasonably satisfactory to the Warrantholder, executed and
delivered in accordance with Section 8.2 hereof, the obligation to deliver to
the Warrantholder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, the Warrantholder is entitled to purchase.

            6.2.3. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock of the Company, the Company shall not effect any consolidation, merger or
sale with the Person

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

having made such offer or with any Affiliate of such Person, unless prior to the
consummation of such consolidation, merger or sale the Warrantholder shall have
been given a reasonable opportunity to then elect to receive either the stock,
securities or assets then issuable upon the exercise of the Warrant or, if
different, the stock, securities or assets, or the equivalent, issued to
previous holders of the Common Stock in accordance with such offer, computed as
though the Warrantholder hereof had been at the time of such offer, a holder of
the stock, securities or assets then purchasable upon the exercise or conversion
of the Warrant. As used in this paragraph 6.2.3. the term "Person" shall mean
and include an individual, a partnership, a corporation, a trust, a joint
venture, a limited liability company, an unincorporated organization and a
government or any department or agency thereof and an "Affiliate" of any Person
shall mean any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with, such other Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.

      6.3 ADJUSTMENT TO WARRANT SHARES FOR CERTAIN DILUTIVE ISSUANCES.

            6.3.1 SPECIAL DEFINITIONS. For purposes of this Subsection 6.3, the
following definitions shall apply:

                  "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Subsection 6.3.2 below, deemed to be
issued) by the Company after the Threshold Financing Closing Date other than:

                  (A) Common Stock issued or issuable upon conversion of shares
of the Company's preferred stock, par value $.01 per share (the "Preferred
Stock"), outstanding as of the close of business on the Threshold Financing
Closing Date;

                  (B) Common Stock issued or issuable (i) upon exercise of the
Vertex Warrants outstanding as of the close of business on the Threshold
Financing Closing Date or (ii) in exchange for any shares of Preferred Stock
held by Vertex;

                  (C) Common Stock granted, or issued or issuable upon the
exercise of Options granted, to employees, consultants, creditors or other
persons performing or providing services or products to the Company or any
affiliate of the Company, in connection with their employment, advisory or other
relationship with the Company, pursuant to stock grants, options or other
arrangements approved by the Board of Directors of the Company. Shares of Common
Stock or Options previously issued pursuant to any such stock grants or option
plans as of the date that the exclusion hereunder is being determined shall be
included in calculating the number of shares of Common Stock subject to such
exclusion;

                  (D) Common Stock issued as a dividend or distribution on the
Preferred Stock;

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                  (E) Common Stock issued in any public offering of Common Stock
or Convertible Securities;

                  (F) Common Stock issued in connection with any strategic
alliance, license, distribution, marketing or collaboration agreements, up to an
aggregate of 500,000 shares of Common Stock (as such number may be adjusted in
connection with any of the events described in Section 6.1);

                  (G) issuances with respect to which an adjustment is made
pursuant to Section 6.1 above; and

                  (H) Common Stock issued upon conversion of the shares of
Series B Stock issued upon exercise of the Series B Warrants.

                  "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities including Options, directly or
indirectly convertible into or exchangeable for Common Stock.

                  "Factor" shall initially be one (1) and shall be subject to
adjustment pursuant to this Section 6.3.

                  "Option" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Stock or Convertible Securities.

                  "Series B Warrants" shall mean the several warrants issued to
the investors at the closing of the Threshold Financing for the purchase of
shares of the Company's Series B Preferred Stock, $.01 par value per share.

                  "Threshold Financing" shall mean the Company's Series B
Preferred Financing pursuant to which the Company sold approximately $35,600,000
of its Series B Convertible Preferred Stock to a group of investors including
Nomura International plc, SG Cowen Securities Corporation, and US Ventures
Partners.

                  "Threshold Financing Closing Date" shall mean September 26,
2001.

                  "Threshold Price" shall mean $4.3147358 per share.

                  "Vertex Warrants" shall mean the Company's warrants for the
purchase of Common Stock issued to Vertex Pharmaceuticals Incorporated.

                  6.3.2 DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.

                        6.3.2.1 If the Company at any time or from time to time
after the Threshold Financing Closing Date shall issue any Options (other than
Options

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

excluded pursuant to Section 6.3.1(C) hereof) or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subsection 6.3.5
hereof) of such Additional Shares of Common Stock would be less than the
Threshold Price then in effect, and provided further that in any case in which
Additional Shares of Common Stock are deemed to be issued:

                              (A) no further adjustment in the Factor shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;

                              (B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Factor computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;

                              (C) no readjustment pursuant to clause (B) above
shall have the effect of increasing the Factor to an amount which exceeds the
lower of (i) the Factor on the original adjustment date, or (ii) the Factor that
would have resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date;

                              (D) upon the expiration or termination of any
unexercised Option, the Factor shall be readjusted, and the Additional Shares of
Common Stock deemed issued as the result of the original issue of such Option
shall no longer be deemed issued for the purposes of any subsequent adjustment
of the Factor; and

                              (E) in the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Factor then in effect
shall forthwith be readjusted to such Factor as would have obtained had the
adjustment that was made upon the issuance

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

of such Option or Convertible Security (prior to such change) been made upon the
basis of such change, but no further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or conversion of any such Option or
Convertible Security.

                        6.3.3 NO ADJUSTMENT OF NUMBER OF SHARES. No adjustment
to the Factor shall be made unless the consideration per share (determined
pursuant to Subsection 6.3.5) for an Additional Share of Common Stock issued or
deemed to be issued by the Company hereunder is less than the Threshold Price
then in effect.

                        6.3.4 ADJUSTMENT OF FACTOR AND THRESHOLD PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Company shall
issue or sell (or pursuant to Section 6.3.2 be deemed to have issued) Additional
Shares of Common Stock without consideration or for a consideration per share
less than the Threshold Price then in effect (each such event a "Dilutive
Event"), then and in such Dilutive Event, the number of Warrant Shares subject
to purchase under this Warrant shall be increased to a number that is determined
by dividing the number of Warrant Shares prior to the Dilutive Event by the
factor determined by reference to the formula below (the "Factor") and the
Exercise Price in effect prior to the Dilutive Event shall be decreased to a
price that is determined by multiplying such price by the Factor. The Factor
shall be determined as follows:

      Factor = CSB + X
               -------
                 CSA

      where

      CSB = the total outstanding shares of Common Stock outstanding and deemed
to outstanding immediately prior to the dilutive transaction (calculated to
include the number of shares of Common Stock issuable upon conversion of the
outstanding Options and Convertible Securities).

      X = the number of shares determined by dividing the aggregate
consideration received in the dilutive transaction (as determined by reference
to Section 6.3.5) divided by the Threshold Price.

      CSA = the total outstanding shares of Common Stock immediately after
the dilutive transaction (calculated to include the number of shares of Common
Stock issuable upon conversion of the outstanding Options and Convertible
Securities).

In addition, the Threshold Price for future determination under this Section 6.3
shall be adjusted by multiplying the Threshold Price in effect immediately prior
to the dilutive issuance by the Factor.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                        6.3.5 DETERMINATION OF CONSIDERATION. For purposes of
this Section 6.3, the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                              6.3.5.1 Cash, Services and Property: Such
consideration shall:

                                    (A) insofar as it consists of cash, be
computed at the aggregate of cash received by the Company, excluding amounts
paid or payable for accrued interest or accrued dividends;

                                    (B) insofar as it consists of services or
property other than cash, be computed at the fair market value thereof at the
time of such issue, as determined in good faith by the Board of Directors; and

                                    (C) in the event Additional Shares of Common
Stock are issued together with other assets of the Company for consideration
which includes cash, property or services, be the proportion of such
consideration so received for the Additional Shares of Common Stock as
determined in good faith by the Board of Directors.

                              6.3.5.2 Options and Convertible Securities. The
consideration per share received by the Company for Options and Convertible
Securities shall be determined by dividing

                                    (A) the total amount of cash, services or
property, if any, received or receivable by the Company as consideration for the
issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such-consideration) payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by

                                    (B) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.

            6.4. NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the Exercise Price or the Factor, the Company shall promptly notify the
Warrantholder of such event, of the calculation by which such adjustment is to
be made and of the resulting Exercise Price and Factor.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            6.5. DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event
occurs as to which in the opinion of the Board of Directors the other provisions
of this Section 6 are not strictly applicable or if strictly applicable would
not fairly protect the purchase and exercise rights of the Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid.

      7. RESERVATION OF WARRANT SHARES. The Company shall at all times reserve
and keep available out of its authorized but unissued Common Stock the full
number of Warrant Shares deliverable upon exercise of the Warrant, as such
number may change from time to time pursuant to the terms hereof. Also, the
Company shall, at its own expense, take all such actions and obtain all such
permits and orders as may be necessary to enable the Company lawfully to issue
fully paid and nonassessable Warrant Shares upon the exercise or conversion of
the Warrant, provided, however, this Section 7 shall not be construed to require
the Company to register the Warrant or the Warrant Shares under the 1933 Act or
any state's securities laws.

      8. MISCELLANEOUS.

            8.1. ENTIRE AGREEMENT. This Warrant, the Registration Rights
Agreement of even date herewith between the Company and the Holder and the
Alliance Agreement constitute the full and entire understanding and agreements
between the parties hereto with respect to the subjects hereof and thereof.

            8.2. SUCCESSORS AND ASSIGNS. The terms and conditions of this
Warrant shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto, except as expressly provided
otherwise herein.

            8.3. GOVERNING LAW. This Warrant shall be governed by and construed
under the internal laws of the Commonwealth of Massachusetts (without reference
or regard to conflict or choice of law provisions).

            8.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or the day following deposit with a nationally recognized
overnight courier service, or upon the fifth day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Holder, Cystic Fibrosis
Foundation Therapeutics, Inc., at 6931 Arlington Road, Bethesda, MD 20814, (301)
907-2699 (fax), Attention: Dr. Robert Beall, or at such other address as shall
have furnished to the Company in writing, with a copy to Swidler Berlin Sheroff
Friedman, LLP, 3000 K Street, N.W., Suite 300, Washington, D.C. 20007, (202)
424-7643 (fax), Attention: Kenneth I. Schaner, Esquire, (b) if to the Company, a
copy should be sent to 625 Putnam Street, Cambridge, MA 02139, (617) 577-6502
(fax), Attention: Treasurer, or at such other address as the Company shall have
furnished in writing to the Warrantholder, with a copy to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Massachusetts 02111, (617) 542-2241 (fax), Attention: Jonathan L. Kravetz,
Esquire, or (c) if to any other Warrantholder, at such address as such holder
shall have furnished to the Company in writing, or, until such Warrantholder so
furnishes an address to the Company, then to and at the address of the last
holder of such Warrant who so furnished an address to the Company.

            8.5. DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any holder of any securities issued or sold
or to be issued or sold hereunder, upon any breach or default of the Company
under this Warrant, shall impair any such right, power or remedy of such holder
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or in any similar breach or default thereafter occurring,
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Warrant, or any waiver on the part of any holder of
any provisions or conditions of this Warrant must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Warrant or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

      8.6. SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Warrant, except as
expressly provided otherwise herein.

      8.7. WAIVERS AND AMENDMENTS. With the written consent of the record or
beneficial holders of more than 50% in interest of the Warrant Shares, the
obligations of the Company and the rights of the Warrantholders may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its board of
directors, may enter into a supplemental agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Warrant; provided, however, that no such waiver or supplemental agreement
shall reduce the aforesaid percentage of the Warrant Shares, the holders of
which are required to consent to any waiver or supplemental agreement, without
the consent of the record or beneficial holders of all the Warrant Shares
(treated as if exercised). Upon the effectuation of each such waiver, consent,
agreement of amendment or modification the Company promptly shall give written
notice thereof to the record holders of the Warrant and the Warrant Shares. This
Warrant or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 8.7.

      8.8. SEVERABILITY. If one or more provisions of this Warrant are held to
be invalid, illegal or unenforceable under applicable law, such provision shall
be modified in such manner as to be valid, legal and enforceable, but so as to
most nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant as if such provision
were not included in either case, and the

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

balance of this Warrant shall not in any way be affected or impaired thereby and
shall be enforceable in accordance with its terms.

      8.9. REGISTERED HOLDER. The Company may deem and treat the registered
Warrantholder(s) hereof as the absolute owner(s) of this Warrant
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise or conversion hereof, of any
distribution to the Warrantholder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Other than as set
forth herein, this Warrant does not entitle any Warrantholder hereof to any
rights of a stockholder of the Company.

      8.10. TITLES AND SUBTITLES. The titles of the sections and subsections of
this Warrant are for convenience and are not to be considered in construing this
Warrant.

      IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.

                                                     ALTUS BIOLOGICS INC.

                                                     By: __________________
                                                         Peter Lanciano
                                                         President

ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:

CYSTIC FIBROSIS FOUNDATION
THERAPETICS, INC.

By: _______________________
    Dr. Robert Beall
    President

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                               NOTICE OF EXERCISE

                 (To be Executed by the Registered Warrantholder
                        in order to Exercise the Warrant)

The undersigned hereby irrevocably elects to exercise the right to purchase
____________________ (_________________) shares of the Common Stock, $.01 par
value, of Altus Biologics Inc., a Delaware corporation, covered by Warrant No.
W-__________, according to the conditions thereof and herewith makes payment of
the Exercise Price of such Warrant Shares in full.

      I. Such payment is hereby tendered in the form of $____________ by wire
transfer or certified or bank check.

      II. The undersigned elects to receive the net value of the Warrant Shares
pursuant to Section 1.2 of the Warrant.

      III. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Warrant and the shares of Common Stock to be issued upon
exercise thereof are being acquired solely for the account of the undersigned
and not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of all or any portion of
the Warrant or such Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.

                                        Printed Name of Warrantholder:

                                        ________________________________

                                        Signature:

                                        ________________________________
                                        Title (if signing on behalf
                                        of a Warrantholder):

                                        ________________________________
                                        Date:

                                        ________________________________

                                        Address:

                                        ________________________________

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                               FORM OF ASSIGNMENT

      For Value Received, the undersigned registered owner of this Warrant
issued by Altus Biologics Inc. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant No. W-_________, with respect to the number of Warrant Shares of Common
Stock set forth below:

<TABLE>
<CAPTION>
Name of Assignee                 Address           Number of Warrant Shares
----------------                 -------           ------------------------
<S>                              <C>               <C>
</TABLE>

and does hereby irrevocably constitute and appoint _______________________
attorney to make such transfer on the books of Altus Biologics Inc., maintained
for such purpose, with full power of substitution in the premises.

Dated:_____________

_____________________________
Signature of registered owner

Witness:___________________

The Assignee acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws. Further, the Assignee has acknowledged that upon
exercise of this Warrant, the Assignee shall, if requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or sale in a violation of the Securities Act of 1933,
as amended, or any state securities laws.

_______________________________
Signature of Assignee

Print Name: ___________________

Print Title:___________________

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>

                                 EXECUTION COPY

     This Second Amendment to Strategic Alliance Agreement is made as of
December 22, 2003 (this "Second Amendment Agreement"), by and between Altus
Biologics Inc, a Delaware corporation (the "Company"), and Cystic Fibrosis
Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI" and collectively,
with the Company, the "Parties," and each a "Party"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to them
in the Strategic Alliance Agreement dated as of February 22, 2001, as amended by
the First Amendment to Strategic Alliance Agreement dated as of September 26,
2001 (the "Agreement").

     WHEREAS, the Company has requested that CFFTI advance [**********] of
payments that would not otherwise be due from CFFTI in respect of the Grant
until completion of the Pediatric Phase II milestone and CFFTI has agreed to
make such advance on the terms set forth herein;

     WHEREAS, the Milestone Grant Funding Plan has been modified by the Parties
to account for the development plan of the Products and requires further
modification to provide for the advance described herein; and

     WHEREAS, certain amendments to the Agreement are necessary or desirable in
connection with the foregoing.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:

     1. AMENDMENTS.

     1.1 New Definitions. In Article I of the Agreement, the following new
definitions are added to the definitions list in the appropriate alphabetical
order:

     "Pediatric Payment" shall have the meaning set forth in Section 2(b)(i) of
the Second Amendment Agreement.

     "Phase II Milestone Date" shall mean the last day of the quarter specified
in the Milestone Grant Funding Plan within which Phase II is to be completed and
[*****************] associated with the Phase II transmitted by the Company to
CFFTI in accordance with the Milestone Grant Funding Plan.

     "Second Amendment Agreement" means the Second Amendment to Strategic
Alliance Agreement dated as of December 22, 2003 between the Company and CFFTI.

     1.2 Amendment of Certain Definitions. In Article I of the Agreement, the
following definitions are amended as indicated:

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       43

<PAGE>

          (a) The definition of "Milestone Grant Funding Plan" is deleted in its
entirety and the following new definition is inserted in lieu thereof:

     "Milestone Grant Funding Plan" shall mean the revised Milestone Grant
Funding Plan attached to the Second Amendment Agreement as Exhibit 1, as the
same shall be amended and modified from time to time pursuant to the approval of
the ASC in accordance with Section 2.2 of the Agreement.

          (b) The definition of "Phase IIb Milestone Date" is deleted in its
entirety.

     1.3 Sections 2.6(a) and (b) of the Agreement are deleted in their entirety
and the following new Sections 2.6(a) and (b) are inserted in lieu thereof

          "2.6 License Fee.

          (a) On the first Approval Date to occur, the Company shall be
obligated to pay to CFFTI an amount in cash in United States dollars [**********
********************************************************************************
*********************] (such excess is referred to herein as the "License Fee").

          (b) The License Fee shall be paid as follows: (i) [*********] after
the first Approval Date to occur, the Company shall pay by wire transfer of
immediately available funds to an account designated in writing by CFFTI an
amount equal to the greater of (A) [********] or (B) [**************************
****************], whichever is higher, and (ii) [*****************] of such
date, the Company shall pay by wire transfer of immediately available funds to
an account designated in writing by CFFTI an amount equal to the greater of (A)
[********] or (B) [******************************************], whichever is
higher ([**************************************************************]) until
the License Fee (plus all accrued interest thereon) has been paid in full.
Interest on the outstanding balance of the License Fee shall be compounded
annually and accrue on the outstanding balance of the License Fee at the Regular
Rate. If a Company Default occurs following the first Approval Date to occur,
the entire unpaid License Fee shall become immediately due and payable without
any action of CFFTI, and the Company shall immediately pay such amount to CFFTI,
and such overdue amounts shall bear interest at a rate equal to the Regular Rate
plus [***************]."

     1.4 Section 2.7 of the Agreement is deleted in its entirety and the
following new Section 2.7 is inserted in lieu thereof:

          "2.7 Royalties on Combined Net Sales. After the first Approval Date to
occur (or, if an Approval Date has not occurred but the Company is selling Other
Products) and until exercise of the Call Option, and provided (a) CFFTI has not
exercised its right to terminate under Section 10.1 and (b) CFFTI has funded all
of the Grant that has become due prior to such Approval Date (or the date such
Other Products are first sold, as applicable) in accordance with the terms and
subject to the conditions set forth in this Agreement, the Company will pay
royalties to CFFTI in the amount of [********************] of Combined Net Sales
until the

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       44

<PAGE>

later of either (x) [**********************************************************
***] covering the Products or Other Products, including patents granted after
the date of the First Amendment Agreement or (y) [************************
******************] of the United States patents that have issued [*************
*********************************] (Patent No. [*******]; Patent No. [*******];
Patent No. [*******]; Patent No. [*******]; Patent No. [*******]; and Patent No.
[*******]). Royalties under this Section 2.7 shall be payable on a quarterly
basis within [*********] days following the end of each [**************] for
which royalties are due. Each payment made by the Company to CFFTI under this
Section 2.7 shall be accompanied by a written report summarizing the data used
to calculate the amounts paid, including the amount of Combined Net Sales
worldwide on a country by country basis and supporting information reasonably
necessary to determine the amount of royalties due under this Section 2.7. Upon
the written request of CFFTI, and no more frequently than [***] in any calendar
year, the Company shall permit an independent certified public accountant
selected by CFFTI to have access during normal business hours to such records of
the Company as may be reasonably necessary to verify the accuracy of royalties
payable and reports made hereunder. If such audit reveals that any royalty was
required during the audited period, such royalty shall be paid promptly to CFFTL
The fees charged by such accountant shall be paid by CFFTI, unless the audit
discloses that the royalties for the audited period are deficient by more than
[***************], in which case the Company shall pay the [********************
******] charged by the independent certified public accountant."

     1.5 Section 2.8 of the Agreement is deleted in its entirety and the
following new Section 2.8 is inserted in lieu thereof:

          "2.8 Call Option. On and after the first Approval Date to occur, the
Company shall have the right and option to purchase (the "Call Option") the
royalty stream described in Section 2.7 above from CFFTI at an exercise price
(which shall be paid upon exercise of the Call Option) determined as follows:

          (a) On or prior to the [******************] after such Approval Date,
the exercise price shall be [***************]: the sum of: (1) the [*********],
and (2) the amount, if any, by which [*****************************************
***********], and (3) [*******************] CFFTI through the date of exercise
under Section 2.7 of the Agreement (and [**************************************
********************] of the Second Amendment Agreement), discounted back to
such Approval. Date at an annual discount rate equal to [***************] (such
amount the "Base Exercise Price");

          (b) From and after the [*****************] day after such Approval
Date through the third anniversary of such Approval Date, the exercise price
shall be the sum of: (X) the [*****************] and (Y) a premium amount equal
to [******************************************]; and

          (c) From and after the [***************] of such Approval Date, the
exercise price shall be the sum of: (X) the [*****************] and (Y) a
premium amount equal to the [*******************************], where the
"Applicable Percentage" shall be

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       45

<PAGE>

equal to [**************************************************************] of
such Approval Date.

By way of example, if the first Approval Date occurs on April 12, 2004 and the
exercise of the Call Option occurs on July 20, 2009, a date five years and three
months after such Approval Date, the Applicable Percentage would be
[******************]."

     1.6 Section 10.1(c) of the Agreement is deleted in its entirety and the
following new Section 10.1(c) is inserted in lieu thereof:

          "(c) within thirty (30) days after the Phase II Milestone Date, CFFTI
may terminate this Agreement in its sole discretion without cause by sending a
written notice of termination to the Company. Such termination shall not be
deemed a CFFTI Default provided that: (i) CFFTI pays the Company within
[**************] of the date of such notice, an amount that is the lesser of
[******************************************************] and in the form
attached hereto as Exhibit 2.3(b)(ii) as of the date of such termination, or
(ii) the Parties agree in writing to a reasonable alternative course of action.
Upon such termination, CFFTI's license under Section 5.1 and rights to License
Fees will terminate immediately, provided however, after the first Approval Date
to occur, in the event of sales of Products, the Company will pay royalties not
to exceed the cumulative total of [*********************************************
**************] to CFFTI, by paying to CFFTI [****************] of Net Sales,
provided, however, if the Company sells or distributes the Products through a
sublicensee and does not sell directly, the Company will pay CFFTI
[*****************] of any royalties on Net Sales received therefrom by the
Company, in either case pursuant to a payment schedule to be agreed upon by the
Parties. Each payment made by the Company to CFFTI hereunder shall be
accompanied by a written report summarizing the data used to calculate the
amounts paid, including the amount of Net Sales and supporting information
reasonably necessary to determine royalties due."

     2. ADVANCE. Notwithstanding any provision in the Agreement to the contrary,
the Company and CFFTI agree as follows:

          (a) CFFTI shall fund [********] of the Grant prior to December 31,
2003, which amount, the parties acknowledge, would not otherwise have become due
until completion of the Pediatric Phase II milestone under the Milestone Grant
Funding Plan in effect prior to the date of this Second Amendment Agreement. The
date on which the Advance is actually paid to the Company is referred to herein
as the Advance Date.

          (b) In consideration of CFFTI's agreement to make the advance
described in Section 2(a) of this Second Amendment Agreement:

               (i) The amount of the Grant payable upon completion of the
Pediatric Phase II milestone shall be equal to the excess of (A) [*************]
(B) the sum of (1) [*************] (2) the product of [*************************
*****************************************************] that have elapsed from
and after December 31, 2003 through (and including) the date payment in respect
of the Pediatric Phase II milestone is

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       46

<PAGE>

due under the Agreement (such excess amount is referred to as the "Pediatric
Payment"). For purposes of the calculation required by clause (2) of this
Section 2(b)(i)(B), the quarter in which the payment in respect of the Pediatric
Phase II milestone is due under the Agreement shall be included, thus by way of
example if such milestone were achieved on May 1, 2005, the amount calculated
under such clause (2) would be equal to [******]; and

               (ii) Upon payment of the Pediatric Payment in accordance with the
applicable provisions of Section 2.5 of the Agreement, the entire Grant shall be
deemed funded and CFFTI shall have no further obligation to make payments in
respect of the Grant under the Agreement or otherwise; and

               (iii) Within [*****] following the first Approval Date to occur,
the Company shall pay to CFFTI, as an additional royalty and in addition to any
amounts due under Section 2.7 of the Agreement, an amount equal to [********] by
wire transfer of immediately available funds.

     3. MISCELLANEOUS. Except as amended by the First Amendment Agreement and
this Second Amendment Agreement, the Agreement remains in full force and effect,
and all references contained in the Agreement to "this Agreement" shall be
deemed to include this Second Amendment Agreement. This Second Amendment
Agreement may be executed in one or more counterparts, including via facsimile,
each of which shall be deemed an original. This Second Amendment Agreement may
not be amended except by a written agreement executed by each of the Parties.

     4. EXPENSES. The Company shall pay and indemnify CFFTI against the
reasonable fees and expenses (including legal fees and expenses) incurred by
CFFTI in connection with the execution of this Second Amendment Agreement. Such
amount shall be paid within five (5) days after CFFTI provides the Company with
the full amount of such fees and expenses.

     5. ENTIRE AGREEMENT. This Second Amendment Agreement, together with the
Agreement and the First Amendment Agreement, contain the entire agreement
between the Parties hereto with respect to the matters contemplated herein and
therein and supersede all prior agreements or understandings among the Parties
related to such matters.

                                  [END OF PAGE]

                            [SIGNATURE PAGE FOLLOWS]

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       47

<PAGE>

     IN WITNESS WHEREOF, the Parties have caused this Second Amendment to
Strategic Alliance Agreement to be executed by their respective duly authorized
representatives.

                                         ALTUS BIOLOGICS L,NC.

                                         By: /s/ Peter Lanciano
                                             -----------------------------------
                                             Peter Lanciano
                                             President and CEO

                                         CYSTIC FIBROSIS FOUNDATION
                                         THERAPEUTICS, INC.

                                         By: /s/ Robert J. Beall, Ph.D.
                                             -----------------------------------
                                         Name: Robert J. Beall, Ph.D.
                                         Title: President & CEO

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

                                       48
<PAGE>

                                   EXHIBIT 1

Milestone Grant Funding Plan ($ in millions)
As of December 22, 2003

<TABLE>
<CAPTION>
                     MILESTONE    CFFTI   COMPANY
                    ACHIEVEMENT  FUNDING  FUNDING
MILESTONE/ACTIVITY     DATE       AMOUNT  AMOUNT
------------------  -----------  -------  -------
<S>                 <C>          <C>      <C>
                                  [***]    [***]
                                  [***]    [***]
                                  [***]    [***]
M1 [***]               [***]      [***]    [***]
M2 [***]               [***]      [***]    [***]
                       [***]      [***]    [***]
M3 [***]               [***]      [***]    [***]
                       [***]      [***]    [***]
M4 [***]               [***]      [***]    [***]
M5 [***]               [***]      [***]    [***]

M6 [***]                                   [***]
                                           [***]
M7 [***]                          [***]    [***]
TOTAL                             [***]    [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.<PAGE>
                                                                   Exhibit 10.16

                                                                  EXECUTION COPY

                         DEVELOPMENT, COMMERCIALIZATION

                             AND MARKETING AGREEMENT

                                     BETWEEN

                              ALTUS BIOLOGICS INC.

                                       AND

                              DR. FALK PHARMA GMBH

                                DECEMBER 23, 2002

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     DEVELOPMENT, COMMERCIALIZATION AND MARKETING AGREEMENT

     This Development, Commercialization and Marketing Agreement ("Agreement")
dated as of December 23, 2002, by and between Altus Biologics Inc., a Delaware
corporation, with its principal office at 625 Putnam Avenue, Cambridge, MA 02139
("ALTUS"), and Dr. Falk Pharma GmbH, a German corporation, with its principal
office at Leinenweberstra(Beta)e 5, 79041 Freiburg Germany ("FALK"). ALTUS and
FALK are sometimes referred to herein individually as a "Party" and collectively
as the "Parties."

                                    RECITALS

     1. ALTUS has developed a certain pharmaceutical compound known as
TheraCLEC(TM)-Total (defined below) and has certain intellectual property rights
and development capabilities related thereto.

     2. FALK has development, marketing, distribution and sales capabilities in
many countries in the Territory (defined below).

     3. ALTUS and FALK wish to use their respective capabilities to conduct
development of TheraCLEC-Total in a collaborative fashion so that the resources
and expertise of each is put to good use.

     4. By combining the development experience and expertise of both FALK and
ALTUS, the Parties wish to expedite the regulatory approval of TheraCLEC-Total
as a significant new therapeutic in the Territory.

     5. ALTUS wishes to grant to FALK, and FALK wishes to obtain, a license
under ALTUS' intellectual property rights with respect to TheraCLEC-Total to
permit FALK to participate in collaborative TheraCLEC-Total product development
and market TheraCLEC-Total in the Field in the Territory under the terms and
conditions set forth below.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties,
intending to be legally bound hereby, do hereby agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

     The following capitalized terms, whether used in the singular or the
plural, shall have the following meanings as used in this Agreement unless
otherwise specifically indicated:

     1.1 "AFFILIATE" shall mean any corporation, firm, limited liability
company, partnership or other entity, which directly or indirectly controls or
is controlled by or is under common control with a Party to this Agreement. For
the purposes of this Section 1.1, "control" means ownership, directly or through
one or more Affiliates, of fifty percent (50%) or more of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
fifty percent (50%) or more of the equity interests in the entity, in the case
of any other type of legal entity, status as a general partner in any
partnership, or any other arrangement whereby a party controls or has the right
to control the direction of the management or policies of an entity, whether
through the ownership of voting securities, by contract or

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

otherwise. For the avoidance of doubt, the Parties agree that a company is
deemed to be under "common control with" another company if the two companies
are owned or controlled by the same group of individuals.

     1.2 "ALTUS BACKGROUND TECHNOLOGY" shall mean any inventions (whether
patentable or not) and Know-How owned or controlled by ALTUS prior to the
Effective Date.

     1.3 "ALTUS DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit C
to this Agreement.

     1.4 "BASE PATENTS" shall have the meaning set forth in Section 1.29.

     1.5 "CGMP" shall mean the regulatory requirements for current good
manufacturing practices promulgated (1) under the Common Technical Document for
the Registration of Pharmaceuticals for Human Use (ICH CTD) Guidelines and the
ICH Good Manufacturing Practice Guide, as the same may be amended from time to
time, and (2) by the United States Food and Drug Administration ("FDA") under
the U.S. Food, Drug and Cosmetic Act ("FD&C Act") and the regulations
promulgated thereunder, particularly 21 C.F.R. Section 210 et seq., and 21
C.F.R. Section 211 at seq., respectively, and related guidance documents, as the
same may be amended from time to time.

     1.6 "CLINICAL SUPPLIES" shall mean supplies of the Licensed Product,
manufactured, packaged and labeled in such form and strength as agreed by the
Parties, and ready to be used for the conduct of human clinical trials of the
Licensed Product in the Field by the Parties.

     1.7 "COMBINED PHASE III CLINICAL TRIAL" shall mean an international Phase
III clinical trial as set forth in 21 C.F.R. Section 312.21 et seq. which is
performed consistent with the ICH Guidelines and the guidelines of the United
States Food and Drug Administration ("FDA") and the EMEA.

     1.8 "COMMERCIALLY REASONABLE AND DILIGENT EFFORTS" shall mean with respect
to development and commercialization, a Party's use of commercially reasonable
efforts and resources for a company of its size consistent with (i) the exercise
of prudent scientific and business judgment for a lead product of its type and
(ii) such Party's efforts with respect to other lead products in its product
pipeline, and in each case taking into consideration the impact of such efforts
and resources on the development and commercialization of the Licensed Product
in the Territory as a whole.

     1.9 "CONTROLLED" with respect to the Licensed Product Patents or the
Licensed Product Know-how shall mean the ability of a Party to grant a license
or sublicense to such Licensed Product Patents or Licensed Product Know-how as
provided for herein without violating the terms of any agreement or other
arrangement with any Third Party existing and in effect at the time such Party
would be required hereunder to grant the other Party such license or sublicense.

     1.10 "COVER" (including variations such as "Covered", "Covering" and the
like) shall mean that the manufacture, use, sale, offer for sale, or importation
of a particular product would infringe an issued or pending claim of a patent or
patent application (if that claim were to issue in a patent) in the absence of
rights under such patent, as determined on a country-by-country basis.

     1.11 "DISTRIBUTOR" shall mean a Third Party that purchases the Licensed
Product from FALK or its Affiliates at a price that is - on a
country-by-country-basis - less than or equal to [****] of the IMS-Price in the
country in which the Licensed Product shall be sold to end-user customers.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     1.12 "DRUG APPROVAL APPLICATION" shall mean an application for Regulatory
Approval required for commercial sale or use of the Licensed Product as a drug
in the Field in the Territory.

     1.13 "EFFECTIVE DATE" shall mean the date first written above.

     1.14 "EMEA" means the European Medicines Evaluation Agency.

     1.15 "EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN" shall mean the plan
for development and commercialization of the Licensed Product as set forth in
Section 2.2, as may be amended from time to time.

     1.16 "FALK BACKGROUND TECHNOLOGY" shall mean any inventions (whether
patentable or not) and Know-How owned or controlled by FALK prior to the
Effective Date.

     1.17 "FALK DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit C
to this Agreement.

     1.18 "FALK MARKETING COSTS" shall have the meaning set forth in Exhibit C
to this Agreement.

     1.19 "FIELD" shall mean [**************************************************
***************************************].

     1.20 "FIRST COMMERCIAL SALE" shall mean the first sale of the Licensed
Product in any particular country in the Territory by FALK for use by the
general public after all required marketing and pricing approval has been
granted by the governing authorities of that country or, if no such approval is
required, the date of first commercial sale of the Licensed Product in such
country.

     1.21 "GERMAN EX-FACTORY PRICE" shall mean the [****] sales price
(ex-factory in Germany) at which the Licensed Product is sold by FALK or its
Affiliates to any non-Affiliated Third Party in Germany.

     1.22 "ICH GUIDELINES" means the finalized published guidelines of the
International Conference on Harmonization of Technical Requirements for the
Registration of Pharmaceuticals for Human Use.

     1.23 "IMS PRICE" shall mean the price - [************************] - at
which the Licensed Product is sold to wholesalers in a country in the Territory
as evidenced in the Intercontinental Medical Statistics ("IMS") for such
country.

     1.24 "INVENTION" shall mean any invention (whether or not patentable) or
Know-how made after the Effective Date during the course of, in furtherance of,
and as a direct result of the activities of the Parties hereunder. An
"Invention" may be made by employees of ALTUS solely or jointly with a Third
Party, by employees of FALK solely or jointly with a Third Party, or jointly by
employees of ALTUS and FALK with or without a Third Party.

     1.25 "KNOW-HOW" shall mean all proprietary information, trade secrets,
techniques, data (including Confidential Information as defined in Article 10
below), discoveries, formulae, materials, practices, methods, knowledge,
know-how, processes, experience, test data (including pharmacological,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

toxicological and clinical information and test data), analytical and quality
control data, marketing, pricing, distribution, cost and sales data or
descriptions.

     1.26 "THIRD PARTY LICENSED II" shall mean any patents; know-how and other
intellectual property licensed to ALTUS by a Third Party as of the Effective
Date, the practice of which is necessary to make, use or sell Licensed Product
in the Field in the Territory, including the intellectual property licensed to
ALTUS by [**********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*************************], in connection with the development of certain enzyme
materials and the manufacturing of pharmaceutical products known as
TheraCLECTota1(TM) (as defined below).

     1.27 "LICENSED PRODUCT" shall mean any pharmaceutical form, dosage,
strength, or formulation of TheraCLEC-Total purchased from ALTUS.

     1.28 "LICENSED PRODUCT KNOW-HOW" shall mean Know-how which: (a) is
Controlled by ALTUS as of the Effective Date or hereafter during the Term of
this Agreement, and (b) is necessary to manufacture, commercialize, market, sell
and distribute the Licensed Product in the Territory.

     1.29 "LICENSED PRODUCT PATENTS" shall mean any and all patents and patent
applications, together with any extensions (including supplementary protection
certificates), registrations, reissues, continuations, divisions,
continuations-in-part, re-examinations, substitutions or renewals thereof, and
any patent issuing for any of the foregoing, owned or Controlled by ALTUS as of
the Effective Date or at any time during the Term of the Agreement that contain
one or more claims Covering a Licensed Product in the Field in the Territory.
The Licensed Product Patents as of the Effective Date (hereinafter, the "Base
Patents") are set forth on Exhibit A attached hereto and incorporated herein.

     1.30 "MAJOR EUROPEAN COUNTRIES" shall mean [*******************************
*****************************************************************].

     1.31 "NET SALES" means the amount of gross invoiced sales of [*************
********************************************************************************
***************************************], less the following amounts to the
extent included as part of the gross invoiced sales of the Licensed Product sold
by FALK or its Affiliates (regardless of whether separately stated on the sales
invoice):

          (A) any value added taxes ("VAT") charged to the purchaser and [******
***********************************************************];

          (B) bad debt [*****************] by FALK with respect to uncollected
and uncollectable invoiced amounts that have been written off by FALK in
accordance with its general accounting policies and German Generally Accepted
Accounting Principles ("GAAP") consistently applied; provided that such amounts
shall not be deducted to the extent they exceed [**************] of the gross
invoiced sales of the Licensed Product in the Field in the Territory in the
aggregate on a quarterly basis;

          (C) trade, quantity, cash and any government-mandated discounts
[**************] and taken, including without limitation, those granted on
account of billing errors, rejected and damaged goods and recall returns, and
ordinary and customary bona fide customer rebates to the extent such

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

discounts and rebates are consistent with industry practice, but not to the
extent such discounts and rebates could reasonably be attributable to marketing
expenses;

          (D) [*******************] for returns (including allowances actually
given for spoiled, damaged, out-dated, rejected, or returned product sold,
withdrawals and recalls); and

          (E) charges for shipping charges, insurance, freight, and other
transportation costs [************************] of the Licensed Product.

In determining the amounts to be deducted under (e) above, FALK shall be
entitled to deduct up to [******************] of its gross invoiced sales of
Licensed Product for each quarter during the first three calendar quarters of a
given year as a reasonable approximation of the amounts to be deducted under (e)
above; provided that at the end of the fourth calendar quarter FALK shall be
required to make up any difference or short-fall between the amounts actually
deducted by FALK under (e) above during the first three calendar quarters, and
the amount actually allowed to be deducted for the year, which allowed amount
shall be calculated [***********************************************************
********************************************************************************
*************************************************]. Any shortfall due and owing
shall be paid by FALK as part of the payment due for the last calendar quarter
each year. With respect to sales of Licensed Products sold by FALK (or any of
its Affiliates) to a FALK Affiliate prior to resale to a non-Affiliated Third
Party, the "Net Sales" attributable to such product shall be determined by [****
********************************************************************************
********************************************************************************
****].

     1.32 "PARTY" shall mean FALK or ALTUS, and, when used in the plural, shall
mean both of them.

     1.33 "PHASE I CLINICAL TRIAL" shall have the meaning set forth in 21
C.F.R. Section 312.21 et seq.

     1.34 "PHASE II CLINICAL TRIAL" shall have the meaning set forth in 21
C.F.R. Section 312.21 et seq.

     1.35 "PHASE III ENABLING CLINICAL TRIAL" shall mean a Phase I or Phase II
Clinical Trial which has generated sufficient data to commence Combined Phase
III Clinical Trials.

     1.36 "PHASE IV STUDIES" shall mean any post-Regulatory Approval
after-market studies required to be performed by any Regulatory Authority in
connection with the commercialization of the Licensed Product.

     1.37 "REGULATORY APPROVAL" shall mean any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
national or international or local regulatory agency, department, bureau or
other governmental entity necessary for the manufacture and sale of the Licensed
Product in the Field in the Territory.

     1.38 "REGULATORY AUTHORITY" shall mean any local, national or international
regulatory agency, department, bureau or other governmental authority whose
approval is required prior to commercializing the Licensed Product in the Field
in the Territory or any individual country therein.

     1.39 "STEERING COMMITTEE" shall mean that body established pursuant to
Section 3.1 below.

     1.40 "TERRITORY" shall mean the countries listed on Appendix 1 hereto.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     1.41 "THERACLEC-TOTAL" shall mean commercial formulations of that product
currently known as TheraCLEC-Total consisting of the [************************
***], as disclosed in IND Application No. [*****] filed with the United States
Food and Drug ("FDA") Administration on May 28, 2002.

     1.42 "THIRD PARTY" shall mean any entity other than ALTUS or FALK.

     1.43 "VALID CLAIM" shall mean an issued claim, or a pending claim that is
being prosecuted in good faith, of any Licensed Product Patent, that has not
been withdrawn, cancelled, disclaimed, abandoned, or held invalid, unpatentable
or unenforceable by a tribunal of competent jurisdiction in a final decision (i)
which is unappealable or (ii) from which all appeals have been exhausted. If a
Valid Claim is the subject of a final decision holding it not invalid,
unpatentable or unenforceable, the scope of the Valid Claim shall be interpreted
so as to reflect the construction placed upon it in the final decision.

                                   ARTICLE 2.
                           SCOPE OF THE COLLABORATION

     2.1 GLOBAL GOALS. The Parties agree, pursuant and subject to the terms of
this Agreement, to further develop the Licensed Product in the Field in the
Territory, with the goal of obtaining Regulatory Approval for the Licensed
Product as soon as reasonably practicable for commercial marketing and sale in
the Field in the Territory.

     2.2 EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN. The overall strategy
for the development, commercialization and marketing of the License Product in
the Field in the Territory shall be set forth in a written plan (hereinafter,
the "European Development and Commercialization Plan"). The European Development
and Commercialization Plan shall include a Development Plan (to be provided by
ALTUS in accordance with Section 4.3 below) and a Commercialization Plan (to be
provided by FALK in accordance with Section 5.3 below). The European Development
and Commercialization Plan will be reviewed periodically by the Steering
Committee and shall be discussed at Steering Committee meetings. Notwithstanding
the foregoing, in the event any provision set forth in the European Development
and Commercialization Plan conflicts with or is inconsistent with a provision of
this Agreement, the provisions of this Agreement shall control.

                                   ARTICLE 3.
                         MANAGEMENT OF THE COLLABORATION

     3.1 ESTABLISHMENT OF STEERING COMMITTEE. The Parties hereby establish a
Steering Committee for coordinating the development, commercialization, and
marketing of the Licensed Product in the Field in the Territory. The Steering
Committee will be composed of [*******] representatives of each Party, who shall
be appointed (and may be replaced at any time) by such Party on written notice
to the other Party in accordance with this Agreement. Such representatives shall
include individuals within the senior management of each Party with expertise
and responsibilities in the areas of clinical development, process sciences,
manufacturing, regulatory affairs or product development and marketing, as
applicable to the stage of development or commercialization of the Licensed
Product. One of the three representatives for each Party shall be designated as
that Party's General Manager. Although the members of the Steering Committee can
and should change as the life cycle of the Licensed Product changes, the Parties
will endeavor to keep the General Managers consistent for each Party throughout
the collaboration to maintain continuity in the collaboration. The initial
Steering Committee members, including the General Manager, from each Party are
listed on Exhibit D attached hereto to the extent identified therein. Any member
of the Steering Committee may designate a substitute to attend and perform the
functions of that member at any meeting of the Steering Committee. The Steering

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

Committee will meet at least [****] each year (face-to-face) during the Term of
this Agreement, or at any frequency agreed by the Steering Committee. In any
event, the Steering Committee will meet [************] after the execution of
this Agreement or as soon as practicable as mutually agreed by the Parties. Each
representative on the Steering Committee will have one vote in decisions
submitted to the Steering Committee. Unless otherwise specifically set forth in
this Agreement, all issues to be resolved by the Steering Committee shall be
resolved by the affirmative vote of [**********************] on the Steering
Committee (or such representative's designee). ALTUS shall also notify FALK of
and shall use [************************************] to accommodate requests by
FALK to participate in [********************************************************
********************].

     3.2 RESPONSIBILITIES OF STEERING COMMITTEE. The Steering Committee shall,
subject to the provisions set forth in Article 4 and Article 5 hereinafter and
the dispute resolution procedures of Article 16, be the primary vehicle for
interaction between the Parties with respect to the development,
commercialization, and marketing of the Licensed Product in the Field in the
Territory. In particular, the Steering Committee shall perform the following
functions consistent with its objective of managing an effective and efficient
Combined Phase III Clinical Trial that satisfies the development, regulatory and
commercialization requirements of North America and the Territory and leverages
the clinical development activities in both territories:

               (I) exchange of information and facilitation of cooperation and
coordination between the Parties as they exercise their respective rights and
meet their respective obligations under this Agreement;

               (II) manage, review and monitor execution of the European
Development and Commercialization Plan;

               (III) review, prepare and recommend changes to the European
Development and Commercialization Plan;

               (IV) facilitate coordination of information flow, consistent with
the EU privacy directive, with respect to regulatory approvals from the
appropriate regulatory authorities in the Territory; and ensuring compliance in
all material respects with all applicable laws, regulations, and all other
requirements of applicable good laboratory practices;

               (V) establish, monitor, review and modify all development time
lines to be adhered to by the Parties for all Phase III and Phase IV clinical
development and Regulatory Approval activities in the Territory;

               (VI) approve all contracts, agreements, commitments and
undertakings with Third Parties regarding Phase III and Phase IV clinical
development activities in the Territory where the committed expenditures exceed
a threshold amount to be determined by the Steering Committee;

               (VII) facilitate coordination of information flow with respect to
the Combined Phase III Clinical Trials and Phase IV Studies (if any) between the
EU and North America;

               (VIII) facilitate coordination of supply of Clinical Supplies for
EU activities;

               (IX) [**********] relating to material business, scientific,
clinical, medical, regulatory or management issues arising out of this Agreement
in accordance with Section 16.1; and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

               (X) perform such other functions as appropriate to further the
purposes of this Agreement, as determined by the mutual agreement of the
Parties.

     3.3 STEERING COMMITTEE PROCEDURES. The representatives of the Steering
Committee shall designate a Chairperson who will serve as such. The Chairperson
shall send notices (not less than [*************] in advance of such meetings)
and agendas for all regular Steering Committee meetings to all Steering
Committee members. The location of regularly scheduled Steering Committee
meetings shall alternate among the offices of the Parties, unless otherwise
agreed. Meetings may be held telephonically, but each member shall attend at
least [***] meeting in person each year. The Party hosting any Steering
Committee meeting shall appoint one person (who need not be a member of the
Steering Committee) to attend the meeting and record the minutes of the meeting.
Such minutes shall be circulated to the Parties promptly following the meeting
for review, comment and distribution.

     3.4 PRODUCTION REQUIREMENTS REPORTS. FALK shall be responsible for
preparing and delivering to the Steering Committee and ALTUS an [**********]
Licensed Product production requirement report, which report shall be updated
[********************]. Such report shall be provided to the Steering Committee
and ALTUS within [*************] of the end of each [***************]
(beginning with the [*************] following the Phase III Enabling Clinical
Trial for the Licensed Product) and shall include the forecasted requirements
for Clinical Supplies, Licensed Product placebo and commercial supplies for the
subsequent [*****************] period.

     3.5 DISPUTE RESOLUTION. Except as hereinafter provided, all issues that
come before the Steering Committee that require action, approval or resolution
and for which the Steering Committee is unable to reach agreement by a vote of a
majority of the representatives of the Steering Committee shall be resolved in
accordance with Article 16.

                                   ARTICLE 4.
                                   DEVELOPMENT

     4.1 DEVELOPMENT EFFORTS. ALTUS shall be responsible for and shall
[*********************************************] to develop the Licensed Product
in the Field in the Territory in accordance with the terms of this Agreement.
ALTUS shall commit such of its resources as may be necessary to perform its
obligations as set forth herein or in the Development Plan (as defined below)
and shall use personnel with such skills and experiences as are designed to
accomplish efficiently and expeditiously the objectives of the development of
the Licensed Product as set forth herein or in the Development Plan and each
update thereof in good scientific manner and in compliance in all material
respects with all applicable laws, regulations, and all other requirements of
applicable good laboratory practices. In connection with the performance by
ALTUS of its obligations hereunder, ALTUS shall maintain and utilize such
scientific staff, laboratories, offices and other facilities as are reasonably
designed for such purposes. FALK shall use [***********************************]
to perform those activities it is obligated to perform with respect to the
clinical development of the Licensed Product as are set forth in this Agreement
or that have been assigned to FALK, with FALK's approval, by the Steering
Committee, and shall commit such of its resources as may be necessary to perform
such obligations and shall use personnel with such skills and experiences as are
designed to efficiently and expeditiously satisfy such obligations. Each Party
shall cooperate with and use Commercially Reasonable and Diligent Efforts to
support the other Party in the conduct of such development efforts.

     4.2 DEVELOPMENT RESPONSIBILITIES. All decisions regarding the Combined
Phase III Clinical Trial in the Territory in the Field, including but not
limited to formulation of overall development plans, making overall decisions
regarding the design of all clinical trials in the Territory, management of
clinical team activity, and management of regulatory activity shall be made
through the Steering Committee,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

subject to the dispute resolution mechanism set forth in Section 16.1 below.
Prior to the Combined Phase III Clinical Trial, ALTUS shall keep the Steering
Committee informed of the progress of the clinical development, including
development plans, time lines and process development work, and will discuss
with the Steering Committee developments and decisions that ALTUS anticipates
will have a significant impact on the Combined Phase III Clinical Trial and/or
Regulatory Approvals in the Territory.

     4.3 DEVELOPMENT PLAN. Attached hereto as Exhibit B is a copy of the
development plan (hereinafter the "Development Plan") for the development of
Licensed Product in the Field in the Territory. From time to time, ALTUS shall
submit to the Steering Committee an updated Development Plan as appropriate, but
at least [******]. The Development Plan (and any updates thereto) shall become
part of and be incorporated into the European Development and Commercialized
Plan and shall be reviewed and discussed at the Steering Committee meetings.

     4.4 CLINICAL TRIALS. The Steering Committee shall have responsibility for
and control over management of clinical trials for the Licensed Product in the
Field in the Territory and all decisions regarding such trials shall be made
jointly through the Steering Committee, subject to the dispute resolution
mechanism set forth in Section 16.1 below. The Parties may use one or more Third
Parties to assist in the performance of such clinical trials. All clinical data
and reports related to clinical trials for the Licensed Product shall be jointly
owned by the Parties and each Party shall have access to, and copies of; all
such data and reports related to clinical trials for the Licensed Product in the
Field in the Territory, and each Party may use such data in accordance with the
terms of this Agreement without [********************] to the other Party. Each
Party shall treat such data and reports as Confidential Information of the other
Party, and neither Party shall disclose or use such data or reports for any
purpose other than performing its obligations under this Agreement or as
otherwise expressly authorized in writing by the Steering Committee. All data,
database information and safety reports from such clinical trials shall be
centralized and held at ALTUS or by a Third Party selected by ALTUS and agreed
to by FALK, provided, however, that FALK shall be entitled to obtain and keep
copies of such information and reports. If a Party itself obtains data from a
clinical trial hereunder, it shall promptly transfer all of the clean, final
data for such trial to ALTUS or to such Third Party, as the case may be. The
Steering Committee shall coordinate the transfers of any such data. All Phase I
Clinical Trials, Phase II Clinical Trials, and Combined Phase III Clinical
Trials for the Licensed Product in the Field in the Territory shall be performed
in compliance with and conformity to both FDA and EMEA requirements and to ICH
Guidelines. At the completion of each Phase I Clinical Trial, Phase II Clinical
Trial and Combined Phase III Clinical Trial, ALTUS shall prepare a written
report, substantially in the form reasonably expected to be submitted to the
FDA, the EMEA or other applicable Regulatory Authority, summarizing the results
of such clinical trial, and containing an analysis of the clinical significance
of such results, which reports shall be submitted to FALK and the Steering
Committee as soon as is reasonably practicable after completion of the relevant
clinical trial. Such reports shall be referred to herein as the "Phase I
Report," the "Phase II Report," and the "Phase III Report," respectively.

     4.5 DRUG APPROVAL APPLICATIONS.

          (A) FALK [***************] for and shall use [************************
******************] in filing all Drug Approval Applications and seeking
Regulatory Approvals for the Licensed Product in the Territory in the Field;
provided that ALTUS shall assist FALK in preparing and filing such Drug Approval
Applications and seeking such Regulatory Approvals. FALK shall pay [*********]
associated with the preparation, filing, prosecution, meetings, communications,
and review by regulatory agencies of such Drug Approval Applications and
Regulatory Approvals (including the activities set forth in Section 4.5). The
Regulatory Approvals for the Licensed Product in the Territory shall be
prosecuted and obtained in the name of FALK; provided that any such Regulatory
Approvals shall be obtained in the joint name of FALK and ALTUS if permitted
under applicable rules and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

regulations, and provided further that ALTUS shall be permitted to
cross-reference such Drug Approval Applications and Regulatory Approvals that
are in FALK's name. In the event that the laws or regulations in a country in
the Territory do not allow the Licensed Product to be registered solely in the
name of FALK, FALK shall register the Licensed Product at its discretion (i)
[*******************************************************] or (ii)
[***************************************************]. Prior to submitting any
Drug Approval Application, FALK shall discuss with the Steering Committee the
scope and general content of such Drug Approval Application. The Steering
Committee may review and comment on all Drug Approval Applications, and such
comments will be ******** by FALK to the [****************]. All Drug Approval
Applications to be filed by or on behalf of FALK for the Licensed Product in the
Territory must be approved by ALTUS in advance in writing. Regulatory documents
or copies thereof for each filing shall be centralized and held at the offices
of ALTUS, provided, however, that FALK shall be entitled to obtain and keep
copies of originals of any such documents but only for the uses specifically set
forth in this Agreement. Each Party will immediately notify the other Party of
any material developments relating to the clinical development of the Licensed
Product, including, without limitation, any material comments or concerns raised
by any Regulatory Authority.

          (B) Each Party agrees to provide to the other Party a copy of any
documents or reports relating to the Licensed Product that are filed with any
regulatory authority in the Territory under this Agreement, including any Drug
Approval Applications. All such documents and reports shall be centralized and
held at ALTUS or by a Third Party selected by ALTUS and agreed to by FALK,
provided however, that FALK shall be entitled to obtain and keep copies of any
such documents and records. The Steering Committee shall coordinate the
transfers of any such documents or reports.

     4.6 REGULATORY MEETINGS AND COMMUNICATIONS. FALK shall be responsible for
conducting all meetings and discussions and routine telephone communications
with the EMEA or other Regulatory Authority, related to clinical studies, Drug
Approval Applications and Regulatory Approvals for the Licensed Product in the
Field in the Territory; provided that FALK shall use [**********************
***************] to conduct such meetings and discussions to facilitate the
Regulatory Approval of the Licensed Product in the Field in the Territory. ALTUS
shall assist FALK in these efforts. FALK will keep ALTUS and the Steering
Committee apprised of all material communications with such regulatory
authorities, and ALTUS or its designee shall be entitled to attend all meetings
with Regulatory Authorities. FALK shall [*****************] with respect to the
conduct of any inspections by any Regulatory Authority of FALK's site and
facilities related to the Licensed Product, and each Party shall be given the
opportunity to attend such site inspection and the summary, or wrap up, meeting
related to the Licensed Product with such regulatory authority at the conclusion
of such site inspection. To the extent either Party receives written or material
oral communication from any regulatory authority relating to the Licensed
Product in the Field in the Territory, the Party receiving such communication
shall notify the other Party and provide a copy of any written communication as
soon as reasonably practicable.

     4.7 TRANSFER OF MATERIALS. During the development of the Licensed Product,
each Party may transfer certain of its proprietary materials to the other Party.
Each Party agrees that it will use such materials of the other Party only for
the purposes of this Agreement, and will not transfer such materials to any
non-Affiliated Third Party without the prior written consent of the other Party
hereunder. Except as expressly provided in this Agreement, the transfer of any
such proprietary materials by one Party to another shall not be deemed to be a
[***************] in the proprietary material. All right, title and interest in
and to all such proprietary materials (and any patent rights relating thereto)
shall remain in the Party transferring such materials.

     4.8 DEVELOPMENT COSTS. All ALTUS Development Costs (as defined in Exhibit
C) shall be paid directly by [*****]. ALTUS shall send to FALK a [**********]
for all FALK Development Costs

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

(as defined in Exhibit C) incurred by ALTUS for such month in connection with
development work performed pursuant to this Agreement. FALK shall [********]
ALTUS for all such FALK Development Costs within [*********] of receipt of the
[*******] by FALK; provided, however, that FALK shall be entitled to pay its
share of costs related to clinical trials in the Field in the Territory which
have been contracted directly by FALK directly to the relevant CRO (Contract
Research Organisation). Each Party shall keep complete and accurate books and
records pertaining to the Development Costs, which books and records shall be
retained until [***********] after the end of the period to which such books and
records pertain. Each Party shall have the right, at its expense, to have an
[*************************************] the books and records of the other
Party relating to the Development Costs, PROVIDED, HOWEVER, that neither Party
shall conduct more than one such [******************].

     4.9 4.9 Safety Data Base. The Parties will, as soon as practical, organize
a serious adverse event data base (the "SAE Data Base"). ALTUS and FALK shall
jointly own the SAE Data Base and all data contained therein, and the data from
the SAE Data Base shall be made available to both Parties.

                                   ARTICLE 5.
                COMMERCIALIZATION AND MARKETING IN THE TERRITORY

     5.1 COMMERCIALIZATION AND MARKETING EFFORTS. FALK shall use
[**************************************] to commercialize and market the
Licensed Product in the Field in the Territory in accordance with the terms of
this Agreement, and ALTUS shall [*********] with and use [**********************
*************] to support FALK in FALK's conduct of such commercialization and
marketing efforts. During the term of this Agreement and with respect to sales
of Licensed Product in Germany, FALK shall [************************************
*******].

     5.2 COMMERCIALIZATION AND MARKETING RESPONSIBILITIES. FALK shall have
[***************************] over the commercialization and marketing of the
Licensed Product in the Field in the Territory, including but not limited to
designing and implementing all product launch, promotion, marketing and sales
activities, handling the packaging and shipment of all commercial product,
booking sales, handling all returns, handling all aspects of order processing,
invoicing, collection, and receivables, collection of data for purposes of
satisfying applicable regulatory requirements, collection of data of sales to
hospitals and other end users, distribution, inventory, and warehousing. FALK
will discuss with the Steering Committee any [********] commercialization and
marketing issues as may be appropriate. Notwithstanding anything in this
Agreement or the European Development and Commercialization Plan to the
contrary, FALK shall have [****************************************************
******] under this Agreement. In particular, FALK may [*************************
********************************************] within the Territory if
[**********************] that the commercialization in such country might
[*****************] the commercialization of the Licensed Product in the
Territory as a whole; provided that FALK shall inform the Steering Committee of
any such decision and the reasons therefor.

     5.3 COMMERCIALIZATION PLAN. Within a reasonable period of time after a
Phase III Enabling Clinical Trial with respect to the Licensed Product in the
Field in the Territory, FALK shall submit to the Steering Committee a detailed
[*********] (the "Commercialization Plan") for the commercialization of the
Licensed Product in the Field in the Territory. The Commercialization Plan shall
include proposed [*****************] arrangements relating to sales of the
Licensed Product. FALK shall submit to the Steering Committee an annual updated
Commercialization Plan on the first anniversary of the First Commercial Sale of
the Licensed Product and each [*********] thereafter. The Commercialization Plan
(and each update thereto) shall become part of and be incorporated into the
European Development and Commercialization Plan and shall be reviewed and
discussed at the Steering Committee meetings. [********************************]
after completion of a Phase III Enabling Clinical Trial for Licensed

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

Product in the Field in the Territory, FALK will enter into an agreement with a
Third Party contractor covering the packaging of the Licensed Product. FALK
shall also have identified a second source reasonably capable of packaging the
Licensed Product in the event such Third Party contractor is unable to do so.

     5.4 COMMERCIALIZATION COSTS. Except as otherwise provided herein, all FALK
Marketing Costs shall be paid for [***************], all as more fully provided
in Exhibit C.

     5.5 PRODUCT TRADEMARKS. It is the intent of the Parties that one or more
product trademark(s) other than TheraCLEC, TheraCLEC-Total, or such other
trademark to be used in connection with sales of the Licensed Product in the
United States, shall be developed for use on and in connection with the Licensed
Product in the Territory (each, a "Product Trademark"). FALK shall have the
[**********************] for developing and promoting the Product Trademark(s),
subject to the prior review and written approval of ALTUS and the Steering
Committee, which approval by ALTUS shall [*******************************] and
shall be required solely for the purpose of ensuring that the mark(s) proposed
by FALK for use as the Product Trademark(s) are not confusingly similar to
TheraCLEC, TheraCLEC-Total, or such other trademark as is intended to be used in
connection with sales of the Licensed Product in the United States. If it is
determined that it is not possible to register or otherwise use one or more of
the Product Trademark(s) in any country within the Territory, then the Parties
shall agree on an appropriate trademark to use in each such country. FALK shall
own the Product Trademark(s), and shall be responsible for procurement and
maintenance of trademark registrations for such trademark(s) in connection with
sales of the Licensed Product in the Field in the Territory. If FALK elects not
to procure or maintain a trademark registration for any such trademark(s) in
connection with the Licensed Product in a country of the Territory, it shall so
inform ALTUS in writing in a reasonable time before any action is due thereon.
ALTUS shall then have the right but not the obligation to procure and maintain
such trademark(s) in such country at FALK's expense. The cost of filing,
prosecution and maintenance for the Product Trademark(s) shall be paid by FALK
during the term of this Agreement.

     5.6 MARKETING MATERIALS AND PACKAGING. The Licensed Product marketed and
sold in each country in the Territory pursuant to this Agreement shall be
marketed and sold under the particular Product Trademark applicable to sales of
the Licensed Product in such country, and the packaging used for the Licensed
Product shall identify ALTUS as the licensor of such product using the ALTUS
trademark and logo (collectively, the "ALTUS Mark"). ALTUS shall have
[***************] right to control the use of the ALTUS Mark in connection with
sales of the Licensed Product. FALK's use of the ALTUS Mark shall be in strict
compliance with the uses of the ALTUS Mark set forth in the most recent version
of the ALTUS Style Guide, a copy of which (together with any subsequent
revisions thereto) shall be furnished by ALTUS to FALK. From time to time, as
reasonably requested by ALTUS, FALK shall submit to ALTUS for ALTUS' review
copies of marketing materials, packaging, instruction booklets, printed
materials, advertisements, and any other documents containing the ALTUS Mark,
together with an English language translation thereof, if requested by ALTUS. In
the event ALTUS objects to FALK's use of the ALTUS Mark, ALTUS shall so notify
FALK in writing, and FALK shall cease using the ALTUS Mark or change its use of
the ALTUS Mark to the satisfaction of ALTUS as soon as practicable. FALK agrees
that ALTUS shall be identified as licensor on all packaging and printed
literature and advertisements for Licensed Product sold by FALK or its
distributors, subject to legal and commercial requirements on a
country-by-country basis and in a manner in accordance with such legal and
commercial requirements. The packaging and printed literature and advertisements
for the Licensed Product shall indicate that the Licensed Product is an
innovation of ALTUS and that such product is distributed under a license granted
by ALTUS. The packaging shall also contain the patent numbers of any Licensed
Product Patents where such marking is required or provided for under applicable
law. Such marking shall further conform to the laws and practices of the
jurisdiction in which the Licensed Product is manufactured, sold and/or
delivered. FALK shall make copies of all marketing and promotional

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

materials for the Licensed Product available to ALTUS for filing with the
appropriate regulatory authorities, as required under applicable law.

                                   ARTICLE 6.
                                  FALK PAYMENTS

     6.1 FUNDING SUPPORT FOR DEVELOPMENT COSTS. Subject to the other terms and
conditions of this Agreement, and as consideration for the development work and
the development license rights granted to FALK by ALTUS under this Agreement,
FALK shall pay to ALTUS the following non-refundable, non-cancellable, and
non-creditable amounts upon the first occurrence of such event with respect to
the Licensed Product, which payments shall be required to be paid in order for
FALK to maintain its development license in the Territory:

<TABLE>
<CAPTION>
                         Event                         Payment
                         -----                         -------
<S>   <C>                                          <C>
(a)   [*************************************].     [*********](1)

(b)   [**************************************      [*********](1)
      **************************************
      **************************************
      *****************].

(c)   [*****************************************   [*********]
      ****************************************].

(d)   [*****************************************   [*********]
      ****************************************].

(e)   [*****************************************   [*********]
      ****************************************].

(f)   [*****************************************   [*********]
      *****************************************
      ************************************].

(g)   [****************************************    [*********]
      *****************************************
      *****************************************
      *****************************************
      *****************************************
      ***********************].

(h)   [****************************************    [*********]
      *****************************************
      *****************************************
      *****************************************
      *****************************************
      ***********************].
</TABLE>

----------
(1)  [**************************************************************************
     ***************************************************************************
     ***************************************************************************
     ***************************************************************************
     ***************************************************************************
     ************************************************************************
     ****].

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

For purposes of the payments set forth in Section 6.l(c)-(f) above,
[********************************************************************] shall be
deemed to be [**********] when ALTUS has delivered to FALK the
[****************************], or the [*************], respectively, as the
case may be.

     6.2 Subject to the other terms and conditions of this Agreement, and as
consideration for the commercial license rights granted to FALK by ALTUS under
this Agreement, FALK shall pay to ALTUS the following nonrefundable,
non-cancellable, and non-creditable amounts upon the first occurrence of the
Licensed Product to reach such event, which payments shall be required to be
paid in order for FALK to maintain its commercial license in the Territory:

<TABLE>
<S>   <C>                                          <C>
(a)   [****************************************    [*********]
      *****************************************
      *****************************************
      *****************************************
      *****************************************
      ***********************].

(b)   [****************************************    [*********]
      *****************************************
      *****************************************
      *****************************************
      *****************************************
      ***********************].
</TABLE>

     6.3 The payments set forth in Section 6.1(c)-(h) and Section 6.2(a)-(b)
shall be paid by FALK to ALTUS within [**********] days after the applicable
[*****************************]; provided, however that unless otherwise agreed
to by the Parties, any past due amounts shall bear interest at the rate that is
the lesser of (i) the [******************************************************]
as reported by Datastream (or a successor or similar organization) from time to
time, plus, at ALTUS' option, an additional [**************], or (ii) the
highest rate permitted by applicable law, in each case calculated on the number
of days such a payment is overdue.

     6.4 ROYALTIES.

          (A)  ROYALTY.

               (I) As consideration for the license rights granted to FALK by
ALTUS under this Agreement, FALK shall pay to ALTUS a royalty on Net Sales of
the Licensed Product sold by FALK (or its Affiliates) at the following
[********] royalty rate (which rate [********] according to the total amount of
FALK's [************] Deemed Net Sales (defined below) invoiced since the
Effective Date):

<TABLE>
<CAPTION>
[**********] Deemed Net
 Sales euros ("E") (in
       millions)          [*********]
-----------------------   -----------
<S>                       <C>
       [*******]             [****]
       [*******]             [****]
       [*******]             [****]
       [*******]             [****]
</TABLE>

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.

<PAGE>

<TABLE>
<S>                       <C>
       [*******]             [****]
       [*******]             [****]
       [*******]             [****]
</TABLE>

By way of example, if FALK's [*******] Deemed Net Sales of the Licensed Product
since the Effective Date equal [***********], the total royalty owed by FALK
would equal [*********], as set forth below.

<TABLE>
<CAPTION>
              [**********] Deemed Net
Example:    Sales of (euro) 499 million
--------    ---------------------------
<S>         <C>
[*******]      [*******************]
[*******]      [*******************]
[*******]      [*******************]
[*******]      [*******************]
[*******]      [*******************]
[*******]        [***************]
</TABLE>

               (II) For purposes of this Section 6.4(a), FALK's "[*********]
Deemed Net Sales" as of the end of a particular calendar quarter shall be
determined as follows:

                    (1)  If less than [********************] of FALK's gross
                         invoiced sales for the calendar quarter are
                         attributable to sales to Distributors, FALK's
                         "[********] Deemed Net Sales" as of the end of that
                         calendar quarter shall equal: (a) [********************
                         *******************************************************
                         **********************]; and

                    (2)  If [********************] or more of FALK's gross
                         invoiced sales for the calendar quarter are
                         attributable to sales to Distributors (such gross
                         invoiced sales to Distributors in excess of such
                         [*******] hereinafter referred to as "Excess
                         Distributor Sales"), FALK's "[*********] Deemed Net
                         Sales" as of the end of that calendar quarter shall
                         equal: (a) [*******************************************
                         *******************************************************
                         *******************************************************
                         *******************************************************
                         *******************************************************
                         *****************************************].

               In the event that during the term of this Agreement there is a
material change in the outline conditions in the Territory as they relate to the
question whether a Third Party should be considered a [*********] for the
purpose of this Agreement, the Parties undertake to renegotiate in good faith
and to adjust the definition in Section 1.11 above in order to reflect such
change in the outline conditions from the situation prevailing at the signing
hereof.

               (III) FALK shall pay royalties with respect to sales of the
Licensed Product on a country by country basis until the later of (i) the date
of expiration of the last to expire Valid Claim of a Base Patent Covering the
Licensed Product in such country, and (ii) [*************] from the First
Commercial Sale of the Licensed Product in such country.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

          (B) ROYALTY PAYMENT DATES. Royalties paid by FALK pursuant to Section
6.3(a) shall be paid by FALK within thirty (30) days after the end of each
calendar quarter in which Net Sales are made. All such payments shall be
accompanied by a statement showing the source of such revenues, including the
Net Sales of the Licensed Product in each country, a calculation of the
Cumulative Deemed Net Sales as of the end of that quarter, and a calculation of
the amount of payment due for each such jurisdiction. In the event royalties are
not paid within the time period set forth in this Section 6.3(b), unless
otherwise agreed to by the Parties, such royalties shall bear interest at the
rate that is the lesser of (i) the average one-month European Interbank Offered
Rate ("EURIBOR") as reported by Datastream (or a successor or similar
organization) from time to time, plus, at ALTOS' option, an additional
[**************], or (ii) the highest rate permitted by applicable law, in each
case calculated on the number of days such a payment is overdue.

          (C) ACCOUNTING. All payments due to ALTUS by FALK and royalties owed
to ALTUS shall be paid in euros. Whenever payment for the Licensed Product is
received by FALK in a foreign currency other than euros, for the purpose of
calculating royalties on FALK's Net Sales, conversion from such foreign currency
into euros shall be made on the last day of each calendar quarter at the
applicable rate of conversion on that date as retrieved from the Reuters System
(or any other source agreed upon in writing by the parties) for the applicable
calendar quarter.

          (D) TAXES. All sums due to ALTUS under this Agreement shall be paid in
full, subject to deduction for withholding taxes, charges and other duties
levied on account of such payment that may be imposed in the Territory save
insofar as ALTUS shall be capable of obtaining a credit therefore. The Parties
agree to co-operate in all respects necessary to take advantage of such double
taxation agreements as may be available. It is the understanding of FALK, after
consultation with its tax advisors based on current law, that payments to ALTUS
hereunder can be made, subject to the fulfillment of applicable formal
requirements, without the requirement of taxes to be withheld, although FALK
provides no warranty or assurance of such result. In the event that taxing
authorities assert a contrary result, the parties will cooperate in appropriate
proceedings to challenge such assertion. If FALK is required to deduct or
withhold it will (i) promptly notify ALTUS of such requirement, (ii) pay to the
relevant authorities the full amount to be deducted or withheld promptly upon
the earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against ALTUS and (iii) send
proof of payment to ALTUS by transmitting an official receipt (or certified
copy), or other documentation reasonably acceptable to ALTUS and obtainable by
FALK evidencing such payments to such authorities. Any such required tax,
charges and other duties actually paid on ALTUS' behalf shall be deducted from
the sums due to ALTUS under this Agreement.

     6.5 VALUE OF RIGHTS. ALTUS and FALK understand and acknowledge that the
value of each of the rights granted by this Agreement might fluctuate while this
Agreement is in effect. Notwithstanding any such fluctuation, ALTUS and FALK
have agreed to allocate the value of these rights in the manner represented by
the royalties and other payments contemplated hereunder and intend such
allocation to be binding and unchanging.

                                   ARTICLE 7.
                            MANUFACTURING AND SUPPLY

     7.1 SUPPLY OF THE LICENSED PRODUCT.

          (A) CLINICAL SUPPLIES. ALTUS shall provide or cause to be provided all
Clinical Supplies of the Licensed Product for the completion of human clinical
trials for the Licensed Product in the Field in the Territory. ALTUS may enter
into one or more "manufacturing and supply agreement(s)"

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

with Third Party contract manufacturer(s) for such Clinical Supplies. The cost
of Clinical Supplies [*********************************************************
***************************].

          (B) COMMERCIAL SUPPLIES. ALTUS shall be responsible for establishing
and shall use [*************************************] to establish a commercial
manufacturing process for, and making available, commercial supplies of the
Licensed Product at the scale and in the amounts required to [*************] for
the Licensed Product in the Field in the Territory. FALK shall have the
[**************] its requirements for commercial supplies of the Licensed
Product from ALTUS. If FALK takes advantage of such [********], the purchase
price shall be equal to [****] of the German Ex-Factory Price for the Licensed
Product; provided, however, that if ALTUS' aggregate fully-burdened
manufacturing costs for such Licensed Product exceeds [*****] of the German
Ex-Factory Price, [************************************************************
********************************************************************************
*******************************************************************************
******]. ALTUS shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of evidencing its fully
burdened manufacturing costs as a basis for the purchase price to be paid by
FALK for Licensed Product. Such books and records shall be kept at ALTUS'
principal place of business. FALK or its authorized independent accountant shall
have the right to [************] of such books and records of ALTUS that are
necessary to report on the purchase price for the commercial supplies of the
Licensed Product for the period or periods requested by FALK and the correctness
of any purchase price payment made by FALK to ALTUS. With regard to further
details of such [*****], the provisions in Section 13.4 hereinafter shall apply
mutatis mutandis. As soon as practicable after completion of a Phase III
Enabling Clinical Trial for the Licensed Product, ALTUS will enter into a
manufacturing and supply agreement with a Third Party contract manufacturer(s)
covering the manufacture, supply and quality control with respect to the
Licensed Product. ALTUS shall also ensure that [****************] for the
manufacture and supply of the Licensed Product. FALK will be responsible for
paying [**********************************************************************
************************]. The terms of the supply of commercial supplies by
ALTUS, in particular regarding all packaging, handling, shipping, delivery,
insurance, tariffs, taxes and the like pertaining to delivery of the Licensed
Product to FALK, will be governed by a "Supply and Distribution Agreement" to be
negotiated and entered into between the Parties, which agreement shall include
customary indemnification provisions relating to the quality of the manufactured
product and shall have terms consistent with this Agreement.

                                   ARTICLE 8.
                                    LICENSES

     8.1 LICENSE TO FALK. Subject to the terms hereof, ALTUS hereby grants to
FALK a [***********************] (except pursuant to Section 17.1), [********]
license, with the right to [********], under the Licensed Product Patents to
[*******************************************************] the Licensed Product
in the Field in the Territory in accordance with the terms of this Agreement.
Subject to the terms hereof, ALTUS hereby grants to FALK a [********************
***********] (except pursuant to Section 17.1), [*******************************
*******], under the Licensed Product Know-how to [******************************
**********************************] the Licensed Product in the Field in the
Territory in accordance with the terms of this Agreement.

     8.2 THIRD PARTY LICENSED IP. In respect of the Third Party Licensed LP
licensed from [********] to ALTUS, ALTUS shall obtain for FALK an acknowledgment
in writing from [*******] to the rights of FALK under this Agreement whereby the
rights and licenses granted hereunder to the Third Party Licensed IP shall
continue (free of any payment) notwithstanding any termination of the rights of
ALTUS in respect of the Third Party Licensed IP, substantially in the form of
the document contained in

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

Schedule 8.2. In respect of any further Third Party Licensed IP licensed to
ALTUS, ALTUS shall use [**************************************] to obtain for
FALK license rights to such Third Party Licensed IP as is necessary for FALK to
undertake the actions contemplated hereby on terms and conditions similar to
those enjoyed by ALTUS; provided that under no circumstances shall ALTUS be
required to incur any additional financial or other obligations in order to
assist FALK in obtaining such a license, and FALK shall be responsible for
[**************************************] with respect to such license. Without
limiting the foregoing, in connection kith the negotiation of a commercial
supply agreement with [*******], if any, ALTUS shall use
[*************************] to obtain for FALK without any additional obligation
of FALK such license rights from [*********] as may be necessary for FALK to
undertake the actions contemplated hereby.

     8.3 RETENTION OF RIGHTS. Notwithstanding the license granted to FALK in
Section 8.1, ALTUS shall retain the right within the Territory (i) to
[*************************] relating to the Licensed Product, (ii) to use at its
own cost the Licensed Product Patents and Licensed Product Know-how for its own
internal use and for non-commercial purposes, and (iii) to perform all other
activities contemplated by this Agreement.

     8.4 EXCLUSIVITY. During the full Term of this Agreement (as defined in
Section 14.1) ALTUS agrees and obligates itself, and for five years from the
date hereof, FALK agrees and obligates itself not to [**********************]
any other products that consist of [*******************************************
**********] in the Territory in the Field outside this collaboration.

                                   ARTICLE 9.
                                   TRADEMARKS

     9.1 PRODUCT TRADEMARK. All of the Licensed Product shall be sold in the
Territory under the applicable Product Trademark and the ALTUS Mark as described
in Section 5.7.

     9.2 GRANT OF LICENSE. ALTUS grants to FALK, subject to compliance with the
other terms and conditions of this Agreement, a non-exclusive, royalty-free,
non-transferable license, with the right to sublicense, to use the ALTUS Mark
solely within the Territory and solely in connection with the sale of the
Licensed Product in the Field.

     9.3 QUALITY CONTROL. FALK shall apply the Product Trademark and the ALTUS
Mark only to the Licensed Product and only in accordance with the terms of this
Agreement. ALTUS shall have the right, at any time during regular business hours
but no more than one time per calendar year, to conduct an examination of the
Licensed Product to determine the quality of the Licensed Product. If at any
time, the Licensed Product shall, in the reasonable opinion of ALTUS, fail to
conform with the appropriate standards of quality as required under this
Agreement, ALTUS or its authorized representatives shall notify FALK. Upon such
notification, the Parties shall discuss and implement actions to meet standards
of quality to the complete satisfaction of ALTUS.

     9.4 ACKNOWLEDGMENT OF OWNERSHIP RIGHTS.

          (A) FALK acknowledges and agrees that ALTUS is the exclusive owner of
all right, title, and interest in and to the ALTUS Mark, and that all use of the
ALTUS Mark by FALK will inure to the exclusive benefit of ALTUS. FALK undertakes
to make use of the ALTUS Mark only in such a way that the rights of ALTUS in
said mark will not be diminished in any way. FALK shall not use the ALTUS Mark
as all or part of any corporate name, trade name, trademark, service mark,
certification mark, collective membership mark, domain name, or any other
designation confusingly similar to the ALTUS Mark.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

          (B) ALTUS acknowledges and agrees that FALK is the exclusive owner of
all right, title, and interest in and to the "Dr. FALK" trademark and logo
(collectively, the "FALK Mark"), and that all use of the FALK Mark by ALTUS will
inure to the exclusive benefit of FALK. ALTUS undertakes to make use of the FALK
Mark only in such a way that the rights of FALK in said mark will not be
diminished in any way. ALTOS shall not use the FALK Mark as all or part of any
corporate name, trade name, trademark, service mark, certification mark,
collective membership mark, domain name, or any other designation confusingly
similar to the FALK Mark.

     9.5 USE OF TRADEMARK DESIGNATIONS. FALK shall use the TM designation in
conjunction with any use of the ALTUS Mark within the Territory pursuant to this
Agreement until such time as the foreign registrations issue, unless otherwise
required by local trademark law. Once the foreign registrations issue, FALK
shall use the (R) designation with all uses of the ALTUS Mark and any other
similar designation, unless otherwise required by local trademark law.

     9.6 ACTIONS FOR INFRINGEMENT. Each Party shall notify the other promptly
upon learning of any actual, alleged, or threatened infringement of the Product
Trademark(s) or the ALTUS Mark applicable to the Licensed Product in the Field
in the Territory or of any unfair trade practices, trade dress imitation,
passing off of counterfeit goods, or like offenses in the Territory. Upon
learning of such offense from a Party, the Parties shall confer regarding the
defense of the Product Trademark(s) or the ALTUS Mark. FALK shall have the first
right to respond to and defend any such infringement or offense with respect to
the Product Trademark(s). FALK will keep ALTUS reasonably informed at all times
as to the status of the infringement or offense. In the event that FALK elects,
within ninety (90) days, not to respond to or defend any such infringement or
offense or abandons such defense, then, in such event, ALTUS shall have the
option to do so, provided that FALK shall cooperate with and provide reasonable
assistance to ALTUS. ALTUS shall have the sole right to respond to and defend
any such infringement or offense with respect to the ALTUS Mark.

     9.7 COSTS OF DEFENSE OF TRADEMARKS. The Party bringing the action shall
bring such action or proceeding at its own cost and expense. Any damages or
other monetary awards recovered from settlement or judgment from such an action
shall be allocated first to reimburse the costs and expenses of the Party
bringing the action, then to reimburse the costs and expenses, if any, of the
other Party (except for costs associated with the other Party being represented
by counsel of its own choice). Any amounts remaining shall be paid to the Party
bringing such action.

                                   ARTICLE 10.
                                 CONFIDENTIALITY

     10.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement, the Parties agree that, for the Term of this Agreement and
thereafter, the receiving Party shall keep confidential and shall not publish or
otherwise disclose or use for any purpose other than as permitted under this
Agreement any proprietary information or materials furnished to it by the other
Party pursuant to this Agreement, including but not limited to any Know-how,
business plans, marketing plans, customer information, financial information or
patent applications (unless and until such applications are published pursuant
to applicable law) (collectively, "Confidential Information"), except to the
extent that it can be established by the receiving Party that such Confidential
Information:

          (A) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party as
demonstrated by pre-existing written records;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

          (B) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

          (C) became generally available to the public or otherwise part of the
public domain after its disclosure to the receiving Party other than through any
act or omission (i) of the receiving Party in breach of this Agreement, or (ii)
of any Third Party without authority to make such disclosure;

          (D) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others; or

          (E) was subsequently developed by the receiving Party without use of
the Confidential Information as demonstrated by pre-existing written records.

     10.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is required to comply with
applicable laws or governmental regulations or to conduct pre-clinical or
clinical trials or to the extent ordered by a court of competent jurisdiction
(subject to entry of an appropriate protective order); provided, however, that
if a Party is required by law or regulation to make any such disclosure of the
other Party's Confidential Information, or such disclosure is required to
conduct pre-clinical or clinical trials, the disclosing Party will give, to the
extent practicable, reasonable advance notice to the other Party of such
disclosure requirement and will use its reasonable best efforts to secure
confidential treatment of such Confidential Information required to be
disclosed. In addition, each Party shall be entitled to disclose, under a binder
of confidentiality containing provisions substantially as protective as those of
this Article 10, Confidential Information to its consultants, clinical
investigators and contract manufacturer, if any, but only for any purposes
provided for in this Agreement and only to the extent required for the Parties
to perform their respective obligations under this Agreement.

     10.3 SURVIVAL. This Article 10 shall perpetually survive the termination or
expiration of this Agreement.

     10.4 PUBLICATIONS. Except as required by law, FALK agrees that it shall not
publish or present the results of studies or clinical trials carried out by
either Party as part of the collaboration without the prior written consent of
the Steering Committee.

                                   ARTICLE 11.
              OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

     11.1 OWNERSHIP OF INVENTIONS. Any Inventions that relate to ALTUS
Background Technology or to the Licensed Product, its manufacture or its use,
including but not limited to any and all improvements, modifications, and
enhancements thereof in any form or formulation (hereinafter, "ALTUS
Inventions") shall be [***********************]. Any Inventions, excluding ALTUS
Inventions, that relate to FALK Background Technology shall be [**************
**********]. FALK will promptly disclose to ALTUS all ALTUS Inventions conceived
or reduced to practice by FALK, alone or together with ALTUS or Third Parties.
FALK shall assign all ALTUS Inventions to ALTUS and shall cooperate in the
filing and prosecution of any patent applications relating to ALTUS Inventions.
ALTUS will promptly disclose to FALK all FALK Inventions conceived or reduced to
practice by ALTUS, alone or together with FALK or Third Parties. ALTUS shall
assign [***] FALK Inventions to FALK and shall cooperate in the filing and
prosecution of any patent applications relating to FALK Inventions. For purposes
of this Section 11.1, inventorship shall be determined in accordance with

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

principles of U.S. patent law. In the event that there is a dispute between the
Parties as to ownership of Inventions, the Steering Committee shall establish a
procedure to resolve such dispute, which may include engaging a Third Party
patent attorney jointly selected by the parties who is completely unaffiliated
and independent of the Parties, as an expert to resolve such dispute. If the
Steering Committee is unable to establish a procedure to resolve such disputes,
either Party may seek to resolve such dispute in accordance with Article 16
hereof.

     11.2 THIRD PARTY PATENTS. Each Party agrees to bring to the attention of
the other Party in a timely manner any Third Party patent or patent application
that has been brought to its attention by such Third Party, or of which it
otherwise becomes aware, that it believes would have a material affect on the
operations to be conducted by or on behalf of the Parties under this Agreement.

     11.3 PATENT FILINGS.

          (A) With respect to the patents and patent applications constituting
Base Patents that have been filed in the Field in the Territory, ALTUS shall (i)
be responsible for obtaining, prosecuting and maintaining such Base Patents;
(ii) keep FALK apprised of the status of such patents and patent applications,
and (iii) share with FALK all material information (including correspondence
with the various patent offices) relating thereto promptly after receipt of such
information. ALTUS shall be responsible for [*] costs incurred in connection
with the preparation, filing, prosecution, and maintenance of any patents and
patent applications constituting Base Patents that have been filed in the
Territory.

          (B) At its sole discretion, ALTUS shall have the right to file,
prosecute, and maintain patent applications and patents for any and all ALTUS
Inventions in such countries worldwide as it may determine. All such patent
applications and patents Covering the Licensed Product for use in the Field that
are filed in the Territory shall be deemed to be Licensed Product Patents. FALK
shall be responsible for all costs and expenses relating to the filing,
prosecution, and maintenance of the Licensed Product Patents on the ALTUS
Inventions in the Territory, if the ALTUS Inventions Cover the Licensed Product
or are, in FALK's scientific judgment, necessary or useful for the
commercialization and exploitation of the Licensed Product in the Territory. If
ALTUS elects not to file, prosecute or maintain any Licensed Product Patent on
the ALTUS Inventions in any Major European Country, ALTUS shall so inform FALK
immediately. In each such case, FALK may then file, prosecute and maintain any
such patents on an ALTUS Invention in such Major European Country as it may
determine at its own expense and discretion. The Party which is responsible
(pursuant to this Section 11.3(b)) for filing a patent application for such an
ALTUS Invention will be referred to herein as the "filing Party." For the Major
European Countries, the filing Party shall keep the other Party apprised of the
status of each such patent application and patent and shall seek the advice of
the other Party with respect to patent strategy and draft patent applications
and shall give reasonable consideration to any suggestions or recommendations
promptly provided by the other Party concerning the preparation, filing,
prosecution, and maintenance thereof. The Parties shall cooperate reasonably in
the prosecution of all such patent applications and patents on an ALTUS
Invention and shall share all material information relating thereto promptly
after receipt of such information. If, during the Term of this Agreement, the
filing Party intends to allow any patent or patent application for an ALTUS
Invention in any country of the world to lapse or become abandoned without
having first filed a substitute, the filing Party shall make reasonable efforts
to notify the other Party of such intention at least sixty (60) days prior to
the date upon which such patent application or patent shall lapse or become
abandoned, and the other Party shall thereupon have the right, but not the
obligation, to assume responsibility for the prosecution and maintenance
thereof.

     11.4 INITIAL FILINGS IF MADE OUTSIDE OF THE U.S. The Parties agree to use
reasonable efforts to ensure that any patent filed outside of the U.S. prior to
a U.S. filing will be in a form sufficient to establish the date of original
filing as a priority date for the purposes of a subsequent U.S. filing.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     11.5 ENFORCEMENT RIGHTS.

          (A) NOTIFICATION OF INFRINGEMENT. If FALK learns of any infringement
or threatened infringement by a Third Party of a Licensed Product Patent in any
country in the Territory, FALK shall promptly notify ALTUS in writing and shall
provide ALTUS with all available evidence in FALK's possession of such
infringement.

          (B) ENFORCEMENT. ALTUS shall have the right, but not the obligation,
to institute, prosecute and control (collectively, "bring") any action or
proceeding with respect to infringement in the Field in the Territory of any
Licensed Product Patent by counsel of its own choice, and FALK shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice. FALK shall be responsible for paying [****] of the reasonable
costs and expenses, including attorneys fees, relating to any such action if the
infringement is likely to have an adverse effect on the sale and distribution of
the Licensed Product in the Territory and shall inform ALTUS of its intention to
pay such costs and expenses prior to initiating the lawsuit. If ALTUS chooses
not to bring such an action or proceeding within sixty (60) days of being
notified of such infringement, then FALK shall have the right (but not the
obligation) to bring such action. The Party not bringing such action or
proceeding agrees to be joined as a party plaintiff if necessary to prosecute
the action or proceeding and to give reasonable assistance and authority to file
and prosecute the action or proceeding. Any damages or other monetary awards or
amounts recovered from settlement or judgment from such an action or proceeding
shall be allocated first to reimburse the Part(ies) for the reasonable costs and
expenses of the action or proceeding (which amount shall be allocated pro rata
if insufficient to cover the totality of costs and expenses), with the remainder
to be paid to the party paying for the costs and expenses of the litigation;
provided that for purposes of determining the royalty amount payable to ALTUS
pursuant to Section 6.3, any amounts received by FALK as damages that are
attributable to gross revenues of the infringer for infringing sales shall be
added to the Net Sales amount for the calendar quarter in which such damages,
awards or amounts are recovered.

          (C) SETTLEMENT WITH A THIRD PARTY. The Party that brings suit to
enforce a given Licensed Product Patent in the Field in the Territory shall also
have the right to control settlement of such claim; provided, however, that if
one Party controls, no settlement shall be entered into without the express
written consent of the other Party. If there is no agreement between the Parties
regarding such settlement, then the dispute will be resolved pursuant to Article
16 below. If the dispute is not resolved pursuant to Article 16, then the case
may not be settled.

          (D) In the event that a non-Affiliated Third Party institutes a
patent, trade secret or other infringement suit against FALK or its Affiliates,
alleging that the manufacturing, use or sale of the Licensed Product in the
Territory infringes one or more Patents or other intellectual property rights
held by such Third Party (an "Action"), FALK shall promptly notify ALTUS thereof
in writing and discuss with ALTUS the best way to respond. [*******] shall have
the [*******************************************] (subject to the last sentence
of this subparagraph (d)) [*****************************************************
**********************************************************************] not to
[******] such [*******************************************] of such [**********
*****] shall have [*****************************************] (subject to the
last sentence of this subparagraph (d)) [**************************************]
on such [***************************************************], PROVIDED,
HOWEVER, that [*****************************************************************
******************************] not to be [******************************]. In
connection with any such [******************************************************
********************************************************************************
*****************************] for any such [***********************************
********************************************

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

****************************************************]; provided that in no event
[*******************************************************] to this [*************
********************************************************************************
********************************************************************************
**************].

The foregoing shall not affect any liability of ALTUS under Article 12, arising
out of or in connection with any Action.

                                   ARTICLE 12.
                         REPRESENTATIONS AND WARRANTIES

     12.1 REPRESENTATIONS AND WARRANTIES OF ALTUS. As a material inducement to
FALK to enter into this Agreement and to consummate the transactions
contemplated herein, ALTUS hereby represents and warrants to FALK as follows:

          (A) ORGANIZATION. ALTUS is a corporation duly incorporated, validly
existing and in good corporate standing under the Laws of the State of Delaware.
ALTUS has full corporate power and authority to own and lease its properties and
carry on its business and is duly qualified, registered or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the character of its operations
makes such qualification, registration or licensing necessary except where the
failure to be so qualified, registered or licensed would not have a material
adverse effect on the business of ALTUS.

          (B) AUTHORITY. ALTUS has the corporate right, power and authority to
carry on its business and to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action on the part of the ALTUS and no other corporate proceedings on
the part of ALTUS are necessary to authorize this Agreement or the consummation
of the transactions contemplated by this Agreement. This Agreement has been duly
and validly executed by ALTUS and constitutes a legal, valid and binding
obligation of ALTOS, enforceable against ALTUS except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights.

          (C) NO CONFLICT. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will violate, be in
conflict with, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination of,
accelerate or excuse the performance required by any person of any of its
obligations under, cause the acceleration of the maturity of any material amount
of debt or material obligation pursuant to or result in the creation or
imposition of any material encumbrance upon any property of ALTUS under, any
material contract to which ALTUS is a party or by which any of its property is
bound or subject such that any such occurrence will have a material adverse
effect on ALTUS.

          (D) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES; INDEBTEDNESS.

               (I) (i) ALTUS has provided to FALK copies of the audited balance
sheet of ALTUS for the year ended December 31, 2001 and the related audited
statements of operations, statements of stockholder's equity and statements of
cash flows, together with any related notes thereto, for the year ended December
31, 2001 and (ii) the unaudited balance sheet of ALTUS for the nine months ended
September 30, 2002 (collectively, the "Financial Statements"). Each of the
Financial Statements fairly present in all material respects, as the case may
be, the financial condition, assets and liabilities of

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

ALTUS as of date thereof, or ALTUS' results of operations and changes in ALTUS'
financial position for the period set forth therein. Each of the Financial
Statements was prepared in accordance with U.S. GAAP consistently applied during
the relevant period, except as otherwise set forth in the notes thereto and
subject, in the case of the unaudited Financial Statements, to normal and
recurring year-end adjustments and the omission of footnotes.

               (II) As of the date hereof, ALTUS has not incurred any material
liabilities or material obligations of any nature, whether or not accrued,
absolute, contingent or otherwise, other than liabilities adequately provided or
reserved for in the Financial Statements or disclosed in any related notes
thereto.

               (III) Since September 30, 2002, there has been no material
adverse change in the business of ALTUS, or any damage or impairment to, or
destruction or loss, sale, assignment, transfer, lapse or encumbrance of any
Licensed Product Patents or Licensed Product Know-How (whether or not covered by
insurance) that could reasonably be expected to have a material adverse effect
on the Agreement or the activities contemplated thereby.

          (E) LITIGATION. There is no litigation, arbitration, claim, action,
suit, governmental or other proceeding (formal or informal) to which ALTUS is a
party or to the knowledge of ALTUS, investigation pending or, threatened against
or affecting ALTUS, its business or the Licensed Product Patents or Licensed
Product Know-How that could be expected to have an adverse effect on this
Agreement or the activities contemplated hereby or that could be expected to
affect in an adverse manner the ability of ALTUS to comply in all material
respects with its obligations under this Agreement.

          (F) INTELLECTUAL PROPERTY.

               (I) TRADEMARKS. Schedule 12.1(f) sets forth as of the date hereof
an accurate, correct and complete list of all United States trademarks,
trademark applications, trademark registrations, brand names, and trade names
owned or licensed by ALTUS that relate to the Licensed Product (the "ALTUS
Trademarks") and no other Person has been granted by ALTUS (or to the best
knowledge of ALTUS, has been granted by any other Person) any rights, or has any
interest, in such. ALTUS owns and possesses all right, title and interest, or
holds a valid license, in and to the ALTUS Trademarks. Except as set forth in
Schedule 12.1(f), no claim has been asserted or, threatened by any Person
regarding the use or licensing by ALTUS of the ALTUS Trademarks. To the best
knowledge of ALTUS, its use of the Trademarks does not violate or infringe, and
has not in the past violated or infringed, in each case in any material manner
the rights of any Person and no material claims have been asserted by ALTUS
against any other Person claiming infringement of its Trademarks.

               (II) BASE PATENTS. Exhibit A sets forth as of the Effective Date
an accurate, correct and complete list of patents and patent applications owned
or licensed by ALTUS that constitute Base Patents. To the knowledge of ALTUS,
the Base Patents that are issued are valid and enforceable ALTUS owns and
possesses all right, title and interest, or holds a valid license, in and to the
Base Patents, free of any lien, charge or encumbrance and no other Person has
been granted by ALTUS any rights in such with respect to the Licensed Product in
the Territory. No claim has been asserted threatened by any person regarding the
use or licensing by ALTUS of the Base Patents. To the knowledge of ALTUS, its
use of the Base Patents does not violate or infringe, and has not in the past
violated or infringed the rights of any Third Party, and no claims have been
asserted by ALTUS against any other person claiming infringement of the Base
Patents. As of the Effective Date, ALTUS has no knowledge of any Third Party
patent or patent application that would be expected to have a material adverse
effect on the business and operations to be conducted by either Party as
contemplated by this Agreement; ALTUS is not aware of any Patents or Patent
applications that would prevent the development, use and sale of the Licensed

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

Product as contemplated by this Agreement. Additionally, as of the Effective
Date, ALTUS has not received written notice from any Third Party that
TheraCLEC-Total infringes on any patent or patent application owned by such
Third Party that would have an adverse effect on the operations to be conducted
in the Field in the Territory by the Parties under this Agreement.

               (III) ADEQUACY OF RIGHTS. The rights and licenses to the Licensed
Product Patents and Licensed Product Know How that are necessary for the
commercialization of the Licensed Product in the Field in the Territory pursuant
to the terms of this Agreement have been licensed to FALK pursuant to Sections
8.1 and 9.2 hereunder and the Licensed Patents and the Licensed Product Know-How
include all intellectual property, know how and confidential information in the
possession of ALTUS which is necessary for the commercialization of the Licensed
Product by FALK under this Agreement. ALTUS has not previously granted, and will
not grant during the term of this Agreement, any right, license or interest that
is in conflict with the rights and licenses granted to FALK under this
Agreement. There is no action or proceeding nor, so far as ALTUS is aware (due
inquiry having been made), any threat of an action or proceeding that would
materially and adversely affect the rights granted to FALK herein in respect of
the Licensed Product.

               (IV) THIRD PARTY LICENSED IP. All of the patents listed on
Exhibit A that have been licensed to ALTUS have been licensed upon terms
permitting the sublicense to FALK under the terms of this Agreement and none of
such licenses are capable of termination by either party thereto at any time
during the term of this Agreement. [******************************************
***************************] in accordance with the [**************************
*******************************************************************************
*******************************************] under the terms of [**************
*******************************].

          (G) SUBSIDIARIES. Attached on Schedule 12.1(g) is a complete list of
all subsidiaries of ALTUS. Each of the ALTUS Subsidiaries is in good standing
and is qualified to do business in all jurisdictions in which it conducts its
business.

          (H) ASSETS. To ALTUS' knowledge, ALTUS owns or has a valid right to
use all material property that is used by ALTUS to conduct its business as
presently conducted except where the failure to own or have a valid right to use
would not have a material adverse effect on the business of ALTUS.

     12.2 REPRESENTATIONS AND WARRANTIES OF FALK. As a material inducement to
ALTUS to enter into this Agreement and to consummate the transactions
contemplated herein, FALK hereby represents and warrants to ALTUS as follows:

          (A) ORGANIZATION. FALK is a corporation duly incorporated, validly
existing and in good corporate standing under the applicable laws of Germany.
FALK has full corporate power and authority to own and lease its properties and
carry on its business and is duly qualified, registered or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the character of its operations
makes such qualification, registration or licensing necessary except where the
failure to be so qualified, registered or licensed would not have a material
adverse effect on the business of FALK.

          (B) AUTHORITY. FALK has the corporate right, power and authority to
carry on its business and to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

on the part of the FALK and no other corporate proceedings on the part of FALK
are necessary to authorize this Agreement or the consummation of the
transactions contemplated by this Agreement. This Agreement has been duly and
validly executed by FALK and constitutes a legal, valid and binding obligation
of FALK, enforceable against FALK except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights.

          (C) NO CONFLICT. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will violate, be in
conflict with, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination of,
accelerate or excuse the performance required by any person of any of its
obligations under, cause the acceleration of the maturity of any material amount
of debt or material obligation pursuant to or result in the creation or
imposition of any material encumbrance upon any property of FALK under, any
material contract to which FALK is a party or by which any of its property is
bound or subject such that any such occurrence will have a material adverse
effect on FALK.

          (D) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES; INDEBTEDNESS.

               (I) FALK has provided to ALTUS financial information relating to
FALK's sales, net profit and EBITDA for the periods specified therein (the
"Financial Information"). The Financial Information was prepared in accordance
with German GAAP and is true and accurate in all material respects.

               (II) As of the date hereof, FALK has not incurred any material
liabilities or material obligations of any nature, whether or not accrued,
absolute, contingent or otherwise, other than liabilities adequately provided or
reserved for in the Financial Statements or disclosed in any related notes
thereto, and FALK has sufficient cash or cash equivalents on hand to reasonably
be expected to be able to meet all of its financial obligations under this
Agreement.

               (III) Since September 30, 2002, there has been no material
adverse change in the business of FALK, or any damage or impairment to, or
destruction or loss, sale, assignment, transfer, lapse or encumbrance of any
intellectual property of FALK (whether or not covered by insurance) that could
reasonably be expected to have a material adverse effect on the Agreement or the
activities contemplated thereby.

          (E) LITIGATION. There is no litigation, arbitration, claim, action,
suit, governmental or other proceeding (formal or informal) to which FALK is a
party or investigation pending or, to the knowledge of FALK, threatened against
or affecting FALK, its business or its intellectual property that could
reasonably be expected to have a material adverse effect on this Agreement or
the activities contemplated hereby or that could reasonably be expected to
affect in a material adverse manner the ability of FALK to comply in all
material respects with its obligations under this Agreement.

          (F) INTELLECTUAL PROPERTY; TRADEMARKS. Schedule 12.2(f) sets forth as
of the date hereof an accurate, correct and complete list of all trademarks,
trademark applications, trademark registrations, brand names, and trade names
owned or licensed by FALK that relate to the FALK Mark (the "FALK Trademarks")
and no other Person has been granted by FALK (or to the knowledge of FALK, has
been granted by any other Person) any rights, or has any interest, in such FALK
Trademarks. FALK owns and possesses all right, title and interest, or holds a
valid license, in and to the FALK Trademarks. Except as set forth in Schedule
12.2(f), no claim has been asserted or, to the knowledge of FALK, threatened by
any person regarding the use or licensing by FALK of the FALK Trademarks. To the
knowledge of FALK, its use of the FALK Trademarks does not violate or infringe,
and has not in the past violated or infringed, in each case in any material
manner the rights of any person and no material

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

claims have been asserted by FALK against any other person claiming infringement
of its FALK Trademarks

          (G) SUBSIDIARIES. Attached on Schedule 12.2(g) is a complete list of
all subsidiaries of FALK. Each of the FALK Subsidiaries is in good standing and
is qualified to do business in all jurisdictions in which it conducts its
business.

          (H) ASSETS. To FALK's knowledge, FALK owns or has a valid right to use
all material property that is used by FALK to conduct its business as presently
conducted except where the failure to own or have a valid right to use would not
have a material adverse effect on the business of FALK.

          (I) DISTRIBUTION CHANNELS. As of the Effective Date of this Agreement,
FALK employs direct sales personnel in [******************].

     12.3 For purposes of the representations and warranties set forth in
Sections 12.1 and 12.2 above, the knowledge of ALTUS shall mean the knowledge of
the Chief Executive Officer, the Chief Financial Officer and the Director of
Commercial Development of ALTUS, and the knowledge of FALK shall mean the
knowledge of the Chief Executive Officer, Development Director, and the Chief
Financial Officer of FALK.

     12.4 THE EXPRESS REPRESENTATIONS AND WARRANTIES STATED IN THIS AGREEMENT
ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

     12.5 DISCLAIMER. EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES
RELATING TO INTELLECTUAL PROPERTY SET FORTH IN SECTION 12.1(f)(ii), (iii) and
(iv) ABOVE, NEITHER ALTUS NOR FALK BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL,
OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, ARISING OUT
OF THIS AGREEMENT BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY.

                                   ARTICLE 13.
                             INFORMATION AND REPORTS

     13.1 INFORMATION. FALK and ALTUS will disclose and make available to each
other in a timely manner all pre-clinical, clinical, regulatory, marketing and
other information concerning the Licensed Product for use in the Field in the
Territory known by FALK or ALTUS at any time during the Term of this Agreement.
Each Party will use Commercially Reasonable and Diligent Efforts to disclose to
the other Party all significant information directly related to the Licensed
Product promptly after it is learned and its significance is appreciated. ALTUS
shall maintain a database of adverse drug experience information for the
commercial Licensed Product and shall be the owner of such database. As soon as
reasonably practicable after the execution of this Agreement, the Parties will
enter into one or more separate safety and adverse event reporting agreements
that will govern the reporting and other procedures related to adverse drug
experiences under this collaboration between ALTUS and FALK.

     13.2 PRODUCT COMPLAINTS. Each Party will maintain a record of all
non-medical and medical Licensed Product-related complaints and will notify the
other Party of any complaint in a sufficient time to allow the other Party to
comply with any regulatory requirements it may have with respect to such
complaint.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     13.3 ADVERSE DRUG EVENTS. The Parties recognize that as the holder of a
Drug Approval Application, ALTUS will be required to submit information and file
reports to various governmental agencies on compounds under clinical
investigation, compounds proposed for marketing, or marketed drugs. Information
must be submitted at the time of initial filing for investigational use in
humans and at the time of a request for market approval of a new drug. In
addition, supplemental information must be provided on compounds at periodic
intervals and adverse drug experiences must be reported at more frequent
intervals depending on the severity of the experience. The specific obligations
of each Party with respect to adverse drug experiences will be governed by the
safety and adverse event reporting agreement(s) described in Section 13.1 above.

     13.4 RECORDS OF NET SALES. FALK and its Affiliates shall keep full, true
and accurate books of account containing all particulars that may be necessary
for the purpose of calculating all royalties payable to ALTUS. Such books of
accounts shall be kept at their principal place of business. ALTUS or its
authorized independent public accountant shall have the right to perform an
audit, conducted in accordance with German GAAP, of such books and records of
FALK and its Affiliates that are necessary to report on Net Sales of the
Licensed Product for the period or periods requested by ALTUS and the
correctness of any report or payments made under this Agreement.

     Upon timely request and at least [*****************] prior written notice
from ALTUS, such audit shall be conducted during FALK's regular business hours
in such a manner as to not unnecessarily interfere with FALK's normal business
activities, and shall be limited to results in the [*******************] prior
to audit notification. Such audit shall not be performed more frequently than
[********************] nor more frequently than [***] with respect to records
covering any specific period of time. All information, data documents and
abstracts herein referred to shall be used only for the purpose of verifying
royalty statements or compliance with this Agreement, shall be treated as FALK
Confidential Information subject to the obligations of this Agreement and need
neither be retained more than [************] after completion of an audit
hereof, if an audit has been requested; nor more than [*********] from the end
of the calendar year to which each shall pertain; nor more than [***********]
after the date of expiration or termination of this Agreement. If the audit
reveals an underpayment, FALK shall promptly make up such underpayment with
interest, to the extent permitted by applicable law, with such interest payment
calculated for each month during the delinquent period at the Prime rate
applicable on the last day of such month as reported in the Wall Street Journal
from time to time, plus, at ALTUS' option, an additional [*********], calculated
on the number of days such underpayment amount is overdue. If the audit reveals
that the royalties owed by FALK to ALTUS for the countries specifically
requested and for any calendar year in total have been understated by more than
[*************], FALK shall, in addition, pay the reasonable costs of such audit
work. The failure of ALTUS to request verification of any royalty calculation
within the period during which corresponding records must be maintained will be
deemed to be acceptance of the royalty reporting.

     13.5 CONTRIBUTION OF INFORMATION. It is the intention of the Parties that
each will disclose to the other Party such information in its possession that is
useful to the development and commercialization of the Licensed Product in the
Field in the Territory.

     13.6 PUBLICITY REVIEW.

          (A) PRIOR TO FIRST COMMERCIAL SALE. Each of the Parties agree that
prior to the First Commercial Sale of the Licensed Product, neither Party will
issue any announcements, releases, statements or reports, or confirm any
statements made by Third Parties, pertaining to this Agreement or the
transactions contemplated hereby, unless agreed to in writing by the other
party, except as may be required by law or otherwise permitted herein. ALTUS and
FALK will jointly discuss and must first agree in writing before making any
statement to the public regarding this Agreement and the results of

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

clinical studies conducted hereunder. When a Party elects to make any such
statement it will give the other Party at least five (5) business day's notice,
unless disclosure is required by law in a shorter period of time, and allow the
other Party to review and comment on such statement. The Parties acknowledge the
importance of supporting each other's efforts to publicly disclose results and
significant developments regarding the Licensed Product. The principles to be
observed by ALTUS and FALK in such public disclosures will be: accuracy, the
requirements for confidentiality under Article 10, the advantage a competitor of
ALTUS or FALK may gain from any public statements under this Section 13.6, and
the standards and customs in the biotechnology and pharmaceutical industries for
such disclosures by companies comparable to ALTUS and FALK. The terms of this
Agreement may also be disclosed to (a) government agencies where required by
law, including filings required to be made by law with the Securities and
Exchange Commission, or any national securities exchange or quotation system,
(b) Third Parties with the prior written consent of the other Party, which
consent shall not be unreasonably withheld, and (c) investors and potential
investors, lenders and potential lenders, and any other sources of potential
financing for either Party; provided, however, that in the case of (b) and (c)
above, such disclosure is made under a binder of confidentiality at least as
restrictive as the confidentiality provisions in Section 10.1 above (in the case
of Third Parties), so long as highly sensitive terms and conditions such as
financial terms are extracted from the Agreement or not disclosed upon the
request of the other Party and the disclosing Party gives reasonable advance
notice of the disclosure under the circumstances requiring the disclosure.

          (B) AFTER FIRST COMMERCIAL SALE. After the First Commercial Sale of
the Licensed Product, each Party agrees to provide the other Party with at least
48 hours (or sooner if required to comply with applicable law) prior written
notice of any proposed public announcement or press release regarding the
Licensed Product or this Agreement.

                                   ARTICLE 14.
                              TERM AND TERMINATION

     14.1 TERM. This Agreement shall commence as of the Effective Date. The
Parties have specifically provided elsewhere in this Agreement the term during
which certain rights and obligations hereunder shall apply. Unless sooner
terminated as provided in this Article 14, the remaining provisions of this
Agreement relating to activities in the Field in the Territory shall continue in
effect until the date on which ALTUS is no longer entitled to receive a royalty
on the Licensed Product (the "Term"). Upon expiration of this Agreement (other
than by termination by either party), the licenses set forth in Section 8.1
shall be deemed to be [******************] and FALK shall thereafter be
[***************************] the Licensed Product, either by itself or through
its Affiliates or sublicensees, under the Licensed Product Patents and Licensed
Product Know-how in the Territory [****************] to ALTUS.

     14.2 TERMINATION FOR MATERIAL BREACH (OTHER THAN NON-PAYMENT). In the event
there shall have occurred a material adverse breach of this Agreement or a
material adverse default in the observance or performance of any provision of
this Agreement (other than for non-payment of monies due) by a Party (the
"Defaulting Party"), the Party claiming the same (the "Non Defaulting Party")
shall promptly provide detailed notice thereof to the Defaulting Party. The
Defaulting Party shall have [*************] from the date of receipt of such
notice to cure the material adverse breach or material adverse default detailed
in such notice and, if the same is timely cured within such [**********] period
the provisions of this Agreement shall remain in full force and effect. In the
event that the material adverse breach or material adverse default detailed in
such notice (other than on account of nonpayment of monies owed) cannot with due
diligence be cured within such [**********] period and the Defaulting Party
promptly notifies the Non Defaulting Party of the period [*******************]
in which it anticipates that it can be cured, the time to cure such material
adverse breach or material adverse default shall be

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

extended for such period [************************] as may be necessary to cure
the same with all due diligence. This Agreement may be terminated forthwith by
service of notice in writing by the Non Defaulting Party in the event that the
Defaulting Party shall fail to cure such material adverse breach or material
adverse default within such initial or extended period. Upon such termination,
the Parties shall have no further rights or obligations under this Agreement
except as set forth in this Article 14 or as otherwise specifically provided in
this Agreement.

     14.3 TERMINATION FOR NON-PAYMENT. If FALK fails to make any of the payments
required under Section 6.1 (other than those set forth in Sections 6.1(a) and
(b)) and Section 6.2 within [*************] after such payment becomes payable,
or if FALK fails to reimburse ALTUS for the FALK Development Costs when due and
such failure is not remedied within [**************] after FALK's receipt of
written notice from ALTUS of such breach, or if FALK fails to make the payments
set forth in either Section 6.1(a) or Section 6.1(b) when due, then ALTUS shall
have the right to terminate this Agreement; provided however that ALTUS shall
not be entitled to terminate the Agreement for FALK's failure to make any
payments (other than those set forth in Sections 6.1(a) and (b)) if (i) the
Parties have [***************] as to any event that would trigger such payment
to be made to ALTUS, (ii) either FALK or ALTUS has initiated the dispute
resolution procedures set forth in Sections 16.1 and 16.2 in order to resolve
such disagreement, and (iii) FALK has made payment of all such disputed amounts
into an escrow account pending resolution of such disagreement. If FALK fails to
make royalty payments required under Section 6.4, then such failure shall only
be [*******************] if it relates to at least [*************************]
and such failure is not cured within [**********] of FALK's receipt of written
notice of such breach. In no event shall ALTUS be entitled to terminate this
Agreement for a failure of FALK to make royalty payments if the Parties are in
disagreement as to the exact amount of royalties owed by FALK to ALTUS, provided
that FALK shall in this event pay the undisputed amount of royalties to ALTUS
and the disputed part shall be paid by FALK into an escrow account pending and
subject to the dispute resolution process set forth in Sections 16.1 and 16.2.
For purposes of further clarification, it is hereby further expressly stated
that in the case of underpayment that has been revealed by performing an audit
pursuant to Section 13.4, then ALTUS shall only be entitled to the rights
provided under Section 13.4 and such underpayments shall not be grounds for
termination. The right of a Party to terminate this Agreement under this Section
14.3, shall not be affected in any way by its waiver or failure to take action
with respect to any prior breach or default and shall be without prejudice to
any other rights of the Non Defaulting Party in connection with any such
material adverse breach or material adverse default.

     14.4 [RESERVED]

     14.5 FALK TERMINATION.

          (A) Upon receipt by FALK from ALTUS of the [************************
*****************], and for [***********] after receipt of the same, FALK shall
have the right to terminate this Agreement on [*************] prior written
notice.

          (B) In the event the manufacture, use, or sale of the Licensed Product
in the Field in the Territory is found to infringe a valid Third Party patent
and is enjoined by a court or tribunal of competent jurisdiction and neither
FALK nor ALTUS is able to design around such infringement or negotiate a license
to such patent on commercially reasonable terms after using good faith efforts
to do so, FALK shall have the right to terminate this Agreement immediately. In
order to terminate this Agreement under this Section 14.5, FALK shall be
required to satisfy all of the requirements set forth in Sections 14.6(a) and
14.6(c)(i)-(v) below upon such termination, which requirements shall survive
termination of this Agreement.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     14.6 EFFECT OF TERMINATION.

          (A) Termination pursuant to Section 14.2, 14.3, 14.5 or 14.7 shall not
relieve either party of the performance of any obligations incurred or payments
due prior to the effective date of termination which is uncancellable.

          (B) Notwithstanding the foregoing and save as provided otherwise in
Section 14.6(d) hereinunder, if this Agreement is terminated pursuant to
Sections 14.2 or 14.3, the following shall apply:

               (I) FALK shall use its [*************] to effect a smooth and
orderly transition of any already on-going clinical studies, Regulatory Approval
or pre-marketing efforts to ALTUS (including all data and reports in the
possession of FALK);

               (II) FALK shall make its personnel and other resources reasonably
available to ALTUS as necessary to effect an orderly transition of any
development responsibilities, with the reasonable cost of such personnel and
resources to be borne by the defaulting Party after the effective date of
termination;

               (III) all rights and licenses granted herein to FALK shall revert
to ALTUS, for no additional consideration, and immediately terminate, and FALK
shall assign all right, title and interest in and to the Product Trademark(s)
(worldwide) to ALTUS; and

               (IV) FALK shall provide and assign over to ALTUS, at the
defaulting Party's expense, all clinical data, Drug Approval Applications,
Regulatory Approvals and all other regulatory documentation specifically
relating to the Licensed Product that FALK may have developed in its activities
under this Agreement.

          (C) FALK shall have the [************************] this Agreement at
any time upon [*************] written notice to ALTUS if there has been a
[********] imposed by a regulatory authority in Germany, United Kingdom or
France for at least [************]; provided, however, that FALK complies with
the provisions of Section 14.6(b)(i)-(iv) above.

          (D) In the event that ALTUS materially breaches its development
obligations under Section 4.1 hereinabove by making insignificant efforts to
satisfy such obligations and FALK terminates the Agreement pursuant to Section
14.2 above, the following shall apply:

               (I) FALK shall be automatically granted by ALTUS a license to the
Licensed Product Patents and the Licensed Product Know-how to enable FALK to
manufacture, develop, commercialize, market, sell and distribute the Licensed
Product in the Territory; provided, however, the royalty payable by FALK to
ALTUS pursuant to Section 6.4 shall be [*******************************] and
FALK shall have [***********************] pursuant to Sections 6.1 or 6.2 for
events achieved after the date of termination; and

               (II) FALK shall be entitled to continue to use, [***********],
all data and reports which have been generated in the course of the development
and all such data and reports shall be made available by ALTUS to FALK.

     14.7 BANKRUPTCY. Either Party may, in addition to any other remedies
available to it by law or in equity, terminate this Agreement, in whole or in
part as the terminating Party may determine, by written notice to the other
Party in the event the other Party shall have become bankrupt, or shall have

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

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, dissolution, winding-up, arrangement, composition
or readjustment of its debts or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereafter in effect and any such event shall have continued for ninety (90)
days undismissed, unbonded and undischarged. All rights and licenses granted
under to this Agreement by one Party to the other Party are, and shall otherwise
be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses
of rights to "intellectual property" as defined under Section 101 (56) of the
Bankruptcy Code. The Parties agree that the licensing Party under this Agreement
shall retain and may fully exercise all of its rights and elections under the
Bankruptcy Code in the event of a bankruptcy by the other Party. The Parties
further agree that in the event of the commencement of a bankruptcy proceeding
by or against one Party under the Bankruptcy Code, the licensee shall be
entitled to complete access to any such intellectual property pertaining to the
rights granted in the licenses hereunder of the Party by or against whom a
bankruptcy proceeding has been commenced and all embodiments of such
intellectual property.

     14.8 SURVIVING RIGHTS. Except as modified in this Article 14, the
obligations and rights of the Parties under Articles 10, 14, 15 and 16, and
Sections 11.1(a), 11.2, 13.4, 13.6 (but only regarding disclosures required by
law), 17.4, 17.5, 17.7, 17.8, 17.9, 17.10 and 17.14 of this Agreement will
survive any termination or expiration of this Agreement.

     14.9 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Except as specifically provided
in this Agreement, termination, relinquishment or expiration of the Agreement
for any reason shall be without prejudice to any rights which shall have accrued
to the benefit of either Party prior to such termination, relinquishment or
expiration, including damages arising from any breach hereunder. Except as
specifically provided, such termination, relinquishment or expiration shall not
relieve either Party from obligations which are expressly indicated to survive
termination or expiration of the Agreement.

                                   ARTICLE 15.
                                 INDEMNIFICATION

     15.1 INDEMNIFICATION BY FALK. FALK hereby agrees to. save, defend and hold
ALTUS and its agents and employees harmless from and against any and all losses,
damages, liabilities, settlements, penalties, fines, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Losses") resulting or alleged to result from (i) any breach by
FALK of any of the representations or warranties set forth in Section 12.2
above, or (ii) any actual or asserted violation of applicable law or regulation
by FALK, its Affiliates and/or distributors by virtue of which the Licensed
Product advertised, marketed, handled, stored, distributed or sold by FALK, its
Affiliates and/or distributors shall be alleged or determined to be adulterated,
mislabeled or otherwise not in compliance, in either case except to the extent
such Losses result from the [******************************] of ALTUS or its
employees or agents. This indemnification provision shall include any reasonable
attorney's fees incurred by ALTUS in connection with enforcing this
indemnification.

     15.2 INDEMNIFICATION BY ALTUS. ALTUS hereby agrees to save, defend and hold
FALK and its agents and employees harmless from and against any and all Losses
resulting or alleged to result from (i) any breach by ALTUS of any of the
representations or warranties set forth in Section 12.1 above, or (ii) any
actual or asserted violation of applicable law or regulation by ALTUS or its
Affiliates by virtue of which the Licensed Product manufactured, handled,
stored, distributed or sold by ALTUS or its Affiliates shall be alleged or
determined to be adulterated, mislabeled or otherwise not in compliance, in
either case except to the extent such Losses result from the [****************
***************] of

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

FALK or its employees or agents. This indemnification provision shall include
any reasonable attorney's fees incurred by FALK in connection with enforcing
this indemnification.

     15.3 INDEMNIFICATION CONDITIONS. In the event that a Party is seeking
indemnification under Section 15.1 or 15.2 above, it shall inform the
indemnifying Party of a claim as soon as reasonably practicable after it
receives notice of the claim, shall permit the indemnifying Party to assume
direction and control of the defense of the claim (including the right to settle
the claim solely for monetary consideration), shall cooperate as requested (at
the expense of the indemnifying Party) in the defense of the claim, and shall
not settle or compromise the claim without the express written consent of the
indemnifying Party.

     15.4 INSURANCE. Each Party agrees to maintain [*******] insurance coverage
with respect to all occurrences arising out of human clinical trials with
respect to the Licensed Product and all occurrences arising out of the sale of
the Licensed Product pursuant to this Agreement. Each Party shall furnish the
other Party with a copy of such insurance policies.

                                   ARTICLE 16.
                               DISPUTE RESOLUTION

     16.1 DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise during the Term of this Agreement which relate to
either Party's rights and/or obligations hereunder. It is the objective of the
Parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to litigation. To accomplish this objective, the Parties agree to follow
the procedures set forth in this Article 16 if and when a dispute arises under
this Agreement.

     Unless otherwise specifically recited in this Agreement, disputes among the
Parties relating to material business, scientific or management issues arising
out of this Agreement (other than issues for which either Party has sole and
exclusive responsibility and control under this Agreement) shall first be
presented to the [*****************] for resolution. If a majority of the
members of the [*******************] cannot agree on a resolution to the issue
within [****************] of being requested by a Party to resolve a dispute,
such dispute shall be presented to the [*************] of FALK and of ALTUS, or
their respective designee, for resolution. In the event that the chief executive
officer of FALK and ALTUS, or their respective designees, cannot resolve the
dispute within [*****************] of being requested by a Party to resolve a
dispute then the following shall apply: In the event the dispute directly or
indirectly relates to the clinical development of the Licensed Product, ALTUS
shall have [*************************] with respect to such clinical
development issues, notwithstanding anything in this Agreement to the contrary;
provided, however, any such decisions shall be based on [*********************]
that such decision is consistent with the objective of managing an effective and
efficient Combined Phase III Clinical Trial that satisfies the development,
regulatory and commercialization requirements of North America and the Territory
and leverages the clinical development activities in both territories. If the
dispute does not relate to the clinical development of the Licensed Product,
either Party may, by written notice to the other, invoke the provisions of
Section 16.2 hereinafter.

     16.2 ARBITRATION. The Parties agree that any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach, termination,
performance or invalidity thereof, other than disputes relating to the clinical
development of the Licensed Product, that cannot be resolved pursuant to Section
16.1 above shall be resolved through binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
except as modified herein. Each such arbitration shall be conducted before a
penal of three independent experts with relevant business, financial, scientific
or other experience based on the subject matter of the dispute. Each Party shall
select

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

one arbitrator and the arbitrators so elected shall appoint the third
arbitrator. In the event the arbitrators elected by the Parties cannot agree on
the third arbitrator, an arbitrator with the aforementioned qualifications shall
be selected by the AAA in accordance with the procedures set forth by the
Commercial Arbitration Rules of the AAA. A reasoned arbitration decision shall
be rendered in writing within thirty (30) days of the conclusion of the
arbitration hearing and shall be binding and not be appealable to any court in
any jurisdiction. The prevailing Party may enter such decision in any court
having competent jurisdiction. Each Party must bear its own attorney's fees and
associated costs and expenses. The arbitrators shall have the authority to grant
specific performance and shall allocate costs between the Parties (excluding
attorney's fees). Any such arbitration shall be held in Boston, Massachusetts.
Nothing in this Article 16.2 shall be construed to limit or preclude a Party
from bringing an action in any court of competent jurisdiction for injunctive or
other equitable relief including an action for specific Performance to compel
the other Party to perform its obligations under this Agreement.

                                   ARTICLE 17.
                                  MISCELLANEOUS

     17.1 ASSIGNMENT. This Agreement may not be assigned by either Party without
the consent of the other, except that each Party may, without such consent,
assign this Agreement and the rights, obligations and interests of such Party,
in whole or in part, to any of its Affiliates, wholly-owned subsidiaries, to any
[***************************************************] to which this Agreement
pertains, or of all of its [************], or to any [******************]
resulting from any [******************] of such Party with or into such
corporation (collectively a [***********]) where such [***********] to a Party
could reasonably be expected to satisfy that Party's obligations hereunder,
provided, however, that in the case of an assignment to an Affiliate or a
subsidiary, the assigning Party shall remain fully responsible for all of its
obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties. Any attempt to
assign any portion of this Agreement in violation of this Section 17.1 shall be
void. Subject to the foregoing, any references to ALTUS and FALK hereunder shall
be deemed to include the successors and permitted assigns thereof.

     17.2 LEGAL COMPLIANCE. Each Party shall comply in all material respects
with all laws, rules and regulations applicable to the conduct of its business
pursuant to this Agreement.

     17.3 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, terrorism, fire, explosion, flood, strike, lockout, embargo, act of
God, or any other cause beyond the control and without the fault or negligence
of the defaulting Party, provided that the Party claiming force majeure has
exerted all reasonable efforts to avoid or remedy such force majeure; provided,
however, that in no event shall a Party be required to settle any labor dispute
or disturbance. Such excuse shall continue as long as the condition preventing
the performance continues. Upon cessation of such condition, the affected Party
shall promptly resume performance hereunder. Each Party agrees to give the other
Party prompt written notice of the occurrence of any such condition, the nature
thereof, and the extent to which the affected Party will be unable to perform
its obligations hereunder. Each Party further agrees to use all reasonable
efforts to correct the condition as quickly as possible and to give the other
Party prompt written notice when it is again fully able to perform its
obligations.

     17.4 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     17.5 NO RIGHT TO USE NAMES. Except as otherwise provided herein, no right,
express or implied, is granted by either Party to the other to use in any manner
the name "ALTUS," "FALK," "TheraCLEC," "ThereCLEC-Total," the "ALTUS" logo, the
"Dr. FALK" logo, or any other trade name or trademark of ALTUS, FALK or their
Affiliates in connection with the performance of the Agreement.

     17.6 Notices. All notices hereunder shall. be in writing and shall be
deemed given if delivered personally or by registered or certified mail (return
receipt requested), postage prepaid, or sent by express courier service with
tracking service, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice; provided, that notices
of a change of address shall be effective only upon receipt thereof).

IF TO ALTUS TO:   ALTUS BIOLOGICS INC.
                  625 Putnam Avenue
                  Cambridge, MA. 02139
                  Attention: Richard Forrest, Esq.
                             Corporate Counsel
                  Telecopy: 617-299-2999

WITH A COPY TO:   MINTZ LEVIN COHN FERRIS GLOVSKY AND POPEO, P.C.
                  666 Third Avenue New York, NY 10017
                  Attention: Richard G. Gervase, Esq.
                  Telecopy: 212-983-3115

IF TO FALK TO:    DR. FALK PHARMA GMBH
                  Leinenweberstrafie 5
                  Postfach 6529
                  79041 Freiburg
                  Germany
                  Attention: Ursula Falk, Managing Director
                  Telecopy: + 49-761-1514-356

WITH A COPY TO:   HENNERKES, KIRCHDORFER & LORZ
                  (Attorneys at Law) Jahnstrale 43
                  D - 70597 Stuttgart
                  Attention: Dr. Rainer Lorz
                  Telecopy: + 49-711-72 57 920

     17.7 WAIVER. Except as specifically provided for herein, the waiver from
time to time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.

     17.8 SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (a) the remainder of this Agreement,
or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (b) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.

     17.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

     17.10 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.

     17.11 HEADINGS. All headings are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.

     17.12 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     17.13 ENTIRE AGREEMENT. This Agreement, including all Exhibits attached
hereto, which are hereby incorporated herein by reference, sets forth all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof and supersedes and terminates all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties with respect to the subject matter hereof other than as set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.

     17.14 NO THIRD PARTY BENEFICIARY. Except as expressly provided herein, this
Agreement shall not confer any rights or remedies upon any Third Party other
than the Parties and their respective successors and permitted assigns.

                    [This space is intentionally left blank.]

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.

ALTUS BIOLOGICS, INC.                   DR. FALK PHAMA GMBH

By: /s/ Peter Lanciano                  By: /s/ Ursula Falk
    ---------------------------------       ------------------------------------
Name: Peter Lanciano                    Name: Ursula Falk
Title: President & CEO                  Title: General director

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 406 of the Securities Act.
<PAGE>

                                    EXHIBIT A
                            LICENSED PRODUCT PATENTS

APPENDIX 1

<TABLE>
<CAPTION>
COUNTY   SERIAL NO.   FILING DATE   STATUS   PATENT NO.   EXPIRES   ASSIGNEE
------   ----------   -----------   ------   ----------   -------   --------
<S>      <C>          <C>           <C>      <C>          <C>       <C>
[***]      [***]         [***]       [***]      ---         ---      [***]
[***]                                                                [***]
                                                                     [***]
                                                                     [***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***]      [***]         [***]       [***]      ---         ---      [***]
[***]                                                                [***]
[***]                                                                [***]
                                                                     [***]

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

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

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

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
COUNTY   SERIAL NO.   FILING DATE   STATUS   PATENT NO.   EXPIRES   ASSIGNEE
------   ----------   -----------   ------   ----------   -------   --------
<S>      <C>          <C>           <C>      <C>          <C>       <C>
[***]      [***]         [***]       [***]     [***]       [***]      [***]
                                                                      [***]
                                                                      [***]
                                                                      [***]

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

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

[***]      [***]         [***]       [***]     ---         ---        [***]

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

[***]      [***]         [***]       [***]      ---        ---        [***]
                                                                      [***]
                                                                      [***]
                                                                      [***]

[***]      [***]         [***]       [***]      ---        ---        [***]
                                                                      [***]
                                                                      [***]
                                                                      [***]

[***]      [***]         [***]       [***]      ---        ---        [***]
                                                                      [***]
                                                                      [***]
                                                                      [***]

[***]      [***]         [***]       [***]      ---        ---        [***]
[***]

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

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
COUNTY   SERIAL NO.   FILING DATE   STATUS   PATENT NO.   EXPIRES   ASSIGNEE
------   ----------   -----------   ------   ----------   -------   --------
<S>      <C>          <C>           <C>      <C>          <C>       <C>
[***]
[***]      [***]         [***]       [***]     ---         ---        [***]

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

[***]      [***]         [***]       [***]     ---         ---        [***]
[***]

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

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

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

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    Exhibit B
                                Development Plan

      The purpose of this Development Plan (Plan) is to provide guidance on how
to define, organize and execute an effective path by which Altus and Falk will
effectively achieve the development and commercialization of the
TheraCLEC(TM)-Total Product. This Plan will be used to understand the role of
Falk and Altus' management systems and to begin to discuss the format and
contents of the Program along with the roles and responsibilities of both
parties. The central themes of the Plan will include those elements that are
critical to effective decision making and maximizing the long-term value of
TheraCLEC(TM)-Total in the European Union.

      The Plan should be used by both Falk and Altus as a mechanism for
effective communication and creating a clear understanding of each parties
responsibilities. The Plan will capture, in a single place, timely information
currently found across many independent documents. The contents, style and
format of the Plan will evolve through the Steering Committee meetings. The
current estimated clinical timelines, non-clinical costs, formulation costs, and
Phase la and lb study synopsis and process development plans are outlined in
Appendix 2. Updates to the Plan are expected to be coordinated with major
milestones (e.g., Phase I, Phase II, Phase III clinical studies completion,
etc.). Additional updates may also be synchronized with the cycle of the
Steering Committee Team meetings. The Plan should have sections to present the
essential elements of each major functional area's implementation strategy. The
Plan should not be considered to be complete currently, but instead serve as a
template for effective communication and planning.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Phase I -

Falk Responsibilities -

Falk shall be responsible for providing input into the development of the Phase
II clinical study protocol to ensure that the study design and regulatory
aspects will be consistent with the European regulatory needs. Falk shall
cooperate in good faith with Altus' request to support the regulatory process
[***].

Altus Responsibilities -

Altus will be responsible for managing [***] the Phase I clinical trials. Altus
will have responsibility for control and development including but not limited
to formulating overall development plans, managing pre-clinical and non-clinical
activities, making overall decisions regarding the priority and design of all
clinical studies, managing the clinical team activities, management of
regulatory activity, determination of priority with respect to seeking
regulatory approvals. Altus will ensure that the clinical studies and data
conform to the International Committee on Harmonization (ICH) Guidelines to
enable the data to be transferable to a European Dossier submission. Altus will
also be responsible for all non-clinical product development aspects required by
the US Food and Drug Administration (FDA) and to ensure that these aspects will
be applicable to the European Dossier. Altus shall be responsible for the scale
up and manufacturing of the finished product for the clinical trials, and shall
provide Falk with the current product profile and a Target Product Profile.

Altus shall be responsible for managing formulation development and market
research for both the solid and liquid dosage forms and will seek input from the
Steering Committee on development issues that pertain to formulation
development, as appropriate. Altus shall be responsible for data collection of
non-clinical studies, and shall provide all relevant data to Falk. Altus shall
be responsible for filing the Orphan Drug Application and coordinating the
approval process with the EMEA Committee for Orphan Medicinal Products. Altus
shall be responsible for conducting all meetings, discussions, and routine
telephone communications, with the FDA, the EMEA, or other regulatory authority
related to clinical studies for all indications for TheraCLEC(TM)-Total. Altus
will look to involve Falk in such communication and both parties will keep the
Steering Committee Team apprised of all material communications with regulatory
authorities.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Post - Phase I -

Mutual Responsibilities -

Through the Steering Committee both companies will identify an integration
process for the clinical and regulatory programs. Falk and Altus will use all
resources to identify potential study investigators and thought leaders, for
their participation in development meetings. Altus will begin the process for
collaboration between Altus, Falk and the European Agency for the Evaluation of
Medicinal Products. Altus and Falk will work together to identify a publication
plan strategy. Altus will be responsible for all submission of data to
regulatory authorities and peer-reviewed journals but will work with Falk to
identify key participants for each Territory. Altus and Falk will work to
evaluate and understand TheraCLEC(TM)-Total's key product audience, current and
future competitors, and the promotional environment. These activities will
assist in and provide the necessary information for [***] This analysis should
include an evaluation of [***]. Both companies will collaborate to develop and
share through the Steering Committee an effective Marketing/Business plan for
their respective Territories, that will include: a [***].

Falk Responsibilities --

Falk shall work to identify potential clinical trial investigators and also to
develop a plan for [***]. Falk shall work through the Steering Committee
meetings to produce a Target Product Profile (to include a technical profile,
clinical profile and items related to pharmaceutical form). Since [***] for the
success of the clinical studies, [***] - Falk shall manage the [***] program
process to [***]clinical development and market acceptance.

Altus Responsibilities --

Altus will be responsible for managing [***] the Phase II clinical trials. Altus
will coordinate, as necessary, collaborative meetings between Altus, Falk and
the EMEA Committee for Orphan Medicinal Products. Altus shall provide Falk with
a list of key thoughts leaders from North America with whom it is coordinating
the clinical development program. Altus shall use best efforts to make all
necessary individuals available for program updates. Altus will continue
development work on [***]for both the Phase III clinical studies and
commercialization. Altus will be responsible for designing, managing [***] Phase
II dose ranging studies for both the solid and liquid formulations. These Phase
II studies will be compliant with the relevant ICH guidelines.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Phase II -

Mutual Responsibilities -

Falk will work with Altus to identify the necessary Contract Research
Organization (s) (CRO's) that will be used to conduct the Phase III clinical
studies. Falk will be responsible for collection, management and execution of EU
regulatory documentation and work closely with Altus in the control and
execution of such documentation. Falk will work with Altus to identify [***].
Falk and Altus shall work to develop a [***].

Falk Responsibilities -

Falk shall continue to identify target clinical sites and primary investigators
for the Phase III clinical study. Falk shall also provide the necessary
regulatory, medical, clinical, patient and logistical support for the
advancement of the program into Phase III study leading to a successful European
Dossier. Falk shall propose its initial recommended [***] strategy.

Altus Responsibilities -

Altus will be responsible for designing, coordinating [***] Phase III studies
for [***]. Altus will continue development work on [***] for both the Phase III
clinical studies and commercialization. These Phase III studies will be
compliant with the relevant ICH guidelines. Altus shall [***].

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<PAGE>

Post - Phase II  -

Mutual Responsibilities -

Altus and Falk shall use their best efforts to update each other on all market
research, relevant marketing plans, training programs and promotional efforts
during Steering Committee meetings. Using the data generated during the previous
phase, both companies will update the Target Product Profile. Both companies
will plan to develop an integrated market research and thought leader
development program. To more effectively plan a targeted clinical program Falk
and Altus shall provide an assessment of [***] for each of the respective
Territories and discuss their findings with the Steering Committee to enable the
design of a targeted [***] clinical program. Altus will work with Falk (and
outside investigators) to design [***] Phase III clinical protocol, which [***].
Altus will ultimately be responsible to ensure that this protocol will be
compliant with ICH guidelines. Both companies shall look to identify [***]. Both
companies shall provide updates for [***] and strategy for post-Phase III. Falk
and Altus will work to identify companies with potential packaging capabilities
for the European Union. Falk and Altus will also work to develop a clinical
trial materials forecast for the Phase III/IIIb trial. Falk and Altus shall
identify a shipping mechanism for clinical sites in the European Union. Both
parties shall develop an effective planning mechanism to best manage [***] Phase
III clinical studies. The mechanism shall incorporate a relevant and timely
centralized procedure for accumulating necessary clinical and regulatory
information.

Falk Responsibilities -

Falk shall work to integrate all regulatory issues concerning clinical studies
and packaging vendors into the overall regulatory plan. Falk shall update the
marketing plan and [***]. Falk will update the thought leader development plan
as needed. [***] using the results of the investigation should be made for the
clinical and commercial phases of TheraCLEC(TM)-Total. Falk shall be responsible
for recruitment of participating investigators, sites and patients.

Altus Responsibilities -

Altus shall update Falk during Steering Committee meetings on all relevant
clinical, non-clinical and marketing activities and data. Altus will plan [***]
to help develop the necessary information for the clinical and commercial
programs. Altus will conduct an ICH compliant Phase III trial in North America
and develop material supply to ensure that sufficient material can be provided
for the Phase III study. Altus shall establish market research as it relates to
[***]. Altus shall submit to the appropriate [***]. Altus will continue
development work on the solid and liquid dosage forms for both the Phase III
clinical studies and commercialization.

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<PAGE>

Phase III -

Mutual Responsibilities

Falk and Altus will be responsible for coordinating and managing activities of
the CROs and clinical sites. Altus and Falk shall use their best efforts to
provide updates on all market research, relevant marketing plans, training
programs and promotional efforts during Steering Committee meetings. Falk and
Altus will work to more effectively define a Phase IIIb clinical study. Altus
and Falk will work to identify and carry out a strategy for regulatory meetings
to facilitate the EMEA approval process. Falk and Altus shall work to coordinate
an [***] as it becomes necessary. Both companies shall update their marketing
plans and coordinate logistics for an effective [***]. Altus and Falk shall
provide updates on the marketing plans to the Steering Committees for review.
Altus and Falk shall manage the Phase III regulatory documentation and provide
updates as available on the progress of the study. Falk and Altus will work to
begin the writing and submission planning of the European Dossier.

Falk Responsibilities -

Falk should complete the selection of a [***] so that all necessary regulatory
requirements can be addressed and they may enter into an agreement with a [***]
at this time. Falk shall provide updated forecasts on clinical material
requirements. Falk shall continue to update the thought leader base. Falk shall
submit a detailed annual plan for the commercialization of TheraCLEC(TM)-Total
to the Steering Committee. Based on [***] and trademark filings, Falk shall
obtain trademark approval for the Product trademark.

Falk shall be responsible for [***] of the Phase III study through the Phase III
program committee. Falk's support of the studies shall include, but not be
limited to CRO [***].

Altus Responsibilities -

Altus shall update Falk during Steering Committee meetings on all non-clinical
protocols and activities. Altus shall be responsible for establishing a
commercial manufacturing process for - and supply of - TheraCLEC(TM)-Total. The
manufacturing process shall be [***] required to meet the [***]
TheraCLEC(TM)-Total in [***]. Altus may choose to establish [***]. Altus shall
be responsible for managing the European portion of the Phase III study through
a Phase III Program Committee to be established by the Steering Committee. Altus
responsibilities shall include, but not limited to protocol and CRO management,
physician and patient reimbursement, physician and patient care, data
collection, statistical support, coordination of clinical team activity and
coordination of regulatory activities. Altus shall be responsible for the
manufacture and testing of clinical material supply compliant with ICH
Guidelines.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Post - Phase III --

Mutual Responsibilities -

Falk will work with Altus to complete the writing and submission of the European
Dossier. Altus and Falk shall use their best efforts to provide updates on all
market research, relevant marketing plans, training programs and promotional
efforts during Steering Committee meetings. Using the data generated during the
previous phase, both companies should update the Target Product Profile. Altus
and Falk shall provide each other 3 copies of each marketing, promotional and
training piece, and shall establish a mechanism by which a [***] is established
that can serve as an effective mechanism for promotional material efforts. Falk
will work with Altus to determine the [***]. Both companies shall determine how
[***]. Falk and Altus shall provide the Steering Committee a pre-launch and
launch plan so that both companies can integrate data and resources.

Falk Responsibilities -

Falk shall complete and enter into an agreement with a [***]. Falk shall
finalize [***] that it plans on seeking through the regulatory authorities. Falk
shall coordinate country-to-country regulatory, distribution and [***]
requirements. Near, mid and long term forecasts for the commercial phase of
TheraCLEC(TM)-Total shall be made using the results of the Phase III
investigation. A [***] should be provided that is updated on a [***] basis. Falk
will maintain a record of all non-medical and medical related complaints and
will notify Altus of any complaint in a sufficient time to allow Altus to comply
with any regulatory requirements it may have with respect to such complaints.
Falk shall have responsibility for the commercialization and marketing of
TheraCLEC(TM)-Total in Europe. The responsibilities include but not limited to
handling, packaging and shipment of commercial product, designing and
implementing all product launch, promotion, marketing and sales activities,
booking sales, handling all returns, handling all aspects of order processing,
[***] receivables, providing customer medical information, collection of data of
sales to hospitals and other end users, distribution, inventory, and
warehousing. Consistent with regulatory requirements Falk will be responsible
for paying all packaging, distribution, sales and marketing, and collection
costs for TheraCLEC(TM)-Total. Falk may be asked to perform [***] post-marketing
commitments necessary for approval. Falk shall keep books of accounts containing
all particulars that may be necessary for the purpose of calculating royalties
payable to Altus. For the first [***] months after launch Falk shall provide
[***] sales updates.

Altus Responsibilities -

Altus shall make all data available to Falk for reference and launch preparation
activities in the Territory. Altus shall update Falk during Steering Committee
meetings on all clinical, non-clinical and marketing activities. Altus will
maintain a record of all non-medical and medical related complaints and will
notify Falk of any relevant complaint in a sufficient time to allow Falk to
comply with any regulatory requirements. Altus will plan [***] to help develop
necessary information for the clinical and commercial programs. Altus shall be
required to develop a [***]. Based on regulatory requirements Altus may be asked
to perform [***] commitments necessary for approval. As soon as practicable
after completion of the Phase III clinical study, Altus will enter into a [***]
of commercial supplies of TheraCLEC(TM)-Total for use in the Field in the
Territory. Altus shall also ensure that a second source exists for the
manufacture and supply of TheraCLEC.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

APPENDIX 2 -- ESTIMATED DEVELOPMENT PLAN

      A.    ESTIMATED CLINICAL TIMELINE (OCTOBER 25, 2002)

<TABLE>
<CAPTION>
                                            START    FINISH
                                            -----    ------
<S>                                         <C>      <C>
PHASE 1a TESTING

         [***]                              [***]    [***]
         [***]                              [***]    [***]
PHASE 1b STUDY
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
PHASE II STUDY -CAPSULE TESTING
         [***]                              [***]    [***]
         [***]                              [***]    [***]
PHASE II STUDY - LIQUID
         [***]                              [***]    [***]
         [***]                              [***]    [***]
PHASE III STUDY -TABLET                     [***]    [***]
PHASE IV STUDY - TABLET                     [***]    [***]
PHASE III STUDY - LIQUID                    [***]    [***]
PHASE III STUDY - LIQUID                    [***]    [***]
REGULATORY
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
         [***]                              [***]    [***]
</TABLE>

      B.    NON-CLINICAL STUDY COST ESTIMATES (OCTOBER 25, 2002)

<TABLE>
<S>                                <C>      <C>      <C>
NONCLINICAL STUDIES
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
         [***]                     [***]    [***]    [***]
TOTAL NONCLINICAL STUDIES                            [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      C.    ESTIMATED FORMULATION DEVELOPMENT / CLINICAL TRIAL MATERIAL
            DEVELOPMENT COSTS (OCTOBER 25, 2002)

<TABLE>
<S>                                                     <C>
FORMULATION DEVELOPMENT/CLINICAL TRIAL MATERIAL

[***]                                                   $ [***]

[***]                                                   $ [***]

[***]                                                   $ [***]

[***]                                                   $ [***]

[***]                                                   $ [***]

[***]                                                   $ [***]

TOTAL FORMULATION DEVELOPMENT/CLINICAL TRIAL MATERIAL   $ [***]
                                                        -------
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
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<PAGE>

      D.    PROTOCOL SYNOPSIS PHASE 1a

<TABLE>
<CAPTION>
TITLE                                  Open-Label Safety and Tolerability Study of Oral TheraCLEC(TM)-Total in Health
                                       Volunteers
<S>                                    <C>          <C>     <C>     <C>      <C>      <C>
PHASE                                  1
INDICATION                             [***]
OBJECTIVE                              [***]
STUDY DESIGN                           [***]
NUMBER AND DESCRIPTION OF SUBJECTS     [***]
SUBJECT CRITERIA                       [***]
EXCLUSION CRITERIA                     [***]
LENGTH OF STUDY                        [***]
INVESTIGATIONAL PRODUCT                -   [***]    [***]   [***]   [***]    [***]    [***]
Medication Strength                                 [***]   [***]   [***]    [***]    [***]
                                                    [***]   [***]   [***]    [***]    [***]
</TABLE>

Route

Dose Levels

Regimen

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<PAGE>

<TABLE>
<S>                        <C>              <C>
EVALUATIONS                                 -    [***]
SCREENING
                                            -    [***]
                                            -    [***]
                                            -    [***]
                                            -    [***]
                                            -    [***]
                                            -    [***]
BASELINE ([***])                            -    [***]
ENROLLMENT ([***])                          -    [***]
TREATMENT PHASE                             -    [***]
                                 ([***])    -    [***]
                                            [***]
                                            [***]
                           [***] ([***])    [***]
                                   [***]    -    [***]
                                 ([***])
STATISTICAL EVALUATIONS
                                  SAFETY    [***]
</TABLE>

         E.       PROTOCOL SYNOPSIS PHASE 1b

<TABLE>
<S>                                         <C>
TITLE                                       [***]
INDICATION                                  [***]
OBJECTIVES                                  PRIMARY:
                                            -    [***]
                                            SECONDARY:
                                            -    [***]
                                            -    [***]
                                            -    [***]
                                            -    [***]
STUDY DESIGN                                [***]
DRUG DOSAGE                                 [***]
                                            [***]
                                            [***]
                                            [***]
                                            [***]
SAMPLE SIZE                                 [***]
SUBJECT SELECTION                           [***]
OUTCOMES                                    [***]
                                            [***]
</TABLE>

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CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      F.    ESTIMATED YEARLY CLINICAL DEVELOPMENT COSTS (OCTOBER 25, 2002)

<TABLE>
<CAPTION>
                          2002    2003    2004    2005    2006     2007
                          ----    ----    ----    ----    ----     ----
<S>                       <C>     <C>     <C>     <C>     <C>      <C>
PHASE 1A STUDY            [***]
PHASE 1B STUDY            [***]   [***]
PHASE II STUDY-CAPSULE            [***]   [***]
PHASE II STUDY- LIQUID            [***]   [***]
PHASE III STUDY- TABLET                   [***]   [***]   [***]
PHASE IV STUDY- TABLET                                    [***]    [***]
PHASE III STUDY- LIQUID                   [***]   [***]   [***]
PHASE IV STUDY- LIQUID                                    [***]    [***]
TOTAL                     [***]   [***]   [***]   [***]   [***]    [***]
</TABLE>

      G.    PROCESS DEVELOPMENT PLAN (OCTOBER 25, 2002)

                                    [***]

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

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

                                  DOCUMENTATION

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<PAGE>

                                    EXHIBIT C
                   DEVELOPMENT COSTS AND PRODUCT LAUNCH COSTS

C.1   FALK DEVELOPMENT COSTS.

      FALK shall be responsible for paying all FALK Development Costs. "FALK
Development Costs" shall mean all Direct Costs (as defined below), and [***] of
all Indirect Costs (as defined below), incurred after the Effective Date of the
Agreement through the date of expiration or termination hereof. For the purposes
hereof, [***] shall mean [***] costs, fees and expenses incurred by ALTUS or
FALK that are primarily related to (x) the portion [***] include, but are not
limited to, the costs, fees and expenses associated with [***] [***] shall mean
[***] costs, fees and expenses (including the European and non-European Portion
of such costs, fees and expenses) by ALTUS or FALK (other than Direct Costs)
related to [***] Notwithstanding the foregoing, the Parties agree that Direct
Costs and Indirect Costs shall [***] The Steering Committee shall have the
authority to determine whether particular costs, fees and expenses are to be
considered Direct Costs or Indirect Costs for the purposes of this Agreement.
The Clinical Supplies supplied by ALTUS to FALK for use in the development of
the Licensed Product, shall be charged [***] Notwithstanding the foregoing, to
the extent that more than [***] of the participants enrolled in a [***] are
European participants (the number of European participants in [***]being
hereafter referred to as the [***] shall be responsible for [***] to the extent
such [***] would not have been [***] but for the fact that such [***] were
included in the [***] Notwithstanding the foregoing, to the extent that more
than [***] of the participants enrolled in a[***] are participants in the
non-European portion of [***] (the number of non-European participants in [***]
being hereafter referred to as the [***] shall be responsible for [***] to the
extent such [***] would have been included in [***] but for the fact that such
[***] were included in the [***] C.2 FALK MARKETING COSTS.

      FALK shall be responsible for paying [***]. "FALK Marketing Costs" shall
mean all [***].

      In addition, FALK, through the Falk Foundation e.V., shall organize [***].

C.3   ALTUS DEVELOPMENT COSTS.

      ALTUS shall be responsible for paying all ALTUS Development Costs. "ALTUS
Development Costs" shall mean all direct and indirect costs attributable to the
following activities with respect to the Licensed Product in the Field in the
Territory incurred after the Effective Date of the Agreement but before the date
of expiration or termination of the Agreement:

      (i)   [***];

      (ii)  [***];

      (iii) [***];

      (iv)  [***];

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<PAGE>

      (v)   [***];

      (vi)  [***];

      (vii) [***]; and

      (vii) [***].

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<PAGE>

                                    EXHIBIT D
               INITIAL STEERING COMMITTEE MEMBERS/GENERAL MANAGERS

ALTUS

1.    [***]

2.    [***]

3.    [***]

FALK

1.    (General Manager)

2.

3.

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<PAGE>

APPENDIX 1

TERRITORY

1. EUROPE                         2. EUROPE (CONTINUED)
Andorra
Albania                           Russia (including CIS countries)
Austria                                Armenia
Belgium                                Aserbaidschan
Bosnia-Herzegovina                     Belarus
Bulgaria                               Georgia
Croatia                                Kazakhstan
Cyprus                                 Kirgisistan
Czech Republic                         Moldova
Denmark                                Russian Federation
Estonia                                Tadschikistan
Finland                                Turkmenistan
France                                 Ukraina
Germany                                Uzbekistan
Gibraltar                         Slovak Republic
Greece                            Slovenia
Hungary                           Spain
Ireland                           Sweden
Iceland                           Switzerland
Italy                             Turkey
Latvia                            United Kingdom
Liechtenstein                     Republic of Yugoslavia
Lithuania
Luzembourg
Republic of Macedonia
Malta
Monaco                            2. MIDDLE EAST
Netherlands                       Egypt
North Ireland                     Israel
Norway
Poland
Portugal
Romania

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<PAGE>

                                  Schedule 8.2

                       Vertex Pharmaceuticals Incorporated
                               130 Waverly Street
                               Cambridge, MA 02139

                                                              December ___, 2002

Dr. Falk Pharma GmbH
Leinenweberstra(beta)e 5
79041 Freiburg Germany

Ladies and Gentlemen:

      Reference is made to that certain Development, Commercialization and
Marketing Agreement between Altus Biologics Inc., a Delaware corporation
("Altus"), and Dr. Falk Pharma GmbH a German corporation ("Falk"), of even date
herewith, a copy of which is attached hereto as Exhibit A (the
"Commercialization Agreement"), and to that certain Technology License Agreement
between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation
("Vertex"), and Altus, dated as of February 1, 1999 (the "License Agreement").
The Commercialization Agreement as referenced in this letter shall refer to the
terms of the agreement set forth on Exhibit A, and not to any other terms
contained in any future alterations or amendments of that Agreement.

      Vertex hereby agrees [***].

      This Agreement shall be interpreted under the laws of the Commonwealth of
Massachusetts applicable to contracts performed therein. This Agreement sets
forth the entire understanding between the parties and supersedes any prior
agreements or understandings, whether written or oral, and may not be modified
except in writing, signed by both Vertex and Falk.

                                              Sincerely yours,

                                              VERTEX PHARMACEUTICALS
                                              INCORPORATED, a Massachusetts
                                              corporation

                                              By:_______________________________

                                              Its:______________________________

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<PAGE>

                                                Agreed and Accepted,

                                                FALK:

                                                DR. FALK PHARMA GMBH, a German
                                                corporation

                                                By:_____________________________

                                                Its:____________________________

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