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                                                                   EXHIBIT 10.17

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]

                          SPONSORED RESEARCH AGREEMENT

                                 by and between

                                  NANOGEN, INC.

                                       and

                                  PROLINX, INC.

         This Sponsored Research Agreement (the "Agreement") is entered into as
of the 18th day of December, 1996 (the "Effective Date"), by and between
NANOGEN, INC., a California corporation having offices at 10398 Pacific Center
Court, San Diego, California 92121 ("Nanogen") and PROLINX, INC., a Delaware
corporation having offices at 22322 20th Avenue, S.E., Suite 100, Bothell,
Washington 98021 ("Prolinx").

         WHEREAS, Nanogen has developed proprietary expertise related to, among
other things, microelectronic DNA and macromolecular transport and detection,
screening and imaging of molecules, electronic hybridization, sample
preparation, genetic probe technology, electronic stringency control, electronic
complexity reduction and microfluidics; and

         WHEREAS, Prolinx has developed proprietary expertise related to, among
other things, chemical affinity systems, probe immobilization, luminescent
detection reagents and amplification polymers to provide enhanced detection
sensitivity in probe assays; and

         WHEREAS, Nanogen and Prolinx desire to collaborate on a sponsored
research program to be conducted by Prolinx and funded in part by Nanogen as
provided in Article 2 hereof (the "Sponsored Research Program"), the components
of which are to (1) identify and develop a chromophore/fluorophore/luminescent
detection reagent (the "Detection Reagent Research Program"), (2) refine and
develop an amplification polymer (the "Amplimer Research Program"), and (3)
apply Prolinx's proprietary chemical affinity systems to the immobilization of
oligonucleotide probes (the "Immobilization and Capture Program"), with the
overall goal of the Sponsored Research Program being the development of an
enhanced sensitivity detection system for use with Nanogen's proprietary
electronically addressable microchip assays.

         NOW, THEREFORE, the parties agree as follows:

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                                    ARTICLE 1

                                   DEFINITIONS

         1.1 "INFORMATION" means any and all current and future proprietary or
confidential information relating to, without limitation, either party's
designs, specifications, techniques, inventions, practices, knowledge, trade
secrets, know how, intellectual property, skill, experience, test data, quality
control, manufacturing data or drawings.

         1.2 "NANOGEN BACKGROUND INVENTIONS" means the proprietary inventions,
technology and expertise conceived and/or actually or constructively reduced to
practice by Nanogen prior to the Effective Date hereof, including, without
limitation, those covered by United States Patent Number 5,219,726 and its
foreign counterparts, and those described and claimed in United States Patent
Application Numbers 08/146,504, 08/232,233, 08/234,637, 08/258,168, 08/271,882,
08/304,657, 08/534,454, 08/677,305, *** AND , *** and their respective foreign
counterparts, and all Nanogen invention disclosures.

         1.3 "NANOGEN PLATFORM" means Nanogen's proprietary, electronically
addressable microchip arrays.

         1.4      ***

                                   ARTICLE 2

                          FUNDING; ANNUAL RESEARCH FEE

         2.1 FUNDING. The parties agree that the cost of the Sponsored Research
Program shall be funded as follows: the cost of the Detection Reagent Research
Program shall be funded solely by Nanogen, the cost of the Amplimer Research
Program shall be funded jointly by Nanogen and Prolinx, and the cost of the
Immobilization and Capture Program shall be funded solely by Prolinx.

         2.2 ANNUAL RESEARCH FEE. In satisfaction of its funding obligations
under the Detection Reagent Research Program and the Amplimer Research Program,
Nanogen shall pay Prolinx an annual research fee of Five Hundred Thousand
Dollars ($500,000) per year during the term of this Agreement (the "Annual
Research Fee"), unless sooner terminated as set forth in Article 10. The Annual
Research Fee shall be payable in equal monthly Installments of $41,667. Such
payments shall commence within forty-five (45) days after the Effective Date,
and thereafter shall be made on the first day of each calendar month during the
term of this Agreement. Such monthly payments shall be made to Prolinx in
immediately available U.S. funds payable by cashier's or certified check or wire
transfer.

---------------
*** Confidential material redacted and separately filed with the Commission.

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                                   ARTICLE 3

                       DETECTION REAGENT RESEARCH PROGRAM

         3.1 PROGRAM OVERVIEW. The Detection Reagent Research Program to be
conducted by Prolinx shall focus on the identification and development of a
proprietary chromophore/fluorophore/luminescent detection reagent for Optimized
Use on the Nanogen Platform. For purposes of this Agreement, "Optimized Use"
means a ***-fold to ***-fold increase in detection sensitivity as compared to a
probe labeled with a single fluorophore.

         3.2 FUNDING. As provided in Section 2.1 above, funding for the
Detection Reagent Research Program shall be provided solely by Nanogen from the
Annual Research Fee.

         3.3 LICENSE. Nanogen shall be granted an exclusive license to the
detection reagent developed for Nanogen by Prolinx pursuant to the Detection
Reagent Research Program, with no field of use limitations, subject to the terms
of a License Agreement to be negotiated between the parties but including, at a
minimum, the terms provided in Sections 2, 3 and 4 of the Letter of Intent
between the parties dated July 24, 1996 (the "License Agreement").

                                   ARTICLE 4

                            AMPLIMER RESEARCH PROGRAM

         4.1 PROGRAM VIEW. The Amplimer Research Program to be conducted by
Prolinx shall focus on the refinement and development of an amplification
polymer designed to amplify and enhance detection sensitivity on the Nanogen
Platform to Optimized Use (as defined in Section 3.1).

         4.2 FUNDING. As provided in Section 2.1 above, funding for the Amplimer
Research Program shall be provided jointly by Nanogen and Prolinx in equal
amounts. Nanogen's portion of such funding shall be provided from the Annual
Research Fee.

         4.3 LICENSE. Nanogen shall be granted an exclusive license within the
Nanogen Field of Use (as defined in the License Agreement) to the amplification
polymer developed for Nanogen by Prolinx pursuant to the Amplimer Research
Program, subject to the terms of the License Agreement.

                                   ARTICLE 5

                       IMMOBILIZATION AND CAPTURE PROGRAM

         5.1 PROGRAM OVERVIEW. The Immobilization and Capture Program to be
conducted by Prolinx shall involve the application by Prolinx of its already
existing immobilization and capture chemical affinity systems, which systems are
Prolinx Background Inventions, to the

---------------
*** Confidential material redacted and separately filed with the Commission.

                                      -3-
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immobilization of oligonucleotide probes, and the development by Prolinx of such
additional immobilization and capture chemical affinity systems as are necessary
to achieve the goals and purposes provided in the Research Plan.

         5.2 FUNDING. As provided in Section 2.1 above, funding for the
Immobilization and Capture Program shall be provided solely by Prolinx.

         5.3 LICENSE. Nanogen shall be granted a non-exclusive license within
the Nanogen Field of Use (as defined in the License Agreement) to the
immobilization and capture chemical affinity systems developed for Nanogen by
Prolinx pursuant to the Immobilization and Capture Program, subject to the terms
of the License Agreement.

                                   ARTICLE 6

                          RESEARCH OVERSIGHT COMMITTEE

         6.1 RESEARCH OVERSIGHT COMMITTEE. To further the objectives of the
parties and to coordinate the research activities conducted pursuant to the
Sponsored Research Program, the parties shall establish a Research Oversight
Committee ("ROC"). The ROC shall be created within thirty (30) days after the
Effective Date and shall be comprised of six (6) members, each with equal voting
power, three of whom shall be appointed, and may be replaced at any time(s), by
Nanogen in its sole discretion, and three of whom shall be appointed, and may be
replaced at any time(s), by Prolinx in its sole discretion. The purposes of the
ROC shall be to supervise and coordinate the Sponsored Research Program and to
provide a mechanism for exchanging information, modifying the Research Plan (as
described in Section 6.5 hereof), monitoring progress on achieving Technical
Milestones set forth in the Research Plan and reviewing the overall progress of
the Sponsored Research Program. Each party shall be free to replace its
representatives on the ROC from time to time upon written notice to the other
party. The ROC shall continue to operate throughout the term of this Agreement.

         6.2 MEETING. The ROC shall meet either in person or telephonically, as
the parties may agree, at least quarterly and, if in person, the meeting site
shall alternate between the offices of Nanogen and Prolinx. Each party shall be
responsible for the expenses incurred by its respective members of the ROC in
attending such meetings. A quorum of all six (6) members of the ROC shall be
required to meet and conduct business, and all decisions of the ROC shall
require a majority vote.

         6.3 RESEARCH PROJECT COORDINATOR. Nanogen, as the sponsoring party,
shall name a Research Project Coordinator from its members on the ROC. The
Research Project Coordinator shall be responsible for convening and conducting
meetings of the ROC, overseeing the occasional and annual modification of the
Research Plan pursuant to agreement of the ROC, sending notices of meetings to
all members of the ROC, and preparing agendas for each ROC meeting. The
secretary of each meeting shall be designated by the party hosting such meeting
and shall be responsible for recording, preparing and disseminating minutes of
such meeting to all members of the ROC. The ROC also may be polled or consulted
by the Research Project

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Coordinator from time to time by means of telecommunications or correspondence,
but no action of the ROC shall be effective unless it is by a majority vote.

         6.4 AGENDAS. Each ROC member shall communicate to the Research Project
Coordinator proposed agenda items in advance of each meeting of the ROC, and
each such item shall be placed on the agenda.

         6.5 RESEARCH PLAN. Research under the Sponsored Research Program shall
be conducted pursuant to a research plan (the "Research Plan"), which shall be
modified annually under the oversight of the Research Project Coordinator
pursuant to the agreement of the ROC, or by either party at any time with the
consent of the ROC. A copy of the initial Research Plan is attached hereto as
Exhibit A. The Research Plan, among other things, shall specify the direction,
research and Technical Milestones, responsibilities of the parties, reporting
requirements, timetable and experimental parameters of the research activities
conducted pursuant to the Sponsored Research Program.

         6.6 RESEARCH COMMITMENT. In consideration for the funding provided by
Nanogen, Prolinx shall commit to the Sponsored Research Program a dedicated team
consisting of such number of appropriately qualified scientists and support
personnel per year for the duration of the Sponsored Research Program as is
called for under the Research Plan, as modified annually or from time to time
pursuant to Section 6.5 above. Upon the prior approval of Nanogen, which
approval shall not be unreasonably withheld, Prolinx may change the composition
of the dedicated team from time to time in its reasonable discretion to achieve
the needs of the Sponsored Research Program. Prolinx shall use its best efforts
to execute the Research Plan and to achieve the overall goals of the Sponsored
Research Program. In using its best efforts, it is understood that Prolinx is
not obligated to spend more than the Annual Research Fee as specified in Section
2.2 hereof, plus those expenditures specified in Sections 4.2 and 5.2 hereof. It
is further understood that Prolinx does not guarantee the results of this
scientific endeavor.

                                   ARTICLE 7

                             PATENTS AND TECHNOLOGY

         7.1 OWNERSHIP OF INTELLECTUAL PROPERTY. Each party hereto expressly
acknowledges and agrees that the other party currently is engaged, and shall
continue to be so engaged during the term of this Agreement, in research and
development activities on numerous other projects and matters besides the
Sponsored Research Program (the "Other Work"). Each party further expressly
acknowledges and agrees that all right, title and interest in and to the Nanogen
Background Inventions and the Prolinx Background Inventions, and any and all
intellectual property developed by Nanogen or Prolinx in connection with its
Other Work (the "Other Intellectual Property"), is and shall continue to be the
sole and exclusive property of Nanogen or Prolinx, respectively, and that
neither party shall have any rights whatsoever to the Background Inventions or
Other Intellectual Property of the other party. The following provisions shall
apply only to inventions that are conceived and actually or constructively
reduced to practice during the course of, and arising directly from, the
Sponsored Research Program (collectively "Inventions") pursuant to this
Agreement:

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               7.1.1 Upon conceiving or reducing to practice any Invention, the
          party doing such immediately shall provide the other party with
          written notice setting out in detail the nature of the Invention, the
          experiments which support the Invention, the person or persons
          responsible for conceiving and reducing to practice the Invention and
          any other information relevant to the Invention. The discovering party
          also shall supply the other party with copies of all invention
          disclosures and patent and over applications describing and claiming
          the Invention.

               7.1.2 The ownership of all Inventions shall be determined as
          follows: (i) all right, title and interest in and to all Inventions
          conceived and reduced to practice solely by Nanogen, including its
          independent contractors, shall be owned by Nanogen; (ii) all right,
          title and interest in and to all Inventions conceived and reduced to
          practice solely by Prolinx, including its independent contractors,
          shall be owned by Prolinx; and (iii) all right, title and interest in
          and to all Inventions conceived and reduced to practice jointly by
          Nanogen and Prolinx shall be owned jointly by Nanogen and Prolinx.

               7.1.3 With respect to any Invention owned by one party under
          Section 7.1.2(i) or (ii), the other party shall assist the owner, to
          the extent reasonably necessary, at the owner's written request and
          expense, in the preparation of patent applications covering such
          Inventions which the owner elects in its sole discretion to file.

               7.1.4 With respect to any Inventions owned jointly under Section
          7.1.2(iii), Nanogen and Prolinx shall cooperate reasonably in
          determining whether to file patent applications covering such
          Inventions, but in no event shall either party thereby be compelled to
          remit any payments in respect to such patent applications. Should one
          party elect to seek patent protection covering an Invention and the
          other party elects not to participate in the costs with respect to
          such application, then the non-paying party shall relinquish all
          rights in the Invention to the paying party. With respect to jointly
          owned Inventions for which patent application and prosecution expenses
          are shared jointly, the parties shall engage in good faith discussions
          regarding any proposed licensing of such Inventions on a case by case
          basis. In addition, if one party wishes to obtain an exclusive license
          for a jointly owned Invention with regard to a particular field of
          use, the parties shall engage in good faith negotiations for such
          license.

          7.2 LIMITATIONS. Each party hereto expressly acknowledges and agrees
that any rights and interests arising in connection with this Agreement with
regard to intellectual property, technology or materials owned or developed by
the other party shall be strictly limited to those rights and interests
expressly granted to such party herein and in the License Agreement. Each party
further expressly agrees that no technology or materials provided by the other
party hereunder may be used for IN VIVO human studies under any circumstance
without such over party's prior written consent.

                                      -6-
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                                   ARTICLE 8

                                 CONFIDENTIALITY

         8.1 OBLIGATION OF NONDISCLOSURE. All Information communicated by one
party to the other party under this Agreement shall be maintained by the
receiving party in strict confidence and shall not be disclosed to any third
party without the express written permission of the disclosing party, which
permission may be granted or withheld in such disclosing party's sole
discretion. Notwithstanding the foregoing, either party may disclose Information
of the other party to its professional advisors, provided that such advisors are
bound by similar obligations of confidentiality to those contained herein. In
addition, either party may reveal Information of the other party where required
to do so by law or court order; provided, however, that the party intending to
so reveal shall provide the other party with notice of its intent to reveal at
least twenty (20) days prior to such revelations. The confidentiality
obligations of the parties hereunder shall continue for a period of five (5)
years from the expiration or termination of this Agreement.

         8.2 EXCEPTIONS. The Section 8.1 obligation of non-disclosure shall
apply to all such Information except that which:

               8.2.1 Is known by the receiving party prior to its disclosure
         other than pursuant to an obligation of confidentiality; or

               8.2.2 Becomes known to the receiving party from a third party
         under no obligation of confidentiality regarding such Information; or

               8.2.3 Is public knowledge or later becomes public knowledge
         through no act on the part of the receiving party.

         8.3 SAMPLES. No samples of chemicals, machinery, components, probes,
reagents, and other materials submitted by either party to the other party
pursuant to this Agreement shall be transferred by such other party to any third
party without the prior written consent of the submitting party. All such
samples and materials, to the extent unused, shall be returned to the submitting
party promptly upon the expiration or termination of this Agreement.

         8.4 PUBLICATIONS. At least thirty (30) days prior to the presentation
or submission for publication of manuscripts, including abstracts, and texts of
poster presentations of the results of any research conducted pursuant to this
Agreement and containing Information, the party proposing to make such
publication shall submit the same to the other party for purposes of allowing
the other party to comment on the manuscript or text, decline to authorize the
publication of any of its Information, request the filing by the submitting
party of a patent application or initiate the filing of a patent application
prior to publication of any such Information. Each party shall make such
submissions to the other party until two (2) years following the expiration or
termination of this Agreement.

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                                   ARTICLE 9

                            WARRANTIES AND COVENANTS

         9.1 REPRESENTATIONS AND WARRANTIES. Nanogen and Prolinx each hereby
represents and warrants to the other that:

               9.1.1 CORPORATE POWER. It is duly organized and validly existing
         nd has full corporate power and authority to enter into this Agreement
         and to carry out the provisions hereof.

               9.1.2 DUE AUTHORIZATION. It is duly authorized to execute and
         deliver this Agreement and to perform its obligations hereunder.

               9.1.3 BINDING AGREEMENT. This Agreement is a legal and valid
         obligation binding upon the party making such representation and
         warranty and enforceable in accordance with its terms. The execution,
         delivery and performance of this Agreement does not conflict with any
         agreement, instrument or understanding, oral or written, to which or
         by which the party making such representation and warranty may be
         bound, nor violate any law or regulation of any court, governmental
         body or administrative or other agency having jurisdiction over the
         party making such representation and warrant.

               9.1.4 INTELLECTUAL PROPERTY RIGHTS. It holds all necessary right,
         title and interest in and to its respective Background Inventions and
         technology to permit it to undertake the Sponsored Research Program
         contemplated by this Agreement without subjecting the other party
         hereto to liability for infringement of any patent, copyright or trade
         secret of any third party.

                                   ARTICLE 10

                              TERM AND TERMINATION

         10.1 TERM AND TERMINATION. The term of this Agreement shall be three
(3) years from the Effective Date, unless sooner terminated by either party upon
ninety (90) days written notice. If either party fails materially to perform its
obligations hereunder or otherwise breaches in any material respect any material
covenant, term or condition set forth in this Agreement, the nonbreaching party
may give written notice specifying the breach together with a statement of its
intention to terminate this Agreement if the breach is not cured within such
thirty (30) day period immediately following the date of such written notice. If
such breach is not reasonably susceptible of cure within such thirty (30) day
period, but the breaching party has undertaken and continues to make diligent
efforts to cure said breach within such thirty (30) day period, the period for
cure shall be extended for an additional fifteen (15) days. If, at the end of
the cure period, the breaching party has not cured the specified breach, the
non-breaching party may cause this Agreement to be terminated immediately
effective upon notice to the breaching party.

         10.2 TERMINATION IN FIRST YEAR. Notwithstanding the provisions of
paragraph 10.1, except in the case of material nonperformance or other material
breach by Prolinx, Nanogen

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shall not terminate funding for the Sponsored Research Program during the first
twelve (12) months of the Sponsored Research Program unless a determination is
made, subject to the following procedures, that the Technical Milestones, as
defined in the Research Plan, have not been achieved.

               10.2.1 DISPUTE RESOLUTION PROCEDURES. If, within the first nine
(9) months of the Sponsored Research Program, Nanogen wishes to terminate
funding based upon a claim that the Technical Milestones have not been achieved,
the matter shall be presented to the ROC for consideration. If the ROC cannot
agree by majority vote, within ten (10) business days, that the Technical
Milestones have not been achieved, the matter shall be submitted to a Management
Committee comprised of the Chief Executive Officers of both Nanogen and Prolinx
for consideration. If the Management Committee cannot agree, within ten (10)
business days, that the Technical Milestones have not been achieved, the parties
shall have five (5) business days to reach a mutual agreement on a competent
third party technical arbitrator (the "Arbitrator") to make such determination.
Once the Arbitrator is chosen, both parties shall exert best efforts to provide
all reasonably necessary written information to the Arbitrator within ten (10)
business days. Upon the delivery of all such information, the parties shall meet
with the Arbitrator for a single eight (8) hour session during which each party
shall be available to answer questions from the Arbitrator. The Arbitrator shall
then have two (2) additional business days to reach a decision on the dispute.

               10.2.2 OUTCOME OF DISPUTE RESOLUTION. If the Arbitrator concludes
         that the Technical Milestones have not been achieved, Nanogen shall
         have the right to terminate this Agreement upon sixty (60) days
         written notice to Prolinx, commencing upon the date of the
         Arbitrator's decision. If the Arbitrator concludes that the Technical
         Milestones have been achieved, Nanogen shall have no right to
         terminate this Agreement under Section 10.2.1; PROVIDED, HOWEVER, that
         Nanogen shall continue to have rights of termination as provided in
         Sections 10.1, 10.3 and 10.4 hereof. In the event of termination by
         Nanogen during the first twelve (12) months of this Agreement pursuant
         to the terms of this Section, Nanogen's sole and exclusive remedy
         hereunder shall be to cease paying the Annual Research Fee provided
         under this Agreement; PROVIDED, HOWEVER, that such limitation on
         Nanogen's remedies shall not apply in the case of termination by
         Nanogen for material breach by Prolinx.

         10.3 TERMINATION AFTER FIRST YEAR. After the first year, Nanogen shall
have the right, upon ninety (90) days written notice, to terminate this
Agreement, including the obligation to further fund the Sponsored Research
Program, without cause and at its sole discretion should it decide to do so.

         10.4 INSOLVENCY OR BANKRUPTCY. Either party, in addition to any other
remedies available to it by law or in equity, may terminate this Agreement by
written notice to the other party in the event such other party becomes
insolvent or bankrupt, or makes an assignment for the benefit of its creditors,
or a trustee or receiver of such other party or for all or a substantial part of
its property has been appointed.

         10.5 ACTIONS UPON TERMINATION. Upon termination of this Agreement, each
party shall return all Information and samples of the other party to such other
party and shall make no

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further use of such Information and samples. Upon termination, each party's
intellectual property and Inventions shall remain exclusively its own, and each
party shall retain ownership and control of its respective patent applications
(or, in its sole discretion, enter into discussions for the transfer of such
applications to the other party hereto). All ownership and license rights
granted hereunder by either party to the other thereupon shall terminate.

                                   ARTICLE 11

                                 INDEMNIFICATION

         11.1 INDEMNIFICATION. Each party hereby acknowledges that other party's
technology is experimental in nature. Therefore, each party shall defend,
indemnify and hold harmless the other party and its directors, officers,
shareholders, employees and agents of, from and against any and all actions,
causes of action, claims, liabilities, damages, losses, fees (including legal
fees), expenses and costs whatsoever (including without limitation losses,
damages and expenses for death, personal injury, illness, property damage or any
other injury or damage) arising from (i) its use, handling or storage of the
other party's technology at its own facility unless such actions, causes of
action, claims, liabilities and/or damages are proven to be the result of the
gross negligence or the willful breach by the other party of its obligations
hereunder, and (ii) any breach of its representations and warranties contained
herein.

                                   ARTICLE 12

                                   ASSIGNMENT

         12.1 ASSIGNMENT. Except as otherwise provided herein, no party may
assign its contractual rights or obligations under this Agreement to any other
person or entity without the prior written consent of the other party. Nothing
in this Section 12.1 shall restrict the power of either party to assign or
otherwise transfer any of its rights to any of its Background Inventions or
other property.

                                   ARTICLE 13

                                  MISCELLANEOUS

         13.1 NOTICES. To be effective, all notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by facsimile transmission (receipt verified), mailed by registered or
certified mail (return receipt requested), postage prepaid, or sent by express
courier 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):

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         If to Nanogen, addressed to:

                  Nanogen, Inc.
                  10398 Pacific Center Court
                  San Diego, CA 92121
                  Attention:  Vice President, General Counsel
                  With a copy to:  Chairman and Chief Executive Officer

         If to Prolinx, addressed to:

                  Prolinx, Inc.
                  22322 20th Avenue S.E., Suite 100
                  Bothell, WA 98021
                  Attention:  President and Chief Executive Officer

         13.2 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California. Any claim or controversy arising out of or relating to this
contract or any breach hereof shall be submitted to a court of competent
jurisdiction in the State of California or the State of Washington.

         13.3 SEVERABILITY. If any term, covenant or condition of this Agreement
or the application thereof to any party or circumstance, to any extent, is held
to be invalid or unenforceable, then (i) 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 (ii) 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 unenforceable.

         13.4 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against either party, irrespective of which party may be deemed to
have authored the ambiguous provision.

         13.5 ENTIRE AGREEMENT. This Agreement, including all Exhibits hereto,
sets forth all the covenants, promises, warranties, representations, conditions
and understandings between the parties hereto and supersedes all prior
agreements and understandings, written or oral, between the parties.

         13.6 MODIFICATIONS. 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.

         13.7 FORCE MAJEURE. Neither party hereto 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 (including compliance with requests, rules, regulations or
orders of any governmental authority), war, fire, robbery, vandalism, explosion,
flood, strike, lockout, embargo, act of God, or any similar cause beyond the
control of the

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defaulting party, provided that the party claiming force majeure has exerted
all reasonable efforts to avoid or remedy such force majeure.

         13.8 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.

         13.9 INDEPENDENT CONTRACTORS. The parties acknowledge and agree that
they are acting as independent contractors, and neither party is granted any
rights or authority to assume or create any obligation or liability, express or
implied, on the other party's behalf or to bind the other party in any manner
whatsoever.

         13.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.

         IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate originals by their authorized officers as of the date and year first
above written.

NANOGEN, INC.                                       PROLINX, INC.

By: /s/ Howard C. Birndorf                          By: /s/ Mark L. Stolowitz
   ---------------------------------                   -------------------------
     Howard C. Birndorf                                  Mark L. Stolowitz
        Chairman and                                       President and
   Chief Executive Officer                            Chief Executive Officer

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                                    EXHIBIT A

                              INITIAL RESEARCH PLAN

                     RESEARCH PROTOCOL FOR THE JOINT PROGRAM
               BETWEEN NANOGEN AND PROLINX ON ATTACHMENT CHEMISTRY
                            AND SIGNAL AMPLIFICATION

                                NOVEMBER 21, 1996

         The application of Prolinx's attachment chemistry to Nanogen's chip
technology is critically dependent on the stability of the*** under electric
field conditions. A feasibility study has been designed to address this issue
before the research agreement is finalized. This study must be completed within
one month of receiving the reagents from Prolinx so that the Research Oversight
Committee will have time to assess the results and determine if continuation of
the Sponsored Research Agreement scheduled to commence on January 1, 1997, is
justified.

         This plan is based on the assumption that the linkage is stable. We
will continue with a full-scale evaluation of the probes and linkers supplied by
Prolinx. The first three quarters will focus on the use of *** attachment
chemistry with a variety of polymer surfaces. Work on signal amplification will
begin in the third quarter with greater emphasis occurring toward the end of the
year.

                       Feasibility Study (Nov. - Dec. '96)

                                Stability of ***

[6 PAGES OF TECHNICAL DATA AND RESEARCH PROGRAM DETAILS REDACTED AND FILED
SEPERATELY WITH THE COMMISSION.]

--------
*** Confidential material redacted and separately filed with the Commission.

                                      -13-<PAGE>

                                                                 EXHIBIT 10.18

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]

                COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT

                                 By and Between

             HOECHST RESEARCH & TECHNOLOGY DEUTSCHLAND GMBH & CO KG

                                       and

                                  NANOGEN, INC.

                                December 3, 1998

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                          PAGE

<S>                                                                         <C>
1.       Definitions.........................................................3
2.       Research Program....................................................7
3.       Payment.............................................................9
4.       Reports and Records................................................10
5.       Confidentiality and Non-disclosure.................................10
6.       Intellectual Property Licenses.....................................10
7.       Intellectual Property and Patent Rights............................11
8.       Term and Termination...............................................13
9.       Representations and Warranties.....................................14
10.      Disclaimers........................................................14
11.      Insurance..........................................................15
12.      Notices............................................................15
13.      Dispute Resolution.................................................16
14.      Miscellaneous......................................................16
</TABLE>

EXHIBITS

Exhibit A         HR&T Patent Applications
Exhibit B         Nanogen Patent Applications
Exhibit C         Annual Budget
Exhibit D         Program Inventions
Exhibit E         Research Program
Exhibit F         CPR Procedures

                                       2
<PAGE>

                COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT

         THIS COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT is dated as of
December 3, 1998 by and between HOECHST RESEARCH & TECHNOLOGY DEUTSCHLAND GMBH &
CO KG, a German company, having a place of business at D-65926 Frankfurt am
Main, Germany (hereinafter, "HR&T"), and NANOGEN, INC., a Delaware corporation,
having its principal office and place of business at 10398 Pacific Center Court,
San Diego, California 92121 (hereinafter, "Nanogen").

                              W I T N E S S E T H :

         WHEREAS, Nanogen has developed certain technology related to
electronically addressable microchip oligonucleotide arrays ("Arrays"),
including Nanogen's Automated Programmable Electronic Matrix ("APEX")
technology; and

         WHEREAS, HR&T has developed certain technology related to combinatorial
and/or modular nanotechnology, including its Exponential Library by Association
of Sublibraries ("ELIAS") and its pRNA (and related oligonucleotide analog)
technology; and

         WHEREAS, HR&T and Nanogen have previously entered into a Letter
Agreement dated December 4, 1997 (the "Letter Agreement"); and

         WHEREAS, in accordance with the terms of the Letter Agreement
(including the paragraphs under the headings "Purpose of Collaboration" and
"Agreement Field"), HR&T and Nanogen wish to perform certain research and
development activities as contemplated therein.

         NOW THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties hereby agree as follows:

         1.   DEFINITIONS. As used in this Agreement:

         1.1 "Agreement" shall mean this Agreement and any exhibits, appendices,
attachments or addenda hereto, and any renewals or extensions of this Agreement.

         1.2 "HR&T Intellectual Property" shall mean and include all patentable
and unpatentable inventions, ideas, discoveries, improvements, design rights,
semiconductor mask works, works of authorship, trade secrets, know-how and any
equivalents thereof which are in existence as of the Effective Date or
thereafter, as are necessary to make, have made, use or sell a Product and are
owned by HR&T, including, but not limited to, HR&T's ELIAS and pRNA technologies
disclosed in the HR&T patent applications set forth in Exhibit A hereto (amended
with each new HR&T patent application necessary to make, have made, use or sell
a Product).

         1.3 "HR&T Patent Rights" shall mean all patents and patent applications
owned by HR&T which are in existence as of the Effective Date or thereafter,
including the patent applications set forth in Exhibit A hereto (amended with
each new HR&T patent application necessary to make, have made, use or sell a
Product), and which contain a claim necessary to make, have made, use or sell a
Product, including all divisionals, continuations, continuations-in-part,
re-examinations, reissues, and all foreign equivalents of any of the foregoing
in whole or in part.

                                       3
<PAGE>

         1.4 "HR&T Program Inventions" shall mean all Program Inventions made or
conceived by employees or others acting solely on behalf of HR&T; PROVIDED,
however, that HR&T Program Inventions shall not include Program Inventions which
utilize both APEX and ELIAS and/or pRNA technology.

         1.5 "Effective Date" shall mean January 1, 1998.

         1.6 "Executive Committee" shall mean a committee which shall (i) be
responsible for overseeing the Research Management Committee, (ii) set strategic
goals under this Agreement and the Letter Agreement, (iii) approve annual
budgets for the Research Program (the annual budget for the first year and a
proposed annual budget for the second year of the Research Program are set forth
in Exhibit C hereto), (iv) set research milestones and (v) decide when
milestones have been completed. The Executive Committee shall consist of three
(3) members appointed by Nanogen and three (3) members appointed by HR&T. All
decisions of the Executive Committee must be by unanimous consent of all members
of the Executive Committee.

         1.7 "Joint Program Inventions" shall mean (i) all Program Inventions
made or conceived by employees or others acting on behalf of HR&T jointly with
employees or others acting on behalf of Nanogen and (ii) all Program Inventions
which utilize both APEX and ELIAS and/or pRNA technology.

         1.8 "Nanogen Intellectual Property" shall mean and include all
patentable and unpatentable inventions, ideas, discoveries, improvements, design
rights, semiconductor mask works, works of authorship, trade secrets, know-how
and any equivalents thereof which are in existence as of the Effective Date or
thereafter, are necessary to make, have made, use or sell a Product and are
owned by Nanogen, including, but not limited to, Nanogen's APEX technology
disclosed in the Nanogen patents and patent applications set forth in Exhibit B
hereto (amended with each new patent application necessary to make, have made,
use or sell a Product).

         1.9 "Nanogen Patent Rights" shall mean all patents and patent
applications owned by Nanogen which are in existence as of the Effective Date or
thereafter, including the patents and patent applications set forth in Exhibit B
hereto (amended with each new patent application necessary to make, have made,
use or sell a Product), and which contain a claim necessary to make, have made,
use or sell a Product, including all divisionals, continuations,
continuations-in-part, re-examinations, reissues, and all foreign equivalents of
any of the foregoing in whole or in part.

         1.10 "Nanogen Program Inventions" shall mean all Program Inventions
made or conceived by employees or others acting solely on behalf of Nanogen;
PROVIDED, however, that Nanogen Program Inventions shall not include Program
Inventions which utilize both APEX and ELIAS and/or pRNA technology.

         1.11 "Primary Filing Countries" shall mean the United States, Canada,
European Community Countries and Japan.

         1.12 "Products" shall mean products or applications utilizing jointly
developed technology incorporating both Nanogen's APEX technology as disclosed
in Exhibit B hereto and HR&T's ELIAS and/or pRNA technology as disclosed in
Exhibit A hereto.

                                       4
<PAGE>

         1.13 "Program Inventions" shall mean and include all patentable and
unpatentable inventions, ideas, discoveries, improvements, design rights,
semiconductor mask works, works of authorship, trade secrets, know-how and any
equivalents thereof, and any patent applications or patents based thereon, made
or conceived during and as a result of the Research Program, all of which shall
be identified in Exhibit D to this Agreement, which Exhibit shall be amended
from time to time as warranted.

         1.14(a) "Reimbursable Costs" shall mean all direct and indirect costs
incurred by Nanogen in performing its obligations under this Agreement, which
may include without limitation, as applicable:

               (i) salaries and wages,

               (ii) payroll taxes,

               (iii) contract labor,

               (iv) fringe benefits,

               (v) expenses incurred in occupying facilities (including
          leasehold improvements) and equipment-related expenses, excluding
          depreciation and amortization expenses,

               (vi) recruitment and relocation,

               (vii) communications expense,

               (viii) supplies,

               (ix) development and prototype materials,

               (x) freight and transportation,

               (xi) training and education,

               (xii) travel expenses,

               (xiii) data processing costs,

               (xiv) patent, trademark and license fees and filing, prosecution
          and maintenance expenses for Nanogen Intellectual Property as set
          forth in Exhibit B,

               (xv) insurance,

               (xvi) professional services,

               (xvii) depreciation and amortization of facilities (including
          leasehold improvements) and equipment,

               (xviii) a financing charge for capital acquisitions made by
          Nanogen for use in performing work under this Agreement,

               (xix) outside purchased services,

                                       5
<PAGE>

               (xx) sales and use taxes (including such taxes applicable to the
          acquisition, use, transfer or deemed transfer of property),

               (xxi) periodic lease and rental payments under capital or
          financing leases,

               (xxii) costs of applying for regulatory approvals on Products
          approved by the Executive Committee, and fees payable to governmental
          agencies, including the United States Food and Drug Administration
          (the "FDA") and comparable foreign regulatory authorities, including
          expenses resulting from generation of chemical, toxicological,
          microbiological and pharmacological data and techniques, clinical data
          and product formulations and specifications, and

               (xxiii) periodic and special reports, including reports to the
          Research Management Committee.

         (b) In determining Reimbursable Costs, Nanogen will employ the
following accounting policies:

               (i) General use capital equipment, facilities and leasehold
          improvements will be assigned an estimated economic useful life and
          salvage value, if any, and depreciation and amortization will be
          computed using the straight-line method. Depreciation and amortization
          will be allocated to Reimbursable Costs under this Agreement directly
          or through overhead rates applied to direct head count.

               (ii) Such capital equipment purchased pursuant to agreement
          between both parties for use in connection with this Agreement will be
          charged directly against the budget in the quarter the expense was
          incurred.

               (iii) Total facilities expenses of Nanogen, excluding leasehold
          improvement amortization allocated to specific functional areas and
          net of any sublease revenues, will be allocated to Reimbursable Costs
          under this Agreement based on the ratio of direct personnel engaged in
          work under this Agreement to the total Nanogen head count.

               (iv) General and administrative expenses of Nanogen will be
          allocated to this Agreement directly or based on the ratio of total
          Reimbursable Costs to total operating expenses of Nanogen, excluding
          (in both instances) general and administrative expenses subject to
          such allocation, as agreed between the Controllers of both parties, as
          agreed between the Controllers of both parties.

               (v) All other indirect expenses not covered in Paragraphs (i)
          through (iv) of this Paragraph 1.14(b) which are in support of the
          Research Program will be allocated to Reimbursable Costs under this
          Agreement through overhead rates applied to Nanogen direct head count,
          as agreed between the Controllers of both parties.

               (vi) Notwithstanding the foregoing, for purposes of this
          Agreement, Reimbursable Costs shall not include direct and indirect
          costs for start-up of commercial manufacturing, installation of
          commercial production lines and commercial product manufacturing
          operations. These costs shall be addressed in connection with the
          contemplated joint venture agreement between the parties.

                                       6
<PAGE>

         (c) The term "capital acquisition" as used herein shall mean that
portion of capital equipment, facilities, leasehold improvements or other
property, whenever acquired by Nanogen, which are capitalized on Nanogen's
accounting records and which are either: (i) purchased directly by Nanogen; (ii)
financed by Nanogen under a conditional sale contract; (iii) financed by Nanogen
through a secured loan; or (iv) assets constructed in-house by Nanogen. Assets
acquired under capital or financing leases will not be considered capital
acquisitions for purposes of this Paragraph.

         (d) With respect to capital acquisitions financed by Nanogen with
specific borrowing, the financing charge referred to above will be in the amount
and at the time of the actual financing costs incurred by Nanogen. With respect
to capital acquisitions not financed by Nanogen with specific borrowing, the
financing charge will be based on the prime lending rate in effect from time to
time at Citibank N.A., New York, New York, plus two (2) percentage points, to
the extent permitted by applicable law, applied to Nanogen's net book value.
"Net book value" is defined as the gross capital acquisition value excluding
capital acquisitions financed by Nanogen with specific borrowing, less related
accumulated depreciation and amortization. The financing charge for each billing
period will be prorated to the extent depreciation or amortization of the
capital acquisitions has been allocated to work other than work under this
Agreement during such period. The financing charge will be calculated monthly
based on the net book value at the end of the preceding fiscal month.

         1.15 "Research Management Committee" shall mean a committee which shall
be responsible for preparing the Research Program and supervising, managing and
monitoring the progress of the Research Program, for conducting marketing
studies and for facilitating the open exchange of information between the
parties. The Research Management Committee shall consist of two (2) employees of
HR&T and two (2) employees of Nanogen, at least one of whom from each company
shall be at the research director level (or equivalent) or higher. Decisions
that are not taken unanimously by the Research Management Committee are to be
referred to the Executive Committee for resolution.

         1.16 "Research Program" shall mean the cumulative endeavors of the
parties to produce Products in accordance with the specifications, timetables,
milestones, reports and deliverables, as set forth in Exhibit E hereto, as it
may be amended from time to time. The Research Program shall be divided into two
phases, the "Research Phase", which shall mean all research activities up to and
including the development of a prototype and the "Product Development Phase,
which shall mean all post-prototype development activities relating to the
development of Products, for commercialization."

         2. RESEARCH PROGRAM.

         2.1 Each of HR&T and Nanogen shall use reasonable efforts to perform
their respective activities in accordance with the Research Program. Subject to
the terms and conditions of this Agreement, HR&T and Nanogen are free to
independently develop, market and sell any products other than Products.

         2.2 Each of HR&T and Nanogen shall promptly notify the other party, in
writing, through the Research Management Committee, of the existence of any new
Program Inventions.

         2.3 The Research Management Committee shall meet from time to time, but
at least once every three (3) months during the term of this Agreement,
alternating between the

                                       7
<PAGE>

headquarters of HR&T and Nanogen or at a mutually agreed location, to: (a)
review progress and ongoing resource allocation and budgeting matters of the
Research Program; (b) amend the Research Program as agreed by the parties; (c)
disclose Program Inventions which have not previously been disclosed in
accordance with Paragraph 2.2; and (d) review the status of patent filings with
respect to Program Inventions and, if necessary in view of such review, propose
amendments to Appendix A of this Agreement. All decisions taken by the Research
Management Committee must be by unanimous consent of all the members of the
Research Management Committee. In order to facilitate the disclosure of Program
Inventions and the review of the status of patent filings with respect to
Program Inventions, patent attorneys for HR&T and Nanogen may participate in all
such meetings.

         2.4 Within five (5) business days following each meeting pursuant to
Paragraph 2.3, the Research Management Committee shall cause to be prepared a
written summary of such meeting, which summary shall include, at a minimum: (a)
a list of all Program Inventions which have come into existence since the
Effective Date or since the previous meeting, whichever is applicable; (b) all
patent filings with respect to Program Inventions since the Effective Date or
since the previous meeting, whichever is applicable; and (c) a report regarding
the progress of the Research Program, which shall include the tracking of the
Research Program to budget and a report on any material budgetary implications
for changes to the Research Program. Such written summary shall be provided to
the Executive Committee.

         2.5 The Executive Committee shall meet from time to time, but at least
once every three (3) months during the term of this Agreement, alternating
between the headquarters of HR&T and Nanogen, a mutually agreed location or by
telephonic or video conference, to: (a) receive a report on the progress of the
Research Program by the Research Management Committee; (b) review the strategic
goals pursuant to the Letter Agreement and this Agreement; (c) approve annual
budgets under the Research Program and review the progress of the Research
Program against the budget; (d) establish, review and revise milestones where
appropriate, and (e) determine the level of progress toward achievement of
milestones and determine milestone completion. Within five (5) business days
after each meeting, the Executive Committee shall cause minutes to be prepared
and distributed to each party accurately documenting such meeting.

         2.6 Nanogen and HR&T may, upon reasonable notice during normal business
hours, (a) consult informally, during such visits and by telephone, with
personnel of the other party performing work on the Research Program, and (b)
with the other party's prior approval, which approval shall not be unreasonably
withheld, visit the sites of any tests or experiments being conducted by such
other party in connection with the Research Program, but only to the extent in
each case as such trials or other experiments relate to the Research Program. On
such visits an employee of the host company conducting the research or
development activities shall accompany the employee(s) of the visiting party. If
requested by the visiting party, the other party shall cause appropriate
individuals working on the Research Program to be available for meetings at the
location of the facilities where such individuals are employed at times
reasonably convenient to the party responding to such request. All information
revealed to representatives of the HR&T and Nanogen during the visits and
consultations provided for in this Paragraph 2.5 shall be treated as
confidential information in accordance with Paragraph 5 of this Agreement.

                                       8
<PAGE>

         3. PAYMENT.

         3.1 HR&T shall pay *** of its own research and development costs and
shall pay *** of Nanogen's Reimbursable Costs incurred in performing its
obligations under this Agreement (the "Fee"). Nanogen's Reimbursable Costs shall
not exceed *** per year per full time equivalent researchers and staff assigned
to the Research Program. Neither party makes any warranty that these costs and
fees will be sufficient to complete the Research Program. The Fee shall be
payable by HR&T to Nanogen as follows:

         (a) The initial annual budget and a proposed budget for the second year
of the Research Program are attached as Exhibit C. Annually thereafter during
the term hereof, the Research Management Committee shall develop a budget for
the Research Program, including anticipated quarterly expenditures by each
party. The Research Management Committee shall submit each such subsequent
budget to the Executive Committee for its review and approval at least
forty-five (45) days prior to commencement of the next annual period. The
Executive Committee shall review such budget and inform the Research Management
Committee of its determination with respect to same within thirty (30) days
following its receipt of same. If the budget is not approved, the Research
Management Committee shall confer with the Executive Committee to attempt to
develop a mutually acceptable budget. If the Executive Committee cannot resolve
the dispute, then such dispute shall be resolved in accordance with the
provisions of Paragraph 13 hereof.

         (b) The Fee shall be payable to Nanogen in quarterly installments
commencing on January 1, 1998. Each quarterly installment shall be due not later
than five (5) business days following the first day of each quarter. Should a
major positive balance arise due to underuse of the budget, this will be
balanced with the fourth quarter payment in each year. All installments shall be
based upon an estimate of the Reimbursable Costs expected to be incurred by
Nanogen during its next quarterly period beginning on such date, up to a maximum
of Nanogen's budgeted amount for such quarter. Such estimate shall be set forth
in an invoice prepared by Nanogen in reasonable detail, signed by a duly
authorized officer of Nanogen and submitted to the Research Management Committee
at least twenty (20) days prior to the beginning of the quarterly period with
respect to which such payment is to be made. Each such invoice shall be due and
payable in full by HR&T prior to the beginning of such quarterly period.
Beginning with the second invoice under this Agreement, such invoice shall
include a reconciliation and adjustment for the period covered by the preceding
invoice to reflect any difference between actual Reimbursable Costs incurred by
Nanogen and estimated Reimbursable Costs for such period, up to a maximum of
Nanogen's budgeted amount for such quarter. Any amounts in excess of the
budgeted amount shall be subject to the review and approval of the Executive
Committee.

         3.2 If HR&T fails to make prompt and timely payment, Nanogen may give
written notice thereof, and unless HR&T within fifteen (15) days following
receipt of such notice makes such payment, Nanogen may at any time thereafter
until HR&T makes such payment suspend the research and development services
under this Agreement on written notice to HR&T.

         3.3 In the event Nanogen, in course of its research under this
Agreement, is required to lease equipment which Nanogen would ordinarily not
otherwise be required to lease, and HR&T agrees to such lease, HR&T will be
responsible for such lease payments.

---------------
*** Confidential material redacted and separately filed with the Commission.

                                       9
<PAGE>

         4. REPORTS AND RECORDS.

         4.1 Nanogen and HR&T shall provide to the Research Management Committee
within forty-five (45) days following the end of each quarterly period beginning
with the end of the first period on March 31, 1998, a report in such reasonable
detail as the Research Management Committee may request setting forth:

         (a) the Reimbursable Costs incurred by Nanogen and the costs incurred
by HR&T in performing its obligations under the Research Program during such
period;

         (b) the work performed by such party during such period; and

         (c) the status of the research and development of the Products at the
end of the period.

         4.2 Nanogen shall keep and maintain, in accordance with generally
accepted accounting principles and practices, proper and complete records and
books of account documenting all Reimbursable Costs. Each party agrees to permit
either nationally recognized certified public accountants or Controllers from
the other party to verify on a once annually basis the Reimbursable Costs or
costs billed or incurred pursuant to this Agreement; and Nanogen shall provide
annually a certification by nationally recognized certified public accountants
or its internal Controller as to Reimbursable Costs billed to HR&T in that year.
HR&T will keep confidential, and will not disclose to any third party, except
such disclosures as may be required by law, without the prior written consent of
Nanogen, information in statements delivered to HR&T or obtained by HR&T through
access of its independent certified public accounting firm or Controller to the
books and records of Nanogen. HR&T shall provide similar access and similar
certifications to Nanogen regarding its costs incurred under the Research
Program and Nanogen shall similarly keep such information confidential.

         5. CONFIDENTIALITY AND NON-DISCLOSURE. That certain Mutual Confidential
Disclosure Agreement effective as of February 20, 1997 between HR&T and Nanogen,
as amended (the "Confidentiality Agreement"), shall remain in full force and
effect.

         6. INTELLECTUAL PROPERTY LICENSES.

         6.1 HR&T hereby grants solely during the term of this Agreement to
Nanogen, a worldwide, royalty-free, nonexclusive license in and to HR&T
Intellectual Property and HR&T Patent Rights, solely to use in research and
development activities pursuant to the Research Program under this Agreement.

         (a) HR&T recognizes that Nanogen has conducted considerable research
and development activities in connection with its permeation layer technology
and has protected certain of its advancements with intellectual property. HR&T
is willing, as part of this Agreement, to conduct additional research activities
directed toward Nanogen's permeation layer. To the extent HR&T invents any new
inventions or any improvements to Nanogen's inventions relating to permeation
layers with utility on Nanogen's Arrays which would constitute HR&T Intellectual
Property or HR&T Patent Rights or HR&T Program Inventions, HR&T will grant to
Nanogen a worldwide, royalty-free license to practice such intellectual property
(without the right to sublicense unless it applies to a Nanogen product).
Nanogen will be licensed to practice such intellectual property in connection
with any of its other joint venture arrangements

                                       10
<PAGE>

or corporate collaborations subject to a 2% of net sales royalty payable to any
joint venture or other joint relationship involving Nanogen and HR&T.

         (b) Nanogen hereby grants solely during the term of this Agreement, to
HR&T, a worldwide, royalty-free, nonexclusive license in and to Nanogen
Intellectual Property and Nanogen Patent Rights, solely to use in research and
development activities pursuant to the Research Program under this Agreement.

         6.2 Except as provided therein, the licenses granted in accordance with
Paragraphs 6.1(a) and (b) do not include a right to grant sublicenses.

         6.3 In the event that any substantial and continuing infringement of
any of the HR&T Patent Rights or Nanogen Patent Rights licensed hereunder comes
to the attention of either party hereto, such party shall promptly notify the
Executive Committee, which Committee will determine an appropriate action in
accordance with its authority.

         7. INTELLECTUAL PROPERTY AND PATENT RIGHTS.

         7.1 The entire right, title and interest in all Program Inventions
shall be owned jointly by HR&T and Nanogen and may be used only as they mutually
agree.

         7.2 Each party hereto promptly shall disclose to the other party the
making, conception or reduction to practice of Program Inventions by employees
or others acting on behalf of such party. Each of Nanogen and HR&T hereby
represents and warrants that all employees and others acting on its respective
behalf in performing its obligations under this Agreement shall be obligated
under a binding written agreement to assign to it, or as it shall direct, all
Program Inventions made or developed by such employees or others.

         7.3 Promptly following any disclosure of Program Inventions pursuant to
Paragraph 2.2 and Paragraph 7.2, the Research Management Committee, in
consultation with patent attorneys for HR&T and Nanogen, shall discuss and
determine, in good faith, whether patent applications should be prepared and
filed for such disclosed Program Inventions.

         7.4 If patent applications are to be prepared and filed pursuant to
Paragraph 7.3, then the Research Management Committee shall discuss and
determine, in good faith, for each of such Program Inventions, which of the
parties shall be responsible for the preparation, filing, prosecution and
maintenance of such patent applications in the Primary Filing Countries. Each of
such patent applications shall become part of the Program Inventions, and
Exhibit D shall be amended accordingly to evidence such Program Inventions.

         7.5 If the Research Management Committee determines that a particular
patent application be filed in a country or countries in addition to the Primary
Filing Countries, then the Research Management Committee shall determine which
party shall be responsible for the filing, prosecution and maintenance of such
patent application, and such patent application shall be part of the Program
Inventions.

         (a) If the Research Management Committee determines not to file a
particular patent application in a country or countries in addition to the
Primary Filing Countries, either party, alone, after written waiver by the other
party, may file such particular patent application in such country or countries
and shall pay, without right to reimbursement thereof, all costs and expenses

                                       11
<PAGE>

for filing, prosecution and maintenance of patent application filed in such
country or countries, and notwithstanding the provisions of Paragraph 6.1, that
party shall own, exclusively, all right, title and interest in such patent
application.

         (b) If the other party of Paragraph 7.5(b) does not provide such
written waiver, then any such particular patent application shall be treated as
if the Research Management Committee had made a declaration to file the
particular patent application in a country or countries in addition to the
Primary Filing Countries in accordance with Paragraph 7.5(a).

         7.6 Each party shall keep the Research Management Committee currently
informed of the filing and progress of all material aspects of the prosecution
of all such patent applications and of the issuance of patents, and shall
consult with the Research Management Committee concerning any decisions which
would affect the scope of any issued claims and other prosecutorial details,
including the potential abandonment of any application.

         7.7 Upon request, each party shall execute and deliver to the other
party all descriptions, applications, assignments and other documents and
instruments as are necessary or proper to carry out the provisions of Paragraphs
7.1, 7.2, 7.3, 7.4, 7.5 and 7.6 without further compensation, except as
otherwise provided in Paragraph 1.15, and the parties shall cooperate with and
assist each other or their nominees in all reasonable ways and at all reasonable
times, including, but not limited to, testifying in all legal proceedings,
signing all lawful papers and in general performing all lawful acts reasonable,
necessary or proper, to aid the other party in obtaining, maintaining, defending
and enforcing all lawful patent, copyright, trade secret, know-how and the like
in the Primary Filing Countries and elsewhere.

         7.8 Except as otherwise provided in this Agreement, under no
circumstances shall either party, as a result of this Agreement, obtain any
ownership interest or other right in any technology, know-how, trade secrets,
patents, pending patent applications or products of the other party, including
items owned, controlled or developed by the other, or transferred by the other
to such party at any time pursuant to this Agreement. It is understood and
agreed by the parties hereto that this Agreement does not grant to either party
any license or other right, other than the licenses granted in Paragraph 6.1,
the assignments granted in Paragraph 7.1 and the licenses granted in Paragraph
8.3.

         7.9 During the term of this Agreement, Nanogen and HR&T each
acknowledge each other's interest in publishing certain of its results to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each party also recognizes the mutual interest in
obtaining valid patent protection and protecting business interests.
Consequently, each party, its employees or consultants wishing to make a
publication (including any oral disclosure made without obligation of
confidentiality) relating to work performed by such party as part of the
Research Program (the "Publishing Party") shall transmit to the Research
Management Committee a copy of the proposed written publication at least
forty-five (45) days prior to submission for publication, or an outline of such
oral disclosure at least fifteen (15) days prior to presentation. The Research
Management Committee shall have the right (i) to propose modifications to the
publication for patent reasons and (ii) to request a reasonable delay in
publication in order to protect patentable information.

         (a) If the Research Management Committee requests such a delay, the
Publishing Party shall delay submission or presentation of the publication for a
period of ninety (90) days to enable patent applications protecting each party's
rights in such information to be filed in

                                       12
<PAGE>

accordance with this Article 7. Upon the expiration of forty-five (45) days, in
the case of proposed written disclosures, or fifteen (15) days, in the case of
proposed oral disclosures, from transmission to the Research Management
Committee, the Publishing Party shall be free to proceed with the written
publication or the presentation, respectively, unless the Research Management
Committee has requested the delay described above.

         8. TERM AND TERMINATION.

         8.1 The initial term of this Agreement shall be for a two (2) year
period from the Effective Date with an option to extend the term of this
Agreement for an additional one (1) year period upon mutual agreement of HR&T
and Nanogen. The parties hereto are currently in negotiations for a joint
venture agreement, in which license and commercialization rights will be
incorporated. This Agreement will otherwise terminate upon the earliest of:

         (a) the institution of voluntary or involuntary proceedings by or
against either party in bankruptcy, or under any insolvency law, or for
corporate reorganization pursuant to Chapter 11 of the Bankruptcy Code or
similar provision, the appointment of a receiver, or petition for the
dissolution of such party for the benefit of creditors;

         (b) after the first year of the Research Phase, funding may be
terminated upon mutual agreement of HR&T and Nanogen;

         (c) following commencement of the Product Development Phase, and
subsequent to material non-achievement of milestones established and agreed to
by HR&T and Nanogen, the date either party gives notice to the other of its
decision to terminate this Agreement;

         (d) the date mutually agreed to in writing for termination by both
parties;

         (e) as otherwise provided in this Agreement.

         8.2 This Agreement may also be terminated by either party upon default
or breach of a material obligation or condition by the other party, such
termination being effective sixty (60) days after receipt by the alleged
defaulting or breaching party of written notice of such termination under this
Paragraph specifying the default or breach; provided, however, that if the
default or breach is cured or shown to be nonexistent within the sixty (60) day
period after receipt of written notice, the notice shall be deemed automatically
withdrawn and of no effect.

         8.3 In case HR&T terminates the Agreement without cause during the
second year of the Agreement, HR&T shall be obliged to pay Nanogen for
Reimbursable Costs at the agreed budgeted level for nine (9) months following
such termination notice. Nanogen will use its reasonable efforts to minimize
such costs. The same applies in the third year of the Agreement, if the parties
mutually agreed as described in Section 8.1 to enter into such an extension of
term.

         8.4 All records required to be maintained pursuant to Paragraph 4.2
shall be retained for a period of at least five (5) years following the
termination of this Agreement.

         9. REPRESENTATIONS AND WARRANTIES.

         9.1 HR&T hereby represents and warrants to Nanogen that it has full
authority and power to enter into this Agreement, that it has secured any and
all necessary approvals, permits or consents deemed necessary or advisable for
the consummation of the transactions

                                       13
<PAGE>

contemplated hereby and that, upon execution by HR&T and Nanogen, this Agreement
shall immediately be a valid and binding obligation of HR&T, enforceable in
accordance with its terms.

         9.2 Nanogen hereby represents and warrants to HR&T that it has full
authority and power to enter into this Agreement, that it has secured any and
all necessary approvals, permits or consents deemed necessary or advisable for
the consummation of the transactions contemplated hereby and that, upon
execution by HR&T and Nanogen, this Agreement shall immediately be a valid and
binding obligation of Nanogen enforceable in accordance with its terms and that
the execution, delivery and performance of its obligations under this Agreement
will not cause Nanogen to breach or violate any agreement between Nanogen and
Becton, Dickinson and Company and its affiliated entities.

         9.3 HR&T hereby represents and warrants to Nanogen that: (a) it is the
owner of the entire right, title and interest to the HR&T Intellectual Property
and HR&T Patent Rights, and (b) to HR&T's knowledge, the HR&T Patent Rights or
the HR&T Intellectual Property has not infringed, and is not now infringing, any
valid third party rights and HR&T has not received any notice of infringement
from any third party respecting the HR&T Patent Rights or the HR&T Intellectual
Property.

         9.4 Nanogen hereby represents and warrants to HR&T that: (a) it is the
owner of the entire right, title and interest to the Nanogen Intellectual
Property and the Nanogen Patent Rights and (b) to Nanogen's knowledge, the
Nanogen Patent Rights or the Nanogen Intellectual Property has not infringed,
and is not now infringing, any valid third party rights and Nanogen has not
received any notice of infringement from any third party respecting the Nanogen
Patent Rights or the Nanogen Intellectual Property.

         10. DISCLAIMERS. THE PARTIES EACH HEREBY DISCLAIM ANY AND ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THEIR
RESPECTIVE RESEARCH AND DEVELOPMENT EFFORTS HEREUNDER, INCLUDING, WITHOUT
LIMITATION, (A) WHETHER ANY PRODUCT CAN BE SUCCESSFULLY DEVELOPED BY EITHER OF
THE PARTIES, (B) WHETHER THE PRODUCTS AS DEVELOPED BY EITHER OF THE PARTIES
HEREUNDER CAN BE COMMERCIALLY MARKETED, (C) THE ACCURACY, PERFORMANCE, UTILITY,
RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS,
MERCHANTABILITY OR SUITABILITY FOR ANY PARTICULAR PURPOSE WHATSOEVER OF ANY
PRODUCT, AND (D) WHETHER ANY PRODUCTS MANUFACTURED WILL NOT INFRINGE ANY
THIRD-PARTY PATENT, COPYRIGHT OR SIMILAR RIGHT.

         11. INSURANCE. The parties shall each, at all times during the term of
this Agreement, carry and maintain such insurance as each believes to be
commercially reasonable against risks from actions contemplated under this
Agreement. Such insurance shall be with insurers of recognized responsibility
and may be carried under blanket policies maintained by each of the parties.

         12. NOTICES. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally, by facsimile (upon
receipt of appropriate written

                                       14
<PAGE>

confirmation) or sent by registered or certified mail, return receipt requested,
or by overnight courier service, postage prepaid as follows:

         If to Nanogen:

         Nanogen, Inc.
         10398 Pacific Center Court
         San Diego, California 92121
Attn:    Chief Executive Officer
         Facsimile - (619) 546-7717

         with a copy to:

         Nanogen, Inc.
         10398 Pacific Center Court
         San Diego, California  92121
         Attn:  General Counsel
         Facsimile - (619) 546-7717

         and if to HR&T:

         Hoechst Research & Technology Deutschland GmbH & Co KG
         D-65926 Frankfurt am Main
         Attn:  President
         Facsimile - 011-49-69-309-588

         with a copy to:

or to such other address as the  addressee  may have  specified in a notice duly
given to the sender as provided herein. Such notice,  request,  demand,  waiver,
consent, approval or other communication will be deemed to have been given as of
the date so  received  (in case of personal  delivery,  facsimile  or  overnight
courier service delivery) or upon refusal to accept delivery thereof.

         13. DISPUTE RESOLUTION. Every reasonable effort will be made by the
parties hereto to resolve disputes arising hereunder with litigation as a last
resort. Any dispute arising out of or relating to this Agreement which is not
resolved by the Executive Committee or is not within the purview of the
Executive Committee shall be submitted to the Chief Executive Officer of Nanogen
and the President of HR&T for resolution. If those officers cannot resolve the
dispute with twenty (20) days of submission of such dispute, then within ten
(10) days thereafter, either party may, but shall not be obligated to, initiate
nonbinding mediation of the controversy or claim under the Center for Public
Resources Model ADR Procedures for Mediation of Business Disputes attached
hereto as Exhibit F (the "CPR Procedures"). Once the mediation is initiated by
one party, the other party agrees to participate in and conduct mediation in
accordance with the CPR Procedures in good faith and not to pursue other
remedies while such mediation is proceeding. If neither party initiates
mediation within ten (10) days of the officers referenced above failing to
resolve the dispute, or if the dispute has not been resolved by such mediation
within sixty (60) days following initiation of mediation, either party may
pursue all available remedies. All applicable statutes of limitations and
defenses based upon the passage of time

                                       15
<PAGE>

shall be tolled while the negotiation and mediation procedures set forth in this
Paragraph 13 are pending. The parties will take such action, if any, as may be
reasonably be required to effectuate such tolling. Notwithstanding the
foregoing, the remedy at law for any breach of the provisions of this Agreement
may be inadequate, and, accordingly, an aggrieved party seeking equitable relief
or remedies for such a breach shall have the right and is hereby granted the
privilege, in addition to all other remedies at law or in equity, to proceed
directly in a court of competent jurisdiction to seek temporary or preliminary
equitable relief. Each party shall pay its own costs incurred in attempting to
resolve a dispute pursuant to the mediation procedures set forth in this
Paragraph 13 without the right to recover such costs from the other party and
shall share equally the cost of mediation.

         14. MISCELLANEOUS.

         14.1 This Agreement and the Confidentiality Agreement together
constitute the entire understanding among the parties with respect to the
subject matter hereof and supersede and replace all prior agreements,
understandings, writings and discussions between the parties relating to said
subject matter. However, it is the understanding of both parties that the terms
laid down for a joint venture or other joint arrangement in the Letter Agreement
shall survive until a definitive agreement for such an arrangement has been
reached.

         14.2 This Agreement may be amended only by a written instrument
executed by the parties hereto. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect its rights
at a later time to enforce the same. No waiver by any party of any condition or
term in any one or more instances shall be construed as a further or continuing
waiver of such condition or term or any other condition or term.

         14.3 The terms and provisions contained in this Agreement are for the
sole benefit of the parties and their successors and assigns, and they shall not
be construed as conferring and are not intended to confer any rights on any
other persons.

         14.4 Any delays in or failure of performance by any party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to acts of God; acts, regulations, or laws
of any government; strikes or other considered acts of workers; fires; floods;
explosions; riots; wars; rebellion; and sabotage; and any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence.

         14.5 This Agreement shall not be assignable by either party, nor shall
any of its obligations hereunder be delegated to a third party, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. In the event that the other party does not
respond to a request from a party for consent to an assignment or delegation
within fifteen (15) days following written notice requesting such consent, such
party's shall be deemed to be granted. In addition, a condition to any
assignment or delegation hereunder shall be that the successor in interest
expressly agrees in writing to assume the assigning or delegating party's
obligations hereunder. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
permitted successors and assigns. No such assignment shall release the assigning
party from its obligations hereunder. Notwithstanding the foregoing, the consent
of the other party shall not be required in connection with a merger involving
either HR&T or Nanogen or with respect to an assignment of this

                                       16
<PAGE>

Agreement in connection with, as the case may be, the acquisition, sale of all
or substantially all of the assets of HR&T or Nanogen, or a change of control or
similar transaction.

         14.6 If any provision(s) of this Agreement are or become invalid, or
are ruled illegal by any court of competent jurisdiction, or are deemed
unenforceable under then current applicable law from time to time in effect
during the term hereof, it is the intention of the parties hereto that the
remainder of this Agreement shall not be affected thereby. It is further the
intention of the parties that in lieu of each such provision which is invalid,
illegal, or unenforceable, there be substituted or added as part of this
Agreement, a provision which shall be as similar as possible in economic and
business objectives as intended by the parties to such invalid, illegal, or
unenforceable provision, but which shall be valid, legal, and enforceable, and
shall be mutually agreed by the parties.

         14.7 This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to its choice of laws
principles. This Agreement shall be construed and interpreted without
application of any principle or rule to the effect that ambiguities are to be
construed against the party responsible for drafting the agreement. The headings
contained herein are for reference purposes only and shall not in any way affect
the meaning of this Agreement.

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

                                       17
<PAGE>

         IN WITNESS  WHEREOF,  the parties have executed this Agreement  through
duly authorized representatives as of the Effective Date.

NANOGEN, INC.                                     HOECHST RESEARCH &
                                                  TECHNOLOGY DEUTSCHLAND
                                                  GMBH & CO KG
By /S/ HOWARD C. BIRNDORF                         By /S/ DR. REINER HENNIG
   -------------------------------------             --------------------------
         Howard C. Birndorf                              President
   Chairman and Chief Executive Officer
                                                  By /S/ DR. HANS-ULLRICH HAPPE
                                                     --------------------------
                                                    Research Operation Director

                                       18
<PAGE>

                                    EXHIBIT A
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                 NANOGEN APEX APPLICATIONS
-----------------------------------------------------------------------------------------------------------------
                          TITLE                                     APPLICATION NO.                        DATE
---------------------------------------------------------- ----------------------------------- ------------------
<S>                                                        <C>                                 <C>
Active Programmable Electronic Devices for Molecular       USP 5,605,662                       Issued: 02/25/97
Biological Analysis and Diagnostics       (203/218)
---------------------------------------------------------- ----------------------------------- ------------------
Methods for Electronic Stringency Control for Molecular    SN: 08/271,882                      Filed: 07/07/94
Biological Analysis and Diagnostics.      (207/263)
---------------------------------------------------------- ----------------------------------- ------------------
Molecular Biological Diagnostic Systems Including          USP 5,632,957                       Issued: 05/27/97
Electrodes                                (209/062)
---------------------------------------------------------- ----------------------------------- ------------------
Apparatus and Methods for Active Programmable Matrix       SN: 08/534,454                      Filed: 09/27/95
Devices                                   (216/054)
---------------------------------------------------------- ----------------------------------- ------------------
***                                                        ***                                 ***
---------------------------------------------------------- ----------------------------------- ------------------
Methods for Electronic Synthesis of Polymers               SN: 08/725,976                      Filed: 10/04/96
(222/211)

---------------------------------------------------------- ----------------------------------- ------------------
***                                                        ***                                 ***
---------------------------------------------------------- ----------------------------------- ------------------
Methods for Electronic Perturbation Analysis of            SN: 08/855,058                      Filed: 05/14/97
Biological Materials                      (224/175)
---------------------------------------------------------- ----------------------------------- ------------------
***                                                        ***                                 ***
---------------------------------------------------------- ----------------------------------- ------------------
Self-Addressable Self-Assembling Microelectronic           Not Yet Received                    Filed: 12/05/97
Integrated Systems, Component Devices, Mechanisms,
Methods and Procedures for Molecular Biological Analysis
and Diagnostics                           (227/194)
---------------------------------------------------------- ----------------------------------- ------------------
</TABLE>

  *** Confidential material redacted and separately filed with the Commission.

                                       19
<PAGE>

                                    EXHIBIT B

                 C.R.&T'S "ELIAS" AND "pRNA" PATENT APPLICATIONS

                                       ***

  *** Confidential material redacted and separately filed with the Commission.

                                       20
<PAGE>

                                    EXHIBIT C

                             TOTAL PROGRAM (YEAR 1)

         Personnel of Hoechst *** Nanogen ***
         Materials of Hoechst *** Nanogen ***

  *** Confidential material redacted and separately filed with the Commission.

                                       21
<PAGE>

                                 MATERIAL COSTS
<TABLE>
<CAPTION>

         TDM/PROJECT YEAR:

         SYNTHESIS

<S>                                       <C>      <C>
         Equipment (Synthesizer. . .)     ***      (Depreciation over *** Years)
         Analytics                        ***
         Chemicals                        ***
                                          ---

         Total                            ***

         PERMEATION LAYER

         Equipment (Spin Coater. . .)     ***      (Depreciation over *** Years)
         Materials (Chemicals)            ***
                                          ---

         Total                            ***

         DIRECT READ-OUT

         Equipment                        ***
                                          ---

         TOTAL                            *** (***TUS$)
</TABLE>

  *** Confidential material redacted and separately filed with the Commission.

                                       22
<PAGE>

                                EXHIBIT C (CR&T)

                                    PERSONNEL
<TABLE>
<CAPTION>

                           TASK                                    HEADCOUNT

<S>                                                                   <C>
SYNTHESIS
         PhD, Organic Chemists                                        ***
         Postdocs, Lab Technicians                                    ***

PERMEATION LAYER
         PhD's, Organic Chemist
         Physicist                                                    ***
         PhD (Japan)                                                  ***
         Postdocs, Lab Technicians                                    ***

DIRECT ELECTRONIC READ-OUT                                            ***
         PhD's (Japan)
         Lab Technicians                                              ***
         PhD Biophysical-Chemist                                      ***

PROGRAM MANAGEMENT                                                    ***

Total Headcount                                                       ***
</TABLE>

                                       23
<PAGE>

                                     SHEET 1

                               EXHIBIT C (NANOGEN)

                                PERSONNEL/NANOGEN
<TABLE>
<CAPTION>

                   TASK                YEAR 1                       YEAR 2
                   ----                ------                       ------
<S>                                     <C>                           <C>
CHIP                                    ***                           ***
         Process engineer               ***                           ***
         Software engineer              ***                           ***
         Test engineer                  ***                           ***
         Test Tech                      ***                           ***
         Packaging Engineer             ***                           ***
         Packaging Tech                 ***                           ***

INSTRUMENT                              ***                           ***
         Electrical engineer            ***                           ***
         Software engineer              ***                           ***
         Mechanical engineer            ***                           ***

PERMEATION LAYER
         Chemical engineer              ***                           ***

ASSAY DEVELOPMENT
         Physical chemist               ***                           ***
         Biochemist                     ***                           ***

PROGRAM MANAGEMENT                      ***                           ***
         Program manager                ***                           ***

TOTAL HEADCOUNT                         ***                           ***
</TABLE>

---------------
*** Confidential material redacted and separately filed with the Commission.

                                       24
<PAGE>

                                     SHEET 1

                             MATERIALS COSTS/NANOGEN
<TABLE>
<CAPTION>

                        TASK           YEAR 1                          YEAR 2
                        ----           ------                          ------
<S>                                     <C>                             <C>
CHIP
         Design                         $***                            $***
         Masks                          $***                            $***
         Wafer fab                      $***                            $***
         Test                           $***                            $***
         Packaging                      $***                            $***
              TOTAL                     $***                            $***

INSTRUMENTS
         Read-out                       $***
         Probe placement                                                $***
              TOTAL                     $***                            $***

PERMEATION LAYER/CHEMISTRY              $***
         Perm Layer
         Attachment Chem
              TOTAL                     $***                            $***
ASSAY                                   $***                            $***
         Reagents                       $***                            $***
              TOTAL PROGRAM             $***                            $***
</TABLE>

--------
*** Confidential material redacted and separately filed with the Commission.

                                       25

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