1 EXHIBIT 10.20 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

1
EXHIBIT 10.20

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

BETWEEN

ROCHE BIOSCIENCE

AND

COMBICHEM, INC.

October 25, 1996

TABLE OF CONTENTS

Page
----

1. DEFINITIONS................................................................. 1

2. RESEARCH COLLABORATION...................................................... 6
2.1 CCI Responsibilities................................................. 6
2.2 RBS Responsibilities................................................. 6
2.3 Participation by RBS Affiliates...................................... 6

3. RESEARCH PROGRAMS........................................................... 6
3.1 Selection of Approach................................................ 6
3.2 Lead Generation Program.............................................. 6
3.3 Lead Evolution Program............................................... 7
3.4 Lead Optimization Program............................................ 7
3.5 Termination *** ...............................7
3.6 Termination *** ............................ 7
3.7 Extension of Programs................................................ 7

4. TARGETS..................................................................... 8
4.1 Initial Targets...................................................... 8
4.2 Optional Targets..................................................... 8
4.3 Related Targets...................................................... 8
4.3.1 Identification of Related Targets Prior to Commencement of
Research Program..................................................... 8
4.3.2 Identification of Related Targets During Research Progr8m..... 8
4.4 Related Target Becoming Optional Target.............................. 9
4.5 Refining Collaboration Targets....................................... 9
4.6 Maximum Number of Targets............................................ 9

5. TARGET EXCLUSIVITY.......................................................... 9
5.1 Collaboration Target Exclusivity..................................... 9
5.2 Related Target Exclusivity........................................... 9

6. COLLABORATION COMPOUNDS..................................................... 10
6.1 Collaboration Compound Exclusivity................................... 10
6.2 Pre-Existing and Restricted Compounds................................ 10
6.3 Intellectual Property Rights......................................... 10
6.4 Screening Rights..................................................... 10

6.5 Active Collaboration Compounds Against Related Targets............... 11
6.6 Supply of Collaboration Compounds.................................... 11

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

(i)

7. RESEARCH MANAGEMENT & PLAN.................................................. 11
7.1 Research Management Committee........................................ 11
7.2 Project Teams........................................................ 12
7.3 Research Plans....................................................... 12

8. COLLABORATION TERM AND TERMINATION.......................................... 12
8.1 Term................................................................. 12
8.2 Termination by RMC................................................... 12
8.3 Termination by RBS or CCI............................................ 12
8.4 Termination of Research Funding...................................... 12

9. PAYMENT OBLIGATIONS......................................................... 13
9.1 Project Initiation Fee............................................... 13
9.2 Research Funding..................................................... 13
9.3 Milestone Payments................................................... 13
9.4 Royalties............................................................ 13
9.4.1 Royalty Rates................................................. 13
9.4.2 Other Patents................................................. 14
9.4.3 Combination Product........................................... 14
9.5 Option to Purchase Equipment......................................... 14

10. LOGISTICS OF PAYMENT; REPORTS; RECORDS; AUDITS.............................. 15
10.1 Payment and Reports.................................................. 15
10.2 Method of Payment.................................................... 15
10.3 Roche Exchange Rate.................................................. 15
10.4 CCI Exchange Rate.................................................... 15
10.5 Financial Records and Audit Rights................................... 16
10.6 Time Records......................................................... 16
10.7 Taxes................................................................ 16

11. LICENSE GRANT............................................................... 16
11.1 CCI Grant to RBS..................................................... 16
11.2 RBS Due Diligence Failure............................................ 17
11.2.1 RBS Grant Back to CCI......................................... 17
11.2.2 Flat Fee...................................................... 17
11.2.3 *** ......................................... 17

12. TERM AND TERMINATION OF THE AGREEMENT....................................... 17
12.1 Term................................................................. 17
12.2 Termination.......................................................... 17
12.3 Results of Termination............................................... 17

13. CONFIDENTIAL INFORMATION.................................................... 18
13.1 Nondisclosure........................................................ 18
13.2 Exceptions........................................................... 18

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

(ii)

14. PUBLICATIONS................................................................ 18

15. PUBLIC STATEMENTS........................................................... 19

16. INDEMNIFICATION............................................................. 19

17. ASSIGNABILITY............................................................... 19

18. DISPUTE RESOLUTION PROCEDURES............................................... 19
18.1 Senior Executives Discussions........................................ 19
18.2 Non-Binding Mediation................................................ 20
18.3 Binding Arbitration.................................................. 20
18.4 Injunctive Relief.................................................... 20

19. NOTICES..................................................................... 21

20. INDEPENDENT CONTRACTOR...................................................... 22

21. SURVIVAL.................................................................... 22

22. ADDITIONAL TERMS............................................................ 22
22.1 Entire Agreement..................................................... 22
22.2 Amendments; No Waiver................................................ 22
22.3 Validity............................................................. 22
22.4 Headings............................................................. 22
22.5 Counterparts......................................................... 22

(iii)

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the
"Agreement") is entered into on October 25, 1996 (the "Effective Date"), by and
between ROCHE BIOSCIENCE, a division of Syntex (U.S.A.) Inc., a Delaware
corporation, having offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("RBS") and COMBICHEM, INC. a California corporation having offices at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("CCI"). RBS and CCI may be
referred to herein as a "Party" or, collectively, as "Parties."

WHEREAS, CCI has developed and owns certain drug discovery technology
and intellectual property rights, including chemical library design software,
combinatorial organic synthesis methods, chemical libraries suitable for high
throughput biological screening assays and medicinal chemistry;

WHEREAS, the Parties wish to collaborate with the objective of
accelerating RBS's drug discovery activities using CCI Technology (as defined
below) in Research Programs (as defined below) against Collaboration Targets (as
defined below) (the "Collaboration");

NOW, THEREFORE, the Parties agree as follows:

1. DEFINITIONS

1.1 "Additional Royalties" has the meaning set forth in Section 9.4.2.

1.2 "ADR" has the meaning set forth in Section 18.2.

1.3 "Affiliate" of a Party means any corporation or other business
entity controlled by, controlling or under common control with such Party. For
this purpose "control" shall mean direct or indirect beneficial ownership of
more than fifty percent (50%) of the voting or income interest in such
corporation or other business entity, or if not meeting the preceding
requirement, any company owned or controlled by or owning or controlling a Party
at the maximum control or ownership right permitted in the country where such
company exists; provided, however, Genentech, Inc., with offices located at ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, shall not be
considered an Affiliate of RBS unless RBS so notifies CCI that Genentech shall
be deemed an Affiliate.

1.4 "CCI Net Sales" means the gross sales invoiced by CCI or its
Affiliates or sublicensees for Returned Products to non-Affiliated third parties
less (i) actual deductions of returns (including withdrawals and recalls),
rebates (price reductions, including Medicaid and similar types of rebates e.g.
chargebacks), volume (quantity) discounts, discounts granted at the time of
invoicing, sales taxes and other taxes (other than income taxes) directly linked
to and included in the gross sales amount as computed on a product-by-product
basis for the countries concerned, whereby the amount of such sales in foreign
currencies is converted into United States dollars in accordance with Section
10.4 (the "CCI Adjusted Gross Sales"), and

(ii) less a lump sum deduction of *** of *** for those sales related deductions
which are not accounted for on a product-by-product basis.

1.5 "CCI Technology" means those CCI Patents and know-how related
exclusively to the Collaboration Compounds.

1.6 "Collaboration" has the meaning set forth in the preamble.

1.7 "Collaboration Compound Exclusivity Period" for a Collaboration
Compound means (a) with respect to a Collaboration Compound with Target
Activity, the earlier of (i) the publication of a Patent covering the
Collaboration Compound or (ii) five (5) years following the end of the
applicable Research Program Period; and (b) with respect to a Collaboration
Compound with no Target Activity, the earlier of (i) the publication of a Patent
covering the Collaboration Compound or (ii) two (2) years following the end of
the applicable Research Program Period.

1.8 "Collaboration Compounds" means Library Compounds and Derivative
Compounds synthesized under the direction of the RMC, by either RBS or CCI or
their respective Affiliates.

1.9 "Collaboration Library" means a library synthesized under the
direction of the RMC, containing compounds designed to provide information
regarding activity against a specific Collaboration Target.

1.10 "Collaboration Product(s)" means any product containing a compound
which has demonstrated activity against a Collaboration Target and is either (i)
a Library Compound or (ii) a Derivative Compound.

1.11 "Collaboration Target" means either an Initial Target or an
Optional Target.

1.12 "Collaboration Target Exclusivity Period" for a Collaboration
Target means two years following the end of the applicable Research Program
Period.

1.13 "Collaboration Term" has the meaning set forth in Section 8. 1.

1.14 "Combination Product" has the meaning set forth in Section 9.4.3.

1.15 "Confidential Information" includes (i) all information and
materials received by either Party from the other Party either prior to
execution of or pursuant to this Agreement; (ii) all structure-activity data or
structure data relating to a Collaboration Compound; and (iii) the material
financial terms of this Agreement.

1.16 "Development Candidate" means a Collaboration Compound that has
been selected by RBS for *** studies for an Initial Target, Optional Target or
Related Target.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

1.17 "Derivative Compound" is a compound which meets the following
criteria:

If a compound is synthesized ***the relevant If a compound is synthesized during the time
Collaboration Target Exclusivity Period, it period***the relevant Collaboration Target
must Exclusivity Period and***the relevant
Collaboration Compound Exclusivity Period,
it must

(i) result from a chemical synthesis program (i) result from a chemical synthesis program
directly based on*** or directly based on*** or

(ii) be based on *** *** *** (ii)*** data *** under ***

AND

(iii) be a compound that is ***
***(as defined below) in existence at the
time the Research Program is terminated
shall not be deemed a Derivative Compound.

1.18 "$" or "dollar" means United States currency.

1.19 "Due Diligence" means the use of Roche resources in a manner which
is consistent with the exercise of prudent scientific and business judgment as
applied to other Roche programs targeting products aimed at markets or patient
groups of similar sizes and of similar scientific and commercial potential.

1.20 "Field" means all therapeutic and diagnostic indications for the
Collaboration Targets and the Related Targets.

1.21 "First Commercial Sale" of a Product shall mean the first sale for
use or consumption of such Product in a country after required marketing and
pricing approval has been granted by the governing health regulatory authority
of such country. Sale to an Affiliate or sublicensee shall not constitute a
First Commercial Sale unless the Affiliate or sublicensee is the end user of the
Product.

1.22 "Flat Fee" has the meaning set forth in Section 11.2.2.

1.23 "Initial Targets" has the meaning set forth in Section 4. 1.

1.24 "Lead Evolution Program" has the meaning set forth in Section 3.3.

1.25 "Lead Generation Program" has the meaning set forth in Section 3.2.

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Confidential Treatment and filed separately with the Commission.

1.26 "Lead Optimization Program" has the meaning set forth in Section
3.4.

1.27 "Library Compound" means a compound contained in a Collaboration
Library and which compound is not a Pre-existing Compound or a Restricted
Compound (unless that Restricted Compound becomes a Development Candidate).

1.28 "Losses" has the meaning set forth in Section 16.

1.29 "Net Sales" means the gross sales invoiced by RBS or its Affiliates
or sublicensees for Products to non-Affiliated third parties less (i) actual
deductions of returns (including withdrawals and recalls), rebates (price
reductions, including Medicaid and similar types of rebates e.g. chargebacks),
volume (quantity) discounts, discounts granted at the time of invoicing, sales
taxes and other taxes (other than income taxes) directly linked to and included
in the gross sales amount as computed in the central Roche's Swiss Francs Sales
Statistics on a product-by-product basis for the countries concerned, whereby
the amount of such sales in foreign currencies is converted into Swiss Francs in
accordance with Section 10.3 (the "Adjusted Gross Sales"), and (ii) less a lump
sum deduction of *** of Adjusted Gross Sales for those sales related deductions
which are not accounted for on a product-by-product basis.

1.30 "Non-Royalty Bearing Component(s)" has the meaning set forth in
Section 9.4.3.

1.31 "Optional Targets" means a Target that is added to the
Collaboration in accordance with Section 4.2.

1.32 "Patent" means (i) valid and enforceable Letters Patent, including
any extension (including Supplemental Protection Certificate), registration,
confirmation, reissue, continuation, divisionals, continuation-in-part,
reexamination or renewal thereof, and (ii) pending applications for any of the
foregoing.

1.33 "Patent Protected" means that a Product is covered by a Valid Claim
of patent rights with respect to such Product in the country where sold.

1.34 "Pre-existing Compound" means any compound that is in existence at
the commencement of a Research Program which may be contributed to the
Collaboration Library by RBS or CCI and with such contributed compound owned by
any of RBS, CCI, their Affiliates or a Third Party.

1.35 "Prior Art" with respect to determining whether a compound is a
Derivative Compound shall be determined by using the standards of patentability
of such compound with respect to either chemical or biological activity.

1.36 "Product(s)" means Collaboration Product(s) and/or Related
Product(s).

1.37 "Project Leader" means the person appointed by a Party to supervise
and be

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Confidential Treatment and filed separately with the Commission.

accountable for that Party's responsibilities with respect to a Research
Program.

1.38 "Publications Committee" shall consist of the co-chairs of the RMC.

1.39 "Related Product(s)" shall mean any product containing a compound
which has demonstrated activity against a Related Target in accordance with
Section 6.5 and is either (i) a Library Compound or (ii) a Derivative Compound.

1.40 "Related Target" means a Target which the parties have identified,
in accordance with Section 4.3, as being closely related to a Collaboration
Target.

1.41 "Related Target Exclusivity Period" means the term of a Research
Program for the associated Initial Target or Optional Target plus twelve (12)
months.

1.42 "Related Target Notice' has the meaning set forth in Section 6.5.

1.43 "Research Program" means any or all of a Lead Evolution Program or
a Lead Generation Program or a Lead Optimization Program.

1.44 "Research Program Period" means two years from commencement of a
Lead Generation Program and one year from commencement of a Lead Optimization
Program or a Lead Evolution Program, unless any such Research Program is
terminated early or extended pursuant to the terms of this Agreement.

1.45 "Restricted Compound" means a compound that RBS may synthesize
during the course of a Research Program as part of another collaboration against
a Target other than a Collaboration Target or Related Target but which RBS
screens against a Collaboration Target or Related Target.

1.46 "Returned Product" has the meaning set forth in Section 11.2.l.

1.47 "Roche" means RBS and its Affiliates.

1.48 "Royalty Bearing Component(s)" has the meaning set forth in Section
9.4.3.

1.49 "Royalty Paying Party" has the meaning set forth in Section 10.5.

1.50 "Royalty Receiving Party" has the meaning set forth in Section
10.5.

1.51 "Royalty Term" means, in the case of any Product, in any country,
the period of time commencing on the First Commercial Sale and ending upon the
later of (a) ten (10) years from the date of First Commercial Sale in such
country; or (b) the expiration of the last to expire issued Patent with claims
covering that Product in the relevant country.

1.52 "Target" means a biomolecular entity that a small molecule is
synthesized against demonstrating relevant activity.

1.53 "Target Activity" means having activity that meets *** of the
criteria specified for the *** for the appropriate Collaboration Target during
the relevant Research Program Period, which criteria are set forth on Appendix
A.

1.54 "Territory" means all countries world-wide.

1.55 "Third Party" means any entity other than CCI or RBS or an
Affiliate of CCI or RBS.

1.56 "UIL" means CCI's proprietary Universal Informer Library(TM).

1.57 "Valid Claim" means a claim of an issued Patent which claim has not
lapsed, been canceled or become abandoned and has not been declared invalid by
an unreversed and unappealable decision or judgment of a court or other
appropriate body of competent jurisdiction, and which has not been admitted to
be invalid or unenforceable through reissue or disclaimer.

2. RESEARCH COLLABORATION

2.1 CCI RESPONSIBILITIES. CCI will conduct Research Programs against
Collaboration Targets in accordance with the terms of this Agreement.

2.2 RBS RESPONSIBILITIES. RBS will provide funding for the Collaboration
as outlined in Article 9.2, provide screening, biological, and structural data
to CCI with respect to the Collaboration Compounds necessary for CCI to perform
its duties under this Agreement, and will assume scientific, financial and
administrative responsibility for screening and biological support activities,
drug development and regulatory filings during and after the term of
Collaboration in accordance with the terms of this Agreement.

2.3 PARTICIPATION BY RBS AFFILIATES. Upon an Affiliate of RBS agreeing
in writing to be bound by the terms and conditions of this Agreement, RBS may
propose Optional Targets on behalf of such Affiliate. Employees of such
Affiliate may become Project Leaders and RBS may designate employees of such
Affiliate to be members of the RMC as specified in Article 7 hereof.

3. RESEARCH PROGRAMS

3.1 SELECTION OF APPROACH. The parties shall agree upon one of the
approaches set forth below for each Research Program against each Collaboration
Target. The start date of each Research Program shall be as decided by the RMC,
but at least one of the Research Programs for the Initial Targets shall have
commenced by January 1, 1997, and the final two Research Programs for the
Initial Targets shall have commenced by May 1, 1997.

3.2 LEAD GENERATION PROGRAM. In a Lead Generation Program, only the
Target is known. There are no robust structural hypotheses available that will
facilitate rapid inhibitor, agonist or antagonist design. The Lead Generation
Program requires use of the UIL.

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Confidential Treatment and filed separately with the Commission.

Potential Development Candidates will be identified through iterative
generations of Collaboration Libraries resulting in compounds with increased
selectivity/affinity with respect to the Collaboration Target. A Lead Generation
Program will last *** unless terminated *** sooner pursuant to Section 3.5 or
Section 8.2 or Section 8.3 or extended pursuant to Section 3.7.

3.3 LEAD EVOLUTION PROGRAM. A Lead Evolution Program is a research
program in which RBS provides CCI data on a lead series for evolution to a
different structural series or there exists a robust structural hypothesis
available that will facilitate rapid inhibitor, agonist or antagonist design.
Potential Development Candidates will be identified through iterative
generations of Collaboration Libraries. A Lead Evolution Program will last ***
unless terminated *** sooner pursuant to Section 3.6 or Section 8.2 or Section
8.3 or extended pursuant to Section 3.7.

3.4 LEAD OPTIMIZATION PROGRAM. A Lead Optimization Program is a research
program in which RBS provides CCI with data on a suboptimal lead series for
iteration and refinement. A Lead Optimization Program will last *** unless
terminated sooner pursuant to Section 8.2 or Section 8.3 or extended pursuant to
Section 3.7.

3.5 TERMINATION *** . If the first milestone is not achieved in a Timely
Fashion for any Lead Generation Program, the Program will either be terminated
or *** depending on which of these options is more appropriate in the
determination of the RMC. "Timely Fashion" for any Lead Generation Program shall
mean the time necessary to accomplish all of the following: (i) screening of the
UIL to generate hypotheses; (ii) synthesis and screening of a library designed
based upon hypotheses generated in (i); and (iii) synthesis and screening of a
library designed based upon hypotheses generated in (ii). A program cannot be
terminated for failure to meet the milestone in a Timely Fashion in less than
*** following initiation of such Research Program unless the RMC agrees
otherwise.

3.6 TERMINATION *** If the first milestone is not achieved in a Timely
Fashion for any Lead Evolution Program, the Program will either be terminated or
*** depending on which of these options is more appropriate in the determination
of the RMC. "Timely Fashion" for any Lead Evolution Program shall mean the time
necessary to accomplish the following: (i) synthesis and screening of libraries
designed based upon data from RBS or CCI or existing literature; (ii) synthesis
and screening of a library designed based upon hypotheses generated in (i); and
(iii) synthesis and screening of a library designed based upon hypotheses
generated in (ii). A program cannot be terminated for failure to meet the
milestone in a Timely Fashion in less than *** following initiation of such
Research Program unless the RMC agrees otherwise.

3.7 EXTENSION OF PROGRAMS. The term of any Research Program may be
extended up to an additional six (6) months per Research Program upon the
recommendation of the RMC, provided, however, that the aggregate amount of
extensions for Research Programs shall not exceed an incremental aggregate total
of FTEs equal to ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

*** over the life of this Agreement for all such Research Program extensions.

4. TARGETS

4.1 INITIAL TARGETS. The Collaboration will initially focus on the
following Targets: *** *** *** *** (collectively, the "Initial Targets"). Prior
to the proposed commencement date of a Research Program for an Initial Target,
RBS may substitute another Target as an Initial Target. Acceptance of a proposed
substitute Initial Target shall follow the procedures set forth in Section 4.2
for selection of Optional Targets.

4.2 OPTIONAL TARGETS. During the Collaboration Term, RBS may add up to
*** additional Targets to the Collaboration as Optional Targets with the
Research Program for such Optional Target to begin with ninety (90) days of
notification or as mutually agreed by the parties. If RBS is interested in
adding a Target to the Collaboration, RBS shall notify CCI in writing that it
wishes to make such Target an Optional Target. If CCI has delivered a term sheet
to any Third Party and remains engaged in discussions to enter into a binding
agreement with such Third Party with respect to the proposed Target at the time
of notification, CCI shall inform RBS that such proposed Target is not
available. Otherwise CCI shall negotiate with RBS in good faith, based upon
reasonable scientific judgment, to add such Target as an Optional Target. The
RMC will establish the specific scientific achievements for such Target that
correspond to (i) the Milestone Structure Schedule in Appendix A and (ii) the
commercial terms of Appendix C. Any such scientific achievements must be
mutually-agreed between RBS and CCI within *** of delivery of such notification
and upon such agreement, such Target may be added to the Collaboration as an
Optional Target. Mutual agreement under this Section 4.2 and under Section 4.3
shall mean the agreement of RBS and CCI without recourse to the dispute
resolution mechanism set forth in Section 7. 1.

4.3 RELATED TARGETS. RBS may designate *** during each Research Program
*** of certain Related Targets to be mutually agreed upon by the parties based
on reasonable scientific arguments.

4.3.1 IDENTIFICATION OF RELATED TARGETS PRIOR TO COMMENCEMENT OF
RESEARCH PROGRAM. Related Targets for the Initial Targets will be identified and
agreed upon by RBS and CCI and will be detailed in a Appendix B. Related Targets
for the Optional Targets will be identified and agreed upon by RBS and CCI prior
to commencement of the Research Program for such Optional Target, based on
reasonable scientific arguments consistent with the format and approach set
forth on Appendix A.

4.3.2 IDENTIFICATION OF RELATED TARGETS DURING RESEARCH PROGRAM.
Either Party may identify Targets as being Related Targets throughout the
applicable Research Program, which shall be agreed upon by the RMC based on
reasonable scientific arguments as

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Confidential Treatment and filed separately with the Commission.

applied to the associated *** , if any, and set forth in an amendment to
Appendix B; provided, however, that if CCI has delivered a term sheet to any
Third Party and remains in discussions to enter into a binding agreement with
such Third Party with respect to the proposed Target prior to such Target being
identified as a potential Related Target, then such Target shall not become a
Related Target.

4.4 RELATED TARGET BECOMING OPTIONAL TARGET. If RBS proposes to make a
Target an Optional Target and such Target is already a Related Target, the
provisions set forth in Section 4.3 relating to the format and approach would
supersede the provisions of Section 4.2; provided, however, that the commercial
terms of Appendix C rather than Appendix D shall apply to such Optional Target.
If there is a dispute, the dispute resolution mechanism set forth in Section 7.1
shall be utilized.

4.5 REFINING COLLABORATION TARGETS. The RMC may refine the definition of
a Collaboration Target based upon reasonable scientific judgment.

4.6 MAXIMUM NUMBER OF TARGETS. The Collaboration may be expanded to a
total of *** projects subject to the provisions of Section 4.2; provided,
however that after the Collaboration initiates *** Collaboration Targets, RBS
shall pay an upfront fee of *** *** per Optional Target for the final ***
Optional Targets (Collaboration Target numbers *** ) upon the commencement of
the Research Program for each such Optional Target.

5. TARGET EXCLUSIVITY

5.1 COLLABORATION TARGET EXCLUSIVITY. During the Collaboration Target
Exclusivity Period, CCI shall not work on such Collaboration Target with any
party other than RBS or its Affiliates; provided, however, that if RBS (i)
elects not to continue development of Collaboration Compounds against a
Collaboration Target or (ii) ceases to pursue development of any Collaboration
Compound with Due Diligence against a Collaboration Target and is not pursuing
another Collaboration Compound against the same Collaboration Target, the
Collaboration Target Exclusivity Period for such Collaboration Target will
terminate and CCI will thereafter be free to work with any Third Party with
respect to such Collaboration Target. In addition, following termination of the
relevant Collaboration Target Exclusivity Period, CCI shall be free to work with
any Third Party on a Collaboration Target.

5.2 RELATED TARGET EXCLUSIVITY. During the Related Target Exclusivity
Period, CCI will not work on any Related Target with any party other than RBS or
its Affiliates except as set forth herein. If CCI is approached by a Third Party
to work on a Related Target, CCI shall notify RBS in writing of the existence of
Third Party interest with respect to such Related Target. RBS has *** from
receipt of such notice to notify CCI in writing that RBS wishes to make such
Related Target an Optional Target. If RBS fails to respond within such ***
period, RBS shall be deemed to have approved CCI moving forward with
negotiations with a Third Party with respect to such Related Target; provided,
however, that RBS shall retain all rights to the Collaboration Compounds with

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

respect to such Related Target subject to the terms hereof. If the *** is not a
business day, the *** shall be deemed to be the next business day following.
Upon commencement of the Research Program, such Related Target becomes an
Optional Target and all of the terms and conditions applicable to a Optional
Target, including but not limited to, application of the Collaboration Target
Exclusivity Period rather than the Related Target Exclusivity Period apply to
such Target. Nothing contained in this Agreement shall imply that CCI may not
work with other parties on Related Targets using compounds other than
Collaboration Compounds provided that any libraries utilized in such work are
designed independently of Confidential Information provided by RBS.

6. COLLABORATION COMPOUNDS

6.1 COLLABORATION COMPOUND EXCLUSIVITY. Except as set forth in Section
6.2 and 6.4 and subject to Section 11.2, RBS shall have exclusive rights with
respect to the Collaboration Compounds during the applicable Collaboration
Compound Exclusivity Period.

6.2 PRE-EXISTING AND RESTRICTED COMPOUNDS. CCI shall have no rights to
any RBS Pre-existing Compound or to any Restricted Compound, unless and until
such Restricted Compound is designated as a Development Candidate. RBS shall
have no rights to any CCI Pre-existing Compound unless and until such CCI
Pre-existing Compound is designated as a Development Candidate; provided,
however, that CCI shall retain all rights to all compounds in the UIL.

6.3 INTELLECTUAL PROPERTY RIGHTS. Subject to Section 11.2, RBS shall
retain exclusive rights to all intellectual property with respect to the
Collaboration Compounds during the applicable Collaboration Compound Exclusivity
Period. RBS shall not obtain any rights in the UIL as a result of the
Collaboration. RBS shall be responsible for filing, maintaining and prosecuting
all Patents with claims covering Collaboration Compounds at its sole expense.
Immediately prior to filing of a patent application for a Collaboration
Compound, CCI shall assign all intellectual property rights it may have in such
Collaboration Compound to RBS or its designee. RBS may elect upon *** prior
written notice to CCI (given at least *** prior to any relevant deadline to (a)
discontinue prosecution or maintenance or (b) not to file or conduct any further
activities (including conducting any interferences, re-examinations, reissues,
or oppositions) with respect to a Patent. CCI shall have the right to request
that RBS or its designee prosecute, maintain, file or conduct further
activities. If RBS or its designee elects not to file, maintain, or prosecute a
Patent, CCI shall have the right to take over such filing, maintenance or
prosecution, at its sole expense.

6.4 SCREENING RIGHTS. Each Party shall be free to screen Collaboration
Compounds made during the applicable Research Program Period as follows: (a)
following expiration of the relevant Collaboration Target Exclusivity Period,
against any Target; (b) at any time, for screening against any Target other than
the Collaboration Targets; and (c) at any time, for screening for *** but such
screening may be done either *** *** , against Related Targets and to use the
information from such screening to develop *** to generate new compounds and
evolve to a novel

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structural series which is a patentable chemical entity.

6.5 ACTIVE COLLABORATION COMPOUNDS AGAINST RELATED TARGETS. If either
Party determines that a Collaboration Compound has in-vitro activity, *** ***
against a Related Target (which level of in-vitro activity may be altered for a
particular Related Target at such time as the Related Target is identified in
accordance with Section 4.3), such Party shall provide written notice to the
other Party within *** following such determination (the "Related Target
Notice"). Within *** of receipt of such Related Target Notice, the parties shall
begin negotiations to add such Related Target as a Research Program on terms and
conditions as set forth in Appendix C with the specific lead approach to be
determined by the RMC and other terms and conditions to be mutually agreed. If
RBS and CCI are unable to come to mutually-agreeable terms within an additional
*** , RBS will notify CCI (a) whether RBS (or Roche or a sublicensee) will
pursue independent development of the Collaboration Compound against the Related
Target in which case CCI shall receive compensation as set forth in Appendix D
or (b) if RBS does not choose such independent development, CCI may pursue
independent development of the Collaboration Compound against the Related Target
in which case RBS shall receive compensation as set forth in Appendix D; or (c)
that CCI and RBS may each pursue independent development of the Collaboration
Compound against the Related Target in which case neither Party shall owe the
other Party royalties. *** made *** .

6.6 SUPPLY OF COLLABORATION COMPOUNDS. Aliquots of at least *** of any
Collaboration Compound that has been synthesized and characterized will be
prepared and given to RBS *** of such synthesis and characterization. CCI shall
replenish that amount within *** of RBS's reasonable request. CCI shall keep
aliquots of any Collaboration Compound that has been synthesized at CCI. RBS
will have primary responsibility for synthesizing large amounts of Collaboration
Compounds, but CCI will assist RBS as agreed to by CCI's Vice President of
Chemistry at the time of such request.

7. RESEARCH MANAGEMENT & PLAN

7.1 RESEARCH MANAGEMENT COMMITTEE. The design, review and conduct of the
Research Program for each Collaboration Target will be coordinated by a Research
Management Committee ("RMC"), which will meet quarterly. The RMC will consist of
an equal number of members from RBS (or Roche if RBS so elects) and CCI, will
include the Project Leaders and other appropriate representatives from RBS and
CCI as mutually agreed, and will be co-chaired by scientists from each of RBS
and CCI. Decisions of the RMC shall be by consensus. If a decision is not
reached by the RMC with respect to management of the applicable Research Program
during the term of such Research Program, the dispute will be referred to the
co-chairs of the RMC. The co-chairs of the RMC will initially be the
VP-Chemistry of CCI and Therapy Head Director of RBS and subsequently may change
as mutually-agreed upon by the Parties. If the co-chairs of the RMC are unable
to resolve the dispute, the dispute will be referred to CCI's Chief Scientific
Officer and to a VP, Chemical and Pharmaceutical Services from RBS. If they are
unable to reach an agreement, such dispute will be referred to CCI's Chief
Executive Officer and the Senior Vice President, Head

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of the Inflammatory Disease Unit of RBS. If such officers are unable to reach an
agreement, CCI's Chief Executive Officer will have the option to present the
issues/circumstances surrounding the dispute to RBS' President. However, such
dispute shall be *** *** .

7.2 PROJECT TEAMS. Project Teams, comprised of an equal number of
representatives from RBS and CCI, will be established to coordinate individual
programs, and will meet monthly. Each Project Team will be co-chaired by two
Project Leaders, one from RBS and one from CCI, who will also serve on the RMC.
The Project Team may be expanded to include additional members upon the mutual
agreement of the Parties.

7.3 RESEARCH PLANS. The RMC shall prepare a Research Plan at the
beginning of each Research Program which may be refined and amended by the RMC
as appropriate.

8. COLLABORATION TERM AND TERMINATION

8.1 TERM. The initial term of the Collaboration shall be two years from
the date of the first meeting of the RMC (the "Collaboration Term"). The parties
may extend the term of the Collaboration upon mutual agreement. In addition, the
term of any Research Program initiated on a Collaboration Target will last for
that length of time set forth in Article 3 for each type of Research Program. A
Research Program may begin any time during the Collaboration Term and may extend
beyond the term of the Collaboration Term, i.e. a Lead Generation Program that
begins at the end of the Collaboration Term may terminate two years later.

8.2 TERMINATION BY RMC. A Research Program may be terminated by the RMC
for any reason; provided, however, that if the RMC does not re-allocate FTEs
among other Research Programs, RBS will continue funding such FTEs for an
additional period of *** *** from the date of such decision to terminate. If
another Research Program commences during such *** period, then the amount of
FTE payments shall be credited against the new Research Program.

8.3 TERMINATION BY RBS OR CCI. A Research Program may be terminated by
RBS or CCI upon thirty (30) days prior written notice to the other party if (a)
there is a negative outcome in a key proof of principle experiment for the
specific target as determined by the RMC or (b) a mechanism-based toxicity is
discovered and confirmed by the RMC, whether by RBS, CCI or otherwise. Either
Party may terminate a Research Program if there is a material breach which
remains uncured for ninety (90) days following notice of such material breach by
the other Party with respect to the relevant Research Program.

8.4 TERMINATION OF RESEARCH FUNDING. All Research Funding for a given
Research Program shall terminate upon termination of such Research Program
except as set forth in Section 8.2 or unless the FTEs are re-allocated by the
RMC. Following termination of a Research Program pursuant to Section 8.2 or
Section 8.3, RBS and CCI shall be free to pursue independent opportunities with
respect to the relevant Collaboration Target, unless the termination of the
Research Program is due to CCI's material uncured breach (subject to the

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cure provisions of Section 8.3), in which case CCI shall be prevented from
pursuing any such opportunities against such Collaboration Target for a period
of three (3) years after any such termination. Following termination of a
Research Program pursuant to Section 8.3 or pursuant to Section 8.2 if no
milestone payments have been made, the Collaboration Compounds shall be deemed
to have no Target Activity and CCI shall be free to pursue independent
opportunities with respect to the Collaboration Compounds upon the termination
of the relevant Collaboration Compound Exclusivity Period, provided, however,
that if the termination of the Research Program is due to CCI's material uncured
breach (subject to the cure provisions of Section 8.3), then CCI shall be
prevented from pursuing any such opportunities for the longer of (i) the
relevant Collaboration Compound Exclusivity Period or (ii) *** after any such
termination.

9. PAYMENT OBLIGATIONS

9.1 PROJECT INITIATION FEE. RBS shall pay CCI a one-time only,
non-refundable, non-contingent project initiation fee of *** upon execution of
this Agreement.

9.2 RESEARCH FUNDING. Research Programs will be generally staffed by CCI
senior scientific management and approximately 4.5 CCI scientists, consisting of
3 FTE chemists, 1/2 FTE software, 1/2 FTE analytical and 1/2 FTE instrumentation
at *** per Research Program per year or approximately *** per FTE. Research
support will be paid to CCI quarterly on the first day of the quarter for which
such payment is due; provided, however, that the first two quarters' payment for
the Initial Target Research Programs, consisting of *** will be made upon
execution of this Agreement; and provided, further, that such payments shall be
credited by CCI to the appropriate Research Program and the first payment due
following commencement of the Research Program shall be at the beginning of the
third quarter of such Research Program.

9.3 MILESTONE PAYMENTS. The milestone payments set forth in Appendix C
(as further specified in the applicable Research Program set forth in Appendix
A) shall be made by RBS within **** of (i) notice to RBS by CCI of the
achievement of or (ii) achievement by RBS of each such milestone. The milestone
payments set forth in Appendix D shall be made by the applicable Party within
*** the achievement of each such milestone.

9.4 ROYALTIES.

9.4.1 ROYALTY RATES. During the Royalty Term, RBS will pay CCI
royalties on Net Sales on a country-by-country basis as follows:

ROYALTY
ROYALTY RATE MINIMUM
RATE (Product Not ROYALTY
LEAD PROGRAM (Product Patent Patent RATE (If Other
APPROACH EXAMPLE Protected) Protected) Patents)
------------- ------- --------------- ------------- --------------

OPTIMIZATION *** *** *** ***
EVOLUTION *** *** *** ***
GENERATION *** *** *** ***

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Confidential Treatment and filed separately with the Commission.

(1) Royalties in a country will be paid at *** on the portion of *** ***
worldwide Net Sales of up to and including ***; *** on the portion of *** ***
worldwide Net Sales above *** .

(2) Royalties in a country will be paid *** on the portion of *** ***
worldwide Net Sales of up to and including *** on the portion of *** ***
worldwide Net Sales above *** .

9.4.2 OTHER PATENTS. If RBS is required to pay royalties to a Third
Party, to make, use or sell a Product for which RBS is currently paying
royalties to CCI either to avoid infringing such Third Party's compound patent
rights or to obtain a license for a patent (including but not limited to patents
covering drug delivery devices) that RBS or Roche deems necessary to effectively
market the Product (the "Additional Royalties"), then the royalties to be paid
to CCI by RBS shall be reduced by *** of the amount of the Additional Royalties,
provided, however, that at no time during the Royalty Term will CCI receive less
than the Minimum Royalty Rates set forth in the chart above.

9.4.3 COMBINATION PRODUCT. If a Product includes both component(s) for
which royalties are due hereunder ("Royalty Bearing Component(s)") and a
component which is diagnostically useable or therapeutically active alone or in
a combination which does not require a Royalty Bearing Component ("Non-Royalty
Bearing Component(s)") (such Product being a "Combination Product"), then Net
Sales shall be the amount which is normally received by RBS, its Affiliates or
sublicensees from a sale of the Royalty Bearing Component(s) in an arm's length
transaction with a Third Party. If the Royalty Bearing Component(s) are not sold
separately, then Net Sales upon which a royalty is paid shall be the Net Sales
of the Combination Product *** the numerator of which is the *** and the
denominator of which is the *** .

9.5 OPTION TO PURCHASE EQUIPMENT. CCI is developing automation
instrumentation for internal purposes and is currently evaluating its options
for making such instrumentation available to its collaborators or for commercial
sale, either directly or through a Third Party. An automation summary has been
provided in Appendix E to serve as a

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guideline with respect to the potential availability of such equipment and its
potential pricing.

10. LOGISTICS OF PAYMENT; REPORTS; RECORDS; AUDITS

10.1 PAYMENT AND REPORTS. All royalty payments due to either Party under
this Agreement shall be paid in U.S. dollars within sixty (60) days, or ninety
(90) days if the Product is sublicensed to a Third Party, of the end of each
calendar quarter unless otherwise specifically provided herein. Each payment of
royalties shall be accompanied by a report of Net Sales or CCI Net Sales, as
appropriate, in sufficient detail to permit confirmation of the accuracy of the
royalty payment made.

10.2 METHOD OF PAYMENT. All payments, including royalties, to CCI under
this Agreement will be made according to the wire transfer instructions set
forth in Appendix F, which may be amended from time to time by CCI upon
submission of a new Appendix F to RBS. Any payments to RBS under this Agreement
shall be made by wire transfer as instructed by RBS prior to such payment being
made.

10.3 ROCHE EXCHANGE RATE. For countries other than the United States,
the conversion to U.S. dollars from any foreign currency shall be made as
follow:

(a) For Roche:

(i) when calculating the Adjusted Gross Sales, the amount
of such sales in foreign currencies shall be converted into Swiss Francs as
computed in the central Roche's Swiss Francs Sales Statistics for the countries
concerned, using the average monthly rate of exchange at the time for such
currencies as retrieved from the Reuters System;

(ii) when calculating the royalties on Net Sales, such
conversion shall be at the average rate of the Swiss Franc to the United States
dollars as retrieved from the Reuters System for the applicable calendar
quarter.

(b) for a sublicensee in a country:

when calculating the Adjusted Gross Sales, the amount of
such sales shall be reported by the sublicensee to Roche within thirty (30) days
from the end of a calendar quarter, after having converted each applicable
monthly sales in foreign currency into United States dollars using the average
monthly rate of exchange published in the Wall Street Journal (or some other
source agreed upon in writing by the parties for a particular country) of the
applicable calendar quarter.

10.4 CCI EXCHANGE RATE. Royalty payments and reports of CCI Net Sales
shall be calculated and reported for each calendar quarter. With respect to each
quarter, for countries other than the United States, whenever for the purpose of
calculating royalties conversion from any foreign currency to United States
dollars shall be required, such conversion shall be made as follows: when
calculating the Adjusted Gross Sales, the amount of such sales in foreign
currencies shall be converted into United States dollars for the countries
concerned,

using the average monthly rate of exchange at the time for such currencies as
retrieved from the Reuters System.

10.5 FINANCIAL RECORDS AND AUDIT RIGHTS. During the term of this
Agreement and for a period of two years thereafter, any Party paying royalties
(the "Royalty Paying Party") shall keep complete and accurate records pertaining
to the sale or other disposition of Products in sufficient detail to permit the
other Party (the "Royalty Receiving Party") to confirm the accuracy of all
payments due hereunder. The Royalty Receiving Party shall have the right to
cause an independent, major (big six) certified public accountant firm
reasonably acceptable to Roche to audit such records to confirm the Net Sales or
CCI Net Sales, as appropriate, for the preceding year. Any information obtained
during such audit shall be treated as Confidential Information. Such audits may
be exercised during normal business hours once a year upon at least thirty (30)
working days' prior written notice to the Royalty Paying Party. The Royalty
Receiving Party shall bear the full cost of such audit unless such audit
discloses a variance of more than five percent (5 %) from the amount of the Net
Sales or CCI Net Sales, as appropriate, reported by the Royalty Paying Party for
such audited period. In such case, the Royalty Paying Party shall bear the full
cost of such audit.

10.6 TIME RECORDS. During the term of this Collaboration and for a
period of two years thereafter, CCI shall keep complete and accurate records
documenting the time spent by CCI employees in direct support of the
Collaboration. RBS shall have the right to audit such records to confirm CCI
time records and research costs for the preceding year upon thirty (30) working
days' prior written notice. Such audits may be exercised during normal business
hours once a year upon notice to CCI.

10.7 TAXES. All turnover and other taxes levied on account of the
royalties and other payments accruing to each Party under this Agreement shall
be paid by the Party receiving such royalty or other payment for its own
account, including taxes levied thereon as income to the receiving Party. If
provision is made in law or regulation for withholding, such tax shall be
deducted from the royalty or other payment made by the Party making such payment
to the proper taxing authority and a receipt of payment of the tax secured and
promptly delivered to the Party entitled to the royalty. Each Party agrees to
assist the other Party in claiming exemption from such deductions or
withholdings under any double taxation or similar agreement or treaty from time
to time in force.

11. LICENSE GRANT

11.1 CCI GRANT TO RBS. Subject to the terms and conditions of this
Agreement, CCI hereby grants to RBS an exclusive (even as to CCI and its
Affiliates), worldwide license, with the right to sublicense under the CCI
Technology to make, have made and use Collaboration Compounds, and to make, have
made, use, have used, sell, have sold and import Products in the Field. Such
license shall remain exclusive in relation to each Collaboration Compound so
long as Roche or its sublicensees continues to develop and commercialize such
Collaboration Compound and/or a Product containing such Collaboration Compound
against a Collaboration Target with Due Diligence.

11.2 RBS DUE DILIGENCE FAILURE.

11.2.1 RBS GRANT BACK TO CCI. Upon termination of the relevant
Collaboration Compound Exclusivity Period and subject to the terms and
conditions of this Agreement, if Roche has failed to develop and commercialize
with Due Diligence a Development Candidate or a Product, as the case may be (a
"Returned Product"), RBS will grant to CCI an exclusive (exclusive even as to
RBS and its Affiliates), worldwide license under those RBS Patents and know-how
related exclusively to the Development Candidate to make, have made, use, have
used, sell, have sold and import such Returned Product in the Field.

11.2.2 FLAT FEE. Rather than returning such Development Candidate
or Product to CCI, RBS may pay CCI a flat fee equal to *** *** in *** *** , as
determined by an independent market researcher, who shall be mutually agreed
upon between the parties (the "Flat Fee"). However, if having paid such Flat
Fee, the compound is ultimately commercially sold, milestones and royalties will
be reinstated and such Flat Fee will be credited against future payments.

11.2.3 RECIPROCAL ROYALTIES. If a Returned Product is
commercialized by CCI or one of its partners or sublicensees, after such
transfer of such Returned Product to CCI hereunder, the royalties set forth
above and in the Appendices C and D which would otherwise be payable to CCI
shall be payable to RBS on the CCI Net Sales. In addition, if a Returned Product
incorporates a Restricted Compound, CCI shall pay the royalties owed by RBS to
the Third Party who has rights to such Restricted Compound and the royalties
payable to RBS by CCI shall be decreased in accordance with Section 9.4.2.

12. TERM AND TERMINATION OF THE AGREEMENT

12.1 TERM. This Agreement shall terminate at the end of the Royalty Term
for the last Collaboration Compound for which a Party is paying royalties
hereunder.

12.2 TERMINATION. This Agreement may be terminated (a) by either Party
upon a material breach which remains uncured for ninety days following notice to
the breaching Party; or (b) after the first twelve (12) months of the
Collaboration Term, by RBS upon 180 days prior written notice; or (c) by RBS
until the end of the term of the last-to-expire Research Program, upon 45 days
prior written notice if both *** and *** leave CCI and CCI does not receive
RBS's agreement that one or both have been adequately replaced.

12.3 RESULTS OF TERMINATION. All Research Support shall terminate upon
termination of this Agreement. Royalties and milestone payments shall survive
any such termination; provided however that if such termination is by RBS due to
a material breach by CCI of this Agreement, RBS will only owe CCI royalties and
milestones payments for any Product resulting from those Collaboration Compounds
generated for the Research Program prior to CCI's uncured material breach. In
addition, the provisions of Section 8.4 with

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respect to CCI's rights to work with the Collaboration Targets and the
Collaboration Compounds shall apply; provided, however, that if the relevant
Collaboration Target Exclusivity Period and/or the Collaboration Compound
Exclusivity Period has expired, CCI shall have no such constraints on their
actions.

13. CONFIDENTIAL INFORMATION

13.1 NONDISCLOSURE. During the term of the Collaboration and for a
period of five years after termination thereof, each Party will maintain all
Confidential Information in trust and confidence and will not disclose any
Confidential Information to any Third Party or use any Confidential Information
for any purpose except (i) as expressly authorized by this Agreement, (ii) as
required by law or court order, (iii) to its consultants, sublicensees,
subcontractors or agents who need to know to accomplish the purposes of this
Agreement. Each Party may use such Confidential Information only to the extent
required to accomplish the purposes of this Agreement. Each Party will use at
least the same standard of care as it uses to protect proprietary or
confidential information of its own to ensure that its Affiliates, employees,
agents, consultants, sublicensees, and other representatives do not disclose or
make any unauthorized use of the Confidential Information. Each Party will
promptly notify the other upon discovery of any unauthorized use or disclosure
of the Confidential Information.

13.2 EXCEPTIONS. Confidential Information shall not include any
information which the receiving Party can prove by competent evidence:

(a) is now, or hereafter becomes, through no act or
failure to act on the part of the receiving Party, generally known or available;

(b) is known by the receiving Party at the time of
receiving such information, as evidenced by its records;

(c) is hereafter furnished to the receiving Party by a
Third Party, as a matter of right and without restriction on disclosure;

(d) is independently developed by the receiving Party
without the aid, application or use of Confidential Information; or

(e) is the subject of a written permission to disclose
provided by the disclosing Party.

14. PUBLICATIONS

Neither Party shall publish any information with respect to
Collaboration Compounds without the prior written permission of the Publications
Committee (i) for the relevant Collaboration Target Exclusivity Period plus
three years for Collaboration Compounds with Target Activity and (ii) for the
Collaboration Target Exclusivity Period for Collaboration Compounds without
Target Activity. Should a Collaboration Compound be designated by a Party as a
Development Candidate, the other Party shall not publish any information with

respect to that Collaboration Compound or structurally similar Collaboration
Compounds without the prior written consent of the other Party.

15. PUBLIC STATEMENTS

Neither Party shall use the name of the other Party in any prospectus,
annual report, press release or other public statement without the prior written
approval of the other Party, which may not be unreasonably withheld or delayed;
provided, however, that both Parties shall endeavor in good faith to give the
other Party a minimum of five business days to review such prospectus, annual
report, press release, or other public statement; and provided, further, that if
a Party does not approve such public statement, either Party may still use the
name of the other Party in any prospectus, annual report, press release or other
public statement without the prior written approval of the other Party, if such
Party is advised by counsel that such disclosure is required to comply with
applicable law.

16. INDEMNIFICATION

Each Party hereby agrees to save, defend and hold the other Party and
its officers, directors, employees, consultants and agents harmless from and
against any and all suits, claims, actions, demands, liabilities, expenses and
losses, including reasonable legal expense and attorneys' fees ("Losses")
resulting directly or indirectly from the manufacture, development, use,
handling, storage, sale or other disposition of chemical agents, Collaboration
Compounds or Products by such Party, its Affiliates or sublicensees except to
the extent such Losses result from the gross negligence or willful misconduct of
the Party claiming a right of indemnification under this Article 16. If either
Party seeks indemnification under this Section 16, it shall inform the other
Party of a claim as soon as reasonably practicable after it receives notice of
the claim, shall permit the other Party to assume direction and control of the
defense of the claim (including the right to settle the claim solely for
monetary consideration), and shall cooperate as requested (at the expense of the
other Party) in the defense of the claim.

17. ASSIGNABILITY

This Agreement may not be assigned by either Party without the prior
written consent of the other Party; provided, however, that either Party may
assign this Agreement, in whole or in part, to an Affiliate or to a successor of
a Party in connection with the merger, consolidation, or sale of all or
substantially of such Party's assets or that portion of its business pertaining
to the subject matter of this Agreement. RBS also has the right to extend its
rights and benefits under this Agreement to any Affiliate.

18. DISPUTE RESOLUTION PROCEDURES

18.1 SENIOR EXECUTIVES DISCUSSIONS. If a decision is not reached by the
RMC, the dispute will be resolved as set forth in Section 7.1 above. If a
dispute arises between RBS and CCI with respect to matters other than the
management of a Research Program, either during or after the Research Period,
such dispute will be referred to the appropriate senior management in the area
of the dispute. If such senior management are unable to resolve such dispute,
such dispute will be referred to CCI's Chief Executive Officer and RBS's
President (or equivalent

senior Roche officer). If such officers are unable to reach an agreement within
*** following the initiation of discussions between CCI's Chief Executive
Officer and RBS's President (or equivalent senior Roche officer), such dispute
shall be settled first by non-binding mediation and thereafter by arbitration as
described in Sections 18.2 and 18.3 below.

18.2 NON-BINDING MEDIATION. Any dispute which is not resolved by the
parties within the time period described in Section 18.1 shall be submitted to
an alternative dispute resolution process ("ADR"). Within five (5) business days
after the expiration of the thirty (30) day period set forth in Section 18. 1,
each Party shall select for itself a representative with the authority to bind
such Party and shall notify the other Party in writing of the name and title of
such representative. Within ten (10) business days after the date of delivery of
such notice, the representatives shall schedule a date for engaging in
non-binding ADR with a neutral mediator or dispute resolution firm mutually
acceptable to both representatives.

Any such mediation shall be held in a mutually agreeable location; provided,
however that if the parties cannot so agree, such mediation shall occur in San
Diego, California if brought by RBS or in Palo Alto, California, if brought by
CCI. Thereafter, the representatives of the parties shall engage in good faith
in an ADR process under the auspices of such individual or firm. If the
representatives of the parties have not been able to resolve the dispute within
thirty (30) business days after the conclusion of the ADR process, or if the
representatives of the parties fail to schedule a date for engaging in
non-binding ADR within the ten (10) day period set forth above, the dispute
shall be settled by binding arbitration as set forth in Section 18.3 below. If
the representatives of the parties resolve the dispute within the thirty (30)
day period set forth above, then such resolution shall be binding upon the
parties. If either Party fails to abide by such resolution, the other Party can
immediately refer the matter to arbitration under Section 18.3.

18.3 BINDING ARBITRATION. If the parties have not been able to resolve
the dispute as provided in Sections 18.1 and 18.2 above, the dispute shall be
finally settled by binding arbitration. Any arbitration hereunder shall be
conducted under rules of the American Arbitration Association. The arbitration
shall be conducted before three arbitrators chosen according to the following
procedure: each of the parties shall appoint one arbitrator and the two so
nominated shall choose the third. If the arbitrators chosen by the parties
cannot agree on the choice of the third arbitrator within a period of *** after
their appointment, then the third arbitrator shall be appointed by the Court of
Arbitration of the American Arbitration Association. Any such arbitration shall
be held in a mutually agreeable location; provided, however that if the parties
cannot so agree, such arbitration shall occur in San Diego, California if
brought by RBS or in Palo Alto, California, if brought by CCI. The arbitrators
shall have the authority to grant specific performance, and to allocate between
the parties the costs of arbitration in such equitable manner as they determine.
The arbitral award (i) shall be final and binding upon the parties; and (ii) may
be entered in any court of competent jurisdiction.

18.4 INJUNCTIVE RELIEF. Nothing contained in this Section or any other
provisions of this Agreement shall be construed to limit or preclude a Party
from bringing any action in any court of competent jurisdiction for injunctive
or other provisional relief to compel the other Party to comply with its
obligations hereunder before or during the pendency of mediation or arbitration
proceedings.

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19. NOTICES

Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or if delivered by
hand to a Party at the respective addresses and facsimile numbers as set forth
below or at such other address and facsimile number as such Party may designate.
If sent by facsimile letter, notice shall be deemed given when the transmission
is completed if the sender has a confirmed transmission report. If a confirmed
transmission report does not exist, then the notice will be deemed given when
the notice is actually received by the person to whom it is sent. If delivered
by overnight courier, notice shall be deemed given when it has been signed for.
If delivered by hand, notice shall be deemed given when received.

if to CCI, to:

CombiChem, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax number: 619/▇▇▇-▇▇▇▇

with a copy to:

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax number: (▇▇▇) ▇▇▇-▇▇▇▇

if to RBS, to:

Roche Bioscience, a division of Syntex (U.S.A.) Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax number: ▇▇▇-▇▇▇-▇▇▇▇

with a copy to

Roche Bioscience, a division of Syntex (U.S.A.) Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Fax number: ▇▇▇-▇▇▇-▇▇▇▇

20. INDEPENDENT CONTRACTOR

Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the
parties. No Party shall incur any debts or make any commitments for the other,
except to the extent, if at all, specifically provided for herein.

21. SURVIVAL

The provisions of Sections 9, 10, 13, 14, 15, 16, 18, 19, and 22.3 shall
survive termination of this Agreement.

22. ADDITIONAL TERMS

22.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Appendices) constitutes the entire understanding between the parties with
respect to the subject matter hereto and supersedes and replaces all previous
negotiations, understandings, representations, writings, and contract provisions
and rights relating hereof. The parties agree that all services provided
hereunder shall be subject to and governed by the terms and provisions set forth
herein, and none of the terms and conditions contained on any proposal, purchase
order, invoice, or other writing, shall have any effect or change the provisions
of this Agreement.

22.2 AMENDMENTS; NO WAIVER. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each Party. Any waiver on the part of either Party of any
breach or any right or interest hereunder shall not imply the waiver of any
subsequent breach or waiver of any other right or interest.

22.3 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.

22.4 HEADINGS. The descriptive headings are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning of or
interpretation of this Agreement.

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.

COMBICHEM, INC. SYNTEX (U.S.A.) INC.

By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------- ------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Ph.D. ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Ph.D.
President and Chief Executive Officer President

Appendix A - Description of Research Programs
Appendix B - Related Targets
Appendix C - Collaboration Financial Summary
Appendix D - Related Product Milestone Summary
Appendix E - CombiSyn Automation Instruments
Appendix F - Wire Transfer Instructions

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Appendix A Page A-1

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Appendix A Page A-2

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Appendix A Page A-3

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Appendix A Page ▇-▇

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RELATED TARGETS

None at this time

APPENDIX C

COLLABORATION FINANCIAL SUMMARY
($ in millions)

Lead Lead Lead
Optimization Evolution Generation(i)
------------ --------- -------------

UPFRONT FEE ***

RESEARCH SUPPORT
*** target per year
(1) Lead Optimization *** ***
(2) Lead Evolution *** ***
(3) Lead Generation *** ***

DISCOVERY MILESTONES

Lead Optimization

Milestone: LO-1 ***
Milestone: LO-2 ***

Lead Evolution
Milestone: LE-1 ***
Milestone: LE-2 ***

Lead Generation
Milestone: LG-1 ***
Milestone: LG-2 ***
Milestone: LG-3 ***

ADDITIONAL MILESTONES

(1) IND (ii) *** *** ***
(2) Earlier of acceptance into
Roche development pipeline or
initiation of Phase III Clinical
Trials (iii) *** *** ***
(3) NDA or equivalent approval
in Japan or the European Community,
whichever of these approvals occurs
first (iv) *** *** ***
--- --- ---
*** *** ***

Royalty Rates *** *** ***

Footnotes
---------

(i) project utilizes Universal Informer Library

(ii) to be paid *** *** for a Discovery Milestone or Additional Milestone
except for *** ***

(iii) to be paid only for ***

(iv) to be paid for each *** provided that no milestone shall be paid for ***
***

(v) if patented; lower under the circumstances set forth in Section 9; split
royalty structure ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

APPENDIX D

MILESTONES FOR RELATED PRODUCTS SUMMARY
($ in millions)

Lead
Discovery Milestones Optimization
-------------------- ------------

Lead Optimization ***

Milestone: A(i)
ADDITIONAL MILESTONES

(1) IND (ii) ***

(2) Acceptance into Roche development
pipeline or initiation of
Phase III Clinical Trials (iii) ***

(3) NDA or equivalent approval in Japan
or the European Community, whichever of
these approvals occurs first (iv) ***
---
***

ROYALTY RATE ***

FOOTNOTES
---------

(I) ESTABLISHMENT OF A DEVELOPMENT CANDIDATE

(II) TO BE PAID *** *** FOR DISCOVERY MILESTONES OR ADDITIONAL MILESTONES
EXCEPT FOR ***

(III) TO BA PAID ONLY FOR ***

(IV) TO BE PAID FOR EACH *** PROVIDED THAT NO MILESTONE SHALL BE PAID FOR
*** ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

▇▇

▇▇▇▇▇▇▇▇ ▇

COMBISYN AUTOMATION
SUMMARY

1. CombiSyn SP40 Synthesizers
SP40 synthesizers are currently project to be priced at *** per unit,
if made available to collaborators or for commercial sale. This
instrument is in its beta stage and, if commercialized, would
potentially become available in 1998 (subject to the extent of
modifications resulting from beta test).

2. CombiSyn PWS-20
PWS-20 purification/work-up stations are currently expected to be priced
at *** per unit, if made available to collaborators or for commercial
sale. This unit is in the development stage and, if commercialized,
would potentially become available in 1998 (subject to the extent of
modifications resulting from beta test).

3. PE-SCIEX MS-LC
PE-SCIEX API-100LC Mass Spectrometer systems may be purchased from
PE-SCIEX directly. This unit is currently available.

[***] Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

APPENDIX F

COMBICHEM, INC.

INCOMING WIRE TRANSFER INSTRUCTIONS
(into ***

Transfer Funds to:

***
New York, NY

Routing Transit/ABA Number:

***

For Account of:

***

Account Number:

***

For Further Credit to:

***
CombiChem, Inc.

Funds must be received by NFSC by 11:00 a.m. PST for same day credit.

Please call to advise regarding funds transferred:

At CombiChem, Inc.:

***
(▇▇▇) ▇▇▇-▇▇▇▇, ext. 113 - Telephone
(▇▇▇) ▇▇▇-▇▇▇▇ - Fax

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

1 EXHIBIT 10.20 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

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