Sample Business Contracts

License Agreement - F. Hoffman-La Roche Ltd., Hoffman-La Roche Inc. and Human Genome Sciences Inc.

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                                LICENSE AGREEMENT


F.HOFFMANN-LA ROCHE LTD, Grenzacherstrasse 124, CH-4070 Basel,
         Switzerland, and

HOFFMANN-LA ROCHE INC., 340 Kingsland Street, Nutley, New Jersey 07110-
         1199, U.S.A.
         (hereinafter both jointly called "ROCHE")


HUMAN GENOME SCIENCES,  INC., 9410 Key West Avenue,  Rockville,  Maryland 20850,
USA (hereinafter called "HGS")



WHEREAS,  HGS professes to ROCHE to have substantial  knowledge and expertise in
and  owns or has  rights  to  certain  technology  relating  to  genes  and gene
sequencing, and

WHEREAS,  ROCHE  desires to utilize HGS  Know-How  (as  hereinafter  defined) to
research  and develop  Target  Products and  Products  (other than  Vaccines and
Immunotherapeutic Products against infectious agents).



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


         For  purposes of this  Agreement,  the terms  defined in this Article 1
         shall have the respective meanings set forth below:

1.1      "Affiliate"  shall  mean,  with  respect to either  party  hereto,  any
         corporation,  partnership  or  other  business  entity  controlled  by,
         controlling  or under  common  control  with either  such  party,  with
         "control" meaning direct or indirect  beneficial  ownership of at least
         fifty  percent  (50 %) of the voting  interest of such  corporation  or
         other  business  entity.  The term Affiliate of ROCHE shall not include
         Genentech   Inc,  460  Point  San  Bruno  Bid,   South  San  Francisco,
         California,  U.S.A  unless  ROCHE opts for such  inclusion  by giving a
         written notice to HGS.

1.2      "Assembled  Genome" shall mean the final results of the genome assembly
         of a Streptococcus pneumoniae strain whose accuracy,  quality, strategy
         and time lines are set forth in Appendix 1, attached  hereto and made a
         part hereof.

1.3      "FDA" shall mean the United States Food and Drug  Administration or the
         equivalent regulatory agency in a Major Market Country.

1.4      "Field" shall mean the prevention, diagnosis or treatment of infectious
         diseases in humans excluding Vaccines and Immunotherapeutics.

1.5      The term "First  Commercial  Sale" shall mean in each country the first
         sale of any Product as part of a nationwide launch of Product by ROCHE,
         its  Affiliates  or  sublicensees  following  approval of its marketing
         (including  pricing)  by the  appropriate  governmental  agency for the
         country in which the sale is to be made and when governmental  approval
         is not required, the first such sale in that country.


1.6      "HGS"  shall mean and  include  Human  Genome  Sciences,  Inc.  and its

1.7      "HGS Know-How"  shall mean all information and data with respect to the
         Assembled  Genome  which  is  owned  by HGS or as to  which  HGS  has a
         transferable  interest and which is in the  possession  of HGS prior to
         providing the Assembled Genome to ROCHE as set forth herein.

1.8      "HGS  Patents"  shall mean any and all patents and patent  applications
         anywhere  in the world which are or will be owned by HGS or as to which
         HGS  has a  transferable  interest  which  is  based  on  an  invention
         conceived  or reduced to practice  prior to  delivery of the  Assembled
         Genome to ROCHE as set forth herein and which  invention is directed to
         a polynucleotide  contained in the Assembled Genome or to an expression
         product thereof or to an antibiotic produced by S. pneumoniae.

1.9      "Immunotherapeutics"   shall  mean  products  incorporating  antibodies
         and/or  fragments  thereof  and/or  derivatives  thereof  derived  from
         Technology,  which have a  protective  or  therapeutic  effect  against
         infectious agents.

1.10     "Licensee"  means any  person or entity  granted a right or  license by
         ROCHE to  manufacture  and/or use and/or sell a Product  and/or  Target

1.11     "Major Market  Country" shall mean any one of the following  countries:
         the United States of America, France, Italy, Germany, United Kingdom or

1.12     "NDA" shall mean a New Drug Application or Product License  Application
         by which  approval is sought to sell a Product in the United  States of
         America  pursuant  to  the  regulations  of the  FDA  or an  equivalent
         application in a Major Market Country.

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

1.13     "Net Sales" shall mean the gross sales of the Product to third  parties
         less 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 directly  linked to and
         included in the gross sales  amount as computed in the central  ROCHE's
         Swiss Francs Sales Statistics for the countries concerned,  whereby the
         amount of such  sales in foreign  currencies  is  converted  into Swiss
         Francs at the average monthly rate of exchange at the time.

         From the so adjusted gross sales there shall be a lump sum deduction of
         [****] for those sales related  deductions  which are not accounted for
         on a  product-by-product  basis (e.g. outward freights,  transportation
         insurance,  packaging  materials for dispatch of goods,  custom duties,
         discounts  granted later than at the time of invoicing,  cash discounts
         and other direct sales expenses).

1.14     "Product(s)"  shall mean a  pharmaceutical  preparation  or composition
         containing the Substance as its active ingredient(s).

1.15     "Research" shall mean the activities  conducted  directly or indirectly
         by ROCHE to discover and develop  Products  and Target  Products in the

1.16     "S.  Aureus  Data"  shall  mean the DNA  sequencing  data set  forth in
         Appendix II, attached hereto and made a part hereof.

1.17     "Substance" shall mean a polypeptide expressed by a polynucleotide from
         an Assembled Genome or an antibiotic produced by S. pneumoniae which is
         identified by or on behalf of ROCHE prior to the Assembled Genome being
         generally  available  to the  public  and  which  was not  known to the
         general public prior to such identification by or on behalf of ROCHE.

1.18     "Target" shall mean a  polynucleotide  (or expression  product thereof)
         present in the Assembled Genome,  which  polynucleotide  (or expression
         product thereof) is selected as a target for screening by ROCHE.



1.19     "Target  Product"  shall  mean  any  product,  material,  substance  or
         composition which results directly or indirectly from screening against
         a Target.  For the avoidance of doubt a product,  substance or material
         or composition  which is based on or derived from a product,  material,
         substance or  composition  which is identified  by screening  against a
         Target is a Target Product,  however, a product,  substance or material
         or composition  which is based on or derived from a product,  material,
         substance or composition  for which the screening test has been started
         only after the Target or its genomic  sequence  has become known to the
         public  or to ROCHE  independently  from the  collaboration  hereunder,
         shall not be considered as a Target Product.

1.20     "Technology"  means the Assembled  Genome or any portion thereof and/or
         HGS Know-How and/or S. Aureus Data.

1.21     "Vaccine" shall mean products  incorporating genes and/or gene products
         and/or  fragments  thereof  and/or  derivatives  thereof  derived  from
         Technology, utilized for active immunization against infectious agents.

1.22     "Valid  Claim"  shall mean any claim in an  unexpired  patent  included
         within the HGS  Patents  which  claim has not been  disclaimed  of held
         invalid by a decision beyond the right of review.

1.23     The use herein of the plural shall  include the singular and the use of
         the masculine shall include the feminine.


2.1      ROCHE hereby  acknowledges  that HGS has provided  ROCHE with S. Aureus

2.2      HGS  agrees  to use its  reasonable  efforts  to  provide  to ROCHE the
         Assembled Genome in accordance with Appendix I and until March 31, 1997
         at the latest.

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

2.3      HGS agrees to provide HGS Know-How to ROCHE as it becomes  available to

3.       LICENSES

3.1      For the term of this Agreement,  HGS hereby grants to ROCHE a worldwide
         non-exclusive,  royalty bearing license in the Field,  under HGS Patent
         Rights and HGS Know-How, without the right to grant sublicenses for the
         purpose of performing  preclinical  research  under this  Agreement and
         with the right to grant such  sublicenses to develop,  make, have made,
         use and sell Products and Target Products in the Field, in each case in
         accordance with the terms and conditions of this Agreement.

3.2      HGS grants to ROCHE and its Affiliates the  non-exclusive  right to use
         the S. Aureus Data for Research in the Field.

3.3      HGS agrees that for a period of [****] from the date that the Assembled
         Genome is provided to ROCHE, HGS will not grant access to the Assembled
         Genome to any third party for use by such third party in the Field.


4.1      ROCHE agrees to retain Technology in confidence and not to disclose any
         such  Technology to a third party without the prior written  consent of
         HGS and to use  Technology  only for the  purposes  of this  Agreement.
         ROCHE's  obligation  hereunder shall terminate five (5) years after the
         expiration or termination of this Agreement.

4.2      The obligations of confidentiality will not apply to Technology which:

         (i)      was known to ROCHE or  generally  known to the public prior to
                  its disclosure hereunder; or

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

         (ii)     subsequently  becomes  known to the public by some means other
                  than a breach of this Agreement;

         (iii)    is  subsequently  disclosed to ROCHE by a third party having a
                  lawful right to make such disclosure;

         (iv)     is required by law or bona fide legal process to be disclosed,
                  provided that ROCHE takes all reasonable steps to restrict and
                  maintain  confidentiality  of  such  disclosure  and  provides
                  reasonable notice to HGS; or

         (v)      is approved  for release by mutual  written  agreement  of the

4.3      HGS shall not publish or allow  publication  of or  otherwise  publicly
         disclose  Technology  for[****] following the delivery of the Assembled
         Genome to ROCHE.

4.4      Subject to Art. 4.3 and except as required by law (including applicable
         federal or state securities laws), neither ROCHE nor HGS shall disclose
         the terms and  conditions of this Agreement to any third party or issue
         press releases  relating to this  Agreement for any purpose  whatsoever
         without the other party's prior  written  consent,  which consent shall
         not be unreasonably withheld.

4.5      The term "ROCHE" as used in Articles  4.1, 4.2 and 4.4 above shall mean
         and include  F.Hoffmann-La Roche Ltd and its Affiliates and consultants
         who  have  agreed  to be  bound  by  the  confidentiality  and  non-use
         obligations of this Article 4.

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

5.       ROYALTIES

5.1      ROCHE  shall pay HGS a royalty of two and one half  percent (2 1/2%) of
         the Net Sales of Products sold or distributed  by ROCHE,  or a Licensee
         in a country  where such  Product  would  infringe a Valid  Claim.  The
         Initial Royalty Payment shall be due in accordance with Art.7.1.

         In the case of Product being sold as a combination of Substance and one
         or more other  therapeutically  active principle(s),  the parties shall
         negotiate  in good  faith  and  agree  on such  adjusted  royalty  rate
         reflecting the  significance  of the Substance in relation to the other
         active principle(s).

5.2      Royalties shall be payable on a country by country,  Product by Product
         basis,  for ten (10) years from First Commercial Sale of a Product in a
         country  where such Product  would  infringe a Valid Claim or until the
         expiration of the last to expire HGS Patent containing such Valid Claim
         in such country whichever is later.

5.3      [****]


6.1      ROCHE has paid to HGS, a  non-refundable  and  non-creditable  research
         payment of [****] and HGS hereby acknowledges the receipt thereof.

6.2      Within thirty (30) days after  delivery of the Assembled  Genome by HGS
         to ROCHE,  ROCHE  shall pay to HGS an  additional  research  payment of
         [****]  provided that in the event the Assembled  Genome data has on or
         before that date  [****],  the payment  set forth  herein  shall not be

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the


7.1      For each  Product,  ROCHE shall pay HGS an initial  royalty  payment of
         [****] within thirty (30) days after [****].

7.2      For each  Target  Product,  ROCHE  shall pay to HGS an initial  royalty
         payment of [****] within thirty (30) days after [****].


8.1      ROCHE  shall keep full and  accurate  books of account  containing  all
         particulars  that may be necessary for the purpose of  calculating  all
         royalties  payable to HGS. Such books of account shall be kept at their
         principal  place  of  business  and,  abstracts  thereof  shall be made
         independently by ROCHE's public accountants and shall be made available
         for audit not more  frequently  than once per calendar year and upon at
         least thirty (30) working  days' prior written  notice.  Any such audit
         shall be made at the request and expenses of HGS and  conducted  during
         regular  business  hours  in  such a  manner  as to  not  unnecessarily
         interfere with ROCHE's normal  business  activities.  All  information,
         data documents and abstracts  herein referred to shall be used only for
         the purpose of verifying  royalty  statements or  compliance  with this
         agreement,  shall be treated as ROCHE Confidential  Information subject
         to the  obligations of this Agreement and need neither be retained more
         than one (1) year after completion of an audit hereof,  if an audit has
         been  requested;  nor  more  than  two (2)  years  from  the end of the
         calendar year to which each shall  pertain;  nor more than one (1) year
         after the date of termination of this  Agreement,  whichever  period is
         shorter.  In the event  that such  audits  shall  indicate  that in any
         calendar year that the  royalties  which should have been paid by ROCHE
         are at least five percent (5 %) greater than those which were  actually
         paid by ROCHE, then ROCHE shall pay the cost of such inspection.


8.2      In each year the amount of royalty due shall be calculated  half yearly
         as of June 30 and  December  31  (each  as  being  the  last  day of an
         "ACCOUNTING  PERIOD")  and shall be paid half yearly  within the ninety
         (90) days  next  following  such  date,  every  such  payment  shall be
         supported by the  accounting  prescribed  in Paragraph 8.3 and shall be
         made in United States  currency.  For  countries  other than the United
         States,  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  calculated on the basis of the average daily
         rate of  exchange as  retrieved  from the  Reuters  System  during such

         When  calculating the royalties on Net Sales,  such conversion shall be
         at the average  rate of the Swiss Franc to the United  States  currency
         calculated  on the  basis of the  average  daily  rate of  exchange  as
         retrieved from the Reuters System for the applicable ACCOUNTING PERIOD.

8.3      With each half yearly  payment,  ROCHE shall  deliver to HGS a full and
         accurate accounting to include at least the following information:

         (a)      Quantity of each Product  subject to royalty sold (by country)
                  by ROCHE, and its Affiliates and sublicensees;

         (b)      Total adjusted gross sales for each Product subject to royalty
                  sold (by country) by ROCHE, its Affiliates and sublicensees;

         (c)      Total royalties payable to HGS.

8.4      Any tax  required to be withheld by ROCHE under the laws of any foreign
         country for the account of HGS, shall be promptly paid by ROCHE for and
         on behalf of HGS to the appropriate  governmental authority,  and ROCHE
         shall  furnish  HGS with  proof of  payment  of such tax.  Any such tax
         actually paid on HGS's behalf shall be deducted  from royalty  payments
         due HGS.


8.5      Only one royalty shall be due and payable for the manufacture,  use and
         sale of a  Product  irrespective  of the  number of  patents  or claims
         thereof which cover the manufacture,  use and sale of such Product.

         (a)      If at any  time a  Product  is  sold  in a  country  in  which
                  conditions  or  legal   restrictions   exist  which   prohibit
                  remittance  of  United  States   dollars  or  other   currency
                  ("Blocked  Country"),  the following provisions shall apply to
                  the payment of the corresponding  royalty,  depending on where
                  the Product is made:

         (i)      If  such  Product  is  made in the  same  or  another  Blocked
                  Country,  ROCHE  shall  have the right and option to make such
                  royalty  payment  by  depositing  the  amount  thereof  in the
                  currency  of the  country  of sale or  manufacture,  at  HGS's
                  election, to HGS's account in a bank designated by HGS in such

         (ii)     If such  Product  is made in a country  which is not a Blocked
                  Country,  then a "number' shall be obtained by multiplying the
                  applicable  royalty  rate by the price at which the Product is
                  sold to the entity  selling in the Blocked  Country.  ROCHE or
                  its  Affiliates  (A)  shall pay that  "number'  to HGS and (B)
                  shall  deposit the excess of the  applicable  royalty over the
                  "number',  in the  currency  of the  country  of  sale  of the
                  Product,  to HGS's account in a bank designated by HGS in such
                  Blocked Country.

         (b)      If in  any  country  where  the  Product  is  sold,  rates  of
                  royalties  provided  for  herein  are  prohibited  by  law  or
                  regulation,  ROCHE shall pay  royalties  to HGS at the highest
                  rate  permitted in that country for license of the type herein
                  granted,  provided  that  such  rate is  less  than  the  rate
                  applicable under this Agreement.




9.1      (a)      ROCHE  agrees  to  indemnify   and  hold   harmless  HGS,  its
                  directors, officers, employees,  shareholders and agents (each
                  an  "Indemnitee"),   against  any  and  all  actions,   claims
                  (specifically including, but not limited to, any damages based
                  on  product  liability  claims),   suits,   losses,   demands,
                  judgments,  and other liabilities  (including  attorney's fees
                  until ROCHE assumes the defense as described  below)  asserted
                  by third  parties,  government and  non-government,  resulting
                  from  or  arising  out  of  ROCHE's   activities   under  this
                  Agreement,  and/or  Research  conducted  by ROCHE  and/or  any
                  Product or Target Product which is manufactured,  used or sold
                  by or on behalf of ROCHE or a Licensee.  If any such claims or
                  actions  are  made,  HGS shall be  defended  at  ROCHE's  sole
                  expense by counsel selected by ROCHE and reasonably acceptable
                  to HGS  provided  that HGS may,  at its own  expense,  also be
                  represented by counsel of its own choosing.

         (b)      ROCHE's  indemnification  hereunder  shall  not  apply  to any
                  liability,  damage,  loss or expense of an  Indemnitee  to the
                  extent  that  it  is   attributable   to  the   negligence  or
                  intentional  misconduct  (including breach of warranty) by the
                  Indemnitee,  in  which  case  HGS  shall  indemnify  and  hold
                  harmless ROCHE under the same terms and conditions as required
                  of ROCHE hereunder.

         (c)      ROCHE shall have the right to control the defense,  settlement
                  or  compromise of any such action;  however,  no settlement or
                  compromise  shall be made  without  the  consent  of HGS which
                  consent shall not be unreasonably withheld.

9.2      HGS and ROCHE  warrant  to each  other  that it has the full  right and
         authority to enter into this  Agreement and that it is not aware of any
         impediment  which  would  inhibit  its  ability to  perform  any of its




10.1     This Agreement shall not be assignable by either of the parties without
         the prior written  consent of the other party (which  consent shall not
         be  unreasonably  withheld),  except that either  party may assign this
         Agreement to an  Affiliate or to a successor in interest or  transferee
         of all or  substantially  all of the  portion of the  business to which
         this Agreement relates.

10.2     Subject to the limitations on assignment  herein,  this Agreement shall
         be binding upon and inure to the benefit of said successors in interest
         and  assigns of ROCHE and HGS.  Any such  successor  or  assignee  of a
         party's  interest shall expressly  assume in writing the performance of
         all the terms and  conditions of this Agreement to be performed by said
         party and such Assignment  shall not relieve the Assignor of any of its
         obligations under this Agreement.


11.1     Except as  otherwise  specifically  provided  herein and unless  sooner
         terminated  pursuant  to  Paragraph  1  1.2  of  this  Agreement,  this
         Agreement  and the licenses and rights  granted  thereunder  shall on a
         country-by-country  basis remain in full force and effect until ROCHE's
         obligations to pay royalties  hereunder has expired.  After such expiry
         in such  country,  ROCHE  shall  have the right to use or have used the
         rights and licenses  granted to ROCHE hereunder in such country without
         further  payment to HGS. In addition,  after  receipt of the  Assembled
         Genome and payment of the license fee set forth in Article  6.2,  ROCHE
         shall have the right to  terminate  this  Agreement  at any time within
         sixty  (60)  days  prior  written  notice;   provided  that  upon  such
         termination  all rights and licenses  granted to ROCHE  hereunder shall
         terminate and ROCHE shall be bound by the covenant set forth in Article


11.2     Upon material  breach of any material  provisions of this  Agreement by
         either party to this  Agreement,  in the event the breach is not curred
         within thirty (30) days after written notice to the breaching  party by
         the other party, in addition to any other remedy it may have, the other
         party at its sole option may terminate  this  Agreement,  provided that
         such other party is not then in breach of this Agreement.

11.3     The termination of this Agreement means that all rights and obligations
         of this Agreement shall terminate  except those of Articles 4, 9 and 12
         and of Paragraphs 3.2, 7.1, 7.2, 11.1, 11.3 and 11.4 of this Agreement.

11.4     Upon termination of this Agreement for any reason, nothing herein shall
         be construed to release either party from any  obligation  that matured
         prior to the effective date of such termination.


12.1     ROCHE hereby  covenants that, so long as the Technology is not publicly
         known,  it will use the Technology  solely in the Field and only to the
         extent ROCHE retains a license hereunder with respect thereto.

12.2     ROCHE hereby  guarantees and shall be responsible for compliance by its
         Affiliates with all terms and conditions of this Agreement.


13.1     The  relationship   between  HGS  and  ROCHE  is  that  of  independent
         contractors. HGS and ROCHE are not joint venturers, partners, principal
         and agent,  master  and  servant,  employer  or  employee,  and have no
         relationship other than as independent  contracting  parties. HGS shall
         have no power to bind or obligate ROCHE in any manner.  Likewise, ROCHE
         shall have no power to bind or obligates HGS in any manner.



13.2     This  Agreement  sets  forth the  entire  agreement  and  understanding
         between the parties as to the subject matter thereof and supersedes all
         prior  agreements  in this  respect.  There shall be no  amendments  or
         modifications to this Agreement,  except by a written document which is
         signed by both parties.

13.3     This Agreement  shall be construed and enforced in accordance  with the
         laws of the State of Delaware.

         In the event of any  controversy or claim arising out of or relating to
         any  provision  of this  Agreement or the breach  thereof,  the parties
         shall try to settle those conflicts amicably between themselves.

         Should the parties  fail to agree,  any  controversy,  dispute or claim
         which may arise out of or in  connection  with this  Agreement,  or the
         breach,  termination  or validity  thereof  other than with  respect to
         patent  validity  shall be  settled  by final and  binding  arbitration
         pursuant to the Rules of the American  Arbitration  Association ("AAA")
         as herein provided.

         (a)      The Arbitration  Tribunal shall consist of three  arbitrators.
                  Each party shall nominate in the request for  arbitration  and
                  the answer thereto one  arbitrator and the two  arbitrators so
                  named  will  then  jointly  appoint  the third  arbitrator  as
                  chairman of the  Arbitration  Tribunal.  If one party fails to
                  nominate its arbitrator or, if the parties' arbitrators cannot
                  agree on the person to be named as chairman  within sixty (60)
                  days, the necessary appointments shall be made under the rules
                  of the AAA.

         (b)      The place of arbitration shall be in Wilmington,  Delaware and
                  the  arbitration  proceedings  shall be held in  English.  The
                  procedural law of the place of  arbitration  shall apply where
                  the AAA Rules are silent.

         (c)      The  award of the  Arbitration  Tribunal  shall  be final  and
                  judgement  upon such an award may be entered in any  competent
                  court or  application  may be made to any competent  court for
                  judicial acceptance of such an award and order of enforcement.



13.4     The headings in this Agreement  have been inserted for the  convenience
         of  reference  only and are not  intended  to limit  or  expand  on the
         meaning of the language contained in the particular article or section.

13.5     Any delay in  enforcing a party's  rights  under this  Agreement or any
         waiver as to a particular  default or other matter shall not constitute
         a waiver of a party's  right to the  future  enforcement  of its rights
         under this  Agreement,  excepting  only as to an expressed  written and
         signed  waiver as to a  particular  matter for a  particular  period of

13.6     Notices.  Any  notices  given  pursuant to this  Agreement  shall be in
         writing and shall be deemed to have been given and  delivered  upon the
         earlier of (i) when  received at the address set forth  below,  or (ii)
         three (3) business  days after mailed by certified or  registered  mail
         postage prepaid and properly addressed,  with return receipt requested,
         or (iii) on the day when sent by facsimile as confirmed by certified or
         registered mail.  Notices shall be delivered to the respective  parties
         as indicated:

                  To HGS:           Human Genome Sciences, Inc.
                                    9410 Key West Avenue
                                    Rockville, MD 20850
                                    Attn: CEO

                  Copy to:          Carella, Byrne, Bain, Gilfillan,
                                    Cecchi, Stewart & Olstein
                                    6 Becker Farm Road
                                    Roseland, New Jersey 07068
                                    Fax No. (201) 994-1744
                                    Attn: Elliot M. Olstein, Esq.



                  To ROCHE:         F.Hoffmann-La Roche Ltd
                                    Grenzacherstrasse 124
                                    CH-4070 Basel
                                    Attn: Corporate Law


                                    Hoffmann-La Roche Inc.

                                    340 Kingsland Street
                                    Nutley, New Jersey 07110-1199


                                    Att: Corporate Secretary

IN WITNESS WHEREOF,  the parties have executed this Agreement as of the date set
forth above.



Basel, this March 12, 1996                     F.HOFFMANN-LA ROCHE LTD


                                                              Apprv'd As To Form
                                                                       LAW DEPT.

Nutley, this March 12, 1996                    HOFFMANN-LA ROCHE INC.
                                                                    By /s/


Rockville, this March 20, 1996                 HUMAN GENOME SCIENCES, INC.

                                               /s/ William A. Haseltine
                                                William A. Haseltine


"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the


1.       Sequencing and Genome Assembly

         Our plan is to  sequence  and  assemble  the  [****]  of  Streptococcus
         pneumoniae.  This  strain  is a Type IV  pathogenic  clinical  isolate.
         Sequencing will be performed in both a sheared genomic library (present
         in the plasmid pUC18) containing inserts of approximately  [****] and a
         lambda genome library containing  inserts of approximately  [****]. The
         majority of our sequencing  efforts will be from 2-3 libraries prepared
         in pUC18.  Sequencing will be performed from both the 5' and 3' ends of
         each clone picked.  Clones will be stored as glycerol stocks in 96-well
         microtiter  dishes and will be made  available  to Roche as well as the
         host E. coli strain SURE2 (Stratagene) in which the libraries have been
         established and the S. pneumoniae strain [****].

         Based  on  preliminary   sequencing   efforts,   approximately   [****]
         nucleotides  from each genomic insert will be obtained from both the 5'
         and 3' end on first-pass sequencing. Assuming a genomic size of 2.3-2.5
         MB,  approximately  [****] high quality  sequencing  reactions  will be
         required to obtain a 3-5X  coverage  of the  genome.  As only [****] of
         sequencing  reactions result in high quality sequence  information,  we
         estimate that the number of sequencing  reactions will be significantly
         higher than the [****]  predictedrequired to provide [****] coverage of
         the genome.  After adequate  coverage [****] of the genome is complete,
         further  sequencing  on selected  clones from both the pUC18 and lambda
         libraries  will  be  required  to  obtain  closure  of the  genome.  In
         addition,  other  methods,  including  PCR,  will be used to order  and
         complete the genome  sequence map. The final  accuracy of the assembled
         genome will be equivalent  to the [****].  As sequence  ambiguities  in
         important  genes may not be acceptable,  HGS will undertake  additional
         in-depth sequencing of clones selected by Roche (see #2 below)

2.       Individual Gene Sequencing

         For those  sequences of most  importance to Roche  (limited to [****]),
         further  in-depth  sequencing  will be  performed  if after a threefold
         coverage  there still exists  sequence  ambiguities  in the  individual
         clones.  We  estimate  that a [****]  coverage of  individual  genes in
         question  will  be more  than  sufficient  to  resolve  all  sequencing
         ambiguities.  Sequencing of these chosen  clones will continue  through
         the time perod in which Roche has exclusive access.

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

3.       Data Transmittal

         Our plan is to submit edited sequence information weekly to Hoffmann-La
         Roche. Potential homologies of Streptococcus  pneumoniae genes to known
         genes  obtained  by  Blast  analysis  will  also be  provided.  Once an
         appropriate [****] coverage is obtained,  preliminary assembly data can
         also be provided.  Both raw data and a  chromatogram  representing  the
         actual sequence run can be provided if needed.

         We look forward to working with your informatics  people to implement a
         responsive and reliable method for  transmitting  sequence  information
         and annotation throughout the project. An effective transmission scheme

         * Deliver information in a usable electronic form

         * Maintain key relationships among the various data elements

         * Transmit additions and changes to the information as they occur

         * Ensure transmission integrity; enable simple recovery from network or
           equipment failures

         * Ensure the data is secure from unauthorized disclosure

         The details of the transmission  technique should be worked out jointly
         between Roche and HGS technical  experts.  Several schemes are possible
         to meet these objectives.

         Our  recommendation is to use a  transaction-based  "store and forward"
         system  to  transmit   sequence   information,   sequence   annotation,
         preliminary  assemblies and the genome as it is being completed.  Under
         this  architecture,  a  database  server  at Roche  facilities  will be
         connected with the HGS network via an encrypted wide-area network link.
         As changes  are posted to the HGS  database,  they will be  transmitted
         automatically  to a database  machine at Roche  where the  transactions
         will executed on the Roche copy of the database.

         This  architecture  has the  advantage of  delivering  the  information
         directly  in database  format  without  requiring  the  development  of
         export/import  procedures.  Delivering  information in database  format
         ensures that key  relationships  among  database  entities and database
         integrity  constraints  are maintained  across the wide-area  link. HGS
         currently uses the Sybase  database  management  system,  so the Sybase
         Replication  Server product is the natural candidate for performing the
         wide-area database synchronization functions.

         Obviously, there are other scenarios we can follow. Please feel free to
         have  your   informatics   group   contact  us   regarding   additional
         possibilities and suggestions for data transmittal if they believe that
         the above does not adequately address the needs of Hoffmann-La Roche.

"The information  below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the

4.       Timeline

         * Preparation of [****] insert  libraries in [****] - one is completed,
           others are ongoing

         * Preparation of lambda genomic library - [****]

         Sequencing to obtain [****] coverage - [****] weeks        [*
         [****] Coverage - 20 weeks                                  *     
         [****] Coverage (if needed) - [****] weeks                  *]  

         Further  sequencing,  gap filling and genome  assembly is  estimated to
         take  an  additional  [****],  suggesting  a final  completion  date of
         between [****] . Patent  submission on the assembled genome will likely
         take place within this time frame.

         Assuming a genome size of 2.5 MB,  sequence  runs of [****] base pairs,
         and [****] of sequencing reactions resulting in high quality sequence.


1.       Sequencing Data Set

         HGS will provide  sequence  information and frozen  bacterial  glycerol
         stocks  for  [****]  GSTs  (Genome-Specific  Tags).  This  library  was
         prepared with sheared genomic DNA from Staphylococcus  strain [****], a
         strain  cured of the  prophages  present in the  NCTC8325  strain of S.
         aureus.   The  genomic  library  is  present  in  plasmid   pBluescript
         (Stratagene).  The  average  sequence  read on  these  GSTs  is  [****]
         nucleotides  and the fragment sizes range from [****] bp.  Plasmids are
         present in E. coli strain XL-1 Blue (Stratagene).