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Commercial Supply Agreement and Process Validation Agreement - Seragen inc. and Hollister-Stier Laboratories LLC

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                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

                              COMMERCIAL SUPPLY AND
                          PROCESS VALIDATION AGREEMENT

is entered into as of this 27th day of February, 2004, by and between SERAGEN
INCORPORATED ("SERAGEN"), a Delaware corporation having an address at 10275
Science Center Drive, San Diego, California 92121 and HOLLISTER-STIER
LABORATORIES LLC, ("HOLLISTER-STIER") having an address at 3525 North Regal
Street, Spokane, Washington, 99207-5788 with respect to the following:


     A.   SERAGEN, a wholly-owned subsidiary of Ligand Pharmaceuticals, Inc., is
          a commercial pharmaceutical and drug development and manufacturing
          company active in the research, development and sale of drug products.

     B.   HOLLISTER-STIER is in the business of formulating, sterile filling,
          and packaging liquid injectable and *** drug products and
          medical devices.

     C.   SERAGEN and HOLLISTER-STIER desire to enter into this Agreement in
          order to establish the terms and conditions under which
          HOLLISTER-STIER will Formulate, fill, *** package and test for
          commercial release, Product(s) for clinical trial and consistency Lots
          for FDA approval and, following FDA approval of HOLLISTER-STIER as a
          formulation, fill-finish site for the Product, for commercial sale.

     D.   Both parties contemplate that additional SERAGEN products may be
          included under this Agreement, as amendments, by mutual written
          consent of the parties.

     NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

                                    ARTICLE I

     All references to particular Exhibits and Sections shall mean the Exhibits
to, and Sections of, this Agreement, unless otherwise specified. For the
purposes of this Agreement and the Exhibits hereto, the following words and
phrases shall have the following meanings:

     1.01 "ACTIVE INGREDIENT" OR "PDS" shall mean active pharmaceutical
ingredient (API) of SERAGEN, as described in Exhibit A.

     1.02 "AFFILIATE" shall mean any corporation, firm, partnership or other
entity, whether de jure or de facto, which directly or indirectly owns, is owned
by or is under common ownership with a party to this Agreement to the extent of
at least fifty percent (50%) of the equity having the power to vote on or direct
the affairs of the entity and any person, firm, partnership, corporation or
other entity actually controlled by, controlling or under common control of a
party to this Agreement.

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


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

     1.03 "AGREEMENT" shall mean this Commercial Supply and Process Validation

     1.04 "LOT" shall for each Product have the meaning assigned in Exhibit C.

record of detailed processing steps that have been completed according to
instructions in the Master Batch Record, together with relevant in-process data.

     1.06 "CERTIFICATE OF CONFORMANCE" shall mean the formal release document
for the Product issued by HOLLISTER-STIER stating that the Product meets certain
required quality standards. The certificate shall also identify the lot number
and/or components for tracking the chain of custody. For clarity, the
Certificate of Conformance is part of the MRR Documents.

     1.07 "EMEA" shall mean the European Agency for the Evaluation of Medicinal

     1.09 "FDA" shall mean the United States Food and Drug Administration.

     1.10 "FORMULATE OR FORMULATION" shall mean the Processing of Active
Ingredient and excipients into intermediate bulk drug product as described in
Exhibit A.

     1.11 "FREE CARRIER" means that HOLLISTER-STIER delivers the goods, cleared
for export (if any), to the carrier nominated by SERAGEN at HOLLISTER-STIER
site. HOLLISTER-STIER is responsible for loading (Reference Article 5.05).

     1.12 "GOOD MANUFACTURING PRACTICES" or the letters "GMP" or "CGMP" shall
mean the prevailing standards required by the US and European regulatory
agencies as, for example, currently expressed in the writings of the Code of
Federal Regulations, Part 221, Section 210 and Section 211, or other sections so
designated by the title `Good Manufacturing Practices' promulgated under the
Federal Food, Drug and Cosmetic Act, and the EU Guide on Good Manufacturing
Practice, as in effect from time to time.

     1.12A "ICH" shall mean the International Conference on Harmonisation of
Technical Requirements for Registration of Pharmaceuticals for Human Use.

     1.13 "MASTER BATCH RECORD" shall mean a written description of the
procedure to be followed for processing a Lot of Product including but not
limited to a complete list of all active and inactive ingredients, components,
weights and measures, descriptions of drug product containers, closures,
packaging materials, and labeling and complete specifications for each, within
the meaning of 21 CFR part 211.186, or its successor as in effect from time to

     1.14 "MATERIAL" or "MATERIALS" shall mean all inactive ingredients, vials,
stoppers, seals, labels, inserts, folding cartons and/or shipping cartons as are
otherwise necessary to be utilized in the Processing and to meet the
Specifications, but excluding Active Ingredient.

     1.15 "MRR DOCUMENTS" shall mean all the final manufacturing and release
requirements documents which shall set forth all Specifications and release
requirements for Product(s) and as to each, its manufacture, including, without
limitation, all raw materials, solvents, reagents, processing, storage, shipping
and packaging specifications and necessary test protocols, final release
specifications, Batch Records, Certificates of Analysis and Conformance and
other documentation required to describe, control and assure the quality
manufacture and testing of each in compliance with the Biologics License
Application. "HOLLISTER-STIER MRR DOCUMENTS" shall refer to that portion of the


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

Documents arising from HOLLISTER-STIER's performance under this Agreement whose
content shall be mutually agreed between the parties and set forth in Exhibit F
attached hereto.

     1.16 "POOLING" shall mean the mixing together of multiple batches of
purified drug substance into a single homogeneous solution.

     1.17 "PROCESSING" shall mean processing of the Product in accordance with
the Master Batch Record for the Product, as outlined in section 2.01 hereof.
"Processed" and "Process" shall have comparable meanings.

     1.18 "PRODUCT(S)" shall mean:

          ONTAK(R) (denileukin diftitox, DAB389-IL2) final drug product supplied
     as either:

          First generation product ("1ST GEN PRODUCT") in its final dosage form
     supplied as ***.

          Second generation product ( "2ND GEN *** PRODUCT") in its final
     dosage form supplied as ***.

          Third generation product ("3RD GEN *** PRODUCT") in its final
     dosage form supplied as a ***.

     1.19 "PROJECT SUMMARY" shall mean those documents attached to this
Agreement as Exhibit B, which provide specific details about the Product to be

     1.20 "REGULATORY AGENCY, REGULATORY AGENCIES" shall mean the United States
Food and Drug Administration (FDA), The European Agency for the Evaluation of
Medicinal Products (EMEA).

     1.21 "REGULATORY APPROVAL" shall mean approval by the United States Food
and Drug Administration (FDA), The European Agency for the Evaluation of
Medicinal Products (EMEA) or any other national government drug regulatory

     1.22 "SPECIFICATIONS" shall mean the acceptance criteria for the Product as
set forth in the Master Batch Record.

     1.23 "USP" shall mean the United States Pharmacopoeia, Vol. 26, or any
subsequent edition thereof.

                                   ARTICLE II
                        SUPPLY AND PROCESSING OF PRODUCT

     2.01 PROCESSING. Subject to the terms and conditions of this Agreement, and
upon the parties' completion of the technical transfer process for 2nd Gen ***
and 3rd Gen *** Product in accordance with mutually agreed technical transfer
specifications HOLLISTER-STIER agrees that it shall supply Product, to SERAGEN,

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                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

          (a) for 1st Gen Product or 2nd Gen *** Product, ***

          (b) for 3rd Gen *** Product, ***

in each case at its Spokane facility in Spokane, WA (the "MANUFACTURING
FACILITY") validated in accordance with FDA regulations and the Specifications
and HOLLISTER-STIER shall Process the Active Ingredient into Product in
accordance with cGMP's, and the Specifications including without limitation
adherence to appropriate quality assurance and quality control practices.
HOLLISTER-STIER will permit SERAGEN to review from time to time all applicable
written internal HOLLISTER-STIER quality assurance and quality control
practices. The Active Ingredient cannot be Processed at a facility other than at
the Manufacturing Facility without the prior written consent of SERAGEN.

     2.02 MASTER BATCH RECORD. Subject to the terms and conditions of this
Agreement, HOLLISTER-STIER agrees to process the Product in accordance with a
Master Batch Record approved in writing by SERAGEN. HOLLISTER-STIER further
agrees that HOLLISTER-STIER will consult with SERAGEN prior to making any
changes to the Master Batch Record and the process and HOLLISTER-STIER must
receive written approval from SERAGEN prior to the implementation of any such
changes, provided, however, that any approvals to be delivered by SERAGEN shall
not be unreasonably withheld and the parties shall cooperate and act reasonably
and in good faith in connection with their respective activities under this
Section 2.02.

     2.03 SERAGEN-SUPPLIED MATERIALS. SERAGEN, at its expense, shall deliver
sufficient quantities of Active Ingredient, and those Materials and production
equipment indicated on EXHIBIT B hereto as to be provided by SERAGEN, to
HOLLISTER-STIER's plant at Spokane, Washington prior to the scheduled date of
Processing, unless otherwise agreed to by the parties. All such items supplied
by SERAGEN for purposes hereof shall meet the applicable specifications
therefore as set forth on EXHIBIT B and the Master Batch Record. All items so
delivered shall remain the property of SERAGEN.

responsible for supplying sufficient quantities of those Materials indicated on
EXHIBIT B hereto as to be provided by HOLLISTER-STIER, insofar as required to
permit HOLLISTER-STIER to complete the Processing and delivery of Product in
accordance with the terms of this Agreement. All such items supplied by
HOLLISTER-STIER shall meet the applicable Specifications therefore as set forth
on EXHIBIT B and the Master Batch Record. For clarity, the price of
HOLLISTER-STIER-Supplied Materials is included in the price of Product set forth
in Exhibit C.

     2.05 LABELING SPECIFICATIONS. SERAGEN shall be responsible for furnishing
to HOLLISTER-STIER appropriate specifications for the labeling and packaging
(including package inserts) to be used on or in connection with the Processing
which is to bear SERAGEN labels or other identification, and any necessary
artwork and engineering drawings related thereto. HOLLISTER-STIER will label and
package Product in accordance with such labeling specifications. HOLLISTER-STIER
shall not affix any other labeling to the Product, except with the prior written
approval of SERAGEN.

     2.06 ALTERNATE SOURCES. Nothing in this Agreement shall preclude SERAGEN
from taking whatever steps necessary to qualify alternative suppliers other than
HOLLISTER-STIER, including but not limited to selling any Lots reasonably
required to be manufactured for purposes of the qualification of such
alternative suppliers and maintaining such qualifications. HOLLISTER-STIER shall
provide any reasonably requested support for technology transfer in connection
with such qualifications.

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



                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

                                   ARTICLE III
                               PROCESS VALIDATION

     3.01 PROCESS VALIDATION. HOLLISTER-STIER shall validate all Processing
according to validation protocols approved in advance in writing by SERAGEN. The
agreed validation activities are described in Exhibit B. SERAGEN shall pay
HOLLISTER-STIER for such validation(s) as set forth in Exhibit C.

                                   ARTICLE IV
                        ORDERS, PRICE, & TERMS OF PAYMENT

     4.01 FORECAST: SERAGEN shall provide HOLLISTER-STIER with four quarters
rolling forecast. Such forecast shall be provided quarterly at the beginning of
the calendar quarter immediately preceding the period covered by the Forecast.

     4.02 PURCHASE ORDERS. SERAGEN shall provide HOLLISTER-STIER a Purchase
Order which shall provide the Lot size, the estimated API delivery schedule, the
requested Processing and testing completion dates (each a "Requested Release
Date"), and any other information reasonably agreed by the parties and
reasonably necessary to fill the Purchase Order. For clarity, such Requested
Release Date refers to the date of delivery of HOLLISTER-STIER MRR Documents to
SERAGEN. A minimum period of (i) four months for 1st Gen Product and 2nd Gen ***
Product and (ii) five months for 3rd Gen *** Product is required between a
Requested Release Date specified in the Purchase Order and the date the Purchase
Order is received by HOLLISTER-STIER (see Exhibit E). HOLLISTER-STIER shall
notify SERAGEN within 10 days of receipt of a Purchase Order if it anticipates
it will not be able to timely fill any Purchase Order and HOLLISTER-STIER shall
cooperate in good faith and use commercially reasonable efforts to agree with
SERAGEN on an alternate release date. SERAGEN's agreement to any such alternate
date shall be without prejudice to any of its rights and remedies hereunder.

     HOLLISTER-STIER guarantees that it will timely fill all Purchase Orders
placed by SERAGEN wherein the quantity of Product (number of vials) ordered does
not exceed the amount for the corresponding period in the most recently
delivered four-quarter rolling forecast by more than fifty percent (50%) for 1st
Gen Product and 2nd Gen *** Product. For 3rd Gen *** Product HOLLISTER-STIER
shall cooperate in good faith and use commercially reasonable efforts to
accommodate higher SERAGEN requirements up to a maximum of 20 Lots per year. For
clarity, "timely fill" means HOLLISTER-STIER completes all Processing and
delivery of HOLLISTER-STIER MRR Documents on or before the Requested Release

     4.03 PRICE. The price to be paid, in US dollars, by SERAGEN to
HOLLISTER-STIER during the term of this Agreement for all testing, development
work, validation work, stability and each Lot of Product shall be as specified
in EXHIBIT C. All prices are Free Carrier the Manufacturing Facility. Payment of
all FDA fees specific to the Product will be the responsibility of SERAGEN.
Unless otherwise specifically agreed, HOLLISTER-STIER's price does not include
any other testing, studies, Product specific validations and stability not
identified herein, or other activities, not identified in EXHIBIT C, which
SERAGEN may deem necessary but which are not required of HOLLISTER-STIER by this

     Commencing one year after the Effective Date of the Agreement and at each
anniversary date of this Agreement, the price for the Product may be modified by
way of written notification from

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

                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

HOLLISTER-STIER to SERAGEN whereby the written notice of price change is
delivered at least 90 days before such anniversary date. Any changes to the
price shall not exceed the annual percentage change (whether an increase or
decrease) in the Producer Price Index Industry: Pharmaceutical Preparations,
Series Id: PCU2834# (N), as published by the U.S. Department of Labor, Bureau of
Labor Statistics and available through HTTP://DATA.BLS.GOV/CGI-BIN/SRGATE.

     4.04 INVOICES. Invoices shall be delivered to SERAGEN upon SERAGEN's
receipt of the HOLLISTER-STIER MRR Documentation as set forth in Article 5
below. The invoice for the total amount, less any disputed amounts or amount
attributable to rejected Product, shall be payable by SERAGEN to HOLLISTER-STIER
within sixty (60) days of the receipt of the invoice.

     The timeline for submission of purchase order, HOLLISTER-STIER MRR
delivery, invoicing, payment and passage of title is illustrated on attached
Exhibit E.

     4.05 PURCHASE FORMS. Purchase orders, purchase order releases,
confirmations, acceptances and similar documents submitted by a party in
conducting the activities contemplated under this Agreement are for
administrative purposes only and shall not add to or modify the terms of the
Agreement. To the extent of any conflict or inconsistency between this Agreement
and any such document, the terms of this Agreement shall govern. The Requested
Release Date which shall coincide with the requested delivery of HOLLISTER-STIER
MRR Documents shall appear under the heading "Delivery Date" on the purchase
form attached hereto as Exhibit D.

                                    ARTICLE V
                       SHIPMENTS, INSPECTION, & ACCEPTANCE


     (a) In accordance with the times set forth in Article IV, and after
completion of its Processing, inspection, and quality assurance review,
HOLLISTER-STIER shall provide to SERAGEN the HOLLISTER-STIER MRR Documents for
each Lot of Product, certifying that the Product has met all Specifications set
forth in this Agreement and the HOLLISTER-STIER MRR Documents, together with the
relevant invoice and any requested testing samples for such Lot(s).

     (b) SERAGEN shall have 60 days from receipt of the HOLLISTER-STIER MRR
Documentation to complete any quality assurance testing and review of all MRR
Documentation and to notify HOLLISTER-STIER of its acceptance or rejection of
the Lot(s)

     (c) In the absence of such rejection or upon earlier notice of acceptance
and release by SERAGEN, i) such Lot(s) shall be appropriately stored or made
available for immediate shipment at SERAGEN's option; ii) title shall pass to
SERAGEN. Pending acceptance or rejection of Lot(s) by SERAGEN, SERAGEN may
comment upon or request changes to the HOLLISTER-STIER MRR Documentation and
HOLLISTER-STIER shall either a) respond to such comments/requests or b) release
amended HOLLISTER-STIER MRR Documentation to SERAGEN within 10 business days of
its receipt of SERAGEN's comments/requests. Both parties acknowledge that
storage of Lots hereunder may be limited by available freezer capacity at the
Manufacturing Facility. Risk of loss for any Lot(s) stored by HOLLISTER-STIER
shall remain with HOLLISTER-STIER until shipped.

     5.02 REJECTION. In any case where SERAGEN expects to reject or otherwise
make a claim against HOLLISTER-STIER with respect to damaged or otherwise
nonconforming Product, SERAGEN


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

shall, to the extent practical, notify HOLLISTER-STIER of such expected
rejection and HOLLISTER-STIER shall be offered a reasonable opportunity during
the relevant acceptance period (i.e. 60 days after SERAGEN's receipt of
HOLLISTER-STIER MRR Documents under section 5.01 above or 15 days of SERAGEN's
or its agent's receipt of a shipment under section 5.03 below) to offer proof or
evidence as to why such Product should not be rejected and, where relevant, to
inspect and/or test such Product. In the event of a rejection due to failure of
Product to conform to its physical Specifications and HOLLISTER-STIER disputes
such rejection by SERAGEN by providing notice thereof within 10 days of
SERAGEN's notice of rejection, such Product shall be tested for conformance with
the applicable Specifications by an independent testing organization mutually
acceptable to both parties which analysis shall be binding on SERAGEN and
HOLLISTER-STIER solely for the purpose of determining whether such Product may
be rightfully rejected or not. The party who was wrong pays for the costs
associated with the independent testing. SERAGEN shall not under any
circumstances dispose of any Product rejected by SERAGEN or determined by
independent testing organization to be damaged or nonconforming, without
HOLLISTER-STIER's prior written consent. All or part of any shipment of Product
determined to have been rightfully rejected by SERAGEN shall be disposed of by
HOLLISTER-STIER, at HOLLISTER-STIER's expense in accordance with all applicable
laws and regulations. In any case, and without prejudice to any of SERAGEN's
rights or remedies hereunder, HOLLISTER-STIER will use commercially reasonable
efforts to initiate manufacture of a new Lot of Product within 30 days from the
date of SERAGEN's rejection. Following such initiation, the timelines set forth
in Article IV shall apply, with the Requested Release Date deemed to be 60 days
after such initiation.

     In the event a rejection is due to (i) the negligence or willful misconduct
of HOLLISTER-STIER or its employees, directors or agents, (ii) HOLLISTER-STIER's
failure to conform to cGMP or the Specifications, its breach of representation
or warranty or (iii) failure of HOLLISTER-STIER's facilities, suppliers or
subcontractors (collectively "ERROR") HOLLISTER-STIER shall also reimburse
SERAGEN for the total cost of any API consumed in the rejected Lot(s) up to $***
maximum in the event of a total Lot loss. Reimbursement to SERAGEN shall consist
of a series of *** per cent discounts on future deliveries until full
reimbursement of the cost of the lost API as defined above. To the extent
payments for such future deliveries are unavailable to be discounted, upon
written request from SERAGEN the reimbursement shall be made in cash

     5.03 SHIPMENTS. Shipments shall be made Free Carrier the HOLLISTER-STIER
Manufacturing Facility at SERAGEN'S cost. A bill of lading will be furnished to
SERAGEN with respect to each shipment. At delivery, Product will be free and
clear of any liens or encumbrances placed thereon by HOLLISTER-STIER.

     5.04 INSPECTION OF SHIPMENTS. SERAGEN or its agent shall inspect all
shipments of Product received from HOLLISTER-STIER for proper labeling,
packaging and count within fifteen (15) days of actual receipt of shipment at
its designated receiving facility. However, any such inspection shall not
relieve HOLLISTER-STIER of its obligation and warranties under this Agreement.
If any portion of the Product received fails to conform to any applicable
Specification, SERAGEN may, in accordance with the terms of Section 5.02 above,
reject for full credit or replacement at SERAGEN's option, the Lot within
fifteen (15) days of the actual receipt of the Product.

     5.05 SHIPPING LOSS. In the event of partial or full loss or non-delivery of
a shipment, the parties will cooperate to insure that notification and follow-up
with the involved ground and air carriers and customs or other warehouses is
made in order to determine if such missing delivery can be located. The
responsibility for such partial or full loss of a shipment rests with SERAGEN.
For any shipment which is not recovered or which is damaged in transit, the
parties shall agree to a schedule for the manufacture of additional Product by

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Confidential Treatment and filed separately with the Commission.


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

     5.06 CONDITIONAL SHIPMENTS. Except as provided in this paragraph, no
Product shall be shipped from HOLLISTER-STIER prior to delivery of complete
HOLLISTER-STIER MRR Documents and the certification contemplated in section
5.01(a) above. If however SERAGEN deems such prior shipment to be necessary, the
parties shall cooperate in good faith and agree on procedures to make such prior
shipment(s) under appropriate safeguards.

                                   ARTICLE VI
                          REPRESENTATIONS & WARRANTIES

Product delivered to SERAGEN (or shipped to a third party at the direction of
SERAGEN) under this Agreement shall at the time of delivery, be free of defects
in material and workmanship; meet the Specifications (except in the case of
Product delivered in quarantine pursuant to Section 5.02, in which case upon
release from quarantine); and have been Processed and maintained in conformance
with cGMPs and other applicable FDA regulations and all other applicable
Federal, state and local laws, rules and regulations as well as applicable ICH
and EMEA guidelines and regulations and that HOLLISTER-STIER's performance
hereunder will be undertaken in a safe and responsible manner. HOLLISTER-STIER
represents and warrants to SERAGEN that HOLLISTER-STIER is not aware that
activities undertaken by HOLLISTER-STIER hereunder will violate the intellectual
property rights of any third party, and that HOLLISTER-STIER is not engaged in
the theft or misuse of any third party's trade secret information regarding the
activities undertaken by HOLLISTER-STIER hereunder, nor does HOLLISTER-STIER
have notice of any claim of a third party regarding any such theft or misuse.

     6.02 WARRANTIES BY SERAGEN. SERAGEN represents and warrants to
HOLLISTER-STIER that SERAGEN is not aware that Product, or the Processing
thereof in accordance with this Agreement, will violate the intellectual
property rights of any third party, and that SERAGEN is not engaged in the theft
or misuse of any third party's trade secret information regarding the processing
or use or distribution of Product, nor does SERAGEN have notice of any claim of
a third party regarding any such theft or misuse.

     6.03 LIMITATION ON WARRANTIES. The warranties set forth in this Article VI
are expressly stated and in lieu of and exclude, and the parties do expressly
disclaim, all other warranties expressed or implied, arising by operation of law
or otherwise, including, on the part of HOLLISTER-STIER, any implied warranties
of fitness for a particular purpose and any representation or warranty as to the
suitability or efficacy of Product.

                                   ARTICLE VII

indemnify, and hold SERAGEN harmless from and against any and all claims,
liability, damage, loss, cost and expenses (including reasonable attorney's
fees) (a "Loss") insofar as such Loss or actions in respect thereof arise out of
or are based upon (i) HOLLISTER-STIER's breach of any obligations or warranty
hereunder, or the negligence or willful misconduct by HOLLISTER-STIER, its
employees, directors, agents and subcontractors under this Agreement, (ii) any
claim of violation by HOLLISTER-STIER of any patent, trade secret or other
intellectual property rights of any person or entity, or (iii) the handling,
storage or use of the Product.

     7.02 INDEMNIFICATION BY SERAGEN. SERAGEN will defend, indemnify, and hold
HOLLISTER-STIER harmless from and against any and all Loss insofar as such Loss
or actions in


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

respect thereof arise out of or are based upon (i) SERAGEN's breach of any
obligation or warranty hereunder or the negligence of willful misconduct of
SERAGEN, its employees, directors, agents and subcontractors under this
Agreement, (ii) the promotion, distribution, sale or use by SERAGEN or its
agents of Product, including without limitation any product liability claim
(except to the extent of HOLLISTER-STIER's indemnifications above), or (iii) any
claim of violation by SERAGEN of any, patent, trade secret or other intellectual
property rights of any person or entity.

     7.03 CONDITIONS. Each party's indemnity obligations (the "Indemnifying
Party") under Sections 7.01 and 7.02 are conditioned upon the other party (the
"Indemnified Party") promptly notifying the Indemnifying Party of any such claim
or proceeding in writing, provided that the failure to provide such notice will
not effect the Indemnifying Party's obligations hereunder except if and to the
extent such failure actually adversely impacts the Indemnifying Party, tendering
to the Indemnifying Party the opportunity to defend or settle such a claim or
proceeding at its expense and cooperating with the Indemnifying Party (at the
expense of the Indemnifying Party) in defending or settling any such claim or
proceeding. The Indemnifying Party should not enter into any settlement which
imposes liability or fault on the Indemnified Party without the Indemnified
Party's prior written consent not unreasonably withheld.

     7.04 RECALL. Subject to the limitations set forth in Section 7.05 below,
HOLLISTER-STIER agrees to indemnify and hold SERAGEN harmless from and against
all costs and expenses of any recall of Product, provided that such recall
arises out of a matter indemnified by HOLLISTER-STIER above. SERAGEN shall
provide HOLLISTER-STIER an adequate opportunity to provide reasonable input
regarding discussions with the FDA or otherwise concerning the proposed recall,
it being understood that SERAGEN shall exclusively conduct all communications
with government entities concerning any recall. HOLLISTER-STIER shall not be
obligated under this Section 7.04 to indemnify SERAGEN if the recall is due to
misbranding of the Product by SERAGEN or is due to any other act or omission of
SERAGEN or any other third party not controlled by HOLLISTER-STIER (except
HOLLISTER-STIER's subcontractors, suppliers or agents).

     7.05. LIMITATION ON LIABILITY. Anything herein to the contrary

     (i) Neither party hereto shall be liable to the other, or the successors or
permitted assigns of the other, or any other person, for any loss of profits,
loss of business or interruption of business, or for any indirect, incidental,
special or consequential damages, costs, losses or expenses, suffered or
incurred under this Agreement or otherwise, even if advised of the possibility
of such loss; and

     (ii) HOLLISTER-STIER's liability for the replacement or for the cost or
value of any Active Ingredient, Materials, or production equipment supplied to
HOLLISTER-STIER hereunder by SERAGEN, shall include the Active Ingredient, as
defined in Article 5.02, Materials, or production equipment lost or damaged or
incorporated into any single rejected or nonconforming Lot of Product.
HOLLISTER-STIER shall also reimburse SERAGEN for any reasonable shipping or
storage charges with the understanding that HOLLISTER-STIER liability for the
loss of Active Ingredient is as defined in Article 5.02. SERAGEN shall submit
reasonable evidence of such loss to HOLLISTER-STIER as is necessary to support
their claimed loss. The parties hereto agree that the limitations provided for
under the terms of this Section 7.05, excludes indemnified claims and recall
costs and is an integral part of the agreement of the parties as evidenced by
this Agreement and that the parties are entering into this Agreement in reliance
upon the terms and provisions of this Section 7.05, and that, but for such terms
and provisions, the parties would not be entering into this Agreement. Prior to
completion of a successful validation as evidenced by a validation report
submitted to SERAGEN and stating that the Process is validated,
HOLLISTER-STIER's liability for the replacement or for the cost or value of API
is limited to the amount charged to SERAGEN for the relevant Processing
hereunder, unless due to Error.


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

     (iii)Promptly, following the execution of this Agreement, HOLLISTER-STIER
shall furnish to SERAGEN a certificate of insurance signed by an authorized
representative of HOLLISTER-STIER's underwriter evidencing the insurance
coverage required by this Agreement and providing for at least thirty (30) days'
prior written notice to SERAGEN of any cancellation, termination, material
change or reduction of such insurance coverage.

                                  ARTICLE VIII

     8.01 SERAGEN RESPONSIBILITIES. SERAGEN will be responsible for obtaining
and maintaining all necessary regulatory approvals for the distribution and sale
of Product. Additionally, SERAGEN will be responsible for all other regulatory
requirements which are not related to the Manufacturing Facility and not
specifically assigned to HOLLISTER-STIER in this Agreement, including the
payment of any FDA user fees or other fees associated with the review and
approval to market the Product imposed by any regulatory agency. SERAGEN will be
responsible for maintaining claim files and for submitting appropriate reports
to the FDA and other similar foreign regulatory agencies. SERAGEN will be
further responsible for promptly notifying HOLLISTER-STIER of all communications
from the FDA or other regulatory agencies, which may impact or change the
production and/or testing of the Product as performed by HOLLISTER-STIER.
SERAGEN will promptly notify HOLLISTER-STIER of any consumer complaints
concerning Product, which might reasonably be attributed to HOLLISTER-STIER's
obligations and warranties. All such information disclosed to HOLLISTER-STIER
shall be considered Confidential Information under Article IX below.

     8.02 HOLLISTER-STIER RESPONSIBILITY. So long and insofar as necessary to
permit it to perform its obligation hereunder, HOLLISTER-STIER shall maintain
its Annual Registration of Drug Establishment (form FDA 2656e) granted by the
FDA updated and in good order and will make the license and copies of all
related documents available to SERAGEN and its designees for inspection, upon
reasonable request. HOLLISTER-STIER shall maintain Product complaint files
pursuant to applicable federal regulations as covered by HOLLISTER-STIER's
Standard Operating Procedures. HOLLISTER-STIER will be further responsible for
promptly notifying SERAGEN of all communications from the FDA or other
regulatory agencies, which may impact or change the production and/or testing of
the Product as performed by HOLLISTER-STIER.

     HOLLISTER-STIER shall provide reasonable assistance to SERAGEN in its
efforts to obtain and maintain all necessary regulatory approvals and permits
relating to the production of Product at HOLLISTER-STIER's facilities.
Accordingly, insofar as relating to Product and HOLLISTER-STIER's processing
thereof, HOLLISTER-STIER shall permit SERAGEN or its designees access to
HOLLISTER-STIER's facility, other than the filling, and packaging areas, during
the Formulation and filling of Product and, upon reasonable notice and during
reasonable business hours and so long as SERAGEN does not unreasonably interfere
with HOLLISTER-STIER's day to day operations (i) to inspect HOLLISTER-STIER's
processing facilities, (ii) to review manufacturing and quality control records
relative to production by HOLLISTER-STIER of the Product, prior to the
disposition of the Product (iii) to audit HOLLISTER-STIER's production efforts
in respect of Product for compliance with FDA and other Regulatory Agency
requirements, provided that SERAGEN shall be entitled to only one full cGMP
audit in any twelve month period (iv) to review HOLLISTER-STIER's
correspondence, reports, or other documents from HOLLISTER-STIER to the FDA and
other Regulatory Agencies, or from the FDA and other Regulatory Agencies, to
HOLLISTER-STIER, related to the Product and/or the facility as it effects the
Product, and (v) to approve all Product related variances which occur during
manufacture or storage of the Product, including approval of label text after
receipt of labels and prior to application. During the manufacturing process,
HOLLISTER-STIER will permit SERAGEN to view the operation through live
television cameras or windows. HOLLISTER-STIER agrees to supply SERAGEN


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

with any documents, information, and/or data specified as HOLLISTER-STIER's
responsibility in the Project Summary in a timely manner so as not to interfere
with or otherwise impede SERAGEN's rights under this Agreement.

     In addition to the foregoing, with at least five (5) days advance notice,
SERAGEN shall be permitted to investigate/audit HOLLISTER-STIER facilities and
records in the event of any failure of any batch to meet Specifications, any
major deviation from Specifications, or any regulatory actions, violations or
complaints relevant to this Agreement.

to SERAGEN, at no additional cost, one paper copy, of all documents, in
HOLLISTER-STIER's standard format, for the manufacturing and control of Product
at HOLLISTER-STIER's facility, in support of SERAGEN's regulatory filings for
approval to market Product. Any additional support, beyond the documents above,
requested by SERAGEN will be charged as set forth in Exhibit C.

     8.04 MASTER FILE. HOLLISTER-STIER shall maintain one or more facility
master files at the Regulatory Agencies and agrees to provide SERAGEN with any
requisite letters authorizing the FDA access to HOLLISTER-STIER's facility
master file in conjunction with regulatory review of HOLLISTER-STIER's
production of Product as set forth in this Agreement.

                                   ARTICLE IX

     9.01 CONFIDENTIALITY. Each party shall for 10 years from the expiration or
termination of this Agreement maintain in confidence all information and
materials disclosed by the other party and marked as confidential or which the
other party knows or has reason to know are or contain trade secrets or other
proprietary information of the other, including without limitation the
Specifications, Master Production and Control Record, Batch Production and
Control Record, and other information relating to the Product (all such
information being "Confidential Information"), and shall not use such trade
secrets or proprietary information for any purpose except as permitted by this
Agreement or disclose them to anyone other than those of its employees,
consultants, agents or subcontractors as are necessary in connection with such
party's activities as contemplated in this Agreement. Each party shall be
responsible for ensuring compliance with these obligations by such party's
employees, consultants, agents and subcontractors. Each party shall take
precautions at least as strong as those which it takes to protect its own most
valuable trade secrets or proprietary information to ensure that its employees,
consultants, agents and subcontractors do not disclose or make any unauthorized
use of trade secrets or proprietary information of the other party. Each party
shall notify the other promptly upon discovery of any unauthorized use or
disclosure of the other's trade secrets or proprietary information. It is
acknowledged that SERAGEN and HOLLISTER-STIER may enter into confidentiality
agreements with third parties in connection with the above and those agreements
will be reviewed and approved by both SERAGEN and HOLLISTER-STIER.

     9.02 EXCEPTIONS. The foregoing restrictions on use and disclosure shall not
apply to any SERAGEN Confidential Information or HOLLISTER-STIER Confidential
Information that:

     (i) was know to the receiving party prior to its disclosure to the
receiving party by the disclosing party as evidenced by written documents
predating the receiving party's receipt of such Confidential Information, or

     (ii) is public knowledge at the time of its disclosure to the receiving
party or became public knowledge after its disclosure to the receiving party
through no act or omission or on its behalf: or


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

     (iii) is lawfully disclosed or made available to the receiving party by a
third party having no direct or indirect obligation to the disclosing party to
maintain the confidentiality of such Confidential Information; or

     (iv) is independently developed by the receiving party without the aid or
benefit of Confidential Information disclosed to the receiving party by the
disclosing party.

     Confidential Information may be disclosed by the receiving party pursuant
to a subpoena lawfully issued by a court or governmental agency provided that
the receiving party notifies the disclosing party promptly upon receipt of any
such subpoena.

     9.03 INTELLECTUAL PROPERTY Any intellectual property arising out of the
performance of this Agreement (the "Product IP") shall be the exclusive property
of SERAGEN, except to the extent such intellectual property is (i) invented or
created solely by HOLLISTER-STIER's employees and (ii) does not arise from
SERAGEN confidential or proprietary information, processes or compositions,
including the Active Ingredient and (iii) is not specific to Product, its
manufacture or use, or improvements thereto. HOLLISTER-STIER represents and
warrants that its employees are and will remain under binding obligations to
assign such Product IP to HOLLISTER-STIER, and HOLLISTER-STIER will assist in
every proper way in obtaining or executing the necessary assignments and other
documents reasonably necessary to perfect SERAGEN's interest in the Product IP
as set forth above. HOLLISTER-STIER shall grant SERAGEN an irrevocable
non-exclusive, royalty-free, paid-up license to any other intellectual property
necessary to or used in Processing.

                                    ARTICLE X
                              TERM AND TERMINATION

     10.01 TERM. Unless terminated in accordance with the provisions of Section
10.02, the term of this Agreement shall commence on the date hereof and shall
continue until the fifth (5) anniversary of the date of this Agreement. In the
event SERAGEN has not placed Purchase Orders with HOLLISTER-STIER for twelve
(12) contiguous months, then this Agreement shall be immediately terminable by
HOLLISTER-STIER upon delivery to SERAGEN of written notice of termination. The
contract shall automatically renew for additional two-year terms unless either
party provides notice of non-renewal at least 36 months prior to the next
renewal date.

     10.02 TERMINATION. This Agreement may be terminated by either party, in the
event that the other party (a) is insolvent, fails to pay its debts as they come
due, files or has filed against it a petition under the Bankruptcy Act, makes an
assignment for the benefit of creditors, has a receiver appointed for it or a
substantial part of its assets, or otherwise takes advantage of any statute or
law designed for relief of debtors or (b) fails to perform or otherwise breaches
any of its obligations hereunder, if, following the giving of notice by the
terminating party of its intent to terminate and stating the grounds therefore,
the party receiving such notice shall not have cured the failure or breach
within thirty (30) days. In no event, however, shall such notice or intention to
terminate be deemed to waive any rights to damages or any other remedy which the
party giving notice of breach may have as a consequence of such failure or

Agreement expires or is terminated pursuant to Section 10.02, both parties shall
be released from all obligations and duties imposed or assumed hereunder to the
extent so terminated, except as expressly provided to the contrary in this
Agreement. Upon termination, both parties shall cease any further use of, and
promptly return any, confidential information disclosed to the receiving party
by the other party. Termination of this Agreement for whatever reason, shall not
affect the obligations of either party, including payment


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

obligations, which have accrued prior to such termination. Upon termination of
this Agreement, other than due to a breach of this Agreement by HOLLISTER-STIER,
SERAGEN shall purchase from HOLLISTER-STIER, at HOLLISTER-STIER's cost, any
Materials purchased for the Product which HOLLISTER-STIER has reasonably
purchased or ordered (to the extent the order cannot be canceled) based upon
SERAGEN's forecast and to the extent that such materials cannot be returned for
credit or used by HOLLISTER-STIER in its business or to fill orders of other of
HOLLISTER-STIER's customers. HOLLISTER-STIER shall immediately ship such
materials to SERAGEN in accordance with SERAGEN's instructions, provided that
SERAGEN has given reasonable assurance of payment for such items.

                                   ARTICLE XI

     11.01 INDEPENDENT CONTRACTOR. HOLLISTER-STIER shall at all times during the
term of this Agreement be an independent contractor, maintaining sole and
exclusive control over its personnel and operation. It is understood that all
work performed by HOLLISTER-STIER shall meet Specifications set forth in this
Agreement, and the detailed manner and method of doing the same shall be under
the control of HOLLISTER-STIER. At no time will either HOLLISTER-STIER or
SERAGEN hold itself out to be the agent, employee, lessee, sub lessee, partner,
or joint venturer of the other, and it is further understood and agreed between
the parties that the full and exclusive relationship between them is that of an
independent contractor. Nothing in this Agreement shall be construed to create
any agency, employment, partnership, joint venture or similar relationship
between the parties other than that of an independent contractor. Neither party
shall have any right or authority whatsoever to incur any liability or
obligation (express or implied) or otherwise act in any manner in the name or on
the behalf of the other, or to make any promise, warranty or representation
binding on the other. HOLLISTER-STIER and SERAGEN agree not to use or refer to
the other without prior written permission, in any public statements, whether
oral or written, related to this Agreement. Furthermore, HOLLISTER-STIER and
SERAGEN both agree not to employ or solicit for employment or as an independent
contractor any employee of either party during the term of this Agreement and
for a period of two (2) years thereafter.

each at their own expense, shall obtain and thereafter maintain i) adequate
workers' compensation insurance and ii) comprehensive general liability (bodily
injury and property damage) insurance coverage of not less than $*** million,
with respect to performance under this Agreement. Each party shall give the
other or its representative immediately notice of any suit or action filed, or
prompt notice of any claim made, against them arising out of the performance of
this Agreement.

     11.03 PRODUCT LIABILITY. SERAGEN and HOLLISTER-STIER each agree at its own
expense to maintain product liability insurance coverage of at least $***
million. SERAGEN and HOLLISTER-STIER will provide a Certificate of Insurance to
the other upon request, and such coverage will remain in effect indefinitely and
so long as either party has product liability exposure for any Product
manufactured for SERAGEN. [If such product liability insurance is underwritten
on a "claims made" basis, SERAGEN and HOLLISTER-STIER agree that any change in
underwriters during the term of this agreement will require the purchase of
"prior acts" coverage to ensure that coverage will be continuous throughout the
term of this Agreement.]

     11.04 GOVERNING LAW. This Agreement shall be construed, and relevant legal
relations between the parties hereto shall be determined, in accordance with the
laws of the State of New York.

     11.05 NOTICE. All notices or communication required or permitted to be
given by either party hereunder shall be mailed by registered mail or certified
mail return receipt requested or sent by overnight

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


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

courier return receipt requested, such as Federal Express, to the other party at
its respective address set forth below or to such other address as one party
shall give notice of to the other from time to time hereunder. Notices shall be
deemed given upon receipt.

IF TO SERAGEN:                             IF TO HOLLISTER-STIER:
10275 Science Center Drive                 3525 North Regal Street
San Diego, California 92121                Spokane, Washington 99207-5788

Attn:  Supply Operations                   Attn: President

Tel:  858-550-7500                         Tel:     509 489-5656
Fax: 858-550-1801                          Fax:     509 484-4320


SERAGEN Pharmaceuticals, Inc.
10275 Science Center Drive
San Diego, California 92121

Attn: General Counsel

Tel:  858-550-7500
Fax: 858-550-1825

     11.06 SUCCESSORS AND ASSIGNS. HOLLISTER-STIER shall not assign this
Agreement (or any schedule hereto) without the prior written consent of SERAGEN,
except that HOLLISTER-STIER shall be permitted to assign its rights and
obligation hereunder with such consent to (i) one or more of its Affiliates, or
(ii) the purchaser of all or substantially all of its assets, through merger,
consolidation or otherwise. SERAGEN may assign this Agreement by providing prior
written notice to HOLLISTER-STIER.

     11.07 NO WAIVERS; SEVERABILITY. No waiver of any breach of this Agreement
shall constitute a waiver of any other breach of the same or other provision of
this Agreement, and no waiver shall be effective unless made in writing. Any
provision hereof prohibited by or unenforceable under any applicable law of any
jurisdiction shall as to such jurisdiction be deemed ineffective and deleted
herefrom without affecting any other provision of this Agreement. It is the
desire of the parties hereto that this Agreement be enforced to the maximum
extent permitted by law, and should any provision contained herein be held by
any governmental agency or court of competent jurisdiction to be void, illegal
and unenforceable, the parties shall negotiate in good faith for a substitute
term or provision which carries out the original intent of the parties.

that they have read this entire Agreement and that this Agreement, including the
attached Exhibits constitutes the entire understanding and contract between the
parties hereto and supersedes any and all prior or contemporaneous oral or
written communications with respect to the subject matter hereof, all of which
communications are merged herein. It is expressly understood and agreed that
this Agreement shall not be modified, amended or in any way altered except by an
instrument in writing signed by both of the parties hereto.


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

     11.09 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party hereto,
shall impair any such right, power or remedy to such party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

     11.10 FORCE MAJEURE. If either party fails to fulfill its obligations
hereunder (other than an obligation for the payment of money), when such failure
is due to an act of God, or other circumstances beyond its reasonable control,
including but not limited to fire, flood, civil commotion, riot, war (declared
and undeclared), revolution, action by government including delays in obtaining
governmental approvals or embargoes, then said failure shall be excused for the
duration of such event and for such a time thereafter as is reasonable to enable
the parties to resume performance under this Agreement provided that the party
whose performance is delayed or prevented shall continue to use good faith
diligent efforts to mitigate, avoid or end such delay or failure in performance
as soon as practicable.

     11.11 FURTHER ASSURANCES. Each party shall, at any time, and from to time,
prior to or after the effective date of this Agreement, at reasonable request of
the other party, execute and deliver to the other such instruments and documents
and shall take such actions as may be required to more effectively carry out the
terms of this Agreement.

     11.12 SURVIVAL. All representations, warranties, covenants and agreements
made herein and which by their express terms or by implication are to be
performed after the execution and/or termination hereof, or are prospective in
nature, shall survive such execution and/or termination, as the case may be.

     11.13 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall be
construed as giving any person, firm, corporation or other entity, other than
the parties hereto and their successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.

     11.14 HEADINGS. Section headings are for convenient reference and not a
part of this Agreement. All Exhibits are incorporated herein by this reference.

     11.15 SINGULAR TERMS. Except as otherwise expressly provided herein or
unless the context otherwise requires, all references to the singular shall
include the plural and vice versa.

     11.16 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which when taken together shall be
deemed but one instrument.

     11.17 NO RIGHTS. No rights or licenses with respect to the Product or any
of either party's intellectual property rights and granted or deemed granted
hereunder or in connection herewith, other than those rights expressly granted
in this Agreement.

     11.18 DISCLOSURE. Except as SERAGEN may be required by law or regulation,
neither party shall disclose the name of the other party, the identity of the
Product or any information with respect thereto, the existence of this Agreement
or the terms and provisions of this Agreement without the prior written approval
to the other party. Neither party shall use the name of the other party in any
publicity or advertising without the other party's prior written consent. If
either party is required in accordance with


                           COMMERCIAL SUPPLY AGREEMENT
                                  27 FEBRUARY 2004

SEC or other relevant governmental regulations to disclose the other party's
name, the existence of this Agreement or the terms and provisions of this
Agreement, such party shall (i) give the other prior written notice of such
disclosure, and (ii) assist the other in any efforts to prevent or limit such
disclosure including without limitation seeking confidential treatment of such

IN WITNESS WHEREOF, this Agreement shall take effect as of the date first
written above when it has been executed below by the duly authorized
representatives of the parties.


By:   /S/ RICK LAPOINTE                        By:   /S/ GIAN ALIPRANDI
      -----------------------------------          --------------------
      Name: Rick Lapointe                            Name:  Gian Aliprandi
      Title:    V.P. Operations                      Title: SR VP TECH, SUPPLY &
                                                            INT'L OPERATIONS

By: /S/ ANTHONY D. BONANZINO 03/04/2004

      Name:      Anthony D. Bonanzino, Ph.D.
      Title:     President and CEO







Exhibit A


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


Exhibit B


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


Exhibit C


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


                                   EXHIBIT "D"

                            EXAMPLE OF PURCHASE ORDER

                                 (SEE ATTACHED)


                                   EXHIBIT "D"

                            EXAMPLE OF PURCHASE ORDER


                                            |           Purchase Order         |
                                            |PURCHASE ORDER NO.  REVISION  PAGE|
                                            |     996358             0       1 |
[LOGO]                                      |----------------------------------|
10275 Science Center Drive                  | APPEAR ON ALL INVOICES, PACKING  |
San Diego, CA 92121-1117                    |LISTS, CARTONS AND CORRESPONDENCE |
858/550-7500                                |      RELATED TO THIS ORDER.      |
                                            |SHIP TO:                          |
                                            |   ICS                            |
                                            |   5051 COMMERCE CROSSING         |
                                            |   LOUISVILLE, KY 40229           |
                                            |   United States                  |
        HOLLISTER STIER                     |                                  |
VENDOR: 3525 N. REGAL STREET                |----------------------------------|
        SPOKANE, WA  99207                  |BILL TO:                          |
        United States                       |   LIGAND PHARMACEUTICALS INC.    |
                                            |   10275 SCIENCE CENTER DRIVE     |
                                            |   SAN DIEGO ,CA 92121            |
                                            |   United States                  |
                                            |                                  |

Order Confirmation #:
|                       7029        27-FEB-04 DEAMICIS, S                      |
|                                                                              |
|PAYMENT TERMS                      SHIP VIA               F.O.B.              |
|N30                                                         SHIPPING POINT    |
|                                                                              |
|PREPAY & ADD                                                                  |
|   |                       |             |        |    |          |         |A|
|   |                       |             |        |    |          |         |X|
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |          |         | |
|   |                       |             |        |    |----------|-----------|
|   |                       |             |        |    |  TOTAL   |           |
|                                                       |                      |
|                                                       |                      |
|                                                       |                      |
|                                                       |                      |
|                                                       |                      |
|                                                       |----------------------|
|                                                       |AUTHORIZED SIGNATURE  |

                                   EXHIBIT "D"

                       EXAMPLE OF PURCHASE ORDER (cont'd)


IN CONSIDERATION of this Order, Seller agrees to the following terms and
conditions which cannot be altered or supplemented without the express prior
permission of Buyer in writing and which, together with the terms and conditions
set forth on the front hereof, constitute the complete and final Agreement
between the parties. The Purchase Order is in no way intended and shall not be
construed as an expression of acceptance or confirmation document. Any
acceptance which may be contained herein is expressly made conditional on
Seller's consent to the additional or different items contained herein.

1.   AGREEMENT. Written acceptance by Seller of this Purchase Order or the
     commencement of any work or services hereunder (including work or services
     with respect to samples) shall constitute acceptance by Seller of the terms
     and conditions of this Purchase Order. Failure by Seller to perform in
     accordance with all such terms and conditions shall constitute a breach of
     the Agreement and a substantial impairment of the value of the entire
     Agreement to Buyer. Upon such occurrence, Buyer, at his election and
     without penalty, shall have all the rights and remedies of a Buyer in the
     event of a breach by the Seller which goes to the whole contract, as set
     forth in the Uniform Commercial Code, including without limitation
     cancellation of the Purchase Order, specific performance, cover, damages,
     and the rejection or revocation of acceptance of articles delivered by

2.   DELIVERY. Delivery must be made within the time stated on the Purchase
     Order, time being of the essence. If delivery cannot be made within such
     time, Seller must give Buyer immediate notice of such fact and advise of
     the best possible delivery date. In such event, Buyer reserves the right at
     its option, either to accept late delivery or to cancel this Purchase Order
     in whole or part in either event without cost to Buyer, and without
     prejudice to Buyer's right to charge Seller with any costs, losses or
     damages of any kind (including loss of profits) incurred as a result of
     Seller's failure to make timely delivery. Buyer reserves the right, upon
     written or facsimile notice to Seller, to postpone delivery hereunder for
     up to ninety (90) days past the original delivery date.

3.   SHIPPING RELEASES. Unless specific delivery dates are specified in this
     Purchase Order, Seller shall not fabricate, procure or ship any goods or
     materials, except to the extent authorized in written release furnished to
     Seller by Buyer. Buyer shall have no responsibility for goods not shipped
     pursuant to such releases.

4.   TRANSPORTATION. All material shall be forwarded for delivery via carrier
     specified, if any, procuring lowest rate via such carrier. Transportation
     charges on goods sold F.O.B. destination must be prepaid. No insurance
     charges which increase shipping costs will be allowed unless expressly
     authorized by Buyer. Unless otherwise instructed in writing, the original
     Bill of Lading shall be forwarded to Buyer's Receiving Department at
     destination. Shipping containers must conform to specifications as
     described in the National Motor Freight classification 10-A, and Uniform
     Freight classification 9 as amended.

5.   RISK OF LOSS. Risk of Loss on any articles shipped by Seller under this
     Purchase Order shall remain with Seller until acceptance of articles by

6.   CARTAGE. Price is to cover net weight of material and no charges of any
     kind; including without limitation charges for boxing, packing, loading,
     bracing or cartage will be allowed unless specifically agreed to by Buyer
     in writing.

7.   QUANTITY. The quantity of material ordered must not be exceeded or reduced
     unless specifically agreed to by Purchaser in writing.

8.   QUALITY. Seller warrants and guarantees that all items covered by this
     Purchase Order will conform to the terms, plans, drawings, samples or other
     specifications or descriptions, furnished or adopted by Buyer, and to high
     professional standards, will be fit and sufficient for the purpose
     intended, merchantable, of good material, workmanship and quality and free
     from defect. Seller will be liable for costs, losses or damages (including
     loss of profits) incurred as a result of any breach of the warranties set
     forth herein. This warranty is in addition to and shall not exclude any
     other warranties arising under the terms of this Purchase Order, applicable
     law, or otherwise. Seller will indemnify and hold Buyer harmless from any
     losses or damages resulting from injury to person or property as a result
     of any defect in any item furnished hereunder.

9.   INSPECTION. All articles shall be received subject to Buyer's inspection
     and rejection upon receipt or within a reasonable time thereafter. Seller
     shall pay the cost of inspecting and testing goods rejected and all
     transportation charges thereon. Payment for the articles specified herein
     shall not constitute an acceptance by Buyer.


                                   EXHIBIT "D"

                       EXAMPLE OF PURCHASE ORDER (cont'd)

10.  REJECTIONS. If any of the goods are found at any time to be defective in
     material or workmanship, o! r otherwise not in conformity with the
     requirements of this Purchase Order, Buyer, in addition to any other rights
     which it may have under warranties or otherwise, shall have the right to
     reject or revoke acceptance, and return such goods at Seller's expense and
     require repair, alteration, replacement or credit. Such goods are not to be
     repaired, altered, replaced or credited without prior written authorization
     from Buyer.

11.  OTHER REMEDIES. In addition to all other rights, Buyer at its option shall
     have the right to retain any defective or non-conforming goods and to
     correct, at Seller's expense, any such deficiencies. Upon default of the
     Seller, Buyer shall have the right to require the delivery to it of any
     completed or partially completed goods or materials that Seller has
     produced or acquired for this Purchase Order.

12.  WORK ON BUYER'S PREMISES. If this Purchase Order requires installations or
     any other work by Seller on the premises of Buyer, Seller shall take all
     necessary precautions to prevent the occurrence of any injury to person or
     property during the progress of such work. Seller shall indemnify and hold
     Buyer harmless against all loss or damage which may result in any way from
     its performance of such work or the act or emission of the Seller, its
     agents, servants, employees, or subcontractors. Seller shall maintain such
     Public Liability, Property Damage and Workman's Compensation insurance as
     will hold Buyer harmless from said risks and from any claims under the
     Workman's Compensation and Occupational Disease Acts or any other
     applicable law and on Buyer's request, Seller will furnish the certificates
     of insurance. Any employees of Seller engaged in such work shall not be
     deemed agents, servants, or employees of Buyer for any purpose, and Seller
     assumes exclusive liability for all payroll and other taxes pertaining to
     such employees.

13.  COMPLIANCE WITH LAWS. Seller shall comply with all applicable Federal,
     State and local laws, ordinances, rules and regulations and shall indemnify
     and hold Buyer harmless from any losses or damages arising from any
     violation thereof.

14.  FAIR LABOR STANDARDS ACT. By acceptance of this Order, Seller warrants and
     certifies that the goods and/or services to be furnished hereunder were or
     will be produced in full compliance with the requirements of the Fair Labor
     Standards Act of 1938 as amended from time to time and all Regulations
     adopted thereunder.

15.  NON-DISCLOSURE OF INFORMATION. Except as required by this Purchase Order or
     as otherwise authorized in writing by Buyer, Seller shall not disclose to
     any third party any knowledge or information it has concerning this
     Purchase Order or Buyer's plans, specifications, designs, drawings,
     operations, methods, personnel, customers, business, work or services.

16.  BUYER'S PROPERTY. Any plans, specifications, designs, drawings, blueprints,
     tracings and other items prepared by Seller and paid for by Buyer shall be
     the property of Buyer and such items, as well as all items furnished
     hereunder to Seller by Buyer, shall be maintained in first class condition
     and shall not be furnished to anyone other than Buyer. Such items shall be
     available for Buyer's inspection and, unless otherwise authorized by Buyer,
     shall be delivered to Buyer upon the completion or termination of this
     Purchase Order. No reproductions hereof shall be retained except as
     authorized by Buyer.


(a)  infringement or alleged infringement of any patent rights allegedly caused
     by the sale or use of any article furnished by Seller and will defend or
     settle any such matters at its sole cost.

(b)  Seller does hereby grant to Buyer, its successors and assigns, a
     non-exclusive, royalty-free license under any inventions, improvements or
     discoveries conceived or first reduced to practice as a result of such
     research or development work as is required by this Purchase Order. This
     license shall include the right to manufacture and produce goods made in
     accordance with such inventions, improvements, and discoveries.

18.  MODIFICATIONS. Buyer reserves the right, upon written Change Order
     forwarded to Seller, to modify the subject matter of this Purchase Order
     including but not limited to modifications in (1) plans, specifications,
     designs, drawings or other items applicable to required goods or services.
     (2) the method of shipping and packing, or (3) the time or cost of Seller's
     performance. An adjustment may be made in the schedule or price provided a
     written claim for such adjustment is submitted by Seller within twenty (20)
     days after receipt of the Change Order.

19.  TERMINATION. Until such time as Seller has substantially begun performance
     under this Purchase Order or has otherwise materially changed his position,
     or prior to thirty (30) days before delivery for items not specially
     manufactured, whichever occurs later, Buyer shall have the right to
     terminate this Purchase Order without penalty.


                                   EXHIBIT "D"

                       EXAMPLE OF PURCHASE ORDER (cont'd)

20.  NON-ASSIGNMENT. Seller shall not assign this Purchase Order or any interest
     therein without the prior written consent of Buyer.

21.  OCCUPATIONAL SAFETY. All goods and services must comply with the
     Williams-Steiger Occupational Safety and Health Act of 1970.

22.  TAXES. Except as may be otherwise provided in this Purchase Order, price
     includes all applicable Federal, State and local taxes in effect on the
     order date.

23.  LIENS. All materials or articles delivered and labor performed under this
     Purchase Order shall be free of all liens and a proper release of all liens
     or satisfactory evidence of freedom from liens will be delivered to the
     Buyer upon request.

24.  LIMITATIONS. Seller must bring an action for any alleged breach of this
     Agreement by Buyer within one (1) year from the date of such alleged

25.  PAYMENT. Unless specific payment terms are specified in this Purchase
     Order, Buyer shall make payment on a net 30 day basis from the date of
     Buyer receipt of the goods, work or service specified on this Purchase

26.  CONTRACT - APPLICABLE LAW. Seller agrees that this Purchase Order and the
     acceptance thereof shall be a contract made in the state in which the
     office issuing this Purchase Order is located and governed by the laws
     thereof. Except as otherwise provided herein, the Uniform Commercial Code
     shall apply to this transaction and it is hereby included as though set
     forth at length.


                                    EXHIBIT E


                             Requested Release Date

Final                                                                Payment
                                                          (HOLLISTER-STIER MRR)
Complete                                                                   &
                                                         Invoice         MRR


PO                    ID TEST                                          1 month
                                   1 month

                                                                       2 months

                                                2 months

        2 months
        1st & 2nd Gen

                                                                       2 months
        3 months
        3rd Gen


                                   EXHIBIT "F"

The following lists all documentation required from HOLLISTER-STIER by SERAGEN
to release Finished Drug Product for Commerce:

1.   Completed production and packaging records

2.   A Certificate of Conformance comparing test results to product
     specifications. The summary of testing to be accompanied by completed
     Quality Control request forms and results worksheets with associated raw

3.   All receipt and distribution records associated with Lot production

4.   Any planned or unplanned deviations associated with lot production or
     Quality Control testing

5.   Any alert or action notifications generated during processing

6.   Any Out of Specification (OOS) investigations associated with Lot
     production or Quality Control testing


                                   EXHIBIT "G"




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Signature Page

This technical manual is intended to document those aspects of the relationship
between Ligand and its contractors that impact the quality of the goods and
services provided by these contractors.  This manual provides a contractor with
the instructions and technical data to continue to provide these goods and
services, as well as those procedures utilized by Ligand to carry out its
responsibilities with respect to assuring that the goods and services continue
to be provided in a manner consistent with Ligand corporate requirements and
in compliance with applicable product licenses and current good manufacturing
practices (CGMP).




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Signature Page

                Quality Assurance                       Date

                Technical Operations                    Date




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents


        1.1 General
        1.2 Purpose of Manual
        1.3 Contractor/Quality Manual Change Procedure
        1.4 Communication


        2.2 Ligand


        3.2 Ligand
        3.3 Active Pharmaceutical Ingredient Manufacturer
        3.4 Drug Product Packager
        3.5 Warehouse/Distributor


        4.1 Compliance
        4.2 Master Batch Record (MBR) (Manufacturing and Packaging Log Sheets
        4.3 Product Formulation
        4.5 Manufacturing Process Summary
        4.6 Reports
        4.7 Records Retention
        4.8 Technical Support
        4.9 Reprocessing
        4.10 Reconciliation
        4.11 Product Specifications
        4.12 Storage Conditions Bulk API
        4.13 Storage Conditions for Drug Product
        4.14 Packaging
        4.15 Labeling
        4.16 Label Destruction
        4.17 Lot Numbering and Expiration Dating



                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents


        5.1 Document Review
        5.2 Product Release and Procedures
        5.3 Change Control
        5.4 Process Deviations
        5.5 Out-of-Specification/Out-of Trend Results
        5.6 Complaint Evaluation
        5.7 Audits
        5.8 Validation
        5.9 Reference Standards
        5.10 Retain (Reserve) Samples
        5.11 Stability Samples and Stability Program
        5.12 AQL Requirements
        5.13 Product Surveillance
        5.14 Product Recall
        5.15 Alcohol, Tobacco and Firearms
        5.16 DEA


        6.1 Active Pharmaceutical Ingredient
        6.2 Excipients
        6.3 Drug Products
        6.4 Packaging Components (bulk and finished product)
        6.5 Issuance and Control of Methods and Specifications
        6.6 Method Validation Reports



                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents

Appendix A


1.  Contractor Documentation Update
2.  Ligand Product Disposition Form
3.  Inventory on Hand Request Form
4.  Inventory Shipping Form
5.  Shipment Receipt Acknowledgement Form

Appendix B


1.  Issuance and Maintenance of Contractor Manuals, 880-QA-DOC-17
    (effect 10/30/97)
2.  Numbering System for Lots of Active Pharmaceutical Ingredients and Drug
    Products Intended for Commercial Use, 900-MAT-OPR-1 (effective 5/28/98)
3.  Part Numbering System for Raw Materials, Intermediates, Drug Substance and
    Finished Drug Product Intended for Commercial Use, 900-MAT-OPR-2
    (effective 8/28/97)
4.  Handling of Out-of-Specification or Unusual Data, 865-AD-OPR-13 (effective
    date 12/4/97)
5.  Documentation of Deviations, 880-QA-DOC-9 (effective 8/14/98)
6.  Waste Disposal SOP (Contractor Supplied)

Appendix C


Appendix D




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents

Appendix E


        1.  Active Pharmaceutical Ingredient


                a.  Ingredient A
                b.  Ingredient B
                c.  Ingredient C
                d.  Ingredient D
                e.  Ingredient E

        3.  Inprocess and bulk products

        4.  Finished Product


                a.  Bottle
                b.  Cap
                c.  Insert
                d.  Label
                e.  Shipper

Appendix F




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents

Appendix G


        1.  GENERAL METHODS (GM)




                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   Table of Contents


Appendix H


        1.  Active Pharmaceutical Ingredient
        2.  Drug Product

Appendix I



                   Contractor/Quality Manual for Drug Product

Revision Date                                           Section Number
        February 2004                                   7.0