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Research, Development and License Agreement - Warner-Lambert Co. and Ligand Pharmaceuticals Inc.

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                   RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT


                                 by and between



                             WARNER-LAMBERT COMPANY

                                       and

                       LIGAND PHARMACEUTICALS INCORPORATED


                                      dated


                                September 1, 1999



<PAGE>


                                TABLE OF CONTENTS

                                                      

ARTICLE 1 - DEFINITIONS..................................  3

ARTICLE 2 - RESEARCH PROGRAM ............................  9

ARTICLE 3 - MANAGEMENT OF THE RESEARCH PROGRAM ..........  13

ARTICLE 4 - DEVELOPMENT PROGRAM .........................  14

ARTICLE 5 - LICENSES -- RESEARCH, DEVELOPMENT,
            MARKETING AND MANUFACTURING .................  15

ARTICLE 6 - ROYALTIES, MILESTONES AND OTHER PAYMENTS.....  17

ARTICLE 7 - INFRINGEMENT ACTIONS BY THIRD PARTIES........  22

ARTICLE 8 - CONFIDENTIALITY..............................  22

ARTICLE 9 - PUBLICATION .................................  23

ARTICLE 10 - PATENTS AND INVENTIONS....................... 24

ARTICLE 11 - REPRESENTATIONS AND WARRANTIES............... 26

ARTICLE 12 - TERM AND TERMINATION ........................ 28

ARTICLE 13 - FORCE MAJEURE................................ 31

ARTICLE 14 - ASSIGNMENT................................... 31

ARTICLE 15 - REGULATORY MATTERS .......................... 31

ARTICLE 16 - SEVERABILITY................................. 32

ARTICLE 17 - INDEMNIFICATION ............................. 32

ARTICLE 18 - MISCELLANEOUS ............................... 33



                                       2

<PAGE>


                   RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT


     THIS RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT, (this "Agreement"),
effective the 1st day of September , 1999 (the "Commencement Date"), is by and
between WARNER-LAMBERT COMPANY, a Delaware corporation, having its principal
place of business at 201 Tabor Road, Morris Plains, New Jersey 07950
("Warner-Lambert"), and LIGAND PHARMACEUTICALS INCORPORATED, a Delaware
corporation, having its principal place of business at 10275 Science Center
Drive, San Diego, California 92121 ("Ligand"). Warner-Lambert and Ligand may be
referred to herein individually as a "Party" or collectively as the "Parties".

                                 R E C I T A L S

     WHEREAS, Ligand has developed certain expertise and acquired certain
proprietary rights relating to the discovery and development of pharmaceutical
products for the treatment and prevention of diseases, which products act
through the estrogen receptors;

     WHEREAS, Warner-Lambert has certain expertise in the discovery,
development, marketing and sales of pharmaceutical products;

     WHEREAS, Warner-Lambert and Ligand desire to engage in a joint research and
development effort to discover and/or design small molecule compounds which act
through the estrogen receptors and to develop pharmaceutical products from such
compounds (the "Collaboration"); and

     WHEREAS, in conjunction with such joint research and development,
Warner-Lambert desires to sponsor certain research and development activities to
be carried out by Ligand, and Ligand and Warner-Lambert desire that
Warner-Lambert commercialize products resulting from the joint research and
development;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, Warner-Lambert and Ligand agree as follows:


                                    ARTICLE 1

                                   DEFINITIONS

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

     "Act" shall have the meaning set forth in Section 10.5.

     "Affiliate" shall mean, with respect to a Party, any other business entity
which directly or indirectly controls, is controlled by, or is under common
control with, such Party. As used in this definition of "Affiliate", the term
"control" shall mean direct or indirect beneficial ownership of more than 50% of
the voting or income interest in such business entity.

                                       3
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     "Affiliated Customer" shall mean, with respect to a Party, any Affiliate or
Sublicensee.

     "ANDA" shall have the meaning set forth in Section 10.5.

     "Background Technology" shall mean all technology, inventions, information,
data, know-how, compounds and materials (whether or not patented or patentable)
that (a) relate to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of Collaboration Compounds, Collaboration Lead
Compounds or Products for use in the Field, (b) exist as of the Commencement
Date, (c) are owned or Controlled by a Party hereto, and (d) are necessary for
the conduct of the Collaboration.

     "Backup Compound" shall have the meaning set forth in Section 6.10.2.

     "Claim" shall have the meaning set forth in Article 17.

     "Clinical Development" shall mean the development of any Collaboration
Compound in the Field from and after the filing of an IND, through and including
product registration.

     "Collaboration" shall have the meaning set forth in the third paragraph in
the Recitals.

     "Collaboration Compound" shall mean a compound which is first identified,
first confirmed, first discovered, or first synthesized and identified by either
Ligand or Warner-Lambert as having Field Activity during the Term of the
Research Program or by Ligand or Warner-Lambert for *** thereafter. A
Collaboration Compound whose Field Activity is first confirmed, discovered or
identified when the compound is already in at least "preclinical development"
outside the Field by Warner-Lambert (or an affiliate, licensee or collaborator
of Warner-Lambert), shall not generate any obligation to Ligand in the form of
royalties or milestone payments unless designated a Collaboration Lead Compound
by Warner-Lambert during the Research Program or within .........*** thereafter.
For the purpose of this definition, the term "preclinical development" means the
commencement of a structure/activity relation program on or including the
compound in question.

     "Collaboration Lead Compound" shall mean a Collaboration Compound or
Background Technology compound that, during the term of the Research Program or
any extension thereof, has met criteria established by the JRC of safety and
efficacy for advancement into Pre-Clinical Development and which is selected by
Warner-Lambert as a Collaboration Lead Compound according to Section 4.1.

     "Collaboration Technology" shall mean (a) all Collaboration Compounds and
information related thereto; (b) such technology, inventions, information, data,
know-how and materials (whether or not patented or patentable) that (i) a Party
hereto owns or Controls, (ii) related to the Field and (iii) are conceived,
generated or reduced to practice during the Term of the Research Program
pursuant to the Research Program, including, without limitation, improvements on
either Party's Background Technology; and (c) all patents, trade secrets and
other intellectual property rights covering any of (a) or (b).

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                                       4
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     "Commencement Date" shall mean the date of this Agreement first written
above.

     "Competing Product" shall mean, with respect to each specified
Collaboration Compound or Product, (a) any other Collaboration Compound or
Product which exhibits therapeutic or prophylactic activity which is similar to
that exhibited by such specified Collaboration Compound or Product, or which is
being developed for *** for which the specified Collaboration Compound or
Product is also being developed, and (b) a compound which is not a Collaboration
Compound, or a product which does not contain a Collaboration Compound, which is
under active development by Warner-Lambert or that is actually being sold by
Warner-Lambert and which exhibits therapeutic or prophylactic activity which is
similar to such specified Collaboration Compound or Product.

     "Confidential Information" shall have the meaning set forth in Section 8.2

     "Control" or "Controlled" shall mean possession of the ability to grant the
licenses or sublicenses as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party.

     "Cost of Goods" shall mean the cost of finished products sold and shall be
computed in accordance with United States Generally Accepted Accounting
Principles. Cost of Goods shall include Warner-Lambert's Cost of Manufacture of
such finished products, as well as the net cost or credit of any value-added
taxes actually paid or utilized in respect of the finished products, but shall
not include any royalty owed to Ligand.

     "Cost of Manufacture" shall mean the fully allocated cost of manufacturing
of a product (in accordance with Good Manufacturing Practices), which includes
the direct and indirect cost of any raw materials, packaging materials, and
labor (including benefits) utilized in such manufacturing including formulation,
filling, finishing, labeling, and packaging, (as applicable) plus an appropriate
share of all factory overhead, both fixed and variable, allocated to the product
being manufactured, in accordance with the normal accounting practices for all
other products manufactured in the applicable facility.

     "Designated Targets" shall mean the alpha and beta forms of the estrogen
receptor and all splice variants thereof.

     "Development Costs" shall mean ***

                                                  ***
                                                  ***
                                                  ***

                                 ***
                                 ***

                                 ***

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                                 ***
          ***

                                    ***
                                    ***.

     General corporate overhead shall be excluded from Development Costs.

     "Europe" shall mean France, Germany, Great Britain, Italy and Spain.

     "Exploratory Term" shall have the meaning set forth in Section 2.2.

     "Extension Term" shall have the meaning set for the in Section 2.2.

     "FDA" shall mean the United States Food and Drug Administration or any
successor entity thereto.

     "Field" shall mean the discovery, characterization, design and development
of small molecule compounds for the treatment or prevention of diseases and
whose beneficial effects are mediated through the Designated Targets.

     "Field Activity" shall mean the ability of a particular compound to
inhibit, stimulate or otherwise modulate activity of a Designated Target with an
*** of less than *** and which has at least a ***selectivity for the Designated
Target compared to *** *** . The JRC may amend the criteria which are used to
define Field Activity.

     "FTEs" shall mean one or more researchers with appropriate qualifications
employed by Ligand or Warner-Lambert and assigned to work on the Collaboration
with such time and effort to constitute one such researcher working on the
Collaboration on a full time basis for no less than *** hours per year.

     "IND" shall mean an Investigational New Drug Application as defined in the
United States Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or any corresponding foreign equivalent.

     "Indemnified Group" shall have the meaning set forth in Article 17.

     "Invention" shall have the meaning set forth in Section 10.2.

     "Inventor" shall have meaning set forth in Section 10.2.

     "Joint Research Committee" or "JRC" shall mean the joint research committee
composed of representatives of Ligand and Warner-Lambert described in Section
3.1 hereof.

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     "NDA" shall mean a New Drug Application as defined in the United States
Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any
corresponding foreign equivalent.

     "Net Sales" shall mean with respect to a Product, or product subject to
royalty under this Agreement , the gross amount invoiced to Non-Affiliated
Customers for all units of such Product, or product subject to royalty under
this Agreement , sold by Warner-Lambert (or in the case of a product subject to
royalty under Section 12.3, by Ligand) and its Affiliated Customers, after
deduction for the following items  ***
                                   ***
                                   ***
                                   ***
                                   ***
                                   ***
                                   ***
                                   ***
                                             ***.

     "Non-Affiliated Customer" shall mean any purchaser of Product who is not an
Affiliated Customer.

     "Patent Rights" shall mean, with respect to Warner-Lambert or Ligand (a)
all patent applica-tions heretofore or hereafter filed in any country within the
Territory owned or Controlled by or licensed to Ligand or Warner-Lambert during
the Term of this Agreement, together with any and all United States and foreign
patents that have issued or in the future issue therefrom, and (b) all
divisionals, continuations, continuations-in-part, reexaminations, reissues,
renewals, substitutions, confirmation, registrations, revalidations, extensions
or additions to any such patents and patent applications and patents issuing
thereon; all to the extent and only to the extent that Ligand or Warner-Lambert
now has or hereafter will have the right to grant licenses or other rights
thereunder.

     "Phase I", "Phase II", and "Phase III" shall mean Phase I (or Phase I/II),
Phase II and Phase III clinical trials, respectively, in each case as prescribed
by the applicable Regulatory Agency's regulations.

     "Pre-Clinical Development" shall mean, after selection of a Collaboration
Lead Compound under Section 4.1, all activities undertaken to develop the
Collaboration Lead Compound in the Field up to and including the filing of an
IND on such Collaboration Lead Compound, which are determined by the JRC or
Warner-Lambert to be necessary or desirable to file an IND on such Collaboration
Lead Compound, including the preparation and filing of an IND.

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                                       7
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     "Primary Screening" shall mean conducting any assay, screen or other test
on a compound under the Research Program to determine initially whether such
compound exhibits Field Activity, including without limitation such assays,
screens and other tests set forth in the Research Plan and which Ligand
currently has in its possession.

     "Product" shall mean a pharmaceutical product which has as one of its
active ingredients a Collaboration Lead Compound that has been approved by the
applicable Regulatory Agency for marketing in a country for treatment,
palliation or prevention of disease in the Field.

     "Project Leader" shall have the meaning set forth in Section 3.3.

     "Regulatory Agency" shall mean the FDA and agencies of other governments of
other countries having similar jurisdiction over the development, manufacturing
and marketing of pharmaceutical products.

     "Research Plan" shall mean the research plan for the conduct of the
collaboration, which is established and modified from time to time by the JRC.

     "Research Program" shall mean the program of research in which Ligand and
Warner-Lambert will participate and which is described generally in the Research
Plan.

     "Secondary Screening" shall mean conducting any assay, screen or other test
using intracellular receptors on a Collaboration Compound, after the Primary
Screening of such Collaboration Compound, for the purpose of confirming the
results of the Primary Screening or to test such Collaboration Compound for
cross-reactivity with other than the Designated Target.

     "Sublicensee" shall mean any Third Party who is granted the right to sell a
Product or a product subject to a royalty under Section 12.3.

     "Term of the Research Program" shall have the meaning set forth in Section
2.2.

     "Term of this Agreement" shall mean the period from the Commencement Date
until, with respect to each Product, the expiration of the last royalty
obligation owed by one Party to the other with respect to such Product, or until
this Agreement is otherwise terminated pursuant to its terms.

     "Territory" shall mean the entire world.

     "Third Party" shall mean any party other than Warner-Lambert or Ligand or
an Affiliate of either of them.

     "Trigger Event" shall have the meaning set forth in Section 6.10.1.

     "Valid Claim" shall mean a claim of an issued, unexpired and unabandoned
patent included within the Patent Rights owned or Controlled by a Party, which
has not been held unenforceable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been disclaimed or admitted
to be invalid or unenforceable through reissue or otherwise.

                                       8
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     "Withheld Party" shall have the meaning set forth in Section 6.6.

     "Withholding Party" shall have the meaning set forth in Section 6.6.


                                    ARTICLE 2

                                RESEARCH PROGRAM


     2.1. Conduct of Research. Each Party shall diligently conduct the work
assigned to it in the Research Plan in a professional manner and in compliance
with all requirements of applicable laws and regulations. Promptly after the
Commencement Date, each Party shall disclose to the other all Background
Technology then possessed by it which it deems to be relevant to the Field and
which it deems to be necessary or helpful for the other Party to perform the
work set out in the Research Plan. Each Party agrees to commit the qualified and
experienced personnel, facilities, equipment, expertise and other resources
necessary to perform its obligations under the Research Program.

     2.2. Term of the Research Program. The term of the Research Program (the
"Term of the Research Program"), shall be comprised of two components. The first
component shall begin on the Commencement Date and shall terminate on the
fifteen month anniversary of the Commencement Date (the "Exploratory Term"). If
Warner-Lambert gives written notice to Ligand of its intention to sponsor the
Extension Term no later than fourteen months after the Commencement Date, then
the second component of the Term of the Research Program shall commence upon
expiration of the Exploratory Term and shall terminate on the third anniversary
of the Commencement Date (the "Extension Term"). If no notice is given by
Warner-Lambert, or if notice is given after fourteen months from the
Commencement Date, the Research Program shall terminate upon termination of the
Exploratory Term unless otherwise agreed in writing by Ligand.

     2.3. Allocation of Personnel. Unless otherwise recommended by the JRC,
Ligand and Warner-Lambert shall allocate FTEs at the times, in the numbers and
for the areas of activity set forth below:

(a) During the Exploratory Term:

         (i)      ***



              Area of Activity                         Commencement Date                     March 1, 2000
                                                     to February 28, 2000                 to November 30, 2000
                                                                                            

                    ***                                       ***                                 ***

                    ***                                       ***                                 ***

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                    ***                                       ***                                 ***

                    ***                                       ***                                 ***


           (ii)     ***

                    ***                                       ***                                 ***



(b) During the Extension Term

         (i)      ***

                           ***      as determined by the JRC

         (ii)     ***

                           ***      as determined by the JRC


Allocation of personnel not within the ranges of (b)(i) and (b)(ii) shall
require the written consent of the JRC.

     2.4. Screening Responsibility. Ligand shall be responsible for conducting
*** and *** as set forth in the Research Plan and as designated by the JRC, and
shall promptly inform Warner-Lambert and the JRC of the progress and results
thereof (including providing Warner-Lambert with the screening methodology and
all raw data on a monthly basis).

     2.5. Transfer of Background Technology. Commencing after the Commencement
Data, and from time to time thereafter, each Party shall disclose to the other
Party such of its Background Technology as is reasonably necessary to enable the
other Party to perform Collaboration activities hereunder in accordance with the
Research Plan. During the Term of the Research Program, each Party will provide
the other Party with reasonable technical assistance relating to the use and
practice of such Party's Background Technology, solely to the extent permitted
under the licenses granted to the other Party herein.

     2.6. Subcontracts. Neither Ligand nor Warner-Lambert shall subcontract to
Third Parties portions of the Research Plan to be performed by it or contract
with consultants to provide services specifically relating to the Research Plan
to any Third Party without the prior consent of the JRC, which consent shall not
be unreasonably withheld. Any such subcontractor shall enter into a
confidentiality agreement with the contracting Party which shall require such
subcontractor to maintain Confidential Information in confidence, and any such
subcontractor shall be required to comply in all material respects with all
requirements of applicable laws and

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regulations, together with all applicable good laboratory practices and
good manufacturing practices. The contracting Party shall negotiate and execute
the applicable agreement with such Third Party, at its expense, and shall
supervise and be responsible under this Agreement for such subcontracted work.
All such subcontracts shall contain terms consistent with the terms of this
Agreement.

     2.7. Information and Reports Concerning Collaboration Technology. All
Collaboration Technology made by either Party will be promptly disclosed to the
other Party, with significant discoveries or advances being communicated as soon
as practical after such information is obtained or its significance is
appreciated. The Parties will exchange at least monthly verbal or written
reports presenting a meaningful summary of their activities performed under this
Agreement. In addition to the foregoing, each Party shall promptly provide to
the other, as necessary, biological materials and the structures of all
Collaboration Compounds prepared or developed by such Party pursuant to the
Research Program.

     2.8. Funding of the Research Program. In consideration for Ligand's
performance of its obligations under the Research Program, Warner-Lambert shall
pay Ligand an amount for the FTEs employed by Ligand in the Research Program
according to the following schedule:


                                                                          
         During the Exploratory Term:                     $        ***     payable in 4 equal
                                                          quarterly installments due on
                  .........                               January 1, 2000, April 1, 2000,
                  .........                               July 1, 2000 and October 1, 2000

         From commencement of the Extension
         Term to December 31st, 2001:                     $        ***      per FTE per year.

         From January 1st 2002 to December 31, 2002:      $        ***      per FTE per year


                                                     ***
***

During the Extension Term, Warner-Lambert shall pay Ligand quarterly in advance
for services to be performed by Ligand's FTEs under the Research Program. The
first payment shall be due and payable on December 1, 2000 and shall include
payment for any services rendered between December 1, 2000 and December 31, 2000
 . Subsequent payments shall be due and payable on the first day of each calendar
quarter starting with the calendar quarter starting on January 1, 2001. In the
event Warner-Lambert elects not to extend the Term of the Research Program for
the Extension Term as set forth in Section 2.2, Ligand shall reimburse
Warner-Lambert for *** of the *** payments made by Warner-Lambert for FTEs for
*** *** . Ligand shall apply the research funding it receives from
Warner-

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Lambert under this Agreement solely toward paying the FTE's to conduct
research with the goal of achieving the objectives of the Research Program.

     2.9. Exclusivity. Except as permitted in Article 12, during the Term of the
Research Program, neither Ligand nor Warner-Lambert shall engage in any
pre-clinical (i.e, up to the filing of an IND) research activity independent of
the Collaboration, alone or with a Third Party, in the Field; provided, however,
that a Party shall have the right to engage in such pre-clinical research
activity if it acquires all or substantially all of the assets, stock or
ownership interest of a Third Party which is engaged in activities in the Field.
A Party should not be deemed to be in violation of this provision if it conducts
research of compounds or products outside the Field, including cross-reactivity
testing using Designated Targets, if such compounds or Products have activity
within the Field.

     2.10 Records.

     2.10.1 Records. Ligand and Warner-Lambert each shall maintain records, in
sufficient detail and in accordance with recognized scientific practices
appropriate for patent purposes, which shall be complete and accurate and shall
fully and properly reflect all work done and results achieved in the performance
of the Research Program (including all data in the form required under all
applicable laws and regulations). Such records shall include books, records, raw
data, reports, research notes, charts, graphs, comments, computations, analyses,
recordings, photographs, computer programs and documentation thereof, computer
information storage means, samples of materials and other graphic or written
data generated in connection with the Research Program including any data
required to be maintained pursuant to all requirements of applicable laws, rules
and regulations.

     2.10.2 Inspection of Records. During the Term of the Research Program and
for one year thereafter, Ligand and Warner-Lambert each shall have the right,
during normal business hours and upon reasonable notice, to inspect all such
records of the other Party to the extent reasonably required for the performance
of its obligations under this Agreement (with the Party owning the records
determining what is reasonably required). Each Party shall maintain such records
and the information of the other Party contained therein in confidence in
accordance with Article 8 and shall not use such records or information except
to the extent otherwise permitted by this Agreement. Ligand shall maintain
sufficient records to verify the calculation of Ligand's allocation of Ligand
FTEs to the Research Program as required under Section 2.3. Ligand shall supply
Warner-Lambert with quarterly reports of the FTE allocation to the Research
Program. Not more than once each year during the Term of the Research Program
and for one (1) year after its expiration, Warner-Lambert shall have the right,
during normal business hours and upon reasonable notice, to audit such records
to verify such allocation. Warner-Lambert shall treat all financial information
subject to review under this Section 2.10 as confidential in accordance with the
terms of Article 8. Ligand shall promptly reimburse Warner-Lambert for any
overcharge for services provided under the Research Program.

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<PAGE>

     2.11. Extension of Program Term. Warner-Lambert shall have the right to
further extend the Term of the Research Program beyond the Extension Term in ***
increments for up to *** by giving Ligand written notice not later than ***
prior to the then current date of termination of the Term of the Research
Program and committing to support at least *** FTEs at Ligand during the term of
the further extension(s). The amount paid to Ligand per FTE during any such
extension shall be increased in the manner provided in Section 2.8 for each year
of the extension.

     2.12 In Vivo Testing. The Parties recognize that certain goals of the
Research Plan requiring performance of in vivo assays may not be achievable by
Ligand using the FTEs provided in Section 2.3. Therefore, in the circumstance
where the JRC determines that in vivo assays are required which are not Ligand
responsibilities under the Research Plan, Warner-Lambert shall, in its
discretion either (a) perform, or have performed through contractors of its
selection, those assays , or (b) pay Ligand's direct external costs and
reasonable costs (fully allocated) to do the assays at Ligand, such costs
charged for FTEs not to exceed the FTE rate set forth in Section 2.8 above.

         2.13            ***
                         ***
                         ***
                         ***
                         ***
                         ***
                         ***
                         ***
                         ***
                                             ***

     2.14 Transfer of Compounds. In accord with ARTICLE 312.160, Title 21, Code
of US Federal Regulations, the Parties certify that the Background Technology
compounds and Collaboration Compounds transferred from one Party to the other
under this Agreement will be used only for laboratory research or clinical
research in accordance with applicable law. The Parties agree that the
Background Technology compounds and the Collaboration Compounds will be used for
no purpose other than as described herein. Neither Party shall provide
Background Technology compounds, Collaboration Compounds or other Collaboration
Technology jointly owned by the Parties or owned by the other Party to any Third
Party without the prior written consent of the JRC.


                                    ARTICLE 3

                       MANAGEMENT OF THE RESEARCH PROGRAM

          3.1 Joint Research Committee.

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     3.1.1 Composition of the JRC. The Research Program and all pre-clinical
testing of Collaboration Compounds before commencing Pre-Clinical Development
shall be conducted under the direction of the JRC. The JRC shall be composed of
three (3) named representatives of Warner-Lambert and three (3) named
representatives of Ligand. Ligand shall choose one (1) of its three (3) named
representatives to serve as chairperson of the JRC for the Exploratory Term.
Thereafter, the JRC will appoint a successor chairman. Each Party will identify
its representatives to the JRC within thirty (30) days after the Commencement
Date and each Party shall have the right to replace its representatives at any
time in its sole discretion after giving notice to the other Party.

     3.1.2 Responsibilities of the JRC. The purposes of the JRC shall be to
review, direct, supervise and coordinate all operational and scientific aspects
of the Research Program and all pre-clinical testing of Collaboration Compounds
before commencement of Pre-Clinical Development. As part of its
responsibilities, the JRC shall (a) promptly after the Commencement Date
establish criteria of safety and efficacy for advancement of Collaboration
Compounds into Pre-Clinical Development as Collaboration Lead Compounds and
establish joint research teams to carry out the Research Program, (b) review the
research by Ligand and Warner-Lambert under the Research Program and the
pre-clinical testing of Collaboration Compounds before commencement of
Pre-Clinical Development, (c) monitor the progress of the Research Program and
evaluate the work performed and the results obtained in relation to the goals of
the Research Program, (d) plan future activities under, and make any necessary
or desirable modifications to, the Research Program and the Research Plan, (e)
recommend Collaboration Compounds for further evaluation by the Parties under
the Research Program and for Pre-Clinical Development and Clinical Development
by Warner-Lambert, and (f) perform such other functions to which the Parties
agree. The Party hosting each meeting of the JRC promptly shall prepare and
deliver to the other Party within fifteen (15) business days after the date of
such meeting, minutes of such meeting setting forth all decisions of the JRC
relating to the Research Program in form and content reasonably acceptable to
the other Party.

     3.1.3 Meetings of the JRC. The JRC shall meet at least once each quarter
during the Term of the Research Program, at such times and places as agreed to
by Ligand and Warner-Lambert, alternating between San Diego, California and Ann
Arbor, Michigan, or such other locations as the Parties shall agree. The JRC and
any of its members may meet or attend meetings by telephone or video conference.
The JRC will communicate regularly by telephone, facsimile and video conference.
Meetings and telephone and video conferences of the JRC may be attended by such
other directors, officers, employees, consultants and other agents of Ligand and
Warner-Lambert as the Parties from time to time reasonably agree.

     3.1.4 Actions by the JRC. All decisions of the JRC shall be made by
unanimous vote of all of the members.

     3.2 Disagreements. All disagreements within the JRC shall be resolved by
presenting the disagreement to David E. Robinson or his successor as Chief
Executive Officer on behalf of Ligand, and the President of Warner-Lambert's
Pharmaceutical Research Division, or their

                                       14
<PAGE>

designees, for good faith resolution, for a period of *** . If such
disagreement is not resolved by the end of such *** period, the Parties shall be
free to pursue any legal or equitable remedy available to them.

     3.3 Project Leaders. Ligand and Warner-Lambert each shall appoint a person
(a "Project Leader") to coordinate its part of the Research Program. The Project
Leaders shall be the primary contacts between the Parties with respect to the
Research Program. Each Party shall notify the other within thirty (30) days of
the date of the Commencement Date of the appointment of its Project Leader and
shall promptly notify the other Party upon changing this appointment.


                                   ARTICLE 4

                               DEVELOPMENT PROGRAM


     4.1. Pre-Clinical Development. The JRC will review the characteristics of
the Collaboration Compounds identified under the Research Program, and the JRC
will attempt to select certain Collaboration Compounds or Background Technology
compounds to be recommended to Warner-Lambert for further work in the Field as a
"Collaboration Lead Compound". Further, Warner-Lambert shall have the right in
its sole discretion, but without the obligation, during the Term of the
Agreement to select (either on its own or in response to a recommendation from
the JRC) Collaboration Compounds or Background Technology compounds for such
further work in the Field. Upon a written recommendation by the JRC,
Warner-Lambert will use diligent efforts to conduct all needed studies on such
Collaboration Compound or Background Technology compound to determine if such
Collaboration Compound or Background Technology compound shall be selected by
Warner-Lambert as a "Collaboration Lead Compound" and shall make such selection
within *** of such recommendation by the JRC. If so selected, Warner-Lambert
shall conduct Pre-Clinical Development of each such selected Collaboration Lead
Compound in such manner as Warner-Lambert shall determine in its sole
discretion, and shall inform Ligand and the JRC of the progress and results
thereof. If not selected, then Ligand shall have the right *** following the
date of recommendation by the JRC to develop and commercialize the compound as
if it were an abandoned Collaboration Lead Compound in accordance with Section
5.3.1.

     4.2. Clinical Development. Warner-Lambert shall use diligent efforts to
pursue the Clinical Development and commercialization of each Collaboration Lead
Compound at its own expense and under its sole discretion. Notwithstanding
anything else in this Agreement, but subject to Ligand's rights under Section
5.3, Warner-Lambert shall have the sole discretion to determine (a) which
Products to develop or market or to continue to develop or market, (b) which
Products to seek regulatory approval for, and (c) when and where and how and on
what terms and conditions, to market such Products in the Territory.

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     4.3 Development Information. Warner-Lambert shall be the owner of any data,
information, inventions and discoveries generated as a result of the
Pre-Clinical Development, Clinical Development and commercialization of
Collaboration Lead Compounds and Products. Within thirty (30) days after the end
of each twelve (12) month period following the commencement of Preclinical
Development by Warner-Lambert of the first Collaboration Lead Compound,
Warner-Lambert shall provide to Ligand a reasonably detailed written development
report which shall describe the progress of the Preclinical Development and/or
Clinical Development of the Collaboration Lead Compound or Product and the
filing and obtaining of the approvals necessary for marketing. The report shall
contain not less than the information identified in Exhibit A hereto.


                                    ARTICLE 5

                       LICENSES -- RESEARCH, DEVELOPMENT,
                           MARKETING AND MANUFACTURING


     5.1 Cross-Licenses to Background Technology. Each Party hereby grants and
agrees to grant to the other a worldwide, non-exclusive, royalty-free license to
use and practice such Party's Background Technology solely to the extent
necessary for the other Party to perform its obligations under the Research
Program, until the termination of the Term of the Research Program.
Notwithstanding the foregoing, the granting Party may terminate such license
granted by it hereunder immediately upon its termination of this Agreement for
breach by the other Party under Section 12.4.

     5.2 License Grant to Warner-Lambert. Ligand hereby grants to Warner-Lambert
an exclusive, worldwide license, with the right to sublicense, which license
shall be exclusive even as to Ligand, under Ligand's Patent Rights, to
Background Technology and Collaboration Technology owned or Controlled by or
licensed to Ligand, including Ligand's rights in any jointly owned Patent Rights
to the extent necessary, to develop, make, have made, use, manufacture, have
manufactured, import, promote, offer for sale, sell, distribute, market and
commercialize (with the right to sublicense) any Products in the Field. The
rights granted Warner-Lambert by Ligand under this Section 5.2 are subject to
the rights of American Home Products Incorporated granted by Ligand under an
agreement made between Ligand and American Home Products Incorporated prior to
the Commencement Date. That agreement does not provide American Home Products
with rights to compounds in Ligand's compound library that have Field Activity.

     5.3 Ligand Rights.

     5.3.1 At any time after a Collaboration Lead Compound is in Clinical
Development, except in the case of termination by Warner-Lambert under Section
12.4 below, Ligand shall have the right in its sole discretion at its sole
expense, for its own benefit or together with an Affiliate or Third Party, to
develop and commercialize in the Territory those Collaboration Lead Compounds
which Warner-Lambert notifies Ligand that it has abandoned or elected not to
develop in the Field, provided that Warner-Lambert, or any of its Affiliates or

                                       16
<PAGE>

Sublicensees is not developing or commercializing the Collaboration Lead
Compound for any other pharmaceutical purpose and not conducting Pre-Clinical
Development or Clinical Development with respect to, or selling or
commercializing, a Competing Product.

     5.3.2 Except in the case of termination by Warner-Lambert under Section
12.4 below, if Warner-Lambert notifies Ligand that it has abandoned a Product ,
Ligand shall have the right in its sole discretion at its sole expense, for its
own benefit or together with an Affiliate or Third Party, to develop and
commercialize such Product in the Territory, provided that Warner-Lambert, its
Affiliates or Sublicensees is not conducting Pre-Clinical Development or
Clinical Development with respect to, or selling or commercializing, a Competing
Product in the Territory, and Ligand reimburses Warner-Lambert for *** % of the
*** incurred by Warner-Lambert with respect to such Product by payment of an
additional ***% royalty on Net Sales of the Product under Section 6.2 and ***%
of any milestone and royalty payments made to Ligand by a Sublicensee until such
Development Costs have been fully reimbursed.

     5.3.3 In the event that Warner-Lambert decides, in its sole discretion, to
license a Product to Third Parties, it shall first notify Ligand in writing and
offer to negotiate such arrangement with Ligand. If Ligand notifies
Warner-Lambert that it desires to negotiate for such rights within thirty (30)
days of receipt of notification from Warner-Lambert, the Parties shall in good
faith and for a period of sixty (60) days, negotiate the terms of any such
commercial arrangement. If no definitive written agreement on such terms is
reached within such sixty (60) day period, Warner-Lambert may at any time
thereafter transfer such rights to a Third Party.

     5.3.4 If Ligand exercises its rights under this Section 5.3 with respect to
any Collaboration Lead Compound owned by or licensed to Warner-Lambert,
Warner-Lambert (a) shall grant to Ligand an exclusive license (with the
exclusive right to sublicense) in the United States to make, have made, use and
sell Products incorporating such Collaboration Lead Compound in the Field, (b)
shall provide Ligand, at Ligand's expense, with all such information and data
which Warner-Lambert, its Affiliates or Sublicensees reasonably has available in
such country, for example access to drug master file, clinical and QA data and
the like, and shall execute such instruments as reasonably necessary , to
effectuate such license , and (c) thereafter shall have no further rights under
this Agreement with respect to such Collaboration Lead Compound or Product in
the Territory in the Field except as expressly provided in this Agreement. If
Ligand exercises the right to develop and commercialize a Collaboration Lead
Compound or Product under this Section 5.3, upon exercise Ligand shall refund
any payment made by Warner-Lambert to Ligand under Section 6.11 and that right
shall be exclusive and with the right to grant sublicenses and the provisions of
Sections 6.2 through 6.10 and Articles 7, 10 and 15 shall apply to Ligand
mutatis mutandis.

     5.3.5 If Ligand, its Affiliate or Sublicensee is not diligently developing
or commercializing any such Collaboration Lead Compound or Product licensed from
Warner-Lambert under this Section 5.3 *** after the effective date of such
license, then such license shall terminate, and all rights in and to such
Collaboration Compound or Product

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                                       17
<PAGE>


shall revert to Warner-Lambert subject to the provisions of this Agreement,
except the provisions of this Section 5.3.


                                    ARTICLE 6

                    ROYALTIES, MILESTONES AND OTHER PAYMENTS


     6.1. Reimbursement For Research and Development. As consideration for
research and development expense incurred by Ligand in the Field, Warner-Lambert
shall pay Ligand a fee of *** due and payable upon agreement by the JRC that the
screening of the Warner-Lambert compound library has been completed according to
the Research Plan, but in no event shall such payment be made later than *** ;
and in the event that Warner-Lambert decides to sponsor the Extension term, a
fee of *** due and payable on *** .

     6.2. Royalties Payable by Warner-Lambert. In consideration for the
technology and know-how provided by Ligand to the Research Program and for the
licenses granted to Warner-Lambert herein, Warner-Lambert shall pay to Ligand a
royalty on worldwide sales of Products by Warner-Lambert and Affiliated
Customers to Non-Affiliated Customers of Warner-Lambert equal to a percentage of
the annual Net Sales of such Products, where the percentage rate applicable to a
particular sale shall be determined based on the total annual Net Sales of
Products according to the following rate schedule:


                                           
                                    Annual Net Sales (in millions)
         Royalty Percentage         of each Product in the Territory

                   ***                       ***
                   ***                       ***
                   ***                       ***
                   ***                       ***


By way of clarification, the royalty on *** in Net Sales in each year during the
Term of this Agreement will be ***%. The royalties shall be payable with respect
to a particular Product, on a country-by-country basis, until the later of (a)
expiration in the particular country of the last to expire Valid Claim owned or
Controlled by Ligand or jointly owned by Ligand and Warner-Lambert that is
necessary to make, use, import for sale or sell such Product in such country, or
(b) *** from the date of the first sale of such Product to a Third Party in such
country; provided that such royalty obligation shall terminate upon the first
commercial sale in such country of such Product by a Third Party without a
license from Ligand, which sale has been approved by the applicable Regulatory
Agency. For a Product subject to a Valid Claim jointly owned by Ligand and
Warner-Lambert and not subject to a Valid Claim owned or controlled solely by
Ligand, the royalty shall be paid in full for .*** from the date

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                                       18
<PAGE>

of sale of the first Product and thereafter the royalty shall be *** %
until the expiration of the jointly owned patent.

     6.3 Adjustments to Royalty.

     (a) Royalty Credit. If Warner-Lambert is already obligated as of the
Commencement Date, or becomes obligated after the Commencement Date, to pay
royalties to any Third Party in connection with the manufacture, use or sale of
a Collaboration Lead Compound or Product, *** of such royalties shall be
creditable against royalties otherwise payable to Ligand under this Agreement
provided such credit, combined with any Cost of Goods adjustment under Section
6.3(b), shall not exceed *** of the aggregate royalty which would otherwise be
payable to Ligand. If a Third Party patent or other claim of right poses a
concern of infringement relating to a Collaboration Lead Compound or Product,
Warner-Lambert may license such Third Party patent or claim of right pursuant to
terms negotiated by Warner-Lambert in its sole discretion if in Warner-Lambert's
sole judgment such action would be required to permit the manufacture, use or
sale of such Collaboration Compound, Collaboration Lead Compound or Product

     (b) Cost of Goods Adjustment. In the event that the sum of Warner-Lambert's
Cost of Goods plus the royalty due and owing to Ligand, taking into account any
credit under Subsection 6.3(a), and any Third Party by Warner-Lambert during any
calendar year for any Product exceeds ***% of the Net Sales of such Product, the
royalty to be paid by Warner-Lambert to Ligand shall be reduced by *** of such
excess, provided that such reduction, combined with any Royalty Credit under
Section 6.3(a), shall not exceed *** of the aggregate royalty which would
otherwise be payable to Ligand.

     6.4 Currency of Payment. All payments to be made under this Agreement shall
be made in United States dollars in the United States by wire transfer to a bank
account designated by the Party to be paid. Royalties earned shall first be
determined in the currency of the country in which they are earned and then
converted to its equivalent in United States currency. The buying rates of
exchange for the currencies involved into the currency of the United States
quoted by Citibank (or its successor in interest) in New York, New York at the
close of business on the last business day of the quarterly period in which the
royalties were earned shall be used to determine any such conversion.

     6.5 Payment and Reporting. The royalties due under Section 6.2 and Section
12.3 shall be paid quarterly, within three (3) months after the close of each
calendar quarter, or earlier if practical (i.e., on or before the last day of
each of the months of June, September, December and March), immediately
following each quarterly period in which such royalties are earned. With each
such quarterly payment, the payer shall furnish the payee a royalty statement
setting forth on a country-by-country basis the total number of units, gross
amount invoiced, deductions taken according to each category listed in the Net
Sales definition, and Net Sales of each royalty-bearing Product sold hereunder
for the quarterly period for which the royalties are due.

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     6.6 Taxes Withheld. Any income or other tax that one Party hereunder, its
Affiliates or Sublicensees is required to withhold (the "Withholding Party") and
pay on behalf of the other Party hereunder (the "Withheld Party") with respect
to the royalties payable under this Agreement shall be deducted from and offset
against said royalties prior to remittance to the Withheld Party; provided,
however, that in regard to any tax so deducted, the Withholding Party shall give
or cause to be given to the Withheld Party such assistance as may reasonably be
necessary to enable the Withheld Party to claim exemption therefrom or credit
therefor, and in each case shall furnish the Withheld Party proper evidence of
the taxes paid on its behalf.

     6.7 Computation of Royalties. All sales of Products between the selling
Party and any of its Affiliated Customers shall be disregarded for purposes of
computing Net Sales and royalties under this Section 6 and Section 12.3, but in
such instances royalties shall be payable only upon sales of the selling Party
and its Affiliated Customers to Non-Affiliated Customers. Nothing herein
contained shall obligate either Party to pay the other Party more than one
royalty on any unit of a Product.

     6.8 Licenses to Affiliates and Sublicensees. Each Party shall, at the other
Party's reasonable request, enter into license and/or royalty agreements
directly with the other Party's Affiliates and permitted Sublicensees, in lieu
of the license grant to or royalty obligation of the requesting Party; provided
such agreements would not decrease the amount of royalties which would be owed
hereunder. Such agreements shall contain the same language as contained herein
with appropriate changes in parties and territory, and this Agreement shall be
amended as appropriate. No such license and/or royalty agreement will relieve
Warner-Lambert or Ligand, as the case may be, of its obligations hereunder, and
such Party will guarantee the obligations of its Affiliate or sublicense in any
such agreement. Royalties received directly from one Party's Affiliates and
Sublicensees shall be credited towards such Party's royalty obligations under
this Agreement, as applicable.

     6.9 Restrictions on Payments. Payment of royalties under this Agreement
shall be adjusted or excused to the extent necessary to comply with statutes,
laws, codes or government regulations in a particular country which restrict or
prevent such royalty payments by the seller of Products.

     6.10 Milestone Payments.

     6.10.1 Trigger Events: As additional consideration for Ligand's
participation in the Research Program, Warner-Lambert shall pay Ligand, at the
times set forth below, milestone payments with respect to each Collaboration
Lead Compound to achieve such milestone, except as permitted in Section 6.10.2:

                                            ***
          ***
                  ***
                           ***

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<PAGE>

                                    ***
                                             ***

                                                     ***
                                                     ***
          ***
                                             ***
                    ***

                                             ***
                                             ***
                                             ***
                                             ***
                                             ***
                                             ***
                               ***

For convenience of reference, each of the events described in clauses (a)
through (f) above is referred to herein as a "Trigger Event".

     6.10.2 Backup Compounds. Except as provided in this Section 6.10.2,
Warner-Lambert shall not have to make milestone payments under Section 6.10.1
with respect to Trigger Events for any Collaboration Lead Compound it designates
to be a backup compound (the "Backup Compound") to a more developmentally
advanced Collaboration Lead Compound for which it is obligated to make milestone
payments under Section 6.10.1. If development of the more advanced Collaboration
Lead Compound is abandoned prior to occurrence of the Trigger Event described in
Section 6.10.1, Warner-Lambert will only have to make milestone payments for
Trigger Events achieved by the Backup Compound that were not achieved by the
abandoned Collaboration Lead Compound. If the Backup Compound reaches a Trigger
Event before the Collaboration Lead Compound for which it is a backup compound,
Warner-Lambert will make the milestone payment for that and each subsequent
Trigger Event reached by the Backup Compound but shall not be required to make
milestone payment for that and each subsequent Trigger Event realized by the
Collaboration Lead Compound. If the Backup Compound reaches the Trigger Event
described in Section 6.10.1 before abandonment of the more advanced
Collaboration Lead Compound, then Warner-Lambert will make the milestone
payments for the Trigger Event described in Section 6.10.1 and for each
subsequent Trigger Event reached by the Backup Compound.

     6.11 Audits.

     6.11.1 Audits. Upon the written request of Ligand and not more than once in
each calendar year, Warner-Lambert shall permit an independent certified public
accounting firm of nationally recognized standing, selected by Ligand and
reasonably acceptable to Warner-Lambert, at Ligand's expense, to have access
during normal business hours to such of the records of Warner-Lambert as may be
reasonably necessary to verify the accuracy of the royalty reports

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                                       21
<PAGE>

hereunder for eight (8) quarters prior to the date of such request. The
accounting firm shall be bound by confidentiality obligations and shall disclose
to Ligand only whether the records are correct or not and, if applicable, the
amount of any discrepancies.

     6.11.2 If such accounting firm concludes that additional royalties were
owed during such period, Warner-Lambert shall pay the additional royalties
within *** of the date Ligand delivers to Warner-Lambert such accounting firm's
written report so concluding. The fees charged by such accounting firm shall be
paid by Ligand; provided, however, if the audit discloses that the royalties
payable by Warner-Lambert for the audited period are more than *** of the
royalties actually paid for such period, then Warner-Lambert shall pay the
reasonable fees and expenses charged by such accounting firm.

     6.11.3 Warner-Lambert shall include in each permitted sublicense granted by
it pursuant to the Agreement a provision requiring the Sublicensee to make
reports to Warner-Lambert, to keep and maintain records of sales made pursuant
to such sublicense and to grant access to such records by Ligand's accounting
firm to the same extent required of Warner-Lambert under the Agreement. Upon the
expiration of *** following the end of any year, the calculation of royalties
payable with respect to such year shall be binding and conclusive upon Ligand,
Warner-Lambert and its Sublicensees, and such Sublicensees shall be released
from any liability or account-ability with respect to royalties for such year.


                                    ARTICLE 7

                      INFRINGEMENT ACTIONS BY THIRD PARTIES


     If a Party, or to its knowledge, any of its Affiliates or Sublicensees
shall be sued or threatened to be sued for infringement of a patent or other
intellectual property rights of a Third Party because of the reasonable
development, manufacture, use or sale of Collaboration Compounds, Collaboration
Lead Compounds or Products or any other action undertaken by such Party under
this Agreement, such Party shall promptly notify the other in writing of the
institution or threat of such action. The Party sued or threatened to be sued
shall have the right, in its sole discretion, to control the defense and
settlement of such claim at its own expense, in which event the other Party
shall cooperate fully in the defense of such suit and furnish to the Party sued
all evidence and assistance in its control. Any judgments, settlements or
damages payable with respect to legal proceedings covered by this Article 7
shall be paid by the Party which controls the litigation, subject to any claims
against the other Party for breach of this Agreement or otherwise available at
law or in equity. Any Third Party royalty payments required to be paid as the
result of a judgment or settlement under this Article 7 shall be paid by the
Party controlling the suit subject to any claims against the other Party for
breach of this Agreement or otherwise available at law or in equity; provided,
however, in the case of a Product sold by Warner-Lambert, if such Third Party
royalty payments arise from the infringement of a patent or other intellectual
property rights having a claim or claims which cover the screening activities or
Background Technologies of Ligand under the Research Program, the Third Party

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                                       22
<PAGE>

royalty payments shall be equally shared by Warner-Lambert and Ligand, but in no
event shall the royalty owed by Ligand under this provision exceed the royalty
due to Ligand for the Product under Article 6 .


                                    ARTICLE 8

                                 CONFIDENTIALITY


     8.1 Nondisclosure Obligations. Except as otherwise provided in this Article
8 and subject to Article 9 hereof, during the Term of this Agreement and for a
period of *** thereafter, (a) both Parties shall maintain in confidence all
Collaboration Technology and information and data developed pursuant to the
Collaboration and solely owned by the disclosing Party or jointly owned by the
Parties; and (b) both Parties shall also maintain in confidence and use only for
purposes of this Agreement all Background Technology and all other information
and data supplied by the other Party under this Agreement, which if disclosed in
writing is marked "Confidential," or if disclosed in a non-tangible way is
characterized as confidential at the time of disclosure.

     8.2 Permitted Disclosures. For purposes of this Article 8, information and
data described in clauses (a) or (b) of Section 8.1 above shall be referred to
as "Confidential Information". To the extent it is reason-ably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, (a) a Party may disclose Confidential Information it is otherwise
obligated under this Article 8 not to disclose to its Affiliates, Sublicensees,
consultants, outside contractors, clinical investigators, agent, suppliers and
other Third Parties on a need-to-know basis on condition that such persons or
entities agree to keep the Confidential Information confidential for the same
time periods and to the same extent as such Party is required to keep the
Confidential Information confidential; (b) a Party or its Affiliates or
Sublicensees may disclose such Confidential Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to conduct Pre-Clinical Development, Clinical Development or
commercialization of Collaboration Lead Compounds or Products or to obtain
patents on Collaboration Compounds, Collaboration Lead Compounds or Products ;
(c) a Party may disclose Confidential Information as required by applicable law,
regulation or judicial process, provided that, where practicable, such Party
shall give the other Party prior written notice thereof and adequate opportunity
to object to any such disclosure or to request confidential treatment thereof;
and (d) a Party may disclose Confidential Information as permitted under Article
9.

     The obligation not to disclose or use the Confidential Information shall
not apply to any part of the Confidential Information that (i) is or becomes
patented, published or otherwise part of the public domain other than by acts of
the Party obligated not to disclose such Confidential Information or its
Affiliates or Sublicensees in contravention of this -Agreement; or (ii) is
disclosed to the receiving Party or its Affiliates or Sublicensees by a Third
Party, provided such

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                                       1
<PAGE>

Confidential Information was not obtained by such Third Party directly or
indirectly from the other Party on a confidential basis; or (iii) prior to
disclosure under this Agreement, was already in the possession of the receiving
Party or any of its Affiliates or Sublicensees, provided such Confidential
Information was not obtained directly or indirectly from the other Party on a
confidential basis; (iv) is independently developed by the receiving Party or
any of its Affiliates of sublicenses without aid or use of the Confidential
Information; or (v) is disclosed in a press release agreed to by both Parties
under Section 8.3 below.

     8.3. Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby (other than
publications by Warner-Lambert of results of Pre-Clinical Development, Clinical
Development or post-marketing research) shall be reviewed in advance by, and
shall be subject to the approval of, both Parties; provided, however, that
either Party may (a) publicize the existence and general subject matter of this
Agreement without the other Party's approval, (b) disclose the terms of this
Agreement only to the extent required to comply with applicable securities laws
and in the case of (b), the non-disclosing Party shall have the right to review
and comment on such disclosure prior to its submission and the disclosing Party
shall cooperate to minimize the scope and content of such disclosure, and (c)
disclose the terms of this Agreement to prospective lenders, investment bankers
and other financial institutions of its choice solely for purposes of financing
the business operations of such Party, but only if the disclosing Party obtains
a signed confidentiality agreement with such entity upon terms similar to those
contained in this Article 8.


                                    ARTICLE 9

                                   PUBLICATION


     The Parties shall cooperate in appropriate publication of the results of
the Research Program, but subject to the predominating interest to obtain patent
protection for any patentable subject matter. To this end, it is agreed that
prior to any public disclosure of such results, the Party proposing disclosure
shall send the other Party a copy of the information to be disclosed, and shall
allow the other Party thirty (30) days from the date of receipt in which to
determine whether the information to be disclosed contains subject matter for
which patent protection should be sought prior to disclosure, or otherwise
contains Confidential Information of the reviewing Party which such Party
desires to maintain as a trade secret. If notification is not received during
the thirty (30) day period, the Party proposing disclosure shall be free to
proceed with the disclosure. If due to a valid business reason or a belief by
the non-disclosing Party that the disclosure contains subject matter for which a
patentable invention should be sought, then prior to the expiration of the
thirty (30) day period, the non-disclosing Party shall so notify the disclosing
Party, who shall then delay public disclosure of the information for an
additional period of up to six (6) months to permit the preparation and filing
of a patent application on the subject matter to be disclosed or other action to
be taken. The Party proposing disclosure shall thereafter be free to publish or
disclose the information. The determination of authorship for any paper shall be
in accordance with accepted scientific practice. In no event may any publication
or other disclosure contain a Party's Confidential Information without such
Party's prior written consent. Ligand shall not publish the results of the
Pre-Clinical Development or the Clinical Development of any Collaboration Lead
Compound or any other information or data relating to a

                                       24

<PAGE>

Collaboration Compound, Collaboration Lead Compound or Product without
Warner-Lambert's prior written consent. Warner-Lambert may publish the results
of the Pre-Clinical Development and Clinical Development without Ligand's prior
written consent provided that no such publication shall contain Confidential
Information solely owned by Ligand.


                                   ARTICLE 10

                             PATENTS AND INVENTIONS


     10.1 Ownership of Background Technology. Except as otherwise set forth
herein, each Party shall retain ownership or Control, as the case may be, over
its Background Technology. The owner of any patentable Background Technology
shall have the right, at its option and expense, to prepare, file and prosecute
(including without limitation in administrative proceedings such as oppositions
and interferences) in its own name any patent applications with respect to such
Background Technology and to maintain any patents issued.

     10.2 Ownership of Collaboration Technology. Except as otherwise set forth
herein, ownership of Collaboration Technology (whether or not patentable) shall
be owned by the Party(ies) whose employee(s) are determined to be inventors in
accordance with United States laws of inventorship. Subject to Section 10.3, the
owner (the "Inventor") of any patentable Collaboration Technology (an
"Invention") shall have the right, at its option and expense and through
attorneys and agents of its choice, to prepare, file and prosecute (including
any proceedings relating to reissues, reexaminations, protests, interferences
and requests for patent extensions or supplementary protection certificates) in
its own name any patent applications with respect to any Invention owned by it
and to maintain any patents issued. In connection therewith, the non-Inventor
Party agrees to cooperate with the Inventor at the Inventor's expense in the
preparation and prosecution of all such patent applications and in the
maintenance of any patents issued. The obligations set forth in this Section
10.2 shall survive the expiration or termination of this Agreement.

     10.3 Joint Inventions. Collaboration Technology jointly invented by Ligand
and Warner-Lambert will be jointly owned by Ligand and Warner-Lambert; however,
subject to Section 10.2, Warner-Lambert will have the rights and
responsibilities of the Inventor as described in this Section 10 with respect to
the preparation, filing, prosecution and maintenance of patent applications in
the name of both owners for any such patentable, jointly owned Collaboration
Technology and Ligand shall have the rights and responsibilities of a
non-Inventor therein. Warner-Lambert shall have the right but not the obligation
to pay all expenses in connection with the preparation, filing and prosecution
of patent applications that claim patentable, jointly owned Inventions.
Warner-Lambert shall from time to time notify Ligand of the amount of such
expenses, and Ligand shall promptly thereafter pay Warner-Lambert *** of its
out-of-pocket expenses. As used in the preceding sentence "out-of-pocket
expenses" means direct costs, excluding internal labor costs. Ligand may elect
in writing to disclaim all interest in any jointly invented Invention, in which
case (a) such Invention will be

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<PAGE>

solely owned by Warner-Lambert, and Ligand will cooperate to assure
Warner-Lambert's sole ownership, (b) Ligand will have no further interest in
such Invention, by ownership, license or otherwise, and (c) Ligand will not be
responsible for reimbursing Warner-Lambert for any expenses incurred by
Warner-Lambert from and after the date that Warner-Lambert receives Ligand's
written disclaimer. Warner-Lambert may elect in writing to disclaim all interest
in any jointly invented Inventions, in which case (i) such Invention will be
solely owned by Ligand and Ligand shall be solely liable for any expenses
incurred with respect to such Invention after Warner-Lambert's disclaimer, and
Warner-Lambert will cooperate to assure Ligand's sole ownership, (ii)
Warner-Lambert will have no further interest in such Invention, by ownership,
license or otherwise, and (iii) Warner-Lambert will, at Ligand's cost and
request, continue the preparation, filing and prosecution of the relevant patent
application(s) for up to *** following Warner-Lambert's delivery of written
disclaimer, if failure to so continue would have a material adverse impact on
such patent application(s).

     10.4 Protection of Patent Rights.

     (a) The Inventor shall prepare, prosecute and maintain (and shall use
reasonable efforts to keep the other Party currently informed of all steps to be
taken in such preparation, prosecution and maintenance) all of its Patent Rights
which claim an Invention and upon request shall furnish the other Party with
copies of such Patent Rights and other related correspondence relating to such
Invention to and from patent offices and permit the other Party to offer its
comments thereon before the Inventor makes a submission to a patent office which
could materially affect the scope or validity of the patent coverage that may
result. The non-Inventor Party shall offer its comments promptly. Ligand and
Warner-Lambert shall each promptly notify the other of any infringement or
unauthorized use of an Invention which comes to its attention.

     (b) If the Inventor fails to (i) fulfill its obligations under this Section
10, or (ii) protect against abandonment of a Patent Right which claims an
Invention, the Inventor shall permit the non-Inventor Party, at its option and
expense, to undertake such obligations, and thereafter such Patent Rights shall
be deemed to be assigned to such non-Inventor Party. The Party not undertaking
such actions shall fully cooperate with the other Party and shall provide to the
other Party whatever assignments and other documents that may be needed in
connection therewith. The Party finally conducting legal actions or proceedings
against an alleged infringer or other Party shall be entitled to any damages or
costs awarded against such infringer or other Party.

     (c) In the event Ligand or Warner-Lambert becomes aware of any actual or
threatened infringement of any Patent Right of either Party which claims an
Invention, that Party shall promptly notify the other, and the Parties'
representatives shall promptly discuss how to proceed in connection with such
actual or threatened infringement. If both Parties participate in the conduct of
a legal action pursuant to this Section 10.4(c), (i) if one Party files, the
actual costs and expenses of such action shall be reimbursed first to the filing
Party and then to the participating Party out of any damages or other

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                                       26

<PAGE>

monetary awards recovered therein in favor of Warner-Lambert or Ligand, or
(ii) if both Parties file, the actual costs and expenses of such action shall be
reimbursed proportionally between the Parties out of any damages or other
monetary awards recovered therein in favor of Warner-Lambert or Ligand, based on
the actual costs and expenses incurred by each Party in connection with such
action. Any remaining damages received by Warner-Lambert shall then be treated
as Net Sales of Product by Warner-Lambert. If one Party alone conducts such
legal action, *** of the actual costs and expenses of such action shall be
reimbursed to such Party out of any damages or other monetary awards; any
remaining damages shall then be treated as Net Sales of Product. If either Party
commences any actions or proceedings (legal or otherwise) pursuant to this
Section 10.4(c), it shall prosecute the same vigorously at its expense and shall
not abandon or compromise them or fail to exercise any rights of appeal without
giving the other Party the right to take over the prosecuting Party's conduct at
such other Party's own expense.

     10.5 Notification of Patent Term Restoration and Third Party Abbreviated
New Drug Applications. Ligand or Warner-Lambert, as the case may be, shall
notify the other Party of (a) the issuance of each U.S. patent, or foreign
patent where extension is possible, included within the Patent Rights which
claim an Invention, giving the date of issue and patent number for each such
patent, and (b) each notice pertaining to any patent included within the Patent
Rights which claim an Invention which it receives as patent owner pursuant to
the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter
called the "Act") or equivalent foreign laws, including notices pursuant to 21
U.S.C. ss.355(b)(3) and ss.355(j)(2)(B)from persons who have filed an
abbreviated NDA ("ANDA"). Such notices shall be given promptly, but in any event
within five calendar days of each such patent's date of issue or receipt of each
such notice pursuant to the Act, whichever is applicable.

     10.6 Any dispute between the Parties regarding the inventorship of an
Invention or Joint Invention made under the Research Program shall be resolved
through appointment of an independent patent counsel, mutually acceptable to the
Parties, after consideration of all evidence submitted by the Parties. The
expense of the independent patent counsel shall be borne equally by Ligand and
Warner-Lambert.


                                   ARTICLE 11

                         REPRESENTATIONS AND WARRANTIES


     Each Party hereby represents and warrants to the other Party as follows:

     11.1 Corporate Existence and Power. Such Party (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, (b) has the corporate power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it is now
being conducted, and (c) is in compliance with all requirements of applicable
law, except to the extent that any noncompliance would not have a material
adverse effect on such Party's ability to perform its obligations under this
Agreement.

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                                       27

<PAGE>

     11.2 Authorization and Enforcement of Obligations. Such Party (a) has the
corporate power and authority and the legal right to enter into this Agreement
and to perform its obligations hereunder, and (b) has taken all necessary
corporate action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such Party, and constitutes a
legal, valid, binding obligation, enforceable against such Party in accordance
with its terms.

     11.3 Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other persons required to be obtained by such Party
in connection with the execution, delivery and performance of this Agreement
have been and shall be obtained.

     11.4 No Conflict. Notwithstanding anything to the contrary in this
Agreement, the execution and delivery of this Agreement and the performance of
such Party's obligations hereunder (a) do not conflict with or violate any
requirement of applicable laws or regulations or any of the terms of its
certificate of incorporation or by-laws, and (b) do not and shall not conflict
with, violate or breach or constitute a default or require any consent under any
contractual obligation of such Party.

     11.5 Intellectual Property. Such Party (a) owns or is the licensee in good
standing of all Patent Rights, trade secrets and other intellectual property to
be used by it in connection with the Research Program, except to the extent that
such use is to be based upon patents, trademarks and other intellectual property
furnished by the other Party; (b) is not in default with respect to any license
agreement related to the Research Program; (c) is not aware of any patent, trade
secret or other proprietary right of any Third Party which could materially
adversely affect its ability to carry out its responsibilities under the
Research Program or the other Party's ability to exercise or exploit any license
granted to it under this Agreement; provided, however, that the Parties are
aware that the beta form of the estrogen receptor has been claimed in published
applications for patent; and (d) has received no notice of infringement or
misappropriation of any alleged rights asserted by any Third Party in relation
to any Background Technology to be used by it in connection with the Research
Program . Such Party agrees to immediately notify the other Party in writing in
the event such Party hereafter becomes in default under any license agreement
referred to in (b) above, becomes aware of any patent, trade secret or other
proprietary right of the nature referred to in (c) above, or receives a notice
of the type referred to in (d) above.

     11.6 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY LIGAND OR WARNER-LAMBERT (A)
THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE
PATENT RIGHTS, (B) THAT ANY PATENT WITHIN THE PATENT RIGHTS WHICH ISSUES WILL BE
VALID, OR (C) THAT, EXCEPT FOR THE PROVISIONS OF SECTION 11.5 HEREIN WHICH SHALL
NOT BE AFFECTED BY THIS SECTION 11.6, THE USE OF ANY LICENSE GRANTED HEREUNDER
OR THE USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR PROPRIETARY
RIGHTS OF ANY THIRD PARTY. FURTHERMORE, NEITHER LIGAND NOR WARNER-LAMBERT MAKES
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PATENT RIGHTS EXCEPT AS PROVIDED IN SECTION 11.5. LIGAND AND WARNER-LAMBERT EACH

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                                       28

<PAGE>

SPECIFICALLY DISCLAIM THAT THE RESEARCH PROGRAM OR THE PRE-CLINICAL DEVELOPMENT
OR CLINICAL DEVELOPMENT WILL BE SUCCESSFUL, IN WHOLE OR IN PART, OR THAT ANY
CLINICAL OR OTHER STUDIES UNDERTAKEN BY IT WILL BE SUCCESSFUL. WARNER-LAMBERT
DOES NOT WARRANT THAT ITS EFFORTS TO RESEARCH, DEVELOP OR COMMERCIALIZE ANY
COLLABORATION COMPOUND, COLLABORATION LEAD COMPOUND OR PRODUCT WILL RESULT IN
REGULATORY APPROVAL OF ANY PRODUCT, NOR DOES WARNER-LAMBERT WARRANT THAT ANY
SUCH PRODUCT WILL ACHIEVE ANY LEVEL OF NET SALES OR BE CONTINUED IF IT OBTAINS
REGULATORY APPROVAL. EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, EACH PARTY
HEREBY DISCLAIMS ANY WARRANTY, EXPRESSED OR IMPLIED, AS TO ANY PRODUCT SOLD OR
PLACED IN COMMERCE BY OR ON BEHALF OF WARNER-LAMBERT OR ITS AFFILIATES OR
SUBLICENSEES.


                                   ARTICLE 12

                              TERM AND TERMINATION


     12.1 Expiration. Unless terminated earlier by agreement of the Parties or
pursuant to this Article 12, this Agreement shall expire on the expiration of
the last to expire of all obligations to pay royalties under this Agreement.

     12.2 Expiration of Exploratory Term Without Exercise of Option to Extension
Term. This Agreement shall terminate upon expiration without exercise of
Warner-Lambert's option to continue the Research Program through the Extension
Term. Upon such termination, each Party shall return to the other Party the
Background Technology of the other Party in its possession. Warner-Lambert shall
also assign to Ligand its interest in all jointly owned Patent Rights claiming
Collaboration Technology. Warner-Lambert shall provide Ligand, upon request,
with copies of Collaboration Technology that is in its possession and with
samples of Collaboration Compounds in its possession. Upon termination under
this Section 12.2, Warner-Lambert shall grant under its Patent Rights to Ligand
an exclusive, royalty-free, worldwide license in the Field, to use *** compounds
which are Warner-Lambert's Background Technology that have exhibited Field
Activity (and which are not lead compounds in a research or development program
undertaken by Warner-Lambert or any of its Affiliates or Third Party
collaborators) selected by Ligand within *** following such termination, for the
sole purpose of continuing research and development on such compounds in the
Field alone or with a third party. Subject to availability, Warner-Lambert shall
provide Ligand with samples of said *** compounds. The license granted by
Warner-Lambert pursuant to this Section will expire *** after its grant with
respect to all but *** compounds designated by Ligand, in writing, not later
than the expiration of the *** initial period of the license, and if no such
designation is made by Ligand within such *** period, such license shall
terminate with respect to all such compounds. Warner-Lambert shall grant under
its Patent Rights to Ligand an exclusive,

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                                       29
<PAGE>

royalty-free, worldwide license in the Field, including the right to grant
sublicenses, to make, have made, use, sell, import and export the *** compounds
designated by Ligand.

     12.3 Termination of Agreement at End of Extension Term. Warner-Lambert
shall have the right to terminate this Agreement at the end of the Extension
Term by giving Ligand *** written notice if no Collaboration Lead Compound has
been selected. Each Party shall then return to the other Party the Background
Technology of such other Party that is in its possession. If a Party conducts
independent research and development on a Collaboration Compound in the Field
after such termination and files an IND on that Collaboration Compound to
conduct clinical trials for indications relating to the Field within *** after
the effective date of termination hereunder, the Party filing the IND shall pay
the other Party a royalty on worldwide sales equal to ***% of its Net Sales of
the product. The provisions of Section 6.4 to 6.9, 6.11.1, 6.11.2 and 6.11.3
shall apply to royalties payable under this Section.

     12.4 Termination For Breach. A Party shall have the right to terminate the
Term of this Agreement for a material breach of this Agreement; provided,
however, that termination cannot occur until *** after the giving of notice of
intention to terminate to the breaching Party and only if the breach is not
cured during such *** period.

     In the event of an uncured breach of a material obligation under this
Agreement, the non-breaching Party may terminate the Term of this Agreement and
each Party shall retain such ownership interest in the Collaboration Technology
as it shall hold on the date of the termination, provided, however, that (i) the
licenses granted to the non-breaching Party under Article 5 shall remain in full
force and effect (and the breaching Party shall transfer to the non-breaching
Party such Bakground Technology and Collaboration Technology as shall be
necessary to permit the non-breaching Party to continue conduct of the Research
Program) but the breaching Party shall forfeit all rights to develop and promote
all Collaboration Compounds, Collaboration Lead Compounds and Products, (ii) the
breaching Party shall not conduct any further research in the Field for a period
of *** from the effective date of such early termination, (iii) all licenses
granted to such breaching Party under this Agreement may be immediately
terminated by the non-breaching Party, (iv) any royalties due the breaching
Party under this Agreement shall be reduced by *** , and (v) if the breach
relates specifically to a Collaboration Lead Compound or Product, this Agreement
may only be terminated as it relates to such Collaboration Lead Compound or
Product and shall remain in full force and effect as it relates to all other
Collaboration Lead Compounds and Products..

     12.5 Termination of Agreement by Warner-Lambert. Warner-Lambert shall have
the right to terminate this Agreement by giving written notice to Ligand of its
intention to do so in the event that neither Ligand nor Warner-Lambert is able
to obtain a license for technology that is necessary for the conduct of the
Research Program and that is claimed in Third Party patents, or other
intellectual property, excluding the beta form of the estrogen receptor. Notice
of termination can not be effective less than *** from the date upon which
Warner-Lambert advises Ligand in writing that such technology is necessary for
the conduct of the

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                                       30
<PAGE>

Research Program. The termination shall be effective *** after the giving
of the notice. Upon termination each Party shall return to the other Party the
Background Technology of such other Party that is in its possession. If
Warner-Lambert has selected a Collaboration Lead Compound prior to termination
under this section it shall be required to pay Ligand milestones and royalties
for its development and commercialization of as a Product as if this agreement
remains in full force and effect.

     12.6 Effect of Expiration or Termination. Expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior to such
expiration or termination. The representations and warranties contained in this
Agreement as well as those rights and obligations contained in the terms of this
Agreement which by their intent or meaning have validity beyond the Term of this
Agreement shall survive the termination or expiration of this Agreement. The
provisions of Sections 2.10.2 and 4.3, and Articles 5, 8, 9, 11, and 17 shall
survive the expiration or termination of this Agreement. Any rights and
obligations which have accrued prior to termination or expiration of this
Agreement in any respect shall survive such termination or expiration.

     12.7 Bankruptcy. Either Party shall have the right to terminate this
Agreement effective immediately in the event the other Party files a voluntary
petition in bankruptcy, is adjudicated as bankrupt, makes a general assignment
for the benefit of creditors, admits in writing that it is insolvent or fails to
discharge within fifteen (15) days an involuntary petition in bankruptcy filed
against it.

     12.8 Termination of Ligand's Participation in the Research Program.

     12.8.1 Termination Process. Warner-Lambert shall have the right to
terminate Ligand's participation in the Research Program, without termination of
this Agreement, by giving Ligand written notice of its intention to do so not
later than *** from the Commencement Date, if in the sole discretion of
Warner-Lambert, Ligand's performance on the Research Program is not
satisfactory. The termination of Ligand's participation in the Research Program
will be effective *** after the giving by Warner-Lambert of the notice to
terminate.

     12.8.2 Effect of Termination of Ligand's Participation in the Research
Program. If Warner-Lambert terminates the Research Program pursuant to
Subsection 12.8.1 of this Article, (a) Warner-Lambert shall have a non-exclusive
license to use Ligand's Background Technology, excluding Ligand's Background
Technology compounds, and the exclusive license to Ligand Collaboration
Technology to the extent it would if Ligand participated in the Research
Program, to develop Products, and such development shall require the payment of
milestones and royalties as provided in Sections 6.2 and 6.10, and (b) Ligand
shall transfer at Warner-Lambert's expense, to Warner-Lambert such Background
Technology and Collaboration Technology for which a license is provided under
this section as shall be necessary to permit Warner-Lambert to continue the
Research Program. Notwithstanding the previous sentence,

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                                       31
<PAGE>

Warner-Lambert shall have the right to develop and commercialize Ligand
Background Technology compounds in the following manner:

          a) On or before the effective date of termination of Ligand's
     participation in the Research Program, Warner-Lambert can select up to ***
     of Ligand's Background Technology compounds for further development in the
     Field and this development shall be exclusive even as to Ligand.

          b) On or before expiration of *** from the effective date of
     termination of Ligand's participation in the Research Program,
     Warner-Lambert can select up to *** , from the previously selected *** ,
     Ligand Background Technology compounds for further development in the Field
     and this development shall be exclusive even as to Ligand, and all rights
     to the other *** shall revert to Ligand.

After termination of its participation in the Research Program Ligand shall
have the right to use its Background Technology in the Field, subject to
Warner-Lambert's rights under subparts a) and b) above, without restriction,
including the right to collaborate with a Third Party.


                                   ARTICLE 13

                                  FORCE MAJEURE


     Neither Party shall be held liable or responsible to the other Party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement when such failure or
delay is caused by or results from causes beyond the reasonable control of the
affected Party including but not limited to fire, floods, embargoes, war, acts
of war (whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other Party, provided that
the Party so affected shall use its best efforts to avoid or remove such causes
of non-performance and shall continue performance hereunder with the utmost
dispatch whenever such causes are removed.


                                   ARTICLE 14

                                   ASSIGNMENT


     This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations hereunder be assigned
or transferred by either Party without the consent of the other Party; provided,
however, that either Party may, without such consent, assign this Agreement and
its rights and obligations hereunder in connection with the transfer or sale of
all or substantially all of its business pertaining to this Agreement, or in the
event of its merger or consolidation or change in control or similar
transaction. Any permitted

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                                       32
<PAGE>

assignee shall assume all obligations of its assignor under this Agreement.
This Agreement shall be binding upon, subject to the terms of the foregoing
sentence, inure to the benefit of the Parties' successors, legal representatives
and assigns.


                                   ARTICLE 15

                               REGULATORY MATTERS


     15.1 Side Effects and Adverse Events. Ligand shall advise Warner-Lambert
within the time limits required by applicable FDA laws and regulations (or
similar foreign laws and regulations) by telefax or overnight delivery service
addressed to the attention of its Vice President, Medical Affairs of any
unexpected side effect, adverse reaction or injury which has been brought to
Ligand's attention at any place and which is alleged to have been caused by a
Product. Warner-Lambert shall have all rights and responsibilities to report
such side effect, adverse reaction or injury to the appropriate regulatory
authorities as required by applicable law.


     15.2 Product Recall. In the event that Warner-Lambert determines that an
event, incident or circumstance has occurred which may result in the need for a
recall or other removal of any Product, or any lot or lots thereof, from the
market, it shall notify Ligand with respect thereto. Warner-Lambert shall, in
its sole discretion, have the right to order any such recall or other removal
and Ligand shall cooperate with such recall.

     15.3 Regulatory Matters. From and after the Commencement Date, the
preparation, filing and prosecution of INDs, NDAs and other regulatory filings
required to be filed with any Regulatory Agency in respect of a Product will be
in the name of, under sole control of, and at the responsibility of
Warner-Lambert and its Affiliates. Further, Warner-Lambert and/or its Affiliates
shall own all regulatory documentation relating to such filings. The costs of
preparation, filing and prosecution of regulatory filings with regard to
Products incurred on or after the Commencement Date shall be borne entirely by
Warner-Lambert as long as Warner-Lambert retains rights to commercialize such
Product hereunder. Warner-Lambert shall be solely responsible for all contacts
and communications with governmental and regulatory authorities with respect to
all matters relating to any Product (including reporting adverse drug
reactions). Unless required by law, Ligand shall have no contacts or
communications with any governmental or regulatory authority regarding any
Product without the prior written consent of Warner-Lambert. Ligand shall
provide Warner-Lambert with copies of all communications received from any
governmental or regulatory authority relating to any Product and shall allow
Warner-Lambert at its discretion to control and/or participate in any further
contacts or communications in connection therewith.

                                       33

<PAGE>

                                   ARTICLE 16

                                  SEVERABILITY


     If any term or provision of this Agreement is held to be invalid, illegal
or unenforceable by a court or other governmental authority of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement, which shall remain in full force
and effect. The holding of a term or provision to be invalid, illegal or
unenforceable in a jurisdiction shall not have any effect on the application of
the term or provision in any other jurisdiction.


                                   ARTICLE 17

                                 INDEMNIFICATION


     Each of Warner-Lambert and Ligand agrees to indemnify, hold harmless, and
defend the other Party and its Affiliates and their respective employees,
agents, officers, directors and permitted assigns (such Party's "Indemnified
Groups") from and against any claims by a Third Party resulting in the award or
payment of any judgments, expenses (including reasonable attorney's fees),
damages and awards (collectively a "Claim") arising out of or resulting from (a)
its negligence or willful misconduct, (b) a breach of any of its
representations, warranties or obligations hereunder, or (c) such Party's
research and development, manufacture, use, promotion, marketing or sale of any
Collaboration Compounds, Collaboration Lead Compounds or Products, except to the
extent that such Claim arises out of or results from the negligence or
misconduct of a Party seeking to be indemnified and held harmless or the
negligence or misconduct of a member of such Party's Indemnified Group. A
condition of this obligation is that, whenever a member of the Indemnified Group
has information from which it may reasonably conclude an incident has occurred
which could give rise to a Claim, such indemnified Party shall immediately give
notice to the indemnifying Party of all pertinent data surrounding such incident
and, in the event a Claim is made, all members of the Indemnified Group shall
assist the indemnifying Party and cooperate in the gathering of information with
respect to the time, place and circumstances and in obtaining the names and
addresses of any injured Parties and available witnesses. No member of the
Indemnified Group shall make any payment or incur any expense in connection with
any such Claim without prior written consent of the indemnifying party,
provided, however, that an indemnitee may take any reasonably appropriate action
that is necessary to preserve or avoid prejudice to its interests after the
indemnifying party has been notified of the Claim if the indemnitor states that
it does not believe that the indemnification obligations described herein apply
to such Claim or if the indemnitor does not or cannot perform its indemnity
obligations hereunder. The indemnifying Party shall have the right, but not the
obligation, to control any such action. The obligations set forth in this
Article 17 shall survive the expiration or termination of this Agreement.

                                       34

<PAGE>

                                   ARTICLE 18

                                  MISCELLANEOUS


     18.1 Notices. Any consent, notice or report required or permitted to be
given or made under this -Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, or U.S. overnight courier), U.S. overnight
courier, postage prepaid (where applicable), or delivered by certified mail,
postage prepaid, return receipt requested to the address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.


                                       

         If to Ligand:                  Ligand Pharmaceuticals Incorporated
                                        10275 Science Center Drive
                                        San Diego, California 92121
                                        Attention:  General Counsel

         With a copy to:                Ligand Pharmaceuticals Incorporated
                                        10275 Science Center Drive
                                        San Diego, California 92121
                                        Attention:  Chief Scientific Officer

         If to Warner-Lambert:          Warner-Lambert Company
                                        Parke-Davis Pharmaceutical
                                          Research Division
                                        2800 Plymouth Road
                                        Ann Arbor, MI 48105
                                        Attention:  President

         With a copy to:                Warner-Lambert Company
                                        201 Tabor Road
                                        Morris Plains, NJ 07950
                                        Attention: Senior Vice President
                                                   and General Counsel



     18.2 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to its
conflicts of law provisions, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.

     18.3 Entire Agreement. This Agreement contains the entire understanding of
the Parties with respect to the subject matter hereof. All express or implied
agreements and under-standings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both Parties hereto.

                                       35
<PAGE>

     18.4 Headings. The captions to the several Articles and Sections hereof are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.

     18.5 Independent Contractors. Each of Warner-Lambert and Ligand
acknowledges and agrees that neither it nor any of its employees are employees
of the other Party and that neither it nor any of its employees are eligible to
participate in any employee benefit plans of such other Party. Each of
Warner-Lambert and Ligand further acknowledges that neither it nor any of its
employees are eligible to participate in any such benefit plans even if it is
later determined that its or any of its employees' status during the period of
this Agreement was that of an employee of the other Party. In addition, each of
Warner-Lambert and Ligand waives any claim that it may have under the terms of
any such benefit plans or under any law for participation in or benefits under
any of the other Party's benefit plans.

     18.6 Waiver. The waiver by either Party hereto of any right hereunder or
the failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.

     18.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


     IN WITNESS WHEREOF, the Parties have executed this Research, Development
and License Agreement as of the date first set forth above.


WARNER-LAMBERT COMPANY                 LIGAND PHARMACEUTICALS
                                       INCORPORATED


By:  /s/ Peter B. Corr, Ph.D.          By:  /s/ William L. Respess
                                            William L. Respess
                                            Title:  Senior Vice President,
Title: /s/ Peter B. Corr, Ph.D.             General Counsel and
         Corporate Vice President           Secretary
         Warner Lambert Company
         2800 Plymouth Road
         Ann Arbor, MI 48105


                                       36

<PAGE>


                                    EXHIBIT A

                             REPORTING REQUIREMENTS


Each report required under Section 4.3 will include the following:

1.   The declaration of a Collaboration Compound to be a Collaboration Lead
     Compound.

2.   The Projected and actual dates of filing of each IND for a Collaboration
     Lead Compound.

3.   Projected and actual initiation dates for clinical trials for each
     Collaboration Lead Compound for all indications.

4.   Projected and actual dates of completion of clinical phases.

5.   A summary of the purpose of each clinical trial of a Collaboration Lead
     Compound.

6.   The projected and actual completion dates of each trial of a Collaboration
     Lead Compound.

7.   Any projected and actual dates of NDA submissions for each Collaboration
     Lead Compound and any FDA response thereto.

8.   Copies of any publications (preclinical and clinical) by Warner-Lambert or
     its investigators or Warner-Lambert's third party
     collaborators/investigators concerning Collaboration Lead Compounds upon
     request by Ligand.

9.   Copies of materials presented to financial analysts concerning a
     Collaboration Lead Compound upon request by Ligand.

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