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Research and Licence Agreement - Tanox Inc. and Biovation Ltd.

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                         RESEARCH AND LICENCE AGREEMENT

              This Agreement is made this 21st day of April, 1999,


          TANOX, INC. of 10301 Stella Link, Houston, Texas 77025, USA
                             (hereinafter "TANOX")


  BIOVATION LIMITED of Crombie Lodge, Aberdeen Science Park, Balgownie Drive,
           Aberdeen AB22 BGU, Scotland, UK (hereinafter "BIOVATION").

WHEREAS TANOX owns or has rights to commercialize (i) certain MONOCLONAL
ANTIBODIES which each bind to a specific antigen, and to the cell lines
producing them, and (ii) other products, including a novel interferon-a fusion
protein and the expression system for it, (collectively hereinafter referred to
as the "PRODUCTS"); and

WHEREAS BIOVATION has certain technology, materials and know-how for the genetic
engineering of MONOCLONAL ANTIBODIES in a manner which removes potentially
immunogenic sequences in the variable region of antibodies and introduces human
constant regions to produce an antibody for therapeutic or IN VIVO diagnostic
purposes designed to avoid or substantially minimize immunogenic response IN
VIVO. The technology is described in International Patent Application
PCT/GB98/01473 and the procedure is referred to hereinafter in this Agreement as
"Delmmunisation," with the product of such Delmmunisation referred to as a
"Delmmunised" product or said to be "Delmmunised"; and

WHEREAS TANOX wishes BIOVATION to apply its technology and know-how to perform
the Delmmunisation on certain of its PRODUCTS and BIOVATION wishes to perform
such services;

NOW THEREFORE it is hereby agreed as follows:


     In this Agreement, the following terms have the following meanings:

     (a)  "EFFECTIVE DATE" shall mean the date first written above.

     (b)  "TECHNICAL INFORMATION" shall mean technical and scientific
          information and technology which is owned by and in the possession of

     (c)  "MONOCLONAL ANTIBODIES" shall mean and include collectively certain
          monoclonal antibodies specific for certain antigens and the cell lines
          which produce them (and which Tanox has the right to develop and
          commercialize) such Monoclonal Antibodies being described more
          specifically in the Materials Transfer Agreement between the parties
          dated March 17, 1999, or in Schedule II or otherwise specified as
          provided by TANOX pursuant to this Agreement.

     (d)  "IFN PRODUCTS" shall mean and include interferon and/or fusion
          proteins with interferon conjugated to an immunoglobulin Fc,
          preferably through a peptide linker, and the expression system
          therefor, as generally described in U.S. Patent No. 5,723,125 ("IFN
          PRODUCT"), assigned to TANOX.

     (e)  "PRODUCTS" shall mean and include MONOCLONAL ANTIBODIES and IFN

     (f)  The "RESEARCH PROGRAMME" shall mean the Delmmunisation programme
          outlined in Schedule I, as applied to MONOCLONAL ANTIBODIES or as
          modified and applied to IFN PRODUCTS.

          which are Deimmunised as a result of the RESEARCH PROGRAMME and which
          are substantially non-immunogenic.

     (h)  "DEIMMUNISED IFN" shall mean any and all IFN PRODUCTS which are
          Deimmunized as a result of the RESEARCH PROGRAMME and which have
          substantially reduced or no immunogenicity, as agreed by the parties.

     (i)  "FINAL PRODUCTS" shall mean the DEIMMUNISED ANTIBODIES and the

     (j)  "CONFIDENTIAL INFORMATION" shall mean any and all information
          disclosed by TANOX to BIOVATION with reference to the PRODUCTS or the
          RESEARCH PROGRAMME, whether such information is in tangible or
          intangible form, including non-technical or technical information,
          trade secrets, know-how, inventions, processes and samples.
          CONFIDENTIAL INFORMATION shall include any oral disclosure of such
          information, provided that BIOVATION is notified or otherwise
          reasonably informed that such information is confidential or a written
          summary of such oral disclosure is provided to BIOVATION within thirty
          (30) days of disclosure thereof.

     (k)  "PROPRIETARY TECHNOLOGY" shall mean any and all technology,
          techniques, assays or biological materials, including vectors,
          antibodies, cell lines, host cells, expression systems, plasmids,
          organisms, or DNA or RNA sequences, provided by TANOX to BIOVATION.

     (l)  "PATENT RIGHTS" shall mean any and all patent applications and any
          divisionals, continuations, continuations-in-part or patents of
          addition thereof, and any patents issuing from or claiming priority to
          any of the foregoing, or any extensions, supplemental protection
          certificates, reissues, renewals or re-examinations of such patents,
          which arise from the RESEARCH PROGRAMME.

     (m)  "DELIVERABLES" shall mean any and all inventions, materials,
          improvements, technology and intellectual property rights, including
          PATENT RIGHTS, arising out of the RESEARCH PROGRAMME or relating to
          the FINAL PRODUCTS including, without limitation, all specific data
          reports, specific cell lines, specific plasmids, antibodies and fusion

     (n)  "NET SALES" shall mean the total gross receipts from sales of FINAL
          PRODUCTS by or on behalf of TANOX, its affiliates and sublicensees to
          third parties, or from leasing, renting or otherwise making FINAL
          PRODUCTS available to third parties on a payment basis whether
          invoiced or not, less unpaid accounts receivable, returns and
          allowances actually granted, packaging costs, insurance costs,
          freight, taxes, excise or customs duties, and wholesaler, quantity or
          cash discounts customary in the trade. No deductions shall be made for
          commissions paid to individuals, whether they be with independent
          sales agencies or regularly employed by TANOX and on its payroll, or
          for the cost of collections of unpaid accounts.

          with respect to each Final Product, as applicable, the Overall Average
          of the percentage of Comparable Patients, as determined at the time
          the first royalty payment is due for the applicable DEIMMUNISED
          ANTIBODY, who had an immunogenic (HAHA) reaction to humanized
          (CDR-grafted) antibodies which target antigens, respectively, in the
          Same Class as such DEIMMUNISED ANTIBODY. For purposes of determining
          the Average Percentage Experiencing Immunogenic Reaction with respect
          to a particular Deimmunised Antibody, "Overall Average", "Comparable
          Patients", and "Class" shall have the following meaning or be
          determined in the following manner, irespectively:

          (i)  Overall Average shall be determined by first identifying all
               humanized (CDR-grafted) antibodies targeting antigens in the

               Same Class with respect to which the percentage of Comparable
               Patients having an immunogenic reaction to each of such humanized
               (CDR-grafted) antibodies is known and then computing the average
               of all such known percentages;

          (ii) Comparable Patients shall mean patients whose immune system
               function is generally characterized in the same manner as either
               immunocompetent or immunocompromised; and

          (iii) Same Class shall mean antigens primarily targeted by a
               Monoclonal Antibody that has characteristics of only of the
               following classes, which will be agreed by the Parties for each
               of the Monoclonal Antibodies to be Deimmunised: (i) primarily
               present on antigen presenting cells ("APC"); (ii) present on
               cells, but not primarily on APC ("Non-APC"); (iii) primarily a
               soluble antigen.

          The Monoclonal Antibodies which have been transferred to Biovation or
          which are now identified as possible candidates for Deimmunisation
          target the following antigen classes:

          (i)  APC - CD40 and CD4 ; (ii) non-APC - G-CSF-receptor; and (iii)
               soluble antigen - anti-factor D


2.1  TANOX has already transferred to BIOVATION three MONOCLONAL ANTIBODIES as
     to which TANOX desires BIOVATION to initiate Delmmunisation under the
     PROPRIETARY TECHNOLOGY as Tanox deems necessary for BIOVATION to perform
     the Delmmunisation thereon. TANOX may, at its election, transfer to
     BIOVATION three additional PRODUCTS along with all CONFIDENTIAL INFORMATION
     and such PROPRIETARY TECHNOLOGY as Tanox deems necessary for BIOVATION to
     perform the Delmmunisation thereon, and BIOVATION shall be obligated to
     perform such Delmmunisation under the terms and conditions of this
     Agreement with respect to the first such additional PRODUCT if it is
     transferred to BIOVATION on or before March l, 2000, and with respect to
     the second and third such additional PRODUCTS provided that they are
     transferred to BIOVATION on or before October 1, 2000 and on or before May
     1, 2001, respectively. Prior to transferring any IFN PRODUCT to BIOVATION
     under this Article 2.1, the parties shall first agree to the price and the
     research plan (analogous to Schedule I attached) for BIOVATION to produce a
     DEIMMUNISED IFN. All such PRODUCTS transferred under this Article 2.1 are
     and shall remain the property of TANOX and BIOVATION shall have no rights
     therein. Upon receipt of any MONOCLONAL ANTIBODIES, BIOVATION agrees to use
     its best efforts to immediately begin and to complete Delmmunisation
     thereof within six

     months from receipt, as described in SCHEDULE I, and upon receipt of any
     IFN PRODUCTS, BIOVATION agrees to use its best efforts to complete
     Delmmunization thereof within the time frame as agreed by the parties.

2.2  During the RESEARCH PROGRAMME, BIOVATION'S principal investigator and
     representative shall be Dr. Frank Carr and TANOX'S principal representative
     shall be Dr. David Thomas or other such person or persons as the respective
     parties shall identify to the other by written notice.

2.3  BIOVATION shall provide TANOX with a written research report and a final
     report upon completion of the RESEARCH PROGRAMME for each PRODUCT, as
     provided in Schedule I. If required by TANOX, Biovation will deliver to
     TANOX at the completion of Stage 1 of the RESEARCH PROGRAMME for each
     MONOCLONAL ANTIBODY, a corresponding chimeric antibody and plasmids
     containing DEIMMUNISED V regions from the MONOCLONAL ANTIBODIES, with
     sufficient information and materials for TANOX to reasonably verify
     satisfactory completion of Stage 1. The representatives or their designees
     shall keep in contact during the conduct of the RESEARCH PROGRAMME for each

2.4  Upon completion of the RESEARCH PROGRAMME for each PRODUCT, BIOVATION shall
     provide to TANOX a cell line producing a DEIMMUNISED ANTIBODY or a host
     cell producing a DEIMMUNISED IFN derived from the starting PRODUCT with
     sufficient information and materials for TANOX to reasonably verify that
     the FINAL PRODUCT retains the required binding affinity and specificity.
     BIOVATION shall also provide to TANOX samples of any materials created
     during the RESEARCH PROGRAMME and not previously provided, such as plasmids
     and cell lines, as appropriate, along with any protocol for using or
     storing such materials.

2.5  If TANOX requests BIOVATION to perform a human T cell immunogenicity assay
     for any DEIMMUNISED ANTIBODY, the parties have agreed that BIOVATION would
     perform such assay for no more than $80,000 per DEIMMUNISED ANTIBODY, with
     appropriate reductions if TANOX requests such assay for two or more
     DEIMMUNISED ANTIBODIES, and would use diligent efforts to complete such
     assay as soon as reasonably practical.



     a)   In consideration for the Delmmunisation performed by BIOVATION, TANOX
          shall pay BIOVATION: (i)US$112,889 within 10 days of the later of the
          EFFECTIVE DATE or the transfer of each MONOCLONAL ANTIBODY to
          BIOVATION for Delmmunisation; and (ii) two subsequent payments of
          US$112,889 at quarterly intervals measured from the date of

          such first payment for each MONOCLONAL ANTIBODY so transferred. If
          Tanox elects, pursuant to Article 2.1, to transfer additional
          MONOCLONAL ANTIBODIES to BIOVATION for Delmmunisation (I.E., in
          addition to the three MONOCLONAL ANTIBODIES already transferred), the
          payment schedule for each such additional MONOCLONAL ANTIBODY shall be
          the same as set forth above in this Article 3.1 (a), but the amount of
          each payment shall be reduced to US$86,666.

     b)   BIOVATION is obligated to produce DEIMMUNISED ANTIBODIES, for each
          MONOCLONAL ANTIBODY provided to it by TANOX for Delmmunisation, having
          the same specificity as the corresponding MONOCLONAL ANTIBODY and with
          binding efficiency for the specific antigen which is not more than
          3-fold lower than that of a corresponding chimeric antibody with
          matched human constant regions, or a corresponding humanized antibody
          (if provided by TANOX), and to provide TANOX 100 (micron) g of
          DEIMMUNISED ANTIBODY and supply to TANOX a cell line producing each
          DEIMMUNISED ANTIBODY with sufficient information and materials for
          TANOX to reasonably verify satisfactory completion of the RESEARCH
          PROGRAMME. BIOVATION is obligated to produce at least one DEIMMUNISED
          IFN, following TANOX providing one or more IFN PRODUCTS to BIOVATION,
          which DEIMMUNISED IFN shall have an activity to be agreed by the
          parties before beginning such production, and to provide TANOX 100
          (micron) g of such purified DEIMMUNISED IFN and supply to TANOX a host
          cell producing such DEIMMUNISED IFN, with sufficient information and
          materials for TANOX to reasonably verify that the DEIMMUNISED IFN has
          the agreed level of non-immunogenicity and meets the agreed
          specifications therefor, including, but not limited to, the agreed

     c)   In the event that, pursuant to clinical testing in humans, a FINAL
          PRODUCT is found to induce any immunogenic reaction IN VIVO, if
          requested by TANOX within five years of the EFFECTIVE DATE, BIOVATION
          agrees to use its best efforts, as determined in light of surrounding
          circumstances at such time, to redo the Delmmunisation and to provide
          TANOX with an improved FINAL PRODUCT as soon as possible. BIOVATION
          agrees to perform such activities for a price which is proportionally
          reduced from the total of payments under Article 3.1 (a), based on the
          relative difference between such activities and the total of
          activities in the RESEARCH PROGRAMME, but with such price subject to
          increases no greater than the UK Retail Price Index.

     d)   TANOX shall pay BIOVATION a royalty of 1.66% on NET SALES of FINAL
          PRODUCTS; provided, however, that if, any DEIMMUNISED ANTIBODY is
          judged by a court of competent jurisdiction in a particular territory
          to be an infringement of any third party patents relating to antibody
          humanization in that territory including but not limited to Protein

          Design Labs' U S. Patent Nos. 5,530,101; 5,693,761; 5,693,762 and
          European Patent No. 0451216 or related United States or foreign
          patents (other than the Boss patents held by Celltech relating to
          antibody co-co-expression, the Winter patents held by MRC relating to
          antibody humanization and the Cabilly patents held by Genentech
          relating to chimeric antibodies and the United States Cabilly patent
          application relating to antibody co-expression), or if TANOX is
          required to license or licenses, because licensing is appropriate in
          the opinion of independent counsel, any such third party patents
          relating to antibody humanization in a particular territory (other
          than those excluded above) for any DEIMMUNISED ANTIBODY, the royalty
          shall be reduced in that territory by 50% of the royalty percentage
          rate relating to any such third party patents subject to a minimum
          royalty of 0.83% on NET SALES of such DEIMMUNISED ANTIBODY; provided
          further, however, that a DEIMMUNISED ANTIBODY shall only be subject to
          royalties under this Article 3.1(d) if it elicits an immunogenic
          response in no more than 25% of the AVERAGE PERCENTAGE EXPERIENCING
          IMMUNOGENIC REACTIONS. The royalty due under this Article 3.1 (d)
          shall be payable in a specific territory until the earlier of: (i) 10
          years from the first sale of a FINAL PRODUCT in that specific
          territory, or (ii) a judgment or declaration by a court or
          governmental agency or other competent tribunal in that specific
          territory that BIOVATION's patents covering the Delmmunisation
          procedure used for such FINAL PRODUCT and/or which are derived from
          International Patent Application PCT/GB98/01473, are invalid or
          unenforceable, or in the event that such patents have expired in that
          specific territory. TANOX may withhold from royalties due BIOVATION
          amounts for payment of any withholding tax that TANOX has actually
          paid to any taxing authority with respect the royalty payments due to
          BIOVATION hereunder.

3.2  Commencing with the date of the first sale of FINAL PRODUCT, TANOX shall
     pay all royalties due to BIOVATION, pursuant to Article 3.1 (d) quarterly
     in arrears and within sixty (60) days of 31 December, 31 March, 30 June and
     30 September for the preceding quarter or any part thereof. TANOX shall,
     and shall procure that its licencees and sub-licensees of the FINAL PRODUCT
     shall, keep full, true and accurate books of account or verified copies
     thereof setting out the price and volume of sales and other disposals of
     FINAL PRODUCT and such other particulars as may be pertinent to determine
     product revenue and the amount of royalties due thereon to BIOVATION. TANOX
     shall produce a statement thereof in respect of each quarter which shall be
     certified by a responsible officer of TANOX and which shall accompany each
     payment of royalties. TANOX shall provide at the end of each calendar year
     a certified statement detailing product revenue and setting out total
     royalties due hereunder during that year. The said books or verified copies
     thereof shall be open, during regular business hours for two (2) years
     following the end of the calendar year to which they pertain, to the
     inspection of an independent certified public accountant retained by

     and acceptable to TANOX for the purpose of verifying TANOX's royalty
     statements (and TANOX's compliance in all other respects with this
     Agreement), such inspections to occur not more often than once each
     calendar year. The costs and expenses relating to such inspection shall be
     borne by BIOVATION unless it is established that as a result of an error
     TANOX has failed to pay at least ninety percent (90%) of the full amount
     due and owing under this Agreement, in which event the costs and expenses
     of such inspection shall be borne by TANOX. In addition any outstanding
     payments due to BIOVATION which are identified as a result of carrying out
     the investigation shall be made over to BIOVATION as soon as is possible.

3.3  All payments under Article 3.1 (a) shall be due within thirty days of
     receipt of invoice by TANOX of invoice from BIOVATION; provided, however,
     that in the event that a DEIMMUNISED ANTIBODY among the first three
     PRODUCTS transferred to BIOVATION under Article 2.1 does not meet the
     specificity or binding affinity required under Article 3.1 (b), then Tanox
     may offset US$79,750 against any payments due Biovation under this
     Agreement, including, without limitation, payments due under Article 3.1
     (a) for each such DEIMMUNISED ANTIBODY and, with respect to any other
     DEIMMUNISED ANTIBODY received from BIOVATION the amount of such offset
     allowed shall be $65,000. Notwithstanding anything in this Agreement to the
     contrary, Tanox may suspend payments with respect to any Monoclonal
     Antibody with respect to which Delmmunisation is in progress as follows:
     (i) Tanox may suspend the first quarterly payment due after the initial
     payment until 10 days following successful completion of all stage 1
     activities in the Research Programme and (ii) Tanox may suspend the final
     quarterly payment until 10 days following successful completion of all
     stage 2 activities in the Research Programme.

3.4  Payments shall be made by cheque drawn upon a UK clearing bank or paid into
     BIOVATION'S designated bank account. BIOVATION reserves the right to
     suspend all work on a PRODUCT in the event payment is more than 30 days
     past due with respect to such PRODUCT; provided, however, that BIOVATION
     must have first notified TANOX that such payment is past due at least 30
     days prior to suspending work.

3.5  Subject to Article 3.3, any payments due hereunder which are not paid
     within thirty days of receipt by TANOX of invoice from BIOVATION shall then
     be subject to the levy of daily interest charges at the rate of 3% over the
     prevailing Barclays UK bank interest rate calculated from the published
     rate on the last day of each preceding month where a balance is due.


4.1  With respect to each FINAL PRODUCT produced under the RESEARCH PROGRAMME,
     provided that no payments under Article 3.1 (a) are overdue,

     BIOVATION shall assign to TANOX all rights to the FINAL PRODUCT and to the
     DELIVERABLES, including all of the PATENT RIGHTS.

4.2  Pursuant to Article 4.1, TANOX shall be free to use the DELIVERABLES and
     FINAL PRODUCTS, including any methods, protocols and procedures it receives
     from BIOVATION, in any manner whatsoever subject to the provisions of
     Article 7.4.

4.3  BIOVATION agrees to cooperate with TANOX's reasonable requests for
     assistance in the filing, prosecution, maintenance, enforcement or defense
     of any PATENT RIGHTS, including by filing patent applications or taking any
     such actions in its own name, at Tanox's request. TANOX shall reimburse
     BIOVATION for all out-of-pocket expenses incurred by BIOVATION during such

4.4  With respect to each FINAL PRODUCT produced under the RESEARCH PROGRAMME,
     upon completion of the RESEARCH PROGRAMME provided that no payments under
     Article 3.1 (a) for such FINAL PRODUCT are overdue, BIOVATION agrees to
     grant to TANOX a non-exclusive worldwide licence to BIOVATION's patents
     relating to Delmmunisation technology, including all such patents based on,
     relating to or derived from International Patent Application
     PCT/GB98/01473, and a non-exclusive sublicence to all of BIOVATION's rights
     under the National Institutes of Health patents relating to Veneering
     technology, which are based on, relate to or are derived from U.S.
     Application Serial Nos. 08/109,187 and 08/609,218, for the purpose of
     making, using and selling the FINAL PRODUCTS. Such sublicence may be
     terminated in the event that BIOVATION's licence from the National
     Institutes of Health is terminated although at such time, and at any time
     during the term of the sublicence, TANOX will have the option to licence
     directly from the National Institutes of Health subject to approval by the
     National Institutes of Health. In the event that TANOX enters such a direct
     licence with the National Institutes of Health, TANOX shall receive a full
     credit for percentage royalties paid in connection therewith against the
     royalty due under Article 3.1 (d); provided, however, that in no event
     shall the total of the under this Article 4.4 reduce the royalties
     otherwise due under Article 3.1 (d) to less than 0.83%.


5.1  The term of this Agreement shall commence on the EFFECTIVE DATE and shall
     continue until the expiration of the royalty obligation set forth in
     Article 3.1 (d) for all PRODUCTS, unless earlier terminated in accordance
     with this Article 5.

5.2  Either party shall have the right to immediately terminate this Agreement
     in the event the other party: (i) shall fail to perform any of its material
     obligations under this Agreement and such default is not cured within 60
     days of notice of default,

     or (ii) shall file for protection under bankruptcy or similar statutes or
     shall be liquidated or placed in receivership.

5.3  Upon expiration or termination of this Agreement, BIOVATION shall deliver
     possession and title to all DELIVERABLES and FINAL PRODUCTS and shall
     TECHNOLOGY received from TANOX. TANOX's obligations for payment for work
     performed by BIOVATION prior to the date of expiration or termination of
     this Agreement, all obligations of assignment and cooperation under Article
     4, the confidentiality and non-use obligations of Article 6 and the
     warranties and disclaimers of Article 7 shall survive expiration or
     termination of this Agreement, and, following expiration or termination of
     this Agreement, all licenses and sublicenses under Article 4 shall become
     fully paid up and royalty-free and irrevocable thereafter, except as
     otherwise provided therein.


6.1  BIOVATION agrees that it will hold the CONFIDENTIAL INFORMATION and any
     PROPRIETARY TECHNOLOGY received from TANOX in secrecy and confidence and
     will not disclose it to any third person, nor use it for any purpose other
     than the evaluation which is the purpose of this Agreement, except to the
     extent that such CONFIDENTIAL INFORMATION:

     a.   was known to BIOVATION at the time it was received, and BIOVATION
          promptly so notifies TANOX, or it is subsequently developed
          independently by BIOVATION without any reliance on the information
          received, as evidenced by written record; or

     b.   was publicly known when received from TANOX or thereafter becomes
          publicly known through no fault of BIOVATION; or

     c.   is made known to BIOVATION by a third person who did not derive it
          from TANOX and who does not impose any obligation or confidence on
          BIOVATION, as evidenced by written record; or

     d.   is approved for disclosure by prior written consent of TANOX; or

     e.   is required by government authority, and reasonable notice of the
          impending disclosure has been given to TANOX, and TANOX has been
          provided an opportunity to limit the disclosure to the extent
          possible, for example, by cooperating in drafting a protective order.

6.2  BIOVATION further agrees that it will restrict disclosure of the
     own organization (and will not export except as approved by TANOX and then,
     only in compliance with the rules of the United States Export
     Administration) to

     those persons having a need to know it for the purpose of this Agreement,
     and then, only if such persons are subject to obligations of
     confidentiality and non-use of the same scope as set forth set forth in
     this Article 6.

6.3  The above obligations relating to CONFIDENTIAL INFORMATION shall expire
     five (5) years from the date of BIOVATION receiving the CONFIDENTIAL

     remain the sole and exclusive property of TANOX.

6.5  This Agreement shall not be construed as granting any license rights to


7.1  BIOVATION represents and warrants that the performance of its obligation
     hereunder will not conflict with any existing obligation to a third party.

7.2  Except as otherwise provided in this agreement, neither party makes any
     representations or warranties whatsoever, whether express or implied, with
     regard to any materials, information or know-how, including, without
     TECHNICAL INFORMATION. In particular, neither party makes any warranty of
     fitness for a particular purpose or of merchantability.

7.3  BIOVATION shall not be responsible for any claims brought against TANOX by
     third parties in respect of any damage or injury directly resulting from
     the use of the DELIVERABLES. TANOX shall not be responsible for any damage
     or injury resulting from BIOVATION's use of the CONFIDENTIAL INFORMATION,
     indemnify and hold harmless TANOX from all claims relating to such damage
     or injury.

7.4  TANOX, and not BIOVATION, is responsible in its sole discretion for
     obtaining additional licences to any patents and technologies required for
     the commercialisation of the FINAL PRODUCTS and BIOVATION will assist TANOX
     in obtaining such licences or in activities relating thereto, including in
     litigation relating to such licences or to the validity, infringement or
     enforceability of such patents; provided, however, that TANOX shall
     reimburse BIOVATION for all out-of-pocket expenses incurred by BIOVATION
     during such assistance.


If the performance of this Agreement or any obligation hereunder, is prevented,
restricted or interfered with by reason of fire or other casualty or accident,
strikes or

labour disputes, inability to procure raw materials, power or supplies, war,
invasion, civil commotion or other violence, compliance with any order of any
governmental authorities or any other act or conditions whatsoever beyond
reasonable control of either party hereto, the party so affected upon giving a
prompt notice to the other party shall be excused from such performance to the
extent of such prevention, restriction or interference; provided, however, 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
despatch whenever such causes are removed; provided further, however, that if
such non-performance shall continue for a period of more than 6 months, the
other party shall have the right to terminate this Agreement.


In the event that BIOVATION shall be acquired by another company, or be merged
with another company, this Agreement shall be assumed by and binding upon any
such company. However, excluding this exception, this Agreement shall not be
assigned by BIOVATION without the prior written consent of TANOX. TANOX may
assign this Agreement to its affiliates and subsidiaries, and this Agreement
shall be assumed by and binding upon any company TANOX is acquired by or merges
with, but Tanox may not assign this Agreement to other parties without
BIOVATION's prior written consent.


The parties hereto shall attempt to amicably settle all disputes, controversies
or differences which may arise between them out of or in relation to this
Agreement. In case of failure of amicable settlement between the parties hereto,
all such disputes, controversies or differences shall be finally settled by
binding arbitration before three arbitrators selected by the parties from a pool
of potential arbitrators. The arbitration shall take place in England, under
English law, in accordance with the Rules of Conciliation and Arbitration of the
International Chamber of Commerce if BIOVATION is the responding party and in
Houston, Texas, under Texas law, if TANOX is the responding party, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration award shall be final and binding, may impose
injunctive or other equitable relief including specific performance, and may be
enforced by any court having jurisdiction, or by courts where the arbitration
took place or where a party resides.


     (a)  All notices and statements required to be given to either party shall
          be despatched by express courier (E.G., DHL or FedEx) or by telefax,
          with confirmation, addressed to such party at the following address:

               To BIOVATION
               Dr. Frank J. Carr
               Biovation Limited

               Chief Executive Officer
               Crombie Lodge
               Aberdeen Science Park
               Balgownie Drive
               Aberdeen AB22 8GU
               Tel: 44 1224 707337
               Fax: 44 1224 708816

               To Tanox, Inc.
               Dr. Nancy Chang, President
               Tanox, Inc.
               10301 Stella Link
               Texas 77025
               copy to: Head of Legal Affairs
               Tel: 1 713 664 2288
               Fax: 1 713 664 8914

     (b)  All notices and statements shall be deemed effective the following
          day, if sent by telefax, or three business days after shipping, if
          sent by express courier.

     (c)  Each party hereto may change its address or person to whom notice is
          directed set forth above for the purpose of this Agreement by giving a
          written notice to the other party from time to time.


This Agreement contains the entire understanding of the parties hereto with
respect to the subject matter contained herein. There are no restrictions,
promises, covenants or understandings other than those expressly set forth
herein; except that the obligations of the Confidentiality Agreement between the
parties of October, 1998 remains in full force and effect. No rights or duties
on the part of either party hereto are to be implied or inferred beyond those
expressly herein provided for. The parties hereto may, from time to time during
the continuance of this Agreement, modify, vary or alter any of the provisions
of this Agreement but only by an instrument duly executed by the parties hereto.


This Agreement may be amended and any of its terms or conditions may be waived
only by a written instrument executed by both parties, or, in the case of a
waiver, by the party waiving compliance. The failure of either party at any
time to require performance of any

provision hereof shall in no manner affect its rights a later time to enforce
the same. No waiver by either party of any condition or term in any instance
shall be construed as a further or continuing waiver of such condition or term
or of another condition or term.


The relationship between the parties is that of independent contractor. Nothing
herein shall be deemed to constitute TANOX, on the one hand, or BIOVATION, on
the other hand, as the agent or representative of the other, or as master and
servant, employer and employee, joint venturers or partners for any purpose.
Neither party shall use the other's name without the consent of the other.


In the event one or more provisions of this Agreement should for any reason be
held by any court or authority having applicable jurisdiction to be invalid,
illegal or unenforceable, such provision(s) shall either be reformed to comply
with applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of the remainder of this Agreement.


     (a)  Each party acknowledges that it has negotiated and entered into this
          Agreement in good faith.

     (b)  The Schedules I and II attached are incorporated and considered part
          of this Agreement.

     IN WITNESS WHEREOF, the parties hereto may have caused this Agreement to be
executed in duplicate originals, in which case each counterpart shall be
considered an original.


Signed: /s/ DR. FRANK J. CARR
Dr. Frank J. Carr
Chief Executive Officer


Signed: /s/ NANCY T. CHANG
Nancy T. Chang, CEO

                                   SCHEDULE 1

                              RESEARCH PROGRAMME:
                             STAGES AND TIMESCALES

        (V = variable region; C = constant region; CDR = complementarity
        determining region; H = heavy; L = light)

Provision and growth of starting monoclonal antibody producing cell lines.
Confirmation of starting antibody production (simple assays provided by TANOX).
Optional V region sequencing or sequence verification.
Computer analysis of VH and VL chain sequences for immunogenic epitopes.
Design of DEIMMUNISED V regions.
Construction of DEIMMUNISED V region frameworks.
Construction of control chimeric antibody (if not already available).

TIMESCALE:    3 months from start.
DELIVERABLES: Plasmids containing DEIMMUNISED V regions.
              A report is to be delivered to TANOX.

Cloning of DEIMMUNISED VH and VL fragments into expression vectors.
Addition of human heavy chain gamma 1 and light chain kappa constant region gene
fragments (or other C regions specified by TANOX).
Transfection into mouse NSO myeloma cell line (or other cell line specified by
Selection and analysis of clones for DEIMMUNISED ANTIBODY production.

TIMESCALE:    3 months.
DELIVERABLES: Supply the control chimeric antibody, the recombinant cell-line
stably producing a DEIMMUNISED ANTIBODY, and 100 (micron)g of purified
              A report is to be delivered to Tanox.

                                   SCHEDULE II

                                                        ISOTYPE OF STARTING
DESIGNATED NAME                     ANTIGEN                  ANTIBODY
---------------                     -------             -------------------
(1) 5D12                            CD40                    Human IgG4

(2) 5A8                             CD4                     Human IgG4

(3) 166-93                          G-CSF Receptor          Murine IgG1

(4) 166-32 or                       Factor D                Human IgG1
    IFNa-Fc                                                 Human IgG4


Payment due now: $225,778 (5A8 and 5D12)

First report due by July 21 (completion of Stage I); Second payment due

Final report due by October 21, at completion; third payment due

For the most favorable pricing: we must provide an additional product by March
l, 2000, then another by October l, 2000, and a final one by May l, 2001. Each
payment would be reduced to $86,666 for these three products.

Interferon products require a separate negotiation of pricing and scheduling

May provide novel patentable products with enhanced activity

Begin recording immunogenicity data for humanized antibodies in clinical trials.

Examine products to determine if PDL license is needed

If he loses his NIH license, we go to NIH and get it, if needed.