Exhibit 10.1
Confidential treatment requested

RESEARCH AGREEMENT

    THIS RESEARCH AGREEMENT dated as of June 8, 1993 (the "Agreement"), is entered into between IXSYS, INC., a Delaware corporation ("Ixsys"), having a place of business located at 3550 General Atomics Court, Suite L-103, San Diego, California 92121, and BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation ("Bristol-Myers"), having a place of business located at Route 206 and Province Line Road, Princeton, New Jersey 08543-4000.

WITNESSETH

    WHEREAS, Ixsys and Bristol-Myers desire to design and develop products, for use in the in vivo diagnosis or treatment of solid tumors in humans, through the use of one or more antibodies.

    WHEREAS, Bristol-Myers desires to sponsor certain research by Ixsys, and to develop and commercialize, products resulting from such research and development.

    WHEREAS, Bristol-Myers and Ixsys are entering into three (3) other agreements, entitled "LICENSE AGREEMENT," "SCREENING AND OPTION AGREEMENT," and "STOCK PURCHASE AGREEMENT," dated as of even date herewith, in addition to this "RESEARCH AGREEMENT."

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

ARTICLE 1
DEFINITIONS

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

    1.1   "Affiliate"   shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person. A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever.

    1.2   "Annual Workplan"   shall mean the research workplan prepared annually in accordance with the provisions of Section 3.1 below.

    1.3   "Antibody" and "antibody"   shall mean a molecule which has the ability to bind an antigen of interest, including without limitation, single chain antibody molecules, Fab fragments, F(ab) ₂ fragments, Fv fragments, single chain Fv molecules, and whole antibody molecules.

    1.4   "BR96 Antibodies"   shall mean those certain Program Antibodies that (a) are murine or chimeric antibodies and (b) are specifically reactive immunologically with the BR96 antigen, such BR96 antigen having characteristics substantially as described in Exhibit B hereto, as amended, supplemented or modified from time to time.

    1.5   "Commencement Date"   shall mean March 21, 1993.

    1.6   "FDA"   shall mean the United States Food and Drug Administration, or the successor thereto.

[*]   Confidential treatment requested

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    1.7   "Field"   shall mean the in vivo diagnosis or treatment of solid tumors in humans through the use of one or more antibodies.

    1.8   "First Commercial Sale"   shall mean, with respect to any Product, the first sale for use or consumption by the general public of such Product in any country in the Territory after required marketing and pricing approval has been granted, or otherwise permitted, by the governing health authority of such country.

    1.9   "Improvements"   shall mean all inventions, discoveries, improvements or other technology, whether or not patentable, and any patent applications or patents based thereon, made or conceived during and pursuant to the Research Program by employees or others acting solely on behalf of Bristol-Myers or its Affiliates which represent an improvement to Ixsys' Patent Rights or Ixsys' Know-How.

    1.10   "Know-How"   shall mean any information and data, which is not generally known including, but not limited to, formulae, procedures, protocols, techniques and results of experimentation and testing, which are necessary or useful to make, use, develop, sell or seek regulatory approval in any country in the Territory to market a Product for use in the Field, in which Ixsys or Bristol-Myers has an ownership interest and which is in the possession of Ixsys or Bristol-Myers on the date of the Agreement or thereafter during the term of the Research Program.

    1.11   "L6 Antibodies"   shall mean those certain Program Antibodies that (a) are murine or chimeric antibodies and (b) are specifically reactive immunologically with the L6 antigen, such L6 antigen having characteristics substantially as described in Exhibit B hereto, as amended, supplemented or modified from time to time.

    1.12   "License Agreement"   shall mean that certain License Agreement dated as of even date, between Ixsys and Bristol-Myers, as the same may be amended, modified, supplemented or restated from time to time.

    1.13   "Net Sales"   shall mean, with respect to any Product, the invoiced sales price of such Product billed to independent customers who are not Affiliates, less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, out-dated or returned Product; (b) actual freight and insurance costs incurred in transporting such Product in final form to such customers; (c) trade discounts, cash discounts, quantity discounts, rebates and other price reduction programs; (d) sales, value-added and other direct taxes incurred; and (e) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Product in final form.

    1.14   "Patent Rights"   shall mean (a) all patent applications heretofore or hereafter filed or having legal force in any country within the Territory owned by or licensed to Ixsys or Bristol-Myers or to which Ixsys or Bristol-Myers otherwise acquires rights, which claim a Product or a Program Antibody or the process of manufacture or use of a Product or a Program Antibody, together with any and all patents that have issued or in the future issue therefrom, including utility, model and design patents and certificates of invention, and (b) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; all to the extent and only to the extent that Ixsys or Bristol-Myers now has or hereafter will have the right to grant licenses, immunities or other rights thereunder.

    1.15   "Person"   shall mean an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

    1.16   "Prior Agreements"   shall mean the agreement between Ixsys and Bristol-Myers Pharmaceutical Research Institute and its Affiliates, dated January 23, 1991, as extended by the letter

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agreement dated March 16, 1992 and the letter agreement dated August 5, 1992, and the Research and Option Agreement between Bristol-Myers and Ixsys dated September 18, 1992.

    1.17   "Product"   shall mean any Diagnostic Product or Therapeutic Product.

    1.17.1   "Diagnostic Product"   shall mean a diagnostic product, containing one or more Program Antibodies, for use in the in vivo detection of solid tumors in humans.

    1.17.2   "Therapeutic Product"   shall mean the final dosage formulation of a product incorporating pharmaceutical compositions containing a Program Antibody for use in the treatment of solid tumors in humans, regardless of the route of administration. Each different chemical formulation of a Therapeutic Product containing the same one or more Program Antibodies but no additional antibodies, except different formulations for use in the treatment of the same indication in the Field by different routes of administration, shall constitute a different Therapeutic Product.

    1.18   "Program Antibody"   shall mean an antibody that (a) is first conceived or synthesized, or the variable regions of which have been modified, by Ixsys, Bristol-Myers or both during and pursuant to the Research Program; and (b) is specifically reactive immunologically with solid tumor antigens; whether or not the variable regions of such antibody have been modified by Bristol-Myers, its Affiliates or permitted sublicensees after termination of the Research Program.

    1.19   "Research Program"   shall mean the research program described in the Annual Worldplans, and the research performed by Bristol-Myers and Ixsys pursuant to the Prior Agreements.

    1.20   "Royalty Term"   shall mean, with respect to each Product in each country in the Territory, the period of time equal to the longer of (a) [*] ([*]) [*] from the date of the First Commercial Sale of such Product in such country or (b) if the manufacture, use or sale of such Product in such country was at the time of the First Commercial Sale in such country covered by a Valid Patent Claim, [*].

    1.21   "Steering Committee"   shall mean the joint research and development committee composed of representatives of Ixsys and Bristol-Myers described in Section 5.1 hereof.

    1.22   "Territory"   shall mean the entire world.

    1.23   "Third Party"   shall mean any Person other than Ixsys, Bristol-Myers and their respective Affiliates.

    1.24   "Valid Patent Claim"   shall mean either (a) a claim of an issued and unexpired patent included within the Patent Rights, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent application included within the Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES

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

    2.1   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 and (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.

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    2.2   Authorization and Enforcement of Obligations.   Such party (a) has the corporate power and authority and the legal right to enter into the 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 the Agreement and the performance of its obligations hereunder. The 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.

    2.3   Consents.   All necessary consents, approvals and authorizations of all governmental authorities and other Persons, if any, required to be obtained by such party in connection with the Agreement have been obtained.

    2.4   No Conflict.   The execution and delivery of the 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 contractual obligation of such party and (b) do not conflict with, or constitute a default under, any contractual obligation of such party.

    2.5   DISCLAIMER OF WARRANTIES.   NOTHING IN THE AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY IXSYS OR BRISTOL-MYERS THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE PATENT RIGHTS, THAT ANY PATENT WITHIN THE PATENT RIGHTS WHICH ISSUES WILL BE VALID, OR THAT THE USE OF ANY LICENSE GRANTED HEREUNDER OR THAT THE USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER PERSON. FURTHERMORE, NEITHER IXSYS NOR BRISTOL-MYERS MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

    2.6   Maintenance of Licenses.   Ixsys shall use due diligence to maintain each license agreement between Ixsys and any Third Party involving Ixsys' Patent Rights sublicensed to Bristol-Myers hereunder.

ARTICLE 3
RESEARCH PROGRAM

    3.1   Annual Workplan.   The Annual Workplan for the period from the Commencement Date through and including June 30, 1993 is set forth on Exhibit A hereto. The Steering Committee shall prepare and provide to Ixsys and Bristol-Myers on or before July 1, 1993, the Annual Workplan, in form and substance mutually acceptable to Ixsys and Bristol-Myers, which shall describe the research for the period from July 1, 1993 through and including December 31, 1993. Thereafter, prior to November 1 of each year (commencing on November 1, 1993) during the term of the Research Program, the Steering Committee shall prepare and provide to Ixsys and Bristol-Myers a proposed Annual Workplan describing the research for the next calendar year. Prior to December 1 of each such year (commencing on December 1, 1993), Ixsys and Bristol-Myers shall approve such Annual Workplan with such changes as Ixsys and Bristol-Myers muta11y deem necessary. The Annual Workplan shall allocate the responsibilities of the parties to conduct the research under the Research Program. The Steering Committee may revise the Annual Workplan, from time to time, as approved by the mutual written agreement of Ixsys and Bristol-Myers.

    3.2   Research Procedures.   

    3.2.1   Conduct of Research.   Ixsys and Bristol-Myers each shall conduct the Research Program in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations, and all other requirements of any applicable good

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laboratory practices to attempt to achieve its objectives efficiently and expeditiously. Ixsys and Bristol-Myers each shall proceed diligently to perform the work set out in the Annual Workplan by using their respective good faith efforts to provide, among others, the following resources:

    (a) in the case of Ixsys, allocation of eight (8) Ixsys scientists per year (measured on a full-time equivalent basis), using personnel with sufficient skills and experience, together with sufficient equipment and facilities, to carry out its obligations under the Research Program and to accomplish the objectives of the Research Program; and

    (b) in the case of Bristol-Myers, allocation of sufficient time and effort, using personnel with sufficient skills and experience, together with sufficient equipment and facilities, to carry out its obligations under the Research Program and to accomplish the objectives of the Research Program.

    3.2.2   Use of Research Funding.   Ixsys shall apply the research funding it receives from Bristol-Myers under the Agreement to fund the direct and indirect costs of carrying out its obligations under the Research Program and accomplishing the objectives thereof.

    3.2.3   Exclusivity.   

    (a) During the term of the Research Program, Ixsys shall not perform any research or development work, with or for the benefit of any Third Party, directed to products for use in the Field, unless specifically permitted under the Agreement.

    (b) During the term of the Research Program, Ixsys shall not engage in any research, development or commercialization of any product, for use in the treatment of cancer in humans, incorporating pharmaceutical compositions containing one or more antibodies, with or for the benefit of any Third Party, unless Ixsys first offers to Bristol-Myers the right to collaborate with Ixsys on the research, development and commercialization of such product. Such offer shall specify the material terms and conditions of the offer to be made to Bristol-Myers. If Bristol-Myers elects to collaborate with Ixsys on the research, development and commercialization of any such product, Bristol-Myers shall deliver to Ixsys written notice of its election within ninety (90) days after receipt of written notice from Ixsys of Ixsys' intention to collaborate with a Third Party regarding such product. If Bristol-Myers timely exercises its option to collaborate with Ixsys on the research, development and commercialization of such product, Bristol-Myers and Ixsys shall negotiate in good faith and, within thirty (30) days after receipt of written notice from Bristol-Myers of its exercise of such option, enter into a collaborative agreement substantially on the terms and conditions offered to Bristol-Myers above. If Bristol-Myers fails to timely exercise its option to collaborate with Ixsys with respect to any such product or the parties fail to reach agreement after good faith negotiations as provided above, Ixsys shall have the right, in its sole discretion, to engage in research, development and commercialization of such product with or for the benefit of any Third Party on terms and conditions not materially more favorable to such Third Party, taken as a whole, than those offered to Bristol-Myers.

    3.2.4   Subcontracts.   Ixsys and Bristol-Myers each shall have the right to subcontract portions of the Research Program to be performed by it in the normal course of its business without the prior consent of the other party; provided, however, that (a) such subcontract shall not involve the transfer of Know-How of the other party to Third Parties; (b) the subcontracted Third Party shall enter into a written confidentiality agreement with the subcontracting party in accordance with the provisions of Article 12 below; (c) the subcontracting party shall supervise such subcontract work; (d) the subcontracted Third Party shall be in compliance in all material respects with all requirements of applicable laws and regulations, together with all applicable good laboratory

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practices; and (e) promptly after entering into such subcontract, the subcontracting party shall give written notice thereof to the other party.

    3.3   Funding of the Research Program.   Upon execution of the Agreement by both parties, Bristol-Myers shall pay Ixsys the sum of $[*] in support of research by Ixsys under the Research Program for one year following the Commencement Date. Thereafter, on or before each anniversary of the Commencement Date during the remaining term of the Research Program, Bristol-Myers shall pay Ixsys a research fee equal to the [*]. If Bristol-Myers and Ixsys mutually agree to increase the scope of the Research Program, then Bristol-Myers shall pay Ixsys an additional annual fee to be agreed upon by the parties.

    3.4   Records and Reports.   

    3.4.1   Records.   Ixsys and Bristol-Myers each shall maintain records, in sufficient detail and in good scientific manner, 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).

    3.4.2   Inspection of Records.   Ixsys and Bristol-Myers each shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of the other party to the extent reasonably required for the performance of its obligations under the 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 Section 12.1 below and shall not use such records or information except to the extent otherwise permitted by the Agreement.

    3.4.3   Research Reports and Information.   Ixsys and Bristol-Myers each shall keep the other informed of the progress of such party under the Research Program. Within thirty (30) days following each April 30, August 31 and December 31 during the term of the Research Program and within thirty (30) days following the expiration or termination of the Research Program, Ixsys and Bristol-Myers each shall prepare, and distribute to each member of the Steering Committee and the other party, a reasonably detailed written summary report which shall describe the work performed by such party to date under the Research Program.

    3.5   Term of Research Program.   Subject to the provisions of Section 15.2 below, the term of the Research Program shall continue for a period of [*] ([*]) [*] after the Commencement Date; provided, however, the term of the Research Program may be extended for an additional period of [*] ([*]) [*], by the mutual written agreement of the parties not less than [*] ([*]) [*] prior to the [*] anniversary of the Commencement Date.

    3.6   Project Leaders.   Ixsys and Bristol-Myers each shall appoint a person (a "Project Leader") to coordinate its activities under 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 after the date of the Agreement of the appointment of its Project Leader and shall notify the other party as soon practicable upon changing this appointment.

    3.7   Material Transfer.   In order to facilitate the Research Program, either party may provide to the other party certain biological materials or chemical compounds including, but not limited to, structural genes, genetic sequences, promoters, enhancers, probes, linkage probes, vectors, hosts, plasmids, peptides, polypeptides, transgenic animals, proteins, biological modifiers, antigens, hybridomas, antibodies, toxins, lectins, enzymes, lipids, hormones, viruses, viroids, cell or parts of cells, cell lines and transformed cell lines, and any progeny, replicates, mutants, fragments and derivatives of the foregoing (collectively, "Material') owned by or licensed to the supplying party (other than under the Agreement) for use by the other party in furtherance of the Research Program. Except as otherwise

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provided under the Agreement, all such Material delivered to the other party (a) shall remain the sole property of the supplying party, (b) shall be used only in furtherance of the Research Program and solely under the control of the other party, (c) shall not be used or delivered to or for the benefit of any Third Party without the prior written consent of the supplying party, and (d) shall not be used in research or testing involving human subjects. The Materials supplied under this Section 3.7 must be used with prudence and appropriate caution in any experimental work, since not all their characteristics may be known. THE MATERIALS ARE PROVIDED AS IS AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIAL WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

ARTICLE 4
DEVELOPMENT AND COMMERCIALIZATION

    4.1   Preclinical and Clinical Development.   The decision as to whether to proceed with the preclinical and clinical development and marketing of any Product shall be in the sole discretion of Bristol-Myers. Nothing contained in this Agreement shall be interpreted as requiring Bristol-Myers to develop or market any Product. Bristol-Myers shall comply with all applicable laws and regulations and good laboratory, clinical and manufacturing practices in the preclinical and clinical development of the Products which Bristol-Myers elects to develop, and shall cause its Affiliates and subcontractors to do the same.

    4.2   Development Reports and Information.   Bristol-Myers shall keep Ixsys informed as to the progress of the preclinical and clinical development and testing of all Products which Bristol-Myers elects to develop and the preparing, filing and obtaining of the approvals necessary for marketing of all Products. Within thirty (30) days following each April 30, August 31 and December 31 following the commencement of preclinical development of a Product undertaken by Bristol-Myers, Bristol-Myers shall provide to Ixsys a written report which shall summarize the progress of the development and testing of Products in preclinical development and clinical trials. In addition, Bristol-Myers shall provide to Ixsys a minimum of six (6) months advance written notice of the contemplated filing of an Investigational New Drug application ("IND") with the FDA in the United States (or its equivalent in any other country), a written report which shall summarize all other regulatory submissions prior to the date of such submissions, and written notice of all approvals obtained promptly after obtaining such approvals.

ARTICLE 5
MANAGEMENT OF THE RESEARCH PROGRAM

    5.1   Steering Committee.   

    5.1.1   Composition of the Steering Committee.   The Research Program shall be conducted under the direction of the Steering Committee comprised of three (3) named representatives of Ixsys and three (3) named representatives of Bristol-Myers. Each party shall appoint its respective representatives to the Steering Committee from time to time, and may substitute one or more of its representatives, in its sole discretion, effective upon notice to the other party of such change. Members of the Steering Committee may be represented at any meeting by another member of the Steering Committee, or by a deputy.

    5.1.2   Meetings.   The Steering Committee shall meet not less than once every four months during the term of the Agreement, on such dates and at such times and places as agreed to by

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Ixsys and Bristol-Myers, alternating between San Diego and Princeton, or such other locations as the parties shall agree. At such meetings, the Steering Committee shall discuss the Research Program and set priorities therefor.

    5.1.3   Committee Actions.   Any approval, determination or other action agreed to by all of the members of the Steering Committee or their deputies present at the relevant Steering Committee meeting shall be the approval, determination or other action of the Steering Committee; provided, however , that at least two (2) representatives of each party are present at such meeting.

    5.2   Disagreements.   All disagreements within the Steering Committee shall be resolved in the following manner:

    5.2.1  The representatives of the Steering Committee promptly shall present the disagreement to the executive of each of Ixsys and Bristol-Myers who has the principal responsibility for such party's work under the Agreement.

    5.2.2  Such executives shall meet to discuss each party's view and to explain the basis for their respective positions of such disagreement, and in good faith shall attempt to resolve such disagreement among themselves.

    5.2.3  If such executives cannot promptly resolve such disagreement, then such executives shall establish a mechanism to resolve such disagreement promptly; provided, however, that the parties do not waive any rights which they may have under the Agreement or otherwise as a result of one party's settlement of a disagreement under this Section 5.2.3.

    5.3   Steering Committee Reports.   Within thirty (30) days following each Steering Committee meeting during the term of the Agreement, the Steering Committee shall prepare, and distribute to each party, a reasonably detailed written summary report which shall (a) describe the work performed to date on the Research Program and (b) evaluate the work performed in relation to the goals of the Research Program.

    5.4   Availability of Employees.   Each party shall make its employees and relevant reports of non-employee consultants available, upon reasonable notice during normal business hours, at their respective places of employment to consult with the other party on issues arising during the Research Program and in connection with any request from any regulatory agency.

    5.5   Visit of Facilities.   Representatives of Ixsys and Bristol-Myers may, upon reasonable notice during normal business hours, (a) visit the facilities where the Research Program is being conducted, (b) consult informally, during such visits and by telephone, with personnel of the other party performing work on the Research Program and (c) with the other party's prior approval, which approval shall not be withheld unreasonably, visit the sites of any other experiments being conducted by such other party in connection with the Research Program but only to the extent in each case as such other experiments relate to the Research Program. On such visits an employee of the party conducting the research shall accompany the employee(s) of the visiting party.

ARTICLE 6
GRANT OF LICENSES

    6.1   License Grant to Bristol-Myers.   

    6.1.1   License to Make, Have Made, Use and Sell.   Except as otherwise provided in the Agreement, Ixsys hereby grants to Bristol-Myers an exclusive license (or in the case of licensed Third Party Patent Rights, when permissible, an exclusive sublicense) in the Territory under Ixsys' Patent Rights, including Ixsys' rights in any jointly-owned Patent Rights, and Ixsys Know-How, to

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make, have made, use and sell Products in the Field. Bristol-Myers may not grant sublicenses under such license without-the prior written consent of Ixsys, except sublicenses (without the right to grant further sublicenses) solely for the purpose of (a) subcontract manufacturing and supplying Program Antibodies or Products to Bristol-Myers and its permitted sublicensees, and (b) after receipt of the required marketing approval from the FDA to sell a Product, the making, using, promoting, marketing and selling of such Product for use in the Field. Each permitted sublicense shall be subject to the terms and conditions of the Agreement. Bristol-Myers shall deliver a copy of each permitted sublicense under the Agreement to Ixsys within ten (10) business days after execution of the same.

    6.1.2   Restrictions upon Use of Ixsys' Technology.   Except as otherwise authorized by the prior written consent of Ixsys or as expressly permitted in the License Agreement, Bristol-Myers shall not, directly or indirectly, (a) use any of Ixsys' Patent Rights or Ixsys' Know-How to modify the variable regions of any Program Antibody after the term of the Research Program, (b) use Ixsys' Patent Rights or Ixsys' Know-How other than to make, have made, use or sell Products for use in the Field, (c) sell, assign, transfer, encumber or otherwise dispose of Ixsys' Patent Rights or Ixsys' Know-How, or (d) authorize, cause or assist any other Person in any of the foregoing matters.

    6.1.3   Reservation of Rights in Ixsys.   Subject to the provisions of Section 3.2.3(a) above and Section 6.3 below, and except as otherwise provided in the Agreement, Ixsys reserves the exclusive right under Ixsys Patent Rights, including Ixsys' rights in any jointly-owned Patent Rights, and Ixsys' Know-How, to make, have made, use and sell products for all purposes in all fields and territories and at all times not expressly licensed to Bristol-Myers under Section 6.1.1 above. If Ixsys, its Affiliates or sublicensees commercialize a product, containing one or more Program Antibodies, for use in the in vitro diagnosis of solid tumors in humans, the parties shall negotiate in good faith a reasonable royalty, not to exceed [*] percent ([*]%) of net sales of such product, payable by Ixsys to Bristol-Myers on sales of such product.

    6.1.4   Product Use Outside the Field.   Upon written request by Bristol-Myers, to the extent legally and contractually permitted, the parties shall meet and negotiate in good faith a license from Ixsys to Bristol-Myers in the Territory, under Ixsys' Patent Rights, including Ixsys' rights in any jointly-owned Patent Rights, and Ixsys' Know-How, to make, use and sell a Product for such use outside the Field as the parties mutually agree on such terms and conditions as the parties mutually agree.

    6.2   License Grant to Ixsys.   Subject to the provisions of Section 6.3 below, Bristol-Myers hereby grants to Ixsys a nonexclusive, irrevocable, royalty-free, worldwide license, including the right to grant sublicenses, under Bristol-Myers' rights in the Improvements to make, use and sell products which employ, incorporate or are produced using the Improvements for all-purposes in all fields, other than to make, use or sell a Product in the Territory for use in the Field. Within thirty (30) days following each April 30, August 31 and December 31 during the term of the Agreement, Bristol-Myers shall provide Ixsys with written reports of information regarding Improvements as it becomes available to Bristol-Myers.

    6.3   Restrictions Upon Ixsys' Use of Program Antibodies.   Notwithstanding anything to the contrary in the Agreement, Ixsys shall not, whether within or outside the Field and whether itself or with or by any Affiliate or Third Party, make, use, sell, develop or commercialize (a) any Program Antibody, Product or related Material necessary solely for the production or use of any Program Antibody or Product or any use of any Program Antibody or Product, or any Patent Rights which claim solely any of the foregoing, or (b) Improvements to any Program Antibody, Product or related Material necessary solely for the production or use of any Program Antibody or Product, or any Patent Rights which claim solely any of the foregoing or any use of any Program Antibody or Product, except for the purpose of satisfying its obligations under the Research Program; provided, however, that Ixsys shall have the right,

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itself or with any Affiliate or Third Party, to use, develop or commercialize any Program Antibody or Product ([*] or Improvements to the foregoing or Patent Rights which claim solely any of the foregoing) for use in the in vitro diagnosis of [*], in accordance with the royalty provisions of Section 6.1.3 above.

ROYALTIES AND MILESTONE PAYMENTS

    7.1   Royalties.   In consideration for Ixsys participation in the Research Program and for the licenses granted to Bristol-Myers herein, during the Royalty Term, Bristol-Myers shall pay to Ixsys royalties equal to (a) [*] percent ([*]%) of Net Sales of all Products by Bristol-Myers, its Affiliates and permitted sublicensees in the Territory, except for Products containing BR96 Antibodies or L6 Antibodies (and no other Program Antibodies), and (b) [*] percent ([*]%) of Net Sales of all Products containing BR96 Antibodies or L6 Antibodies (and no other Program Antibodies) by Bristol-Myers, its Affiliates and permitted sublicensees in the Territory.

    7.2   Third Party Royalties.   Bristol-Myers, at its sole expense, shall pay all royalties owing to any Third Party in order to exercise Bristol-Myers' rights hereunder to make, use or sell any Product. If the aggregate royalties owing by Bristol-Myers to Third Parties in order to exercise Bristol-Myers' rights hereunder to make, use or sell a Product exceed [*] percent ([*]%) of Net Sales of such Product, Bristol-Myers shall negotiate in good faith with Ixsys and all such Third Parties mutually acceptable, appropriate and equitable adjustments, if any, to the royalties owing to Ixsys and each Third Party with respect to such Product as necessary to make the commercialization of such Product commercially feasible; provided, however, that in no event shall the royalty owing to Ixsys under Section 7.1(a) above be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product, and under Section 7.1(b) above be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product.

    7.3   Combination Product.   Notwithstanding the foregoing, in the event a Product contains, in addition to Program Antibodies, one or more other biologically active components to produce a combination product, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination product by the fraction A/B, where A is the gross selling price of the Program Antibodies sold separately and B is the gross selling price of the combination product. If no such separate sales are made by Bristol-Myers, its Affiliates or permitted sublicensees, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination by the fraction C/(C+D), where C is the fully allocated cost of the combination product (excluding the fully allocated cost of the other biologically active components in question) and D is the fully allocated cost of such other biologically active components. In no event shall the royalty owing to Ixsys under Section 7.1(a) above be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product, and under Section 7.1(b) above be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product.

    7.4   Milestone Payments.   As partial consideration for the research performed by Ixsys under the Research Program as set forth in the Agreement, Bristol-Myers shall pay Ixsys the following milestone payments upon the first occurrence of each event set forth below with respect to each Product:

    7.4.1  $[*] upon filing with the FDA an IND in the United States (or its equivalent in any other country); and

    7.4.2  $[*] upon commencement of Phase 2/3 (pivotal) clinical trials, or Phase 3 clinical trials, in the United States (or their equivalent in any other country); and

    7.4.3  $[*] upon filing a New Drug Application ("NDA") in the United States (or its equivalent in any other country); and

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    7.4.4  $[*] upon receipt of the required marketing and pricing approval from the FDA (or from the governing health authority of any other country).

    7.5   Single Royalty.   Notwithstanding anything to the contrary in the Agreement, only one royalty shall be due to Ixsys with respect to each Product sold by Bristol-Myers, its Affiliates and permitted sublicensees hereunder regardless of the number of issued patents owned and licensed by Ixsys, if any, which would be infringed by making, using, or selling such Product absent the licenses granted to Bristol-Myers under the Agreement and any other agreements with Ixsys, including without limitation the License Agreement and whether pursuant to the Agreement or any other agreement with Ixsys, including without limitation the License Agreement; provided, however, that the royalty owing to Ixsys with respect to each Product shall be the highest royalty applicable to such Product under the Agreement and any other such agreement with Ixsys.

ARTICLE 8
ROYALTY REPORTS AND ACCOUNTING

    8.1   Reports, Exchange Rates.   During the term of the Agreement following the First Commercial Sale of a Product, Bristol-Myers shall furnish to Ixsys a quarterly written report showing in reasonably specific detail, on a country by country basis, (a) the gross sales of all Products sold by Bristol-Myers, its Affiliates and its sublicensees in the Territory during the reporting period and the calculation of Net Sales from such gross sales; (b) the royalties payable in United States dollars, if any, which shall have accrued hereunder based upon Net Sales of Products; (c) the withholding taxes, if any, required by law to be deducted in respect of such sales (d) the date of the First Commercial Sales of each Product in each country in the Territory during the reporting period; and (e) the exchange rates used in determining the amount of United States dollars. With respect to sales of Products invoiced in United States dollars, the gross sales, Net Sales, and royalties payable shall be expressed in United States dollars. With respect to sales of Products invoiced in a currency other than United States dollars, the gross sales, Net Sales and royalties payable shall be expressed in the domestic currency of the party making the sale together with the United States dollar equivalent of the royalty payable, calculated using the average buying rate for such currency quoted in the continental terms method of quoting exchange rates (local currency per US$1) by as published in the United States in The Wall Street Journal under the caption "Currency Trading" on each of the last business day of each month in the quarter prior to the date of payment. Reports shall be due on the sixtieth (60th) day following the close of each quarter. Bristol-Myers shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the royalties payable hereunder to be determined.

    8.2   Audits.   

    8.2.1  Upon the written request of Ixsys and not more than twice in each calendar year, Bristol-Myers shall permit an independent certified public accounting firm of nationally recognized standing, mutually acceptable to Ixsys and Bristol-Myers, at Ixsys' expense, to have access during normal business hours to such of the records of Bristol-Myers solely to the extent necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall disclose to Ixsys only whether the records are correct or not and the specific details concerning any discrepancies. No other information or details of the audit shall be disclosed to Ixsys.

    8.2.2  If such accounting firm concludes that additional royalties were owed during such period, Bristol-Myers shall pay the additional royalties within thirty (30) days of the date Ixsys delivers to Bristol-Myers such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by Ixsys; provided, however, if the audit discloses that the royalties payable by Bristol-Myers for the audited period are more than one hundred eight percent

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(108%) of the royalties actually paid for such period, then Bristol-Myers shall pay the reasonable fees and expenses charged by such accounting firm.

    8.2.3  Bristol-Myers shall include in each permitted sublicense granted by it pursuant to the Agreement a provision requiring the sublicensee to make reports to Bristol-Myers, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by Ixsys' independent accountant to the same extent required of Bristol-Myers under the Agreement. Upon the expiration of twenty-four (24) months following the end of any year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon Ixsys and Bristol-Myers, its Affiliates and permitted sublicensees shall be released from any liability or accountability with respect to royalties for such year.

    8.3   Confidential Financial Information.   Ixsys shall treat all financial information subject to review under this Article 8 or under any sublicense agreement as the confidential information of Bristol-Myers, and shall cause its accounting firm to retain all such financial information in confidence.

ARTICLE 9
PAYMENTS

    9.1   Payment Terms.   Royalties shown to have accrued by each royalty report provided for under Article 8 of the Agreement shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date.

    9.2   Payment Method.   Except as provided in this Section 9.2, all payments by Bristol-Myers to Ixsys under the Agreement shall be paid in United States dollars, and all such payments shall be originated from a United States bank located in the United States and made by bank wire transfer in immediately available funds to such account as Ixsys shall designate before such payment is due.

    9.3.   Exchange Control.   If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country in the Territory where the Product is sold, payment shall be made through such lawful means or methods as Bristol-Myers reasonably determines and to which Ixsys consents, which consent shall not be unreasonably withheld.

    9.4   Withholding Taxes.   All amounts owing from Bristol-Myers to Ixsys under the Agreement are net amounts, and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges with respect to such amounts, other than United States taxes, payable by Bristol-Myers, its Affiliates or sublicensees, or any taxes required to be withheld by Bristol-Myers, its Affiliates or sublicensees to the extent such taxes are imposed by reason of Bristol-Myers, its Affiliates or sublicensees having a permanent establishment in any country within the Territory or otherwise being subject to taxation by such country (except solely by reason of the license granted under the Agreement).

    9.5   Late Payments.   Unless otherwise provided in the Agreement, Bristol-Myers shall pay interest to Ixsys on the aggregate amount of any payments by Bristol-Myers that are not paid on or before the date such payments are due under the Agreement at a rate per annum equal to the lesser of the prime rate of interest as published in the United States in The Wall Street Journal under the caption "Money Rates," from time to time, plus two percent (2%), or the highest rate permitted by applicable law, calculated on the number of days such payment is delinquent.

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ARTICLE 10
[INTENTIONALLY OMITTED]

ARTICLE 11
INFRINGEMENT ACTIONS BY THIRD PARTIES

    11.1   Notice of Suit or Claim of Infringement.   Each party shall promptly notify the other in writing in the event that either party, or, in the case of Bristol-Myers, its permitted sublicensees or customers, are notified by a Third Party of infringement of a patent, or are sued by a Third Party for infringement of a patent, on account of the manufacture, use or sale of any Program Antibody or Product.

    11.2   Control of Defense.   

      11.2.1(a) Except as provided in subparagraphs (b) and (c) of this Article 11.2.1 and in Article 11.2.2, Ixsys shall have the right, in its sole discretion, and at its sole expense, to control the defense of any suit brought by a Third Party, alleging that the manufacture, use or sale of any Program Antibody or Product or the use of any process to make a Program Antibody or Product infringes a patent, where such products or processes are claimed under the Ixsys patents and patent applications listed in Schedule C as such schedule may be amended, supplemented or modified from time to time by Ixsys with the written consent of Bristol-Myers which shall not be unreasonably withheld. In such event, Bristol-Myers shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Ixsys all evidence and assistance in its control.

    (b) Bristol-Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of any suit brought by a Third Party described in subparagraph (a) above in the event that Bristol-Myers notifies Ixsys in writing before institution of such Third Party suit that the relevant Program Antibody or Product has entered preclinical development, as evidenced by the approval of a Preclinical Lead Profile or equivalent document by the management of the Bristol-Myers Squibb Pharmaceutical Group. In such event, Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

    (c) Bristol-Myers shall have the right to gain control from Ixsys of the defense of any Third Party suit initially controlled by Ixsys pursuant to Section 11.2.1(a) above, in the event that Bristol-Myers notifies Ixsys in writing, after institution of such Third Party suit, that the relevant Program Antibody or Product has entered preclinical development, as evidenced by the approval of a Preclinical Lead Profile or equivalent document by the management of the Bristol-Myers Squibb Pharmaceutical Group; provided, however, that Bristol-Myers shall reimburse Ixsys, on demand, for all expenses incurred by Ixsys in the defense of such Third Party suit prior to Bristol-Myers assuming control thereof. In such event, Bristol-Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of such Third Party suit, and Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

      11.2.2  Bristol-Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of all other suits under this Article 11. In such event, Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

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      11.2.3  If the party having the right to control the defense of such suit (the "Electing Party") does not elect to control the defense of such suit in writing within thirty (30) days after having been notified or sued, as the case may be, by the Third Party, the other party may elect in writing to undertake such control at its own expense; provided, however, that the Electing Party shall then have the right to be represented by the advisory counsel of its own selection and at its own expense, and the Electing Party shall cooperate fully in the defense of such suit and furnish to the other party all evidence and assistance in the Electing Party's control; provided, further, that if Ixsys is the Electing Party pursuant to Section 11.2.1(a) above with respect to any suit and is subsequently notified by Bristol-Myers pursuant to Section 11.2.1(c) above that Bristol-Myers has elected to control the defense of such suit, then Bristol-Myers shall become the Electing Party with respect to such suit.

      11.2.4  The party controlling the defense of any suit under this Article 11 shall vigorously defend such suit and assert all reasonable defenses which may be asserted in good faith, and shall keep the non-controlling party advised at all times of all aspects of such suit, including the defense and settlement thereof; provided, however, that nothing in this Section 11.2.4 shall prohibit the party controlling the defense of such suit from entering into settlement negotiations and settling such suit on the terms and subject to the conditions of the Agreement.

    11.3   Settlement.   The party controlling the defense of the suit may not settle the suit or consent to an adverse judgment in such suit in a manner that, in either event, results in a judicial admission that the Third Party patent which is the subject of the suit dominates the Patent Rights of the non-controlling party, without the express written consent of the non-controlling party, which shall not be unreasonably withheld. The party settling such suit shall provide the other party fifteen (15) days prior written notification of the details of any settlement before settling such suit. Any judgments, settlements or damages payable with respect to legal proceedings covered by this Article 11 shall be paid by the party which controls the litigation.

ARTICLE 12
CONFIDENTIALITY

    12.1   Nondisclosure Obligations.   Except as otherwise provided in this Article 12 and Article 13, (a) during the term of the Agreement and for a period of seven (7) years thereafter, both parties shall maintain in confidence and use only for purposes of the Agreement information and data resulting from the development of Program Antibodies or Products pursuant to the Research Program; (b) during the term of the Agreement and for a period of seven (7) years thereafter, both parties shall maintain in confidence and use only for purposes of the Agreement information and data not described in clause (a) above resulting from the Research Program; and (c) during the term of the Agreement and for a period of seven (7) years thereafter, both parties shall also maintain in confidence and use only for purposes of the Agreement all information and data not described in clause (a) or (b) above but supplied by the other party under the Agreement marked "Confidential." For purposes of this Article 12 and Article 13, information and data described in clause (a), (b) or (c) above shall be referred to as "Information."

    12.2   Permitted Disclosures.   To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under the Agreement, (a) a party may disclose Information it is otherwise obligated under this Article 12 not to disclose to its Affiliates, sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis on condition that such Persons agree to keep the Information confidential for the same time periods and to the same extent as such party is required to keep the Information confidential; and (b) a party or its sublicensees may disclose such Information to government or other regulatory authorities to the extent that such disclosure is required by applicable law, regulation or court order, or is reasonably necessary to obtain patents or

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authorizations to conduct clinical trials with, and to commercially market the Product, provided that such party shall provide written notice to the other party and sufficient opportunity to the other party to object to such disclosure or to request confidential treatment thereof.

    The obligation not to disclose or use Information shall not apply to any part of such 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 Information or its Affiliates or sublicensees in contravention of the Agreement; (ii) is disclosed to the receiving party or its Affiliates or sublicensees by a Third Party, provided such Information was not obtained by such Third Party directly or indirectly from the other party under the Agreement on a confidential basis; (iii) prior to disclosure under the Agreement, was already in the possession of the receiving party or its Affiliates or sublicensees, provided such Information was not obtained directly or indirectly from the other party under the Agreement; (iv) is disclosed in a press release agreed to by both parties hereto, which agreement shall not be unreasonably withheld; or (v) is independently developed by or for the receiving party or its Affiliates or permitted sublicensees by persons who did not have access to Information disclosed by the other party under the Agreement.

    12.3   Terms of the Agreement.   Ixsys and Bristol-Myers shall not disclose any terms or conditions of the Agreement to any Third Party without the prior consent of the other party, except as required by applicable law or to Persons with whom Bristol-Myers or Ixsys has entered into or proposes to enter into a business relationship, provided that such Persons shall enter into the required confidentiality agreement. Notwithstanding the foregoing, prior to execution of the Agreement, Bristol-Myers and Ixsys shall agree upon the substance of information that can be used to describe the terms of this transaction, and Bristol-Myers and Ixsys may disclose such information, as modified by mutual agreement from time to time, without the other party's consent.

ARTICLE 13
PUBLICATION

    13.1   Notice of Publication.   During the term of the Agreement, Ixsys and Bristol-Myers each acknowledge the other party's interest in publishing certain of its results to obtain recognition within the scientific community and to advance the state of scientific knowledge. Each party also recognizes the mutual interest in obtaining valid patent protection and protecting business interests. Consequently, either party, its employees or consultants wishing to make a publication (including any oral disclosure made without obligation of confidentiality) relating to work performed by such party as part of the Research Program (the "Publishing Party") shall transmit to the other party (the "Reviewing Party") a copy of the proposed written publication at least forty-five (45) days prior to submission for publication, or an outline of such oral disclosure at least forty-five (45) days prior to presentation. The Reviewing Party shall have the right (a) to propose modifications to the publication for patent reasons, (b) to request a reasonable delay in publication in order to protect patentable information and (c) to edit the publication in a manner reasonably acceptable to the Publishing Party to protect its Information.

    13.2   Timing of Publication.   If the Reviewing Party requests such a delay, the Publishing Party shall delay submission or presentation of the publication for a period of ninety (90) days to enable patent applications protecting each party's rights in such information to be filed in accordance with Article 14 below. Upon the expiry of forty-five (45) days from transmission to the Reviewing Party, the Publishing Party shall be free to proceed with the written publication or the presentation, respectively, unless the Reviewing Party has requested the delay described above.

    13.3   Prohibited Publications.   Notwithstanding anything to the contrary in the Agreement, neither party shall publish or otherwise disclose to any Third Party any Information of the other party without the prior written consent of the other party.

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ARTICLE 14
PATENTS

    14.1   Ownership of Inventions, Applications for Patent and Patents.   Except as otherwise provided in the Agreement, the entire right and title in all inventions, discoveries, improvements or other technology, including without limitation inventions, improvements or other technology directed to a Product or Program Antibody or the manufacture or use of a Product or Program Antibody, and all processes relating thereto, whether or not patentable, and any patent applications or patents based thereon, made or conceived during and pursuant to the Research Program (collectively, the "Inventions") (a) solely by employees or others acting on behalf of Ixsys or its Affiliates shall be owned solely by Ixsys (the "Ixsys Inventions"), (b) solely by employees or others acting on behalf of Bristol-Myers or its Affiliates shall be owned solely by Bristol-Myers (the "Bristol-Myers Inventions"), and (c) jointly by employees or others acting on behalf of Ixsys and Bristol-Myers, or their respective Affiliates, shall be owned jointly by Ixsys and Bristol-Myers (the "Joint Inventions"). Each party promptly shall disclose to the other party the making, conception or reduction to practice of Inventions by employees or others acting on behalf of such party. Ixsys and Bristol-Myers each hereby represents that all employees and other Persons acting on its behalf in performing its Obligations under the Agreement shall be obligated under a binding written agreement to assign to it, or as it shall direct, all Inventions made or developed by such employees or other Persons. Inventorship and ownership determinations for all Inventions, whether patentable or not, shall be made in accordance with United States patent laws.

    14.2   Patent Applications.   

    14.2.1   Priority Filings.   When an Invention has been made which may reasonably be considered to be patentable, (a) Bristol-Myers in the case of (i) all Bristol-Myers Inventions, (ii) those Joint Inventions that constitute composition of matter and related use inventions (including without limitation Joint Inventions that constitute Program Antibodies, Products or related Materials necessary solely for the production or use of Program Antibodies or Products or the use of Program Antibodies or Products), and (iii) those Ixsys Inventions that constitute BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies or Products containing BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies, or related Materials necessary solely for the production or use of any of the foregoing or the use of Program Antibodies or Products, and (b) Ixsys in the case of all other Joint Inventions and all other Ixsys Inventions, shall file a priority patent application in the United States as soon as reasonably practicable. The party filing the application shall give the other party an opportunity to review the text of the application before filing, shall control the preparation and filing of such application, and shall supply the other party with a copy of the application as filed, together with notice of its filing date and serial number.

    14.2.2   Foreign Filing Decisions.   No later than nine (9) months following the filing date of a priority patent application filed according to Section 14.2.1 above, the parties shall consult together, through the Steering Committee or otherwise, to determine whether such priority patent application should be abandoned without replacement; abandoned and refiled; proceeded within the country of filing only; or used as the basis for a claim of priority under the Paris Convention for corresponding applications in other countries. The parties shall consult together to ensure that so far as practicable the texts filed in the United States and in other countries contain the same information and claim the same scope of protection.

    14.2.3   Prosecution and Maintenance.   Ixsys and Bristol-Myers each shall have the right, using commercially reasonable practices, to control the prosecution, grant and maintenance of its Patent Rights, and to select all patent counsel or other professionals to advise, represent or act

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for it in all matters relating to its Patent Rights, except as otherwise provided in this Article 14. Bristol-Myers shall control the prosecution, grant and maintenance of Patent Rights regarding (a) Bristol-Myers Inventions, (b) those Joint Inventions that constitute composition of matter and related use inventions (including without limitation Joint Inventions that constitute Program Antibodies, Products or related Materials necessary solely for the production or use of Program Antibodies or Products or the use of Program Antibodies or Products), and (c) those Ixsys Inventions that constitute BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies or Products containing BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies, or related Materials necessary solely for the production or use of any of the foregoing or the use of Program Antibodies or Products. Ixsys shall control the prosecution, grant and maintenance of Patent Rights regarding all other Joint Inventions and all other Ixsys Inventions. All costs incurred in connection with the prosecution, grant and maintenance of Patent Rights shall be borne by the party taking action with respect to such Patent Rights. Each party shall inform the other party at regular intervals, or on request, about the status of patent applications or patents for which it is responsible.

    In the event that Ixsys or Bristol-Myers elects not to file a patent application in any country, or decides to abandon any pending application or granted patent in any country, it shall provide adequate notice to the other party and give the other party the opportunity to file or maintain such application or patent at its own expense; provided, however, that except for the right to file and maintain such Patent Rights, the rights of Ixsys and Bristol-Myers to such Patent Rights shall not be affected by reason of this paragraph.

    14.3   Cooperation.   Each party shall make available to the other party or its authorized attorneys, agents or representatives, its employees, agents or consultants necessary or appropriate to enable the appropriate party to file, prosecute and maintain patent applications and resulting patents with respect to Inventions, as set forth in Section 14.2 above, for a period of time sufficient for such party to obtain the assistance it needs from such personnel. Where appropriate, each party shall sign or cause to have signed all documents relating to said patent applications or patents at no charge to the other.

    14.4   No Other Technology Rights.   Except as otherwise provided in the Agreement, under no circumstances shall a party hereto, as a result of the Agreement, obtain any ownership interest or other right in any technology, know-how, patents, pending patent applications, products, vaccines, antibodies, cell lines or cultures, or animals of the other party, including items owned, controlled or developed by the other, or transferred by the other to such party at any time pursuant to the Agreement. It is understood and agreed by the parties that the Agreement does not grant to either party any license or other right in basic technology of the other party except to the extent necessary to enable the parties to carry out their part of the Research Program or the development and marketing of Program Antibodies and Products.

    14.5   Enforcement of Patent Rights.   (a) Bristol-Myers in the case of (i) all Bristol-Myers Inventions, (ii) those Joint Inventions that constitute composition of matter and related use inventions (including without limitation Joint Inventions that constitute Program Antibodies, Products or related Materials necessary solely for the production or use of Program Antibodies or Products or the use of Program Antibodies or Products), and (iii) those Ixsys Inventions that constitute BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies or Products containing BR96 Antibodies, human or humanized BR96 antibodies, L6 Antibodies, human or humanized L6 antibodies, or related Materials necessary solely for the production or use of any of the foregoing or the use of Program Antibodies or Products, and (b) Ixsys in the case of all other Joint Inventions and all other Ixsys Inventions, shall have the right but not the obligation to enforce the Patent Rights against infringers, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to the Patent

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Rights, and in good faith shall consider the interests of the other party in so doing. Upon learning of significant and continuing infringement of Patent Rights by a Third Party in the Territory, Ixsys or Bristol-Myers, as the case may be, promptly shall provide notice to the other party in writing of the fact and shall supply the other party with all evidence possessed by the notifying party pertaining to and establishing said infringement(s). All monies recovered upon, the final judgment or settlement of any suit regarding Patent Rights shall be retained by the party with the right to enforce such Patent Rights. Notwithstanding the foregoing, Ixsys and Bristol-Myers shall fully cooperate with each other in any action to enforce the Patent Rights.

ARTICLE 15
TERM AND TERMINATION

    15.1   Expiration.   Unless terminated earlier pursuant to Section 15.2 below, the Agreement shall expire on the expiration of Bristol-Myers' obligations to pay royalties under the Agreement.

    15.2   Termination for Cause.   Except as otherwise provided in Article 17, upon the breach of any material provision of the Agreement, if the breaching party has not cured such breach within ninety (90) days after receipt of written notice thereof from the other party, the Agreement shall terminate, at the option of the other party, (a) if during the term of the Research Program, on the date which is the earlier to occur of (i) the expiration of the Research Program under Section 3.5 above, (ii) six (6) months after the expiration of such ninety (90) day cure period if Bristol-Myers is the breaching party, or (iii) on the expiration of such ninety (90) day cure period if Ixsys is the breaching party, and (b) if after the expiration of the Research Program under Section 3.5 above, on the expiration of such ninety (90) day cure period. Such termination shall not affect any remedies the nonbreaching party may have at law or in equity.

    15.3   Effect of Expiration and Termination.   Expiration or termination of the Agreement shall not relieve the parties of any rights, causes of action or obligations accruing prior to such expiration or termination. The provisions of Sections 6.2 and 21.7 and Articles 12, 13 and 16 shall survive the expiration or termination of the Agreement, as well as any other provisions necessary to interpret or enforce the Agreement.

ARTICLE 16
INDEMNITY

    16.1   Direct Indemnity.   Each party shall indemnify and hold the other party, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, harmless, and hereby forever releases and discharges the other party, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, from and against all claims, demands, liabilities, damages and expenses, including reasonable attorneys' fees and costs (all "Liabilities"), arising out of negligence, recklessness or intentional acts or omissions of the indemnifying party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents, in connection with the work performed by such party under the Research Program. Neither Bristol-Myers nor Ixsys shall constitute a sublicensee of the other party for purposes of this Article 16.

    16.2   Other Indemnity.   Each party shall indemnify and hold the other party, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, harmless from and against all Liabilities suffered or incurred in connection with Third Party claims for personal injuries or any product recall to the extent caused by: (a) any failure to test for or provide adequate warnings of adverse side effects to the extent such failure arises out of acts or omissions in connection with the preclinical or clinical testing of a Product by such party, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, (b) any manufacturing

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defect in any Product or any other material manufactured by such party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents, or (c) any other act or omission (without regard to culpable conduct) of such party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents, in making, using or selling a Product after termination of the Research Program; except in each case to the extent such Liabilities resulted from negligence, recklessness or intentional acts or omissions of the other party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents.

    16.3   Procedure.   A party (the "Indemnitee") that intends to claim indemnification under this Article 16 shall promptly notify the other party (the "Indemnitor") of any Liability or action in respect of which the Indemnitee or any of its Affiliates intend to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, jointly with any other Indemnitor similarly noticed, to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitee, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The indemnity obligations under this Article 16 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 16, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article 16. The Indemnitee, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.

    16.4   Insurance.   

      16.4.1  During the term of the Research Program, Ixsys shall maintain liability insurance, and Bristol-Myers shall maintain a program of self-insurance, with respect to their respective work performed under the Research Program in such amounts as each customarily maintains with respect to similar research programs, such protection being applicable to officers, employees, contractors and agents while acting within the scope of their employment or engagement by Ixsys or Bristol-Myers. Ixsys and Bristol-Myers shall maintain such insurance, or self-insurance program, thereafter for so long as each customarily maintains insurance, or self-insurance programs, for similar research programs.

      16.4.2  Bristol-Myers shall maintain, through a program of self-insurance or otherwise, product liability insurance with respect to development, manufacture and sales of Products, in such amounts as Bristol-Myers customarily maintains with respect to its other products, such protection being applicable to officers, employees, contractors and agents while acting within the scope of their employment or engagement by Bristol-Myers, Bristol-Myers shall maintain such insurance, or self-insurance program, thereafter for so long as it customarily maintains insurance, or self-insurance programs, for itself covering such development, manufacture and sales of similar products.

    16.5   Own Acts.   Each party hereby assumes any and all risks of personal injury or property damage attributable to the negligent or willful acts or omissions of that party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents.

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ARTICLE 17
FORCE MAJEURE

    Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the 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. Any time for performance hereunder shall be extended by the actual time of delay caused by such occurrence.

ARTICLE 18
ASSIGNMENT

    The 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 (a) either Ixsys or Bristol-Myers may, without such consent, assign the Agreement in its entirety and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger or consolidation or change in control or similar transaction; and (b) Bristol-Myers may, without such consent, assign the Agreement in its entirety and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its pharmaceutical or oncology business. Any permitted assignee shall assume all obligations of its assignor under the Agreement.

ARTICLE 19
NOTIFICATION OF PATENT TERM RESTORATION

    Ixsys or Bristol-Myers, as the case may be, shall notify the other party of (a) the issuance of each U.S. patent included within the Patent Rights, 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 it receives as patent owner pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter called the "Act"), including notices pursuant to Paragraphs 101 and 103 of the Act from persons who have filed an abbreviated NDA ("ANDA"). Such notices shall be given promptly, but in any event within five (5) calendar days of each such patent's date of issue or receipt of each such notice pursuant to the Act, whichever is applicable. Ixsys or Bristol-Myers, as the case may be, shall notify the other party of each filing for patent term restoration under the Act, any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to the Patent Rights. Likewise, Ixsys or Bristol-Myers, as the case may be, shall inform the other patty of patent extensions and periods of data exclusivity in the rest of the world regarding any Product.

ARTICLE 20
SEVERABILITY

    Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of the Agreement be or become invalid in any jurisdiction, the parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the parties would have entered into the Agreement with such provisions. In case such provisions cannot be agreed upon, the invalidity

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of one or several provisions of the Agreement in such jurisdiction shall not affect the validity of the remaining provisions of the Agreement or the Agreement as a whole, or the validity of any of the terms of the Agreement in any other jurisdiction, unless the invalid provisions are of such essential importance to the Agreement that it is to be reasonably assumed that the parties would not have entered into the Agreement without the invalid provisions.

ARTICLE 21
MISCELLANEOUS

    21.1   Notices.   Any consent, notice or report required or permitted to be given or made under the 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, U.S. first class mail or courier), U.S. first class mail or courier, postage prepaid (where applicable), addressed to such other party at its 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 the Agreement) shall be effective upon receipt by the addressee.

    21.2   Applicable Law.   The Agreement shall be governed by and construed in accordance with the laws of the State of California.

    21.3   Entire Agreement.   The Agreement contains the entire understanding of the parties with respect to the subject matter thereof. All other express or implied agreements and understandings, either oral or written, heretofore made between the parties with respect to the subject matter hereof, including without limitation the Prior Agreements, are expressly superseded by the Agreement. The Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto.

    21.4   Headings.   The captions to the several Articles and Sections hereof are not an interpretive part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. The feminine and masculine pronouns are interchangeable hereunder, and the plural shall be substituted for the singular number in any place in which the context may require such substitution. The Agreement has been prepared jointly and shall not be strictly construed against either party hereto.

    21.5   Independent Contractors.   For purposes of the Agreement, and in the performance of all services hereunder, it is expressly agreed that Ixsys and Bristol-Myers shall be, and shall be deemed to be, independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency. Neither Ixsys nor Bristol-Myers shall have the authority to act as

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an agent of the other for any purpose, and shall not act on behalf of the other, or make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other party to do so, or as explicitly provided for herein.

    21.6   Waiver.   No waiver of any right under the Agreement shall be valid unless made in a written instrument duly executed by both parties hereto. The waiver by either party hereto of any right hereunder or of 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.

    21.7   No Solicitation of Employees.   During the term of the Research Program and for a period of two (2) years thereafter, neither Ixsys nor Bristol-Myers nor their respective Affiliates shall, without the prior consent of the other party, solicit the employment of any person who during the course of employment with

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the other party or its Affiliate was involved with activities related to the Research Program.

    21.8   Publicity.   Except as required by applicable law, neither party shall use the name of the other party, any employee of the other party or any other member of the other party's Research Program staff in any promotion or advertisement, without the prior written consent of the other party.

    21.9   Counterparts.   The Agreement may be executed in two 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 the Agreement as of the date first set forth above.

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QuickLinks

Exhibit 10.2
Confidential treatment requested

LICENSE AGREEMENT

    THIS LICENSE AGREEMENT dated as of June 8, 1993 (the "Agreement"), is entered into between IXSYS, INC., a Delaware corporation ("Ixsys"), having a place of business located at 3550 General Atomics Court, Suite L-103, San Diego, California 92121, and BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation ("Bristol-Myers"), having a place of business located at Route 206 and Provinceline Road, Princeton, New Jersey 08543-4000.

W I T N E S S E T H:

    WHEREAS, Ixsys owns or has rights to certain technology relating to the discovery and development of antibodies, growth factors and other biological and chemical compositions.

    WHEREAS, Bristol-Myers desires to acquire from Ixsys a nonexclusive worldwide license under certain Ixsys patent rights to make, use and sell certain products, for use in the in vivo diagnosis or treatment of any disease or condition in humans.

    WHEREAS Bristol-Myers and Ixsys are entering into three (3) other agreements entitled "RESEARCH AGREEMENT," "SCREENING AND OPTION AGREEMENT," and "STOCK PURCHASE AGREEMENT," dated as of even date herewith, in addition to this "LICENSE AGREEMENT."

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

ARTICLE 1
DEFINITIONS

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

    1.1   "Affiliate"   shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person. A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever.

    1.2   "FDA"   shall mean the United States Food and Drug Administration, or the successor thereto.

    1.3   "Field"   shall mean the in vivo diagnosis or treatment of any disease or condition in humans.

    1.4   "First Commercial Sale"   shall mean, with respect to any Product, the first sale for use or consumption by the general public of such Product in any country after required marketing and pricing approval has been granted, or as otherwise permitted, by the governing health authority of such country.

    1.5   "Improvements"   shall mean all inventions, discoveries, improvements or other technology, whether or not patentable, and any patent applications or patents based thereon, conceived or reduced to practice during the term of the Agreement by employees or others acting on behalf of Bristol-Myers, its Affiliates or sublicensees which represent solely an improvement to Licensed Patent Rights, excluding any inventions, discoveries, improvements or other technology conceived or reduced to

[*]   Confidential treatment requested

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practice by employees or others acting jointly on behalf of Ixsys and Bristol-Myers under the Research Agreement.

    1.6   "Improvements Patent Rights"   shall mean (a) all patent applications heretofore or hereafter filed or having legal force in any country owned by Bristol-Myers, which claim an Improvement, together with any and all patents that have issued or in the future issue therefrom, including utility model and design patents and certificates of invention, and (b) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; all to the extent and only to the extent that Bristol-Myers now has or hereafter will have the right to grant licenses, immunities or other rights thereunder.

    1.7   "Know-How"   shall mean that certain information and data of Ixsys, which is not generally known including, but not limited to, formulae, procedures, protocols, techniques and results of experimentation and testing, which are reasonably necessary to make, use or sell Products for use in the Field.

    1.8   "Licensed Patent Rights"   shall mean (a) all patents and patent applications described in Schedule A hereto, together with any and all patents that have issued or in the future issue therefrom, including utility, model and design patents and certificates of invention, and (b) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; all to the extent and only to the extent that Ixsys now has or hereafter will have the right to grant licenses, immunities or other rights thereunder.

    1.9   "Net Sales"   shall mean, with respect to any Product, the invoiced sales price of such Product billed to independent customers who are not Affiliates, less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, out-dated or returned Product; (b) actual freight and insurance costs incurred in transporting such Product in final form to such customers; (c) trade discounts, cash discounts, quantity discounts, rebates and other price reduction programs; (d) sales, value-added and other direct taxes incurred; and (e) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Product in final form.

    1.10   "Peptide"   shall mean a chain of amino acids of not more than fifty (50) residues in length.

    1.11   "Person"   shall mean an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

    1.12   "Product"   shall mean any Diagnostic Product or Therapeutic Product.

    1.12.1  "Diagnostic Product" shall mean a diagnostic product, containing one or more Program Materials, for use in the in vivo detection of any disease or condition in humans.

    1.12.2  ' 'Therapeutic Product' ' shall mean the final dosage formulation of a product, incorporating pharmaceutical compositions containing one or more Program Materials, for use in the treatment of any disease or condition in humans, regardless of the route of administration. Each different formulation of a Therapeutic Product containing the same one or more Program Materials but no additional biological or chemical compositions, except different formulations for use in the treatment of the same indication in the Field by different routes of administration, shall constitute a different Therapeutic Product.

    1.13   "Program Material"   shall mean an antibody, growth factor or other biological or chemical composition, other than a Peptide, which uses, incorporates or is produced using or under Licensed Patent Rights.

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    1.14   "Research Agreement"   shall mean that certain Research Agreement dated as of even date, between Ixsys and Bristol-Myers, as the same may be amended, modified, supplemented or restated from time to time.

    1.15   "Royalty Term"   shall mean, with respect to each Product in each country, the period of time equal to the longer of (a) [*] ([*]) [*] from the date of the First Commercial Sale of such Product in such country or (b) if the manufacture, use or sale of such Product in such country was at the time of the First Commercial Sale in such country covered by a Valid Patent Claim, the [*].

    1.16   "Third Party"   shall mean any Person other than Ixsys, Bristol-Myers and their respective Affiliates.

    1.17   "Valid Patent Claim"   shall mean either (a) a claim of an issued and unexpired patent included within the Licensed Patent Rights, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent application included within the Licensed Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES

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

    2.1   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 and (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.

    2.2   Authorization and Enforcement of Obligations.   Such party (a) has the corporate power and authority and the legal right to enter into the 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 the Agreement and the performance of its obligations hereunder. The 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.

    2.3   Consents.   All necessary consents, approvals and authorizations of all governmental authorities and other Persons, if any, required to be obtained by such party in connection with the Agreement have been obtained.

    2.4   No Conflict.   The execution and delivery of the 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 contractual obligation of such party and (b) do not conflict with, or constitute a default under, any contractual obligation of such party.

    2.5   DISCLAIMER OF WARRANTIES.   NOTHING IN THE AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY IXSYS OR BRISTOL-MYERS THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE LICENSED PATENT RIGHTS OR IMPROVEMENTS PATENT RIGHTS, THAT ANY PATENT WITHIN THE LICENSED PATENT RIGHTS OR IMPROVEMENTS PATENT RIGHTS WHICH ISSUES WILL BE VALID, OR THAT THE USE OF

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ANY LICENSE GRANTED HEREUNDER OR THAT THE USE OF ANY LICENSED PATENT RIGHTS OR IMPROVEMENTS PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER PERSON. FURTHERMORE, NEITHER IXSYS NOR BRISTOL-MYERS MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED PATENT RIGHTS OR IMPROVEMENTS PATENT RIGHTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

    2.6   Maintenance of Licenses.   Ixsys shall use due diligence to maintain each license agreement between Ixsys and any Third Party involving Licensed Patent Rights sublicensed to Bristol-Myers hereunder.

ARTICLE 3
GRANT OF LICENSES

    3.1   License Grant to Bristol-Myers.   

    3.1.1   License to Make, Have Made, Use and Sell.   Except as otherwise provided in the Agreement, Ixsys hereby grants to Bristol-Myers a nonexclusive worldwide license under the Licensed Patent Rights and Know-How to make, have made, use and sell Products for use in the Field. Bristol-Myers may not grant sublicenses under such license without the prior written consent of Ixsys, except sublicenses (without the right to grant further sublicenses) solely for the purpose of (a) subcontract manufacturing and supplying Products to Bristol-Myers and its permitted sublicensees, and (b) after receipt of the required marketing approval from the FDA to sell a Product, the making, using, promoting, marketing and selling of such Product for use in the Field. Each permitted sublicense shall be subject to the terms and conditions of the Agreement. Bristol Myers shall deliver a copy of each permitted sublicense under the Agreement to Ixsys within ten (10) business days after execution of the same.

    3.1.2   Research License.   Subject to the same exceptions as referred to in Section 3.1.1 above, Ixsys hereby grants to Bristol-Myers a nonexclusive worldwide license under the Licensed Patent Rights and Know-How to perform research using products and processes covered by the Licensed Patent Rights; provided, however, that Bristol-Myers shall have no right under the Licensed Patent Rights to modify peptides whose sequences are generated by a process which does not impose restrictions on what sequences are generated, or which generates a large number of peptides whose sequences are not uniquely predetermined. Bristol-Myers license to use Know-How shall survive the expiration of the Agreement under Section 11.1 below, unless the Agreement is terminated earlier pursuant to Section 11.2 or 11.3 below. Bristol-Myers may not grant sublicenses under such license without the prior written consent of Ixsys.

    3.1.3   Restrictions Upon Use of Licensed Technology.   Except as expressly authorized by the Agreement or prior written consent of Ixsys, Bristol-Myers shall not, directly or indirectly, (a) use the Licensed Patent Rights other than to make, have made, use or sell Products for use in the Field or conduct research as provided in Section 3.1.2 above, (b) sell, assign, transfer, encumber or otherwise dispose of the Licensed Patent Rights, or (c) authorize, cause or assist any other Person in any of the foregoing matters.

    3.2   License Grant to Ixsys.   Bristol-Myers hereby grants to Ixsys a nonexclusive, irrevocable, royalty-free, worldwide license, including the right to grant sublicenses, under Bristol-Myers' rights in the Improvements to make, use and sell products which employ, incorporate or are produced using the Improvements for all purposes in all fields. Within thirty (30) days following each April 30, August 31

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and December 31 during the term of the Agreement, Bristol-Myers shall provide Ixsys with written reports of information regarding Improvements as it becomes, available to Bristol-Myers.

    3.3   Technical Assistance.   As soon as reasonably practicable after execution of the Agreement, Ixsys shall provide Bristol-Myers with Know-How regarding the Licensed Patent Rights reasonably necessary to enable Bristol-Myers to make, use and sell Products in the Field. For a period of one (1) year after the date of the Agreement, at Bristol-Myers' request upon reasonable notice, at such times and places as mutually acceptable to the parties during normal business hours, Ixsys shall provide technical assistance to Bristol-Myers regarding the Licensed Patent Rights and shall make its designated employees reasonably available for consultation by telephone, or in person at the offices of Ixsys, in connection with such technical assistance. Bristol-Myers shall reimburse Ixsys on demand for the reasonable fully-burdened cost to Ixsys of providing such technical assistance.

    3.4   Material Transfer.   In connection with the license granted to Bristol-Myers under the Agreement, Ixsys may provide to Bristol-Myers certain biological materials or chemical compounds including, but not limited to, structural genes, genetic sequences, promoters, enhancers, probes, linkage probes, vectors, hosts, plasmids, peptides, polypeptides, transgenic animals, proteins, biological modifiers, antigens, hybridomas, antibodies, toxins, lectins, enzymes, lipids, hormones, viruses, viroids, cells or parts of cells, cell lines and transformed cell lines, and any progeny, replicates, mutants, fragments and derivatives of the foregoing (collectively, "Material") owned by or licensed to Ixsys (other than under the Agreement or the Research Agreement) for use by Bristol-Myers under the Agreement. All such Material delivered to Bristol-Myers under the Agreement (a) shall remain the sole property of Ixsys, (b) shall be used only as permitted under the Agreement and solely under the control of Bristol-Myers, (c) shall not be used or delivered to or for the benefit of any Third Party without the prior written consent of Ixsys, and (d) shall not to be used in research or testing involving human subjects. The Materials supplied under this Section 3.4 must be used with prudence and appropriate caution in any experimental work, since not all their characteristics may be known. THE MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIAL WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

ARTICLE 4
ROYALTIES AND MILESTONE PAYMENTS

    4.1   Royalties.   In consideration for the licenses granted to Bristol-Myers herein, during the Royalty Term, Bristol-Myers shall pay to Ixsys royalties equal to [*] percent ([*]%) of Net Sales of all Products by Bristol-Myers, its Affiliates and permitted sublicensees in the Territory.

    4.2   Third Party Royalties.   Bristol-Myers, at its sole expense, shall pay all royalties owing to any Third Party in order to exercise Bristol-Myers' rights hereunder to make, use or sell any Product. If the aggregate royalties owing by Bristol-Myers to Third Parties in order to exercise Bristol-Myers' rights hereunder to make, use or sell a Product exceed [*] percent ([*]%) of Net Sales of such Product, Bristol-Myers shall negotiate in good faith with Ixsys and all such Third Parties mutually acceptable, appropriate and equitable adjustments, if any, to the royalties owing to Ixsys and each Third Party with respect to such Product as necessary to make the commercialization of such Product commercially feasible; provided, however , that in no event shall the royalty owing to Ixsys under the Agreement be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product.

    4.3   Combination Product.   Notwithstanding the foregoing, in the event a Product contains, in addition to Program Materials, one or more other biologically active components to produce a

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combination product, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination product by the fraction A/B, where A is the gross selling price of the Program Materials sold separately and B is the gross selling price of the combination product. If no such separate sales are made by Bristol-Myers, its Affiliates or permitted sublicensees, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination by the fraction C/(C+D), where C is the fully allocated cost of the combination product (excluding the fully allocated cost of the other biologically active components in question) and D is the fully allocated cost of such other biologically active components. In no event shall the royalty owing to Ixsys under the Agreement be reduced to less than [*] percent ([*]%) of Net Sales with respect to such Product.

    4.4   Milestone Payments.   As partial consideration for the licenses granted to Bristol-Myers herein, Bristol-Myers shall pay Ixsys the following milestone payments upon the first occurrence of each event set forth below with respect to each Product, without duplication of any milestone payments owing to Ixsys under Article 7 of the Research Agreement with respect to such Product:

    4.4.1  $[*] upon filing with the FDA an Investigational New Drug application ("IND") in the United States (or its equivalent in any other country); and

    4.4.2  $[*] upon commencement of Phase ² / 3 (pivotal) clinical trials, or Phase 3 clinical trials, in the United States (or their equivalent in any other country); and

    4.4.3  $[*] upon filing a New Drug Application ("NDA") in the United States (or its equivalent in any other country); and

    4.4.4  $[*] upon receipt of the required marketing and pricing approval from the FDA (or from the governing health authority of any other country).

    4.5   Single Royalty.   Notwithstanding anything to the contrary in the Agreement, only one royalty shall be due to Ixsys with respect to each Product sold by Bristol-Myers, its Affiliates and permitted sublicensees hereunder regardless of the number of issued patents owned and licensed by Ixsys, if any, which would be infringed by making, using, or selling such Product absent the licenses granted to Bristol-Myers under the Agreement and any other agreements with Ixsys, including without limitation the Research Agreement and whether pursuant to the Agreement or any other agreement with Ixsys, including without limitation the Research Agreement; provided, however , that the royalty owing to Ixsys with respect to each Product shall be the highest royalty applicable to such Product under the Agreement and any other such agreement with Ixsys.

ARTICLE 5
ROYALTY REPORTS AND ACCOUNTING

    5.1   Reports, Exchange Rates.   During the term of the Agreement following the First Commercial Sale of a Product, Bristol-Myers shall furnish to Ixsys a quarterly written report showing in reasonably specific detail, on a country by country basis, (a) the gross sales of all Products sold by Bristol-Myers, its Affiliates and its sublicensees during the reporting period and the calculation of Net Sales from such gross sales; (b) the royalties payable in United States dollars, if any, which shall have accrued hereunder based upon Net Sales of Products; (c) the withholding taxes, if any, required by law to be deducted in respect of such sales; (d) the date of the First Commercial Sales of each Product in each country during the reporting period; and (e) the exchange rates used in determining the amount of United States dollars. With respect to sales of Products invoiced in United States dollars, the gross sales, Net Sales, and royalties payable shall be expressed in United States dollars. With respect to sales of Products invoiced in a currency other than United States dollars, the gross sales, Net Sales and royalties payable shall be expressed in the domestic currency of the party making the sale together with

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the United States dollar equivalent of the royalty payable, calculated using the average buying rate for such currency quoted in the continental terms method of quoting exchange rates (local currency per US$1) as published in the United States in The Wall Street Journal under the caption "Currency Trading" on each of the last business day of each month in the quarter prior to the date of payment. eRports shall be due on the sixtieth (60th) day following the close of each quarter. Bristol-Myers shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the royalties payable hereunder to be determined.

    5.2   Audits.   

    5.2.1  Upon the written request of Ixsys and not more than twice in each calendar year, Bristol-Myers shall permit an independent certified public accounting firm of nationally recognized standing, mutually acceptable to Ixsys and Bristol-Myers, at Ixsys' expense, to have access during normal business hours to such of the records of Bristol-Myers solely to the extent necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall disclose to Ixsys only whether the records are correct or not and the specific details concerning any discrepancies. No other information or details of the audit shall be disclosed to Ixsys.

    5.2.2  If such accounting firm concludes that additional royalties were owed during such period, Bristol-Myers shall pay the additional royalties within thirty (30) days of the date Ixsys delivers to Bristol-Myers such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by Ixsys; provided, however if the audit discloses that the royalties payable by Bristol-Myers for the audited period are more than one hundred eight percent (108%) of the royalties actually paid for such period, then Bristol-Myers shall pay the reasonable fees and expenses charged by such accounting firm.

    5.2.3  Bristol-Myers shall include in each permitted sublicense granted by it pursuant to the Agreement a provision requiring the sublicensee to make reports to Bristol-Myers, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by such independent accountant to the same extent required of Bristol-Myers under the Agreement. Upon the expiration of twenty-four (24) months following the end of any year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon Ixsys and Bristol-Myers, its Affiliates and permitted sublicensees shall be released from any liability or accountability with respect to royalties for such year.

    5.3   Confidential Financial Information.   Ixsys shall treat all financial information subject to review under this Article 5 or under any sublicense agreement as the confidential information of Bristol-Myers, and shall cause its accounting firm to retain all such financial information in confidence.

ARTICLE 6
PAYMENTS

    6.1.   Payment Terms.   Royalties shown to have accrued by each royalty report provided for under Article 5 above shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date.

    6.2   Payment Method.   Except as provided in this Section 6.2, all payments by Bristol-Myers to Ixsys under the Agreement shall be paid in United States dollars, and all, such payments shall be originated from a United States bank located in the United States and made by bank wire transfer in immediately available funds to such account as Ixsys shall designate before such payment is due.

    6.3   Exchange Control.   If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country where the Product is sold, payment shall be made through such

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lawful means or methods as Bristol-Myers reasonably determines and to which Ixsys consents, which consent shall not be unreasonably withheld.

    6.4   Withholding Taxes.   All amounts owing from Bristol-Myers to Ixsys under the Agreement are net amounts, and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges with respect to such amounts, other than United States taxes, payable by Bristol-Myers, its Affiliates or sublicensees, or any taxes required to be withheld by Bristol-Myers, its Affiliates or sublicensees to the extent such taxes are imposed by reason of Bristol-Myers, its Affiliates or sublicensees having a permanent establishment in any country or otherwise being subject to taxation by such country (except solely by reason of the license granted under the Agreement).

    6.5   Late Payments.   Unless otherwise provided in the Agreement, Bristol-Myers shall pay interest to Ixsys on the aggregate amount of any payments by Bristol-Myers that are not paid on or before the date such payments are due under the Agreement at a rate per annum equal to the lesser of the prime rate of interest as published in the United States in The Wall Street Journal under the caption "Money Rates," from time to time, plus two percent (2%), or the highest rate permitted by applicable law, calculated on the number of days such payment is delinquent.

ARTICLE 7
RESEARCH, DEVELOPMENT AND COMMERCIALIZATION

    7.1   Research, Development and Commercialization Efforts.   The decision as to whether to proceed with the development and marketing of any Product shall be in the sole discretion of Bristol-Myers. Nothing contained in the Agreement shall be interpreted as requiring Bristol-Myers to develop or market any Product. Bristol-Myers, at its sole expense, shall fund the costs of all research, preclinical and clinical development, and commercialization of the Products for use in the Field. Bristol-Myers shall conduct such activities in compliance in all material respects with all requirements of applicable laws, rules and regulations, and all other requirements of any applicable good laboratory, clinical and manufacturing practices, and all applicable standards of practice established by applicable regulatory authorities.

    7.2   Records.   Bristol-Myers shall maintain records, in sufficient detail and in good scientific manner, which shall reflect all work done and results achieved in the performance of its research and development regarding the Licensed Patent Rights and the Products (including all data in the form required under all applicable laws and regulations).

    7.3   Reports.   Within sixty (60) days following the end of each calendar year during the term of the Agreement, Bristol-Myers shall prepare and deliver to Ixsys a written summary report which shall describe (a) the research performed to date employing the Licensed Patent Rights, (b) the progress of the development, and testing of Products in clinical trials, and (c) the status of obtaining the necessary approvals to market Products. In addition, Bristol-Myers shall provide Ixsys with (w) a minimum of six (6) months' advance written notice of the contemplated filing of an IND with the FDA in the United States (or its equivalent in any country), (x) a written report which shall summarize all other proposed regulatory submissions not less than thirty (30) days prior to the date of such submissions, (y) a written report which shall summarize the proposed commencement of any clinical trial not less than thirty (30) days prior to the proposed commencement of such clinical trial, and (z) prompt written notice of all responses and approvals obtained from such regulatory authorities.

ARTICLE 8
INFRINGEMENT ACTIONS BY THIRD PARTIES

    8.1   Notice of Suit or Claim of Infringement.   Bristol-Myers shall promptly notify Ixsys in writing in the event that Bristol-Myers, its permitted sublicensees or customers, are notified by a Third Party of

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infringement of a patent, or are sued by a Third Party for infringement of a patent, on account of the manufacture, use or sale of any Program Material or Product.

    8.2   Control of Defense.   

    8.2.1(a) Except as provided in subparagraphs (b) and (c) of this Article 8.2.1 and in Article 8.2.2, Ixsys shall have the right, in its sole discretion and at its sole expense, to control the defense of any suit brought by a Third Party, alleging that the manufacture, use or sale of any Program Material or Product or the use of any process to make a Program Material or Product infringes a patent, where such products or processes are claimed under the Licensed Patent Rights. In such event, Bristol-Myers shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Ixsys all evidence and assistance in its control.

    (b) Bristol-Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of any suit brought by a Third Party described in subparagraph (a) above in the event that Bristol-Myers notifies Ixsys in writing before institution of such Third Party suit that the relevant Program Material or Product has entered preclinical development, as evidenced by the approval of a Preclinical Lead Profile or equivalent document by the management of the Bristol-Myers Squibb Pharmaceutical Group. In such event, Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

    (c) Bristol-Myers shall have the right to gain control from Ixsys of the defense of any Third Party suit initially controlled by Ixsys pursuant to Section 8.2.1(a) above, in the event that Bristol-Myers notifies Ixsys in writing, after institution of such Third Party suit, that the relevant Program Material or Product has entered preclinical development, as evidenced by the approval of a Preclinical Lead Profile or equivalent document by the management of the Bristol-Myers Squibb Pharmaceutical Group; provided, however, that Bristol-Myers shall reimburse Ixsys, on demand, for all expenses incurred by Ixsys in the defense of such Third Party suit prior to Bristol-Myers assuming control thereof. In such event, Bristol- Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of such Third Party suit, and Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

    8.2.2  Bristol-Myers shall have the right, in its sole discretion and at its sole expense, to control the defense of all other suits under this Article 8. In such event, Ixsys shall have the right to be represented by advisory counsel of its own selection, at its own expense, and shall cooperate fully in the defense of such suit and furnish to Bristol-Myers all evidence and assistance in its control.

    8.2.3  If the party having the right to control the defense of such suit (the "Electing Party") does not elect to control the defense of such suit in writing within thirty (30) days after having been notified or sued, as the case may be, by the Third Party, the other party may elect in writing to undertake such control at its own expense; provided, however, that the Electing Party shall then have the right to be represented by the advisory counsel of its own selection and at its own expense, and the Electing Party shall cooperate fully in the defense of such suit and furnish to the other party all evidence and assistance in the Electing Party's control; provided, further, that if Ixsys is the Electing Party pursuant to Sections 8.2.1(a) above with respect to any suit and is subsequently notified by Bristol-Myers pursuant to Section 8.2.1(c) above that Bristol-Myers has elected to control the defense of such suit, then Bristol-Myers shall become the Electing Party with respect to such suit.

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    8.2.4  The party controlling the defense of any suit under this Article 8 shall vigorously defend such suit and assert all reasonable defenses which may be asserted in good faith, and shall keep the non-controlling party advised at all times of all aspects of such suit, including the defense and settlement thereof; provided, however, that nothing in this Section 8.2.4 shall prohibit the party controlling the defense of such suit from entering into settlement negotiations and settling such suit on the terms and subject to the conditions of the Agreement.

    8.3   Settlement.   The party controlling the defense of the suit may not settle the suit or consent to an adverse judgment in such suit in a manner that, in either event, results in a judicial admission that the Third Party patent which is the subject of the suit dominates the Patent Rights of the non—controlling party, without the express written consent of the non-controlling party, which shall not be unreasonably withheld. The party settling such suit shall provide the other party fifteen (15) days prior written notification of the details of any settlement before settling such suit. Any judgments, settlements or damages payable with respect to legal proceedings covered by this Article 8 shall be paid by the party which controls the litigation.

ARTICLE 9
CONFIDENTIALITY

    9.1   Nondisclosure Obligations.   Except as otherwise provided in this Article 9, during the term of the Agreement and for a period of seven (7) years thereafter, each party shall maintain in confidence and use only for purposes of the Agreement all information and data ("Information") supplied by the other party under the Agreement and marked "Confidential."

    9.2   Permitted Disclosures.   To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under the Agreement, (a) a party may disclose Information it is otherwise obligated under this Article 9 not to disclose to its Affiliates, sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis on condition that such Persons agree to keep the Information confidential for the same time periods and to the same extent as such party is required to keep the Information confidential; and (b) a party may disclose such Information to government or other regulatory authorities to the extent that such disclosure is required by applicable law, regulation or court order, or is reasonably necessary to obtain patents or authorizations to conduct clinical trials with, and to commercially market the Product, provided that such party shall provide written notice to the other party and sufficient opportunity to the other party to object to such disclosure or to request confidential treatment thereof.

    The obligation not to disclose or use Information shall not apply to any part of such 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 Information or its Affiliates or sublicensees in contravention of the Agreement; (ii) is disclosed to the receiving party, its Affiliates or sublicensees by a Third Party, provided such Information was not obtained by such Third Party directly or indirectly from the other party under the Agreement on a confidential basis; (iii) prior to disclosure under the Agreement, was already in the possession of the receiving party, its Affiliates or sublicensees, provided such Information was not obtained directly or indirectly from the other party under the Agreement; (iv) is disclosed in a press release agreed to by both parties hereto, which agreement shall not be unreasonably withheld; or (v) is independently developed by or for the receiving party or its Affiliates or permitted sublicensees by persons who did not have access to Information disclosed by the other party under the Agreement.

    9.3   Terms of the Agreement.   Ixsys and Bristol-Myers shall not disclose any terms or conditions of the Agreement to any Third Party without the prior consent of the other party, except as required by applicable law or to Persons with whom Bristol-Myers or Ixsys has entered into or proposes to enter into a business relationship, provided that such Persons shall enter into the required confidentiality agreement. Notwithstanding the foregoing, prior to execution of the Agreement, Bristol-Myers and

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Ixsys shall agree upon the substance of information that can be used to describe the terms of this transaction, and Bristol-Myers and Ixsys may disclose such information, as modified by mutual agreement from time to time, without the other party's consent.

ARTICLE 10
PATENTS

    10.1   Ownership Rights.   The entire right and title in all Licensed Patent Rights shall be owned solely by Ixsys, subject to the nonexclusive license granted to Bristol-Myers under Section 3.1 above. The entire right and title in all Improvements, shall be owned solely by Bristol-Myers, subject to the nonexclusive license granted to Ixsys under Section 3.2 above.

    10.2   Patent Prosecution and Maintenance.   Ixsys shall be responsible for and shall control, at its sole cost, the preparation, filing, prosecution, grant and maintenance of all patent applications and patents within the Licensed Patent Rights. Bristol-Myers shall be responsible for and shall control, at its sole cost, the preparation, filing, prosecution, grant and maintenance of all Improvements Patent Rights.

    10.3   Enforcement of Patent Rights.   

      10.3.1  Ixsys, at its sole expense, shall have the right but not the obligation to determine the appropriate course of action to enforce Licensed Patent Rights or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce Licensed Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to Licensed Patent Rights, and in good faith shall consider the interests of Bristol-Myers in so doing. Ixsys shall retain all monies recovered upon the final judgment or settlement of any such suit to enforce Licensed Patent Rights.

      10.3.2  Bristol-Myers, at its sole expense, shall have the right but not the obligation to determine the appropriate course of action to enforce Improvements Patent Rights or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce Improvements Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to Improvements Patent Rights, and in good faith shall consider the interests of Ixsys in so doing. Bristol-Myers shall retain all monies recovered upon the final judgment or settlement of any such suit to enforce Improvements Patent Rights.

      10.3.3  Notwithstanding the foregoing, Ixsys and Bristol-Myers shall fully cooperate with each other in any action to enforce Licensed Patent Rights or Improvements Patent Rights.

ARTICLE 11
TERM AND TERMINATION

    11.1   Expiration.   Unless terminated earlier pursuant to Section 11.2 or 11.3 below, the Agreement shall expire on the expiration of Bristol-Myers' obligations to pay royalties under the Agreement.

    11.2   Termination by Bristol-Myers.   Bristol-Myers shall have the right in its sole discretion to terminate the Agreement upon thirty (30) days' prior written notice to Ixsys.

    11.3   Termination for Cause.   Except as otherwise provided in Article 13 below, upon or after the breach of any material provision of the Agreement, if the breaching party has not cured such breach within ninety (90) days after receipt of written notice thereof from the other party, the Agreement shall

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terminate, at the option of the other party, immediately upon the expiration of such ninety (90) day cure period. Such termination shall not affect any remedies the nonbreaching party may have at law or in equity.

    11.4   Effect of Expiration and Termination.   Expiration or termination of the Agreement shall not relieve the parties of any rights, causes of action or obligations accruing prior to such expiration or termination. The provisions of Section 3.2 and Articles 9, 10 and 12 shall survive the expiration or termination of the Agreement, as well as any other provisions necessary to interpret or enforce the Agreement.

ARTICLE 12
INDEMNITY

    12.1   Direct Indemnity.   

      12.1.1  Bristol-Myers shall indemnify and hold harmless, and hereby forever releases and discharges Ixsys, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, from and against all claims, demands, liabilities, damages and expenses, including reasonable attorneys' fees and costs (all "Liabilities") arising out of any use of the Licensed Patent Rights, any making, using or selling of a Product, or any breach of the Agreement, by Bristol-Myers, its Affiliates or sublicensees, and their respective directors, officers, employees and agents, except for those Liabilities resulting from the negligence or willful misconduct of Ixsys, its Affiliates or permitted sublicensees and their respective directors, officers, employees and agents.

      12.1.2  Ixsys shall indemnify and hold harmless, and hereby forever releases and discharges Bristol-Myers, its Affiliates and permitted sublicensees, and their respective directors, officers, employees and agents, from and against all Liabilities arising out of any breach of the Agreement or any use of the Improvements or Improvements Patent Rights by Ixsys, its Affiliates or permitted sublicensees and their respective directors, officers, employees and agents, except for those Liabilities resulting from the negligence or willful misconduct of Bristol-Myers, its Affiliates or permitted sublicensees and their respective directors, officers, employees and agents.

      12.1.3  Neither Bristol-Myers nor Ixsys shall constitute a sublicensee of the other party for purposes of this Article 12.

    12.2   Procedure.   A party (the "Indemnitee") that intends to claim indemnification under this Article 12 shall promptly notify the other party (the "Indemnitor") of any Liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, jointly with any other indemnitor similarly noticed, to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitee, if representation of the Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the Indemnitee and any other party represented by such counsel in such proceedings. The indemnity obligations under this Article 12 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve the Indemnitor of any liability to the Indemnitee under this Article 12, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to the Indemnitee otherwise than under this Article 12. The Indemnitee, its employees and agents, shall

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cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.

    12.3   Insurance.   Bristol-Myers shall maintain, through a program of self insurance or otherwise, product liability insurance with respect to development, manufacture and sales of Products, in such amounts as Bristol-Myers customarily maintains with respect to its other products, such protection being applicable to officers, employees, contractors and agents while acting within the scope of their employment or engagement by Bristol-Myers. Ixsys shall be named as an additional insured on any such Bristol-Myers policies which Bristol-Myers may purchase to supplement its self-insured status. Bristol-Myers shall maintain such insurance, or self-insurance program, thereafter for so long as it customarily maintains insurance, or self-insurance programs, for itself covering such development, manufacture and sales of similar products.

    12.4   Own Acts.   Each party hereby assumes any and all risks of personal injury or property damage attributable to the negligent or willful acts or omissions of that party, its Affiliates or permitted sublicensees, and their respective directors, officers, employees and agents.

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 the Agreement for failure or delay in fulfilling or performing any term of the 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. Any time for performance hereunder shall be extended by the actual time of delay caused by such occurrence.

ARTICLE 14
ASSIGNMENT

    The 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 (a) either Ixsys or Bristol-Myers may, without such consent, assign the Agreement in its entirety and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger or consolidation or change in control or similar transaction; and (b) Bristol-Myers may, without such consent, assign the Agreement in its entirety and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its pharmaceutical or oncology business. Any permitted assignee shall assume all obligations of its assignor under the Agreement.

ARTICLE 15
NOTIFICATION OF PATENT TERM RESTORATION

    Ixsys or Bristol-Myers, as the case may be, shall notify the other party of (a) the issuance of each U.S. patent included within the Licensed Patent Rights or the Improvements Patent Rights, giving the date of issue and patent number for each such patent, and (b) each notice pertaining to any patent included within, such Patent Rights which it receives as patent owner pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter called the "Act"), including notices pursuant to Paragraphs 101 and 103 of the Act from persons who have filed an abbreviated NDA ("ANDA"). Such notices shall be given promptly, but in any event within five (5) calendar days of each

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such patent's date of issue or receipt of each such notice pursuant to the Act, whichever is applicable. Ixsys or Bristol-Myers, as the case may be, shall notify the other party of each filing for patent term restoration under the Act, any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to such Patent Rights. Likewise, Ixsys or Bristol-Myers, as the case may be, shall inform the other party of patent extensions and periods of data exclusivity in the rest of the world regarding any Product.

ARTICLE 16
SEVERABILITY

    Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of the Agreement be or become invalid in any jurisdiction, the parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the parties would have entered into the Agreement with such provisions. In case such provisions cannot be agreed upon, the invalidity of one or several provisions of the Agreement in such jurisdiction shall not affect the validity of the remaining provisions of the Agreement or the Agreement as a whole, or the validity of any of the terms of the Agreement in any other jurisdiction, unless the invalid provisions are of such essential importance to the Agreement that it is to be reasonably assumed that the parties would not have entered into the Agreement without the invalid provisions.

ARTICLE 17
MISCELLANEOUS

    17.1   Notices.   Any consent, notice or report required or permitted to be given or made under the 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, U.S. first class mail or courier), U.S. first class mail or courier, postage prepaid (where applicable), addressed to such other party at its 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 the Agreement) shall be effective upon receipt by the addressee.

    17.2   Applicable Law.   The Agreement shall be governed by and construed in accordance with the laws of the State of California.

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    17.3   Entire Agreement.   The Agreement contains the entire understanding of the parties with respect to the subject matter hereof. All other express or implied agreements and understandings, either oral or written, heretofore made are expressly superseded by the Agreement.

    17.4   Headings.   The captions to the several Articles and Sections hereof are not an interpretive part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. The feminine and masculine pronouns are interchangeable hereunder, and the plural shall be substituted for the singular number in any place in which the context may require such substitution. The Agreement has been prepared jointly and shall not be strictly construed against either party hereto.

    17.5   Independent Contractors.   For purposes of the Agreement, and in the performance of all services hereunder, it is expressly agreed that Ixsys and Bristol-Myers shall be, and shall be deemed to be, independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency. Neither Ixsys nor Bristol-Myers shall have the authority to act as an agent of the other for any purpose, and shall not act on behalf of the other, or make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other party to do so, or as explicitly provided for herein.

    17.6   Waiver.   No waiver of any right under the Agreement shall be valid unless made in a written instrument duly executed by both parties hereto. The waiver by either party hereto of any right hereunder or of 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.

    17.7   Publicity.   Except as required by applicable law, neither party shall use the name of the other party, any employee of the other party or any other member of the other party's Research Program staff in any promotion or advertisement, without the prior written consent of the other party.

    17.8   Counterparts.   The Agreement may be executed in two 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 the Agreement as of the date first set forth above.

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QuickLinks

Exhibit 10.3
Confidential treatment requested

SEMI-EXCLUSIVE LICENSE AGREEMENT

    THIS AGREEMENT, effective as Sept. 30, 1993, is between Enzon, Inc. a corporation of the State of Delaware (ENZON) having its principal place of business at 40 Kingsbridge Road, Piscataway, NJ 08854-3998, and Bristol-Myers Squibb Company, a corporation of the State of Delaware (BMS) having a principal place of business at Route 206 and Province Line Road, Princeton, NJ 08540.

RECITALS

    ENZON has conceived and reduced to practice certain single-chain antigen binding molecules (as hereinafter further defined under SCA DISCOVERIES);

    BMS has an interest in the semi-exclusive development of said SCA DISCOVERIES into commercially useful products and processes in the field of Lewis-Y antigen binding proteins (as hereinafter further defined under FIELD);

    ENZON has certain PATENT RIGHTS pertaining to the SCA DISCOVERIES; ENZON is interested in licensing said PATENT RIGHTS and know-how associated with SCA DISCOVERIES; and

    BMS is interested in becoming a semi-exclusive licensee and desires to develop, manufacture, use, and sell products and processes in the FIELD related to said SCA DISCOVERIES throughout the world;

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

1.   DEFINITIONS

1.1

The term "AFFILIATE" shall mean:



(a)

Any corporation owning or controlling, directly or indirectly, at least fifty-one percent (51%) of the stock normally entitled to vote for election of directors of a party and



(b)

Any corporation at least fifty-one percent (51%) of whose stock normally entitled to vote for election of directors is owned or controlled, directly or indirectly, by a party.




1.2

The term "EFFECTIVE DATE" shall mean the date first written above.

    1.3 The term "FIELD" shall mean proteins that derive their therapeutic activity by their binding affinity for the Lewis-Y antigen or that compete with monoclonal antibody BR96 for binding to the Lewis-Y antigen, for therapeutic use only, excluding, without limitation, the areas listed in APPENDIX II.

    1.4 The term "FIRST COMMERCIAL SALE" shall mean the first commercial sale of any PRODUCT by BMS or its AFFILIATES or sublicensees.

    1.5 The term "ENZON IMPROVEMENT" shall mean any technology related to an SCA DISCOVERY disclosed or claimed in a patent application filed, or licensed on a royalty-free basis with the right to sublicense, by ENZON or its AFFILIATES after the EFFECTIVE DATE and during the term of this Agreement; PROVIDED, HOWEVER, that ENZON IMPROVEMENT shall not include any specific SCA PROTEIN, or any specific genetic sequence or host coding for or containing such genetic sequence coding for a specific SCA PROTEIN, or the therapeutic or diagnostic use of such a specific SCA PROTEIN.

[*]   Confidential treatment requested

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    1.6 The term "NET SALES" shall mean the gross sales receipt for any quantity of PRODUCT subject to royalty under this Agreement that is sold by BMS or its AFFILIATES or sublicensees to any third party, less deductions for (a) trade and cash discounts, credits, allowances, rebates or refunds incurred or granted; (b) bad debts actually incurred; and (c) sales, use or excise taxes and duties, and freight and insurance, to the extent included in the gross price charged.

    1.7 The term "PATENT RIGHT(S)" shall mean any United States or foreign patent applications or patents owned, or licensed on a royalty-free basis with the right to sublicense, by ENZON or its AFFILIATES containing one or more claims to SCA DISCOVERIES, any continuation-in-part, division, or continuation application thereof, any patent or the equivalent thereof granted thereon, and any reissue, reexamination, or extension of any of these patent(s) including any applications filed and patent(s) granted on ENZON IMPROVEMENTS; PROVIDED, HOWEVER, that PATENT RIGHTS shall not include any claim in patent applications to specific SCA PROTEIN, or to any specific genetic sequence or host coding for or containing such genetic sequence coding for a specific SCA PROTEIN, or to the therapeutic or diagnostic use of such a specific SCA PROTEIN. Existing PATENT RIGHTS are listed in Appendix I, which shall be modified by ENZON from time-to-time so that it accurately reflects those patent applications and patents includable under PATENT RIGHTS during the term of the Agreement, relevant to the FIELD.

    1.8 The term "PRODUCT(S)" shall mean an SCA PROTEIN whose manufacture, composition, or use in the country in question, but for the license granted hereunder, would constitute an infringement of one or more VALID CLAIMS in such country.

    1.9 The term "VALID CLAIM" shall mean a claim contained in any patent included in PATENT RIGHTS which has not been held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

    1.10 The term "SCA DISCOVERIES" shall mean an SCA PROTEIN, genetic sequences coding therefor, transformed hosts containing such genetic sequences, and methods of producing and using such SCA PROTEIN.

    1.11 The term "SCA PROTEIN" shall mean a single chain polypeptide having binding affinity for an antigen, said polypeptide comprising:

(a)

a first polypeptide comprising the binding portion of the light chain variable region of an antibody;



(b)

a second polypeptide comprising the binding portion of the heavy chain variable region of an antibody; and



(c)

at least one peptide linker linking said first and second polypeptides (a) and (b) into a single chain polypeptide having binding affinity for said antigen.

    1.12 The term "BMS PATENT RIGHTS" shall mean any patents issuing after the EFFECTIVE DATE hereof and during the term of this Agreement, owned, or licensed on a royalty-free basis with the right to sublicense, by BMS or its AFFILIATES, covering any SCA DISCOVERY, but only to the extent of claims therein, if any, that, as a matter of U.S. patent law, are dominated by ENZON PATENT RIGHTS; PROVIDED, HOWEVER, that BMS PATENT RIGHTS shall not include any claim to specific SCA PROTEIN, or to any specific genetic sequence or host coding for or containing such genetic sequence coding for a specific SCA PROTEIN, or to the therapeutic or diagnostic use of such a specific SCA PROTEIN.

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2.   PATENT RIGHTS

    2.1   Costs.   All future patent costs pertaining to PATENT RIGHTS whether or not such PATENT RIGHTS are pending on the EFFECTIVE DATE, including preparation, filing, and prosecution of patent applications, issuance, taxation, and maintenance costs shall be borne by ENZON.

    2.2   Control.   All control over PATENT RIGHTS will be in ENZON, and all PATENT RIGHTS will be filed and prosecuted by ENZON's attorneys, subject to any rights BMS may have under Section 7.

3.   LICENSE GRANT TO BMS

    3.1   Semi-Exclusive License.   As of the EFFECTIVE DATE of this Agreement, ENZON hereby grants to BMS and its AFFILIATES a worldwide license under PATENT RIGHTS to make, have made, use, and sell PRODUCTS in the FIELD with the right to grant sublicenses to third parties. The license shall be exclusive (even as to ENZON and its AFFILIATES), subject only to the rights of the companies listed in Appendix III which have rights in the FIELD under the license agreements with ENZON listed therein and, if applicable (i.e., to the extent that monoclonal antibody A33 may bind to the Lewis-Y antigen), subject to the right reserved by ENZON and its AFFILIATES to make, have made, use and sell SCA PROTEINS based on monoclonal antibody A33.

4.   PAYMENT BY BMS

    4.1   Cash.   Within ten (10) days following the EFFECTIVE DATE of this Agreement, BMS shall pay ENZON the sum of [*] Dollars ($[*]).

    4.2   Milestone Payments.   For each therapeutic PRODUCT developed by BMS or its AFFILIATES or sublicensees subject to Regulatory Approval by the Food and Drug Administration, BMS will pay ENZON the following sums at the indicated Milestones:

(a)

[*] Dollars ($[*]) at the time of an Investigational New Drug (IND) application filing;



(b)

[*] Dollars ($[*]) at the time of a Product License Application (PLA) filing; and



(c)

[*] Dollars ($[*]) at the time of the PLA approval.

    Payments under this Section 4.2 shall be credited against the Payments to Maintain Semi- Exclusivity otherwise payable under Section 4.4. It is understood that, with respect to any PRODUCT, no additional payment under this Section 4.2 will be payable as a result of filing in more than one jurisdiction or any filing seeking marketing approval for a new indication.

    4.3   Royalties.   BMS shall pay to ENZON a [*] percent ([*]%) royalty on NET SALES for each PRODUCT sold by BMS or its AFFILIATES or sublicensees. If BMS must pay royalties to a third party on NET SALES of PRODUCT in a country due to an issued patent of any third party relating to SCA DISCOVERIES, then the royalty payable by BMS to ENZON on NET SALES in such country shall be reduced by the amount of the royalty payable by BMS to such third party, provided that the royalty rate payable by BMS to ENZON shall not be reduced below [*]% of NET SALES. Royalties hereunder shall be payable at the [*]% rate (as may be reduced as aforesaid, if applicable), and no more, regardless of the extent of PATENT RIGHTS being exploited.

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    4.4   Payments to Maintain Semi-Exclusivity.   BMS shall pay to ENZON the following sums on the indicated anniversaries of the EFFECTIVE DATE:

    Payments under this Section 4.4 shall be credited against the Milestone Payments otherwise payable under Section 4.2. If BMS fails to make a payment under this Section 4.4, then ENZON in its sole discretion may send BMS a written notice of default and, unless the payment default is cured by BMS within thirty (30) days of the notice, convert BMS' license granted under Section 3 to a non-exclusive license by giving written notice of such conversion to BMS.

    4.5   Currency Conversion.   Royalties due on NET SALES made in currency other than United States dollars shall first be calculated in the foreign currency and then converted to United States dollars on the basis of the arithmetic average of the applicable selling rate reported in The Wall Street Journal for the foreign currency in question for each of the last ten (10) business days of the period for which royalties are due.

5.   ACCOUNTING

    5.1   Reports.   BMS shall report in writing to ENZON within sixty (60) days after the end of each calendar quarter (commencing the quarter during which the FiRST COMMERCIAL SALE occurs) the quantities of PRODUCT subject to royalties hereunder that were sold by BMS and its AFFILIATES and sublicensees during said quarter, and the calculation of the royalties thereon. With said report BMS shall pay to ENZON the total amount of said royalties that have not been paid in advance. Reports, notices, royalty payments, and other communications hereunder shall be sent to the appropriate party at the following addresses:

For ENZON:

John Caruso, Esq.
Vice President of Lega1 Affairs
ENZON, INC.
40 Kingsbridge Road
Piscataway, NJ 08854-3998

For BMS:

Bristol-Myers Squibb Company
Route 206 and Province Line Road
Princeton, NJ 08540
Attention:    Zola P. Horovitz
Vice President, Business Development and Planning

    5.2   Records.   BMS shall keep, and require each AFFILIATE and sublicensee to keep, adequate records in sufficient detail to enable the royalties payable by BMS hereunder to be determined and, upon reasonable advance notice, permit, and require each AFFILIATE and sublicensee to permit, said records to be inspected at any time during regular business hours by an independent auditor appointed by ENZON and reasonably satisfactory to BMS for this purpose, who shall report to ENZON only the amount of the royalties payable hereunder.

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6.   OPTION TO BMS

    6.1   Option to Non-Exclusive License.   ENZON hereby grants BMS and its AFFILIATES the option to take a non-exclusive license under PATENT RIGHTS (as defined in the applicable license agreement referred to below) in the field of (a) cancer therapeutics, or (b) all therapeutics. BMS may exercise this option by signing and delivering to ENZON the License Agreement of Appendix IV (cancer therapeutics) or Appendix V (all therapeutics) accompanied by payment of the sum of [*] Dollars ($[*]) for cancer therapeutics, or [*] Dollars ($[*]) for all therapeutics. [*] Percent ([*]%) of the cash payment of Section 4.1 hereof shall be credited against the applicable option exercise payment if exercise occurs on or before [*]. [*] Percent ([*]%) of the cash payment of Section 4.1 hereof shall be credited against the applicable option exercise payment if exercise occurs after [*] but on or before [*]. This option shall expire on [*]. With respect to each exclusive license agreement in the field of therapeutics covering PATENT RIGHTS entered into by ENZON after the EFFECTIVE DATE, ENZON shall expressly subject the license granted thereunder to the option granted to BMS under this Section 6.1 by way of an express disclosure comparable to Appendix III in such exclusive license agreement.

7.   INFRINGEMENT

    7.1   No Warranty of Non-Infringement.   Nothing in this Agreement shall be construed as a warranty, assurance, or representation by ENZON or its AFFILIATES that BMS or its AFFILIATES or sublicensees can make, have made, use, or sell PRODUCT free of any proprietary rights, including third party patent rights, other than those specifically granted in this Agreement. ENZON hereby represents that, as of the EFFECTIVE DATE, BMS' practice of the inventions covered by PATENT RIGHTS pursuant to the license granted hereunder will not infringe any existing patent (including patent to issue on an existing patent application) right owned, or licensed on a royalty-free basis with the right to sublicense, by ENZON or its AFFILIATES not licensed hereunder, to the extent that such practice does not involve the modification of any SCA PROTEIN as described in Area 8 listed in Appendix II.

    7.2   Infringement by BMS.   In the event that BMS or its AFFILIATES or sublicensees are sued for infringement by reason of practicing any invention covered by PATENT RIGHTS, BMS or its AFFILIATES shall notify ENZON in writing of the suit and shall have the sole right, but not the obligation, to defend such suit at the expense of BMS or its AFFILIATES or sublicensees, as the case may be. Only with respect to matters pertaining to the validity or enforceability of PATENT RIGHTS shall ENZON have the right to provide advice and assistance in any such litigation at its expense, unless such advice and assistance are requested by BMS or its AFFILIATES or sublicensees, in which case it shall be at the expense of BMS or its AFFILIATES or sublicensees, as the case may be. In the event ENZON is joined in such litigation, ENZON shall have the right to defend itself with counsel of its choice at its expense.

    7.3   Infringement by Third Party.   

(a)

BMS shall notify ENZON of any infringement by a third party of any PATENT RIGHTS in the FIELD that BMS is aware of, and shall provide ENZON with the available evidence, if any, of such infringement.



(b)

ENZON shall have the exclusive right and sole discretion during the term of this Agreement to stop such infringement including bringing suit or other proceeding against the infringer in its own name and BMS shall be kept informed at all times of all such actions taken by ENZON. If ENZON requests, BMS may, at BMS' discretion, assist ENZON as a party to the lawsuit or other proceeding at ENZON's expense; however, ENZON shall retain control of the prosecution of such suit or proceeding, as the case may be.

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(c)

ENZON shall bear all its costs incurred in connection with such lawsuit or other proceeding, and consequently shall be entitled to collect and retain for its own account such damages and profits as may be accrued as a result of such lawsuit or other proceeding; provided, however, that, if (and only if) such damages and profits have been determined on the basis of such infringement, then the total amount of such damages and profits, net of ENZON's lost royalties hereunder, litigation costs and expenses, shall be shared with BMS as follows: ENZON shall be entitled to [*] of such net amount; and BMS shall be entitled to the remainder.



(d)

If third party infringement in the FIELD in a particular country continues for more than six months after BMS' notice to ENZON under this Section 7.3, then any royalty obligation incurred by BMS under Section 4.3 hereof shall be reduced by [*] until such third party infringement terminates. For purposes of the above sentence, sales by a third party of infringing product in such country shall not be considered to be "third party infringement" unless such sales, together with sales of infringing product by any other third parties, equal or exceed [*] of BMS sales of PRODUCT in such country.

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(e)

Nothing in this Agreement shall be construed as obligating ENZON, or giving BMS the right, to proceed against a third party infringer.

8.   CONFIDENTIALITY, NON-USE AND PUBLICATIONS

    8.1   ENZON's Rights.   Other than the option granted to BMS pursuant to Section 6.1, nothing in this Agreement shall be construed to prohibit or limit in any manner ENZON's right to grant any license for PATENT RIGHTS to any party outside the FIELD. ENZON may issue public announcements or press releases relating to the existence and/or subject matter of this Agreement (excluding any disclosure of the financial terms hereof unless required by law or regulation) with reference to BMS as the licensee, provided that ENZON shall provide BMS with not less that five (5) business days to review and comment on the form and substance of the public announcement or press release. In no event shall ENZON include in such announcements or re1eases, explicitly or implicitly, any mention or indication that BMS endorses any SCA DISCOVERY.

    8.2   BMS' Rights.   BMS may issue public announcements or press releases relating to the existence of this Agreement (excluding any disclosure of the financial terms hereof unless required by law or regulation) with reference to ENZON as the licensor, provided that BMS shall provide ENZON with not less that five (5) business days to review and comment on the form and substance of the public announcement or press release. In no event shall BMS include in such announcements or releases, explicitly or implicitly, any mention or indication that ENZON endorses the manufacture, use, or sale of any PRODUCT.

    8.3   BMS' Obligations.   BMS shall not use any unpublished PATENT RIGHTS including the text of Appendix I of this Agreement for any purpose other than as permitted under this Agreement. BMS shall keep any unpublished PATENT RIGHTS including the text of Appendix I of this Agreement disclosed to BMS by ENZON confidential for three (3) years following the termination of this Agreement for any reason. Nothing in this Agreement shall prevent BMS from making any disclosure of unpublished PATENT RIGHTS including the text of Appendix I of this Agreement required by law.

    Nothing in this Agreement shall in any way restrict the right of BMS to use or disclose unpublished PATENT RIGHTS including the text of Appendix I that:

(a)

at the time of disclosure by ENZON to BMS had been published or is publicly known or otherwise in the public domain;



(b)

is published, becomes publicly known, or otherwise becomes part of the public domain after disclosure by ENZON to BMS through no fault of BMS;



(c)

was known to BMS prior to the time of disclosure by ENZON, as demonstrated by written records; or



(d)

was or is disclosed to BMS in good faith by a third party who was not and is not under any obligation of confidence to ENZON at the time of said disclosure by said third party.

    The obligation of this Section 8.3 shall apply equally to BMS and us AFFILIATES and sublicensees.

9.   BMS' DILIGENCE

    During the term of this Agreement, BMS and its AFFILIATES and, if any, sublicensees will use commercially reasonable efforts to develop PRODUCTS for commercial sale and distribution throughout the world, and to such end will use commercially reasonable efforts to create a demand for the manufacture, sale, and marketing of PRODUCTS, and to meet and fulfill any such demand for said PRODUCTS.

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10.   INDEMNIFICATION

    BMS shall defend, indemnify, and hold ENZON and its AFFILIATES harmless from and against any and all claims, suits, and expenses, including attorney expenses, arising from the manufacture, use, or sale or other distribution of PRODUCTS by BMS or its AFFILIATES or sublicensees, except to the extent attributable to the indemnified party's negligence or intentional misconduct.

11.   BMS IMPROVEMENTS

    11.1   License to ENZON.   BMS and its AFFILIATES agree to and hereby do grant to ENZON and its AFFILIATES a worldwide, royalty-free, non-exclusive license, including the right to grant sublicenses to third parties, to make, use, and sell any product covered by BMS PATENT RIGHTS.

12.   TERM AND TERMINATION

    12.1   Default.   If either party shall fail to perform any of its obligations under this Agreement, the nondefaulting party may give written notice of the default to the defaulting party. Unless such default is corrected within sixty (60) days after receipt of such notice, the notifying party may thereafter terminate this Agreement.

    12.2   Term.   Unless otherwise terminated, as provided for in this Agreement, this Agreement will continue on a country by country basis until the expiration of the last to expire PATENT RIGHT in the country in question.

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    12.3   Termination by BMS.   This Agreement may be terminated as a whole by BMS at any time from and after the second anniversary of the EFFECTIVE DATE pursuant to written notice and payment if the applicable amount set forth below:

Any foregoing amount payable by BMS is: (i) additional to all amounts that have in due course become payable under Section 4.4 and (ii) subject to any available credit resulting from any prior Milestone Payments made by BMS under Section 4.2

    12.4   Survivability.   Sections 5, 7, 8, 10 and, with respect to all BMS PATENT RIGHTS existing as of the time of termination, 11 shall survive the termination of this Agreement, except that Section 11 shall not survive if BMS terminates this Agreement under Section 12.1 for ENZON's default.

13.   MISCELLANEOUS

    13.1   DISCLAIMER OF WARRANTIES.   EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ENZON EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

    13.2   Integration.   This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof, and supersedes and replaces all prior agreements, understandings, writings, and discussions between the parties relating to said subject matter.

    13.3   Amendments.   This Agreement may be amended only by a written instrument executed by the parties.

    13.4   Waiver.   The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either party of any condition or term in any one or more instances shall be construed as a further or continuing waiver of such condition or term or any other condition or term.

    13.5   Successors.   This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

    13.6   Assignability.   This Agreement shall not be assignable by either party without the other parry's written consent, except for ENZON's right to receive royalties payable hereunder, upon sixty (60) days prior written notice to BMS. Either party, however, shall have the right to transfer this Agreement to any AFFILIATE, or to any successor of its entire business to which this Agreement relates without the consent of the other party.

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    13.7   Notices.   Any notice and payment of royalties required or permitted to be given hereunder shall be deemed sufficient if mailed by registered or certified mail (return receipt requested), or delivered by hand to the party to whom such notice is required at its address set forth in Section 5.1.

    13.8   Validity of Provisions.   If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the parties that the remainder of this Agreement shall not be affected thereby. It is further the intention of the parties that in lieu of each such invalid, illegal, or unenforceable provision, there shall be substituted or added as part of this Agreement a provision that shall be as similar as possible in economic and business objectives to such invalid, illegal, or unenforceable provision as was originally intended by the parties, but that shall be valid, legal, and enforceable.

    13.9   Titles.   All titles and subtitles used in this Agreement are for purposes of illustration or organization and are not legally binding on the parties.

    13.10   Relationship of the Parties.   Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee, or joint venture relationship between the parties.

    13.11   Further Acts and Instruments.   Each party hereto agrees to execute, acknowledge, and deliver such further instruments and to do all such other acts as may be necessary or appropriate to effect the purpose and intent of this Agreement.

    13.12   Export Restrictions.   This Agreement, and any products or technical data supplied during the term of this Agreement, are made subject to any restrictions concerning the export of products or technical data from the United States of America that may be imposed upon ENZON or BMS or their respective AFFILIATES or sublicensees from time to time by the Government of the United States of America. Furthermore, BMS and its AFFILIATES agree that at no time, either during the term of this Agreement or thereafter, will they or their sublicensees export, directly or indirectly, any United States source products or technical data acquired from ENZON or its AFFILIATES under this Agreement or any direct products of that technical data to any country for which the U.S. Government or any agency thereof at the time of export requires an export license or other governmental approval, without first obtaining that license or approval when required by applicable United States law.

    13.13   Choice of Law.   This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New Jersey.

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    The parties have duly executed this Agreement as of the date first above written.

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Exhibit 10.4
Confidential treatment requested

LICENSE AGREEMENT

    This Agreement is effective as January 1, 1998, and is by and between Brookhaven Science Associates, LLC. ("Licensor"), operator of Brookhaven National Laboratory, Upton, New York 11973, under contract with the U. S. Department of Energy, and Seattle Genetics, Inc., ("Licensee") having a principal place of business at 22215 26th Avenue S. E., Bothell, WA 98021.

    Licensor represents that it is the owner by assignment of all rights, title and interest in the patent properties covering the T7 technology.

    Licensor represents that it has the right to grant licenses under said patent properties, subject to a non-exclusive, non-transferable, irrevocable, paid-up license heretofore granted to the U.S. Government to practice or have practiced the invention(s) covered by said Patent Rights for or on behalf of the United States Government.

    Licensor desires to have said patent properties utilized in the public interest and is willing to grant a license thereunder on the terms and conditions set forth herein.

    Licensee desires to secure a non-exclusive license under said patent properties to use the T7 technology to produce anti-cancer products.

    Licensee also desires to secure a non-exclusive license to enter into sublicense agreements with Affiliates and Product Development Partners to produce, test and sell or otherwise commercially use said Designated Protein Product, or derivatives thereof:

    Accordingly, in consideration of the premises and the mutual covenants of this Agreement, the parties hereto agree as follows:

I—DEFINITIONS

    (a) The term "Patent Rights" shall mean:

    1.  United States Patent No. 4,952,496 issued August 28, 1990 in the names of F. William Studier, Parichehre Davanloo, Alan H. Rosenberg, Barbara Moffatt and John J. Dunn entitled "Cloning and Expression of the Gene for Bacteriophage T7 RNA Polymerase", and any reissue thereof;

    2.  U.S. Patent No. 5,693,489 issued December 2, 1997 in the names of F. William Studier, Parichehre Davanloo, Alan H. Rosenberg, Barbara Moffatt and John J. Dunn entitled "Cloning and Expression of the Gene for Bacteriophage T7 RNA Polymerase", and any reissue thereof;

    3.  U.S. Patent Application Serial No. [*], and any continuations, continuations-in-part, or divisionals of said application, and any patents or reissue of patents that issue thereon.

    (b) The term "Valid Claim" means and includes a claim contained in the Patent Rights which has not expired, which has not been held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

    (c) The term "Designated Product" shall mean a protein or other product produced through use of the T7 technology.

[*]   Confidential treatment requested

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    (d) The term "Licensed Product" means and includes Designated Product or derivatives thereof produced during the term of this Agreement by use of any invention covered by a Valid Claim in the Patent Rights, and any product the manufacture, use or sale of which incorporates said Designated Product or derivatives thereof.

    (e) The term "Net Sales Proceeds" shall mean the actual price at which each Licensed Product is sold by Licensee, Affiliate or Product Development Partner, less the following sums actually paid or credited:

i.

sales, excise or value added taxes tariffs and duties directly imposed with reference to particular sales;



ii.

outbound transportation, freight, postage and similar charges prepaid or allowed;



iii.

insurance coverage for such outbound transportation;



iv.

amounts allowed or credited on returns, rejections, defects or recalls;



v.

amounts allowed as customary trade, quantity or cash discounts and rebates;



vi.

currency exchange fees in respect of receipts in other than U. S. dollars.

    (f)  The term "Affiliate" means any corporation or other business entity controlled by Licensee, with "control" meaning ownership of more than fifty percent (50%) of the voting stock, or receipt of more that fifty percent (50%) interest in the income, of such corporation or other business entity.

    (g) The term "Product Development Partner" means any business entity that shall receive from Licensee a sublicense to practice the Patent Rights so as to carry out the commercial development, testing, manufacture, use and/or sale of Licensed Product for one specific application of said Licensed Product.

II—GRANT

    (a) Subject to the rights of the U.S. Government, defined in Public Law 98-620 and the implementing regulations at 37CFR Part 401, Licensor hereby grants to Licensee for the life of this Agreement:

1.

a non-exclusive license under the Patent Rights, to make, have made, use, and/or sell Licensed Products for human and non-human applications;



2.

the right under the Patent Rights to grant to an Affiliate a sublicense; and,



3.

the right under the Patent Rights to grant to Product Development Partner(s) a single sublicense for each specific application of Licensed Product.

    (b) Any sublicense granted under the provisions of paragraph (a) above shall be subject to the following:

i.

the sublicense granted by Licensee shall be subject to the terms and conditions of this Agreement, including without limitation, the insurance requirement in Article VI, paragraphs d and e, hereof;



ii.

said sublicense shall require that the Net Sales Proceeds reported and used in the calculation of the royalties due from sale or commercial use or disposition of Licensed Product(s) by Product Development Partner shall be the amounts billed to end users;



iii.

said sublicense shall be made to include terms that cause it to be automatically terminated by termination, for any reason or cause, of this Agreement between Licensor and Licensee;

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iv.

said sublicense shall be made non-assignable and non-transferable without the prior written consent of Licensee; and



v.

Licensee agrees to forward to Licensor a fully executed copy of any sublicense agreement or any amendment thereof or notice of assignment or transfer thereof within thirty (30) days of execution of said sublicense agreement, amendment or assignment or transfer.

    (c) Nothing herein shall be construed to prevent Licensor from licensing any invention covered by the Patent Rights hereunder to any other for the purpose of manufacturing, using or selling any such invention.

III—LICENSE FEE

    (a) As partial consideration for the granting of this license, Licensee agrees to pay Licensor the sum of [*] U.S. Dollars ($[*]). This sum shall not be applied against any royalty payments due under Article IV hereof. Said license fee shall be payable by Licensee to Licensor within thirty (30) days of the latest date of signature hereto of this Agreement.

    (b) Thereafter, Licensee agrees to pay to Licensor, as an annual license maintenance fee, the sum of [*] U.S. Dollars ($[*]), payable by Licensee to Licensor within thirty (30) days of the anniversary of the effective date of this Agreement and continuing until such time as minimum royalties as required by Article IV, below, are due for any Licensed Product.

IV—REPORTS AND ROYALTIES

    (a) Commencing in the calendar year 1999, Licensee agrees to make written reports to Licensor biannually, within sixty (60) days after the first day of each January and July during the life of this Agreement, and, as of such dates, stating in each such report the tradename or other description it uses in selling any Licensed Product, and the total Net Sales Proceeds during the preceding six calendar months. The first such report shall include all Net Sales Proceeds from the effective date of this Agreement to the date of said report. Such biannual reports shall provide the particulars of the business conducted by Licensee during the preceding six (6) month period under this license Agreement as are pertinent to a royalty accounting. These shall include at least the following:

1.

all Licensed Products manufactured, used, sold or otherwise disposed of;



2.

total billings for Licensed Products sold, used or otherwise disposed of;



3.

calculation of Net Sales Proceeds; and



4.

total royalties due.

In addition, Licensee agrees that following any six month period in which no Licensed Products were sold, bi-annual sales reports required by this Article IV shall so state.

    (b) Concurrently with the making of each such report required by paragraph (a) of this Article IV , Licensee will pay to Licensor a royalty of [*] percent ([*]%) of the Net Sales Proceeds.

    (c) Commencing in the calendar year in which the first sale of Licensed Product is made, Licensee agrees to pay to Licensor minimum annual royalties according to the following schedule:

i.

a sum of [*] U.S. Dollars (U.S. $[*]) for each of the first [*] in which Licensed Product is sold;



ii.

a sum of [*] U.S. Dollars (U.S. $[*]) for each of the [*] ([*]) through the [*] in which Licensed Product is sold; and,

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iii.

a sum of [*] U.S. Dollars (U.S. $[*]) for the [*] and for each calendar year thereafter in which Licensed Product is sold.

In the event that the actual royalties for any calendar year exceed the specified minimum royalty figure for that year, it is understood that no minimum royalties are to be paid for that year. In the event that the actual royalties paid for a calendar year are less than the specified minimum royalty for that year, Licensee shall be obligated to pay within sixty (60) days after the end of each such year the difference between the actual royalties it paid during said year and the minimum royalty specified for that year to satisfy this minimum royalty provision.

    (d) Royalty payments by Licensee to Licensor as provided under paragraphs (b) and (c) of this Article IV shall not be reduced as a result of any requirement that Licensee make royalty payments to third parties, including but not limited to Licensee's Affiliate or Product Development Partner, in order to practice the Patent Rights, regardless of the extent and/or amount of said payments to third parties.

    (e) Licensee agrees to make a written report to Licensor within sixty (60) days after the date of any termination of this Agreement, stating in such report the total Net Sales Proceeds up to such date of termination which were not previously reported to Licensor.

Concurrently with the making of this report, Licensee will pay to Licensor all royalties due on the basis of this report at the rate defined in paragraphs (b) and (c) of this Article.

    (f)  All monies payable hereunder shall be paid in United States Dollars.

V—AUDITING

    (a) Licensee agrees to keep for a period of three years the records used to prepare the reports required by Article IV hereof. Such records shall be in sufficient detail to enable the royalties and licensing fees payable hereunder by Licensee to be clearly and fully determined. Licensee further agrees to permit such records to be examined from time to time, but not more frequently than bi-annually, to the extent necessary to verify the reports provided for in Article IV hereof, such examination to be made at the expense of Licensor by an auditor appointed by Licensor, or at the option and expense of Licensee, by an independent Certified Public Accountant who shall be appointed by Licensee and who shall be acceptable to Licensor.

    (b) Licensor agrees to maintain in confidence the information reported to it in Licensee's biannual sales reports and any confidential information it obtains through its audit rights. Licensor will neither disclose this information outside of its organization nor use this information for any purpose other than collection of royalties from Licensee under this Agreement.

    (c) Licensee agrees that the confidentiality and use provisions of this Article shall not apply to the following:

(1)

any information which appears in printed publications or which otherwise is or becomes generally known in the trade other than through the fault of Licensor;



(2)

any information which Licensor can show by written records was in its possession prior to the disclosure hereunder; or



(3)

any information which comes into the possession of Licensor without covenants of secrecy from another party who is under no obligation to Licensee to maintain the confidentiality of the information.

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VI—DISCLAIMER. INDEMNIFICATION, HOLD HARMLESS AND INSURANCE

    (a) Licensor makes no representation or warranty, either expressed or implied, and no representation or warranty shall be implied, with respect to the License herein granted other than that Licensor has the right to grant said license.

    (b) Nothing in this Agreement shall be construed as:

(1)

a warranty or representation by Licensor as to the validity or scope of any Patent Rights;



(2)

a warranty or representation that any product made, used, sold or otherwise disposed of or any method practiced under any license granted under this Agreement is or will be free from infringement or claims of infringement of patents, copyrights or any other property right of third parties; or



(3)

granting by implication, estoppel or otherwise any licenses or rights under patents or other property rights of Licensor other than said Patent Rights, regardless of whether such patents are dominant or subordinate to any Patent Rights.

    (c) Licensor shall not be liable for any injury, losses or damages, including special or consequential damages or losses incurred by Licensee, nor for claims for such damages, losses or other injuries asserted or levied against Licensee, arising out of Licensee's practice of the Grant set forth in Article II of this Agreement. Licensee shall indemnify and hold harmless Licensor and the U.S. government from any claims, actions, judgements or awards arising out of Licensee's practice of the Grant set forth in Article II, or out of Licensee's manufacture, use, sale or disposition of Licensed Products.

    (d) Licensee shall, at the time of signing this Agreement, have in effect and shall thereafter maintain throughout the continuing life of this Agreement, a liability insurance policy in an amount of at least [*] U.S. dollars ($[*]) coverage for claims arising out of the manufacture, use, sale or disposition of Licensed Products for non-human applications, and Licensee shall have Licensor designated as named insured in said policy, at no expense to Licensor. Licensee shall, at the time of signing of this Agreement, deliver to Licensor a Certificate of Insurance evidencing such liability insurance policy and showing Licensor as an additional named insured.

    (e) Licensee shall, at the time of initiating tests of Licensed Product(s) in human subjects, have in effect a liability insurance policy in an amount of at least [*] U. S. dollars ($[*]) coverage for claims arising out of the manufacture, use, sale or disposition of Licensed Products for human applications. Licensee shall have Licensor designated as named insured in said policy, at no expense to Licensor. Prior to initiating said tests of Licensed Product(s) in human subjects, Licensee shall deliver to Licensor a Certificate of Insurance evidencing such liability insurance policy and showing Licensor as named insured. Licensee shall maintain said $[*] liability insurance policy throughout the period of testing of Licensed Product(s) in human subjects, for the duration of the period of marketing of Licensed Product(s) for human applications and for [*] ([*]) [*] after either the cessation of marketing of Licensed Product(s) for human applications or the termination of this Agreement, whichever transpires first. Said [*] ([*]) [*] obligation to maintain said $[*] liability insurance policy shall apply following the first sale by Licensee of Licensed Product(s) for human applications.

    (f)  Licensee further agrees to periodically provide evidence of its continuing to maintain insurance coverage required by this Article in the amounts of the said [*] ($[*]) or [*] ($[*]) U. S. Dollars.

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VII—INFRINGEMENT OF LICENSOR'S PATENT RIGHTS BY THIRD PARTIES

    (a) Should Licensee become aware of any infringement or alleged infringement in the United States, its territories and possessions, of any of the Patent Rights, Licensee shall promptly notify Licensor in writing of the name and address of the alleged infringer and of the alleged acts of infringement, and provide any available evidence of the alleged acts of infringement.

    (b) Licensor shall not be obligated to prosecute against any third party any suit for infringement of the aforesaid Patent Rights.

    (c) If, at any time during this Agreement, Licensor shall be unable to uphold the validity of any of the Patent Rights against any alleged infringer, Licensee shall not have or assert any damage claim or a claim for refund or reimbursement against Licensor.

VIII—SUCCESSOR RIGHTS

    (a) The obligations of Licensee hereunder, including the obligations to make reports and pay royalties, shall run in favor of the successors, assigns or other legal representatives of Licensor.

    (b) Licensee's rights under this Agreement and the license herein granted shall not be assigned for the benefit of creditors of Licensee or otherwise, nor shall such rights or license pass to any receiver of Licensee's assets, except for a person or corporation succeeding to the entire business and good will of Licensee in the manufacture and sale of Licensed Products as the result of a sale, consolidation, reorganization or otherwise, provided such person or corporation shall, without delay, accept in writing the provisions of this Agreement and agree to become in all respects bound thereby in the place and stead of Licensee. Licensee's rights under this Agreement and the license herein granted shall not be otherwise transferred without the written consent of Licensor.

IX—UNITED STATES GOVERNMENT EXPORT CONTROL REGULATIONS

    (a) The Export Control Regulations of the U.S. Department of Commerce prohibit, except under a special validated license, the exportation from the United States of technical data relating to certain commodities listed in the Regulations, unless the exporter has received certain written assurance from the foreign importer. In order to facilitate the exchange of technical information under this Agreement, Licensee therefor hereby gives its assurance to Licensor that it will comply with all of the requirements of the U.S. Export Control Regulations.

    (b) Violation of the U.S. Export Control laws or regulations by Licensee shall constitute grounds for Licensor, in its sole discretion, to terminate this license agreement. Failure to obtain any needed export control license may result in criminal liability under the United States law.

X—TERM AND TERMINATION

    (a) Unless previously terminated in accordance with the following provisions of this Article X, this Agreement shall become effective as of the date set forth at the outset of this Agreement and shall run to the end of the term of the last to expire patent in the Patent Rights licensed hereunder, and shall thereupon expire.

    (b) If Licensee shall at any time default in the payment of any license fee or royalty or in the making of any report hereunder, or shall commit any breach of any covenant herein contained, and shall fail to remedy any such default or breach within thirty (30) days after written notice thereof by Licensor, then Licensor may, at its option, terminate the license and all other rights herein granted, by giving notice to Licensee in writing to such effect.

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    (c) After two years from the effective date of this Agreement, Licensee shall have the right to terminate the prospective effect of the license hereunder at any time by written notice given to the Licensor at least six (6) months prior to the date when such termination is to become effective.

    (d) Any termination or expiration of this Agreement shall not relieve Licensee from its obligations under Article IV hereof to make a terminal report and maintain records, or from its liability for payment of royalties on Licensed Products sold or otherwise disposed of hereunder prior to the date of such termination or expiration, or for payment of annual minimum royalties due, and shall not prejudice the right of Licensor to recover any royalty or other sums or consideration due or accrued at the time of such termination or expiration and shall not prejudice any cause of action or claim of Licensor accrued on account of any breach or default by Licensee.

    (e) Any termination or expiration of this Agreement shall not prejudice the right of Licensor to conduct a final audit of the records of Licensee in accordance with the provisions of Article V hereof.

XI—ADVERTISING

    Neither the granting of the license herein granted by Licensor nor the acceptance of the license fee or royalties hereunder by Licensor shall constitute Licensor's approval of, or acquiescence in, advertising or other business practices of Licensee, nor an approval of or acquiescence in any use of the corporate name of Licensor, or any use of the name Brookhaven National Laboratory, or any use of the name(s) of the inventors of the Patent Rights licensed, or of the names of any agencies of the U.S. Government, in connection with the manufacture, advertising, use or sale of Licensed Products, and Licensor hereby expressly reserves all rights of actions with respect thereto.

XII—NOTICES

    (a) Any notice pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to a party by certified mail, postage prepaid, addressed to it at its address below:

    For Licensor:

Margaret C. Bogosian, Manager
Office of Economic Development and Technology Transfer
Brookhaven National Laboratory
Building No. 475D
P.O. Box 5000
Upton, New York 11973-5000
Telephone: 516-344-7338
Fax: 516-344-3729
E-mail: OTT@bnl.gov

    For Licensee:

Dr. Perry Fell
President
Seattle Genetics, Inc.
22215 26th Avenue S. E.
Bothell, WA 98021
Telephone: 425-489-8834
Fax: 425-489-4798
E-mail: pfell@seagen.com

    Alternatively, such notices may be delivered to such other address or addresses as either Licensor or Licensee, respectively, may later establish by written notice to the other.

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    (b) Any payments due from Licensee to Licensor hereunder shall be made as follows:

XIII—APPLICABLE LAW

    This Agreement shall be construed, interpreted and applied in accordance with the laws of the United States and of the State of New York.

XI—ENTIRE UNDERSTANDING

    This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Agreement shall be in writing and shall be signed by a duly authorized representative of each party. There are no understandings, representations or warranties with respect to the subject matter hereof, except as herein expressly set forth, and no rights are granted hereunder except as expressly set forth herein. This Agreement does not modify or affect any pre-existing or subsequent separate formal written Agreement between the parties hereto concerning the in-house, non-commercial research use of the T7 technology.

    The parties hereto have duly executed this Agreement.

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QuickLinks

I—DEFINITIONS
II—GRANT
III—LICENSE FEE
IV—REPORTS AND ROYALTIES
V—AUDITING
VI—DISCLAIMER. INDEMNIFICATION, HOLD HARMLESS AND INSURANCE
VII—INFRINGEMENT OF LICENSOR'S PATENT RIGHTS BY THIRD PARTIES
VIII—SUCCESSOR RIGHTS
IX—UNITED STATES GOVERNMENT EXPORT CONTROL REGULATIONS
X—TERM AND TERMINATION
XI—ADVERTISING
XII—NOTICES
XIII—APPLICABLE LAW
XI—ENTIRE UNDERSTANDING

Exhibit 10.5
Confidential treatment requested

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ii

EXHIBITS

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LICENSE AGREEMENT

    THIS LICENSE AGREEMENT (this "Agreement") dated as of March 30, 1998 by and between Bristol-Myers Squibb Company, a corporation duly organized and existing under the laws of the State of Delaware, having offices at P.O. Box 4000, Route 206 and Province Line Road, Princeton, New Jersey 08543-4000, for and on behalf of itself and its Affiliates ("BMS"), and Seattle Genetics, Inc., a corporation duly organized and existing under the laws of the State of Delaware, having offices at 22215 26th Avenue, SE, Bothell, Washington 98021 ("SGI").

PRELIMINARY STATEMENTS

    A.  BMS has developed, is the owner of and has all right, title and interest in and to certain valuable technology, including know-how and patents or patent applications, for the treatment of diseases and conditions in humans.

    B.  In addition, BMS has obtained licenses with respect to certain other valuable technology, including know-how and patents or patent applications, for the treatment of diseases and conditions in humans by entering into: (i) that certain Agreement with the University of Washington (the "Washington Agreement"), dated as of January 26, 1989; (ii) that certain License Agreement, with Ixsys, Inc. (the "Ixsys Agreement"), dated as of June 8, 1993; and (iii) that certain Semi-Exclusive License Agreement with Enzon, Inc. (the "Enzon Agreement"), dated as of September 30, 1993.

    C.  SGI is interested in developing and commercializing such technology and desires to obtain a license from BMS to manufacture, market and sell products using such technology in the Territory.

    D.  BMS is willing to grant such license to SGI on the terms and conditions set forth in this Agreement.

    NOW, THEREFORE, in consideration of the foregoing Preliminary Statements and the mutual covenants and agreements of the Parties contained in this Agreement, the Parties agree as follows:

1.   DEFINITIONS.

    As used in this Agreement, the following terms will have those meanings set forth in this Section 1 unless the context dictates otherwise.

    1.1 " Affiliate ", with respect to any Party, shall mean any Person controlling, controlled by, or under common control with, such Party. For these purposes, "control" shall refer to (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise or (b) the ownership, directly or indirectly, of at least 50% of the voting securities or other ownership interest of a Person.

    1.2 " BMS In-Licenses " shall mean the Washington Agreement, the Ixsys Agreement and the Enzon Agreement, collectively.

    1.3 " Effective Date " shall have the meaning assigned thereto in Section 5.1.

    1.4 " Enzon Field " shall mean proteins that derive their therapeutic activity by their binding affinity for the Lewis-Y antigen or that compete with monoclonal antibody BR96 for binding to the Lewis-Y antigen, for therapeutic use only, excluding, without limitation, the areas set forth in Exhibit B.

    1.5 " Enzon Patents " shall have the meaning assigned thereto in Exhibit A.

[*]

Confidential treatment requested

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    1.6 " Enzon Product " shall mean a Product covered by the Licensed Technology relating to the Enzon Patents in the Enzon Field that is an SCA Protein (as such term is defined in the Enzon Agreement) the manufacture, composition or use of which in a country in the Territory, but for the license to BMS under the Enzon Agreement and the sublicense to SGI hereunder with respect to the Enzon Licensed Technology, would constitute an infringement of one or more Valid Claims of the Enzon Patents.

    1.7 " FDA " shall mean the U.S. Food and Drug Administration, or the successor thereto.

    1.8 " Field " shall have the meaning assigned thereto in Section 4.1(d).

    1.9 " First Commercial Sale " shall mean, with respect to any Product, the first sale for use or consumption by the general public of such Product in a country in the Territory after all required marketing and pricing approvals have been granted, or otherwise permitted, by the governing health authority of such country. "First Commercial Sale" shall not include the sale of any Product for use in clinical trials or for compassionate use.

    1.10 " Generic Product " shall mean, on a country-by-country basis, a Product: (i) the manufacture, use or sale of which is not covered by a Valid Claim in such country, and (ii) that is also marketed by an unlicensed Third Party or Parties in such country, which Third Party or Parties have, in the aggregate, at least [*]% of the unit volume of sales for such Product in any calendar quarter in such country, as measured by IMS.

    1.11 " Improvement " all mean any new or useful invention, process or improvement, patentable or unpatentable, relating to or arising from the Licensed Technology, conceived or first reduced to practice or demonstrated to have utility by either Party, its Affiliates or sublicensees during the term of this Agreement, including, without limitation, any Products developed and marketed by SGI, its Affiliates or sublicensees.

    1.12 " IND " shall mean an investigational new drug application filed with the FDA.

    1.13 " Ixsys Field " shall mean the in vivo diagnosis or treatment of solid tumors in humans through the use of one or more antibodies.

    1.14 " Ixsys Patents " shall have the meaning assigned thereto in Exhibit A.

    1.15 " Ixsys Product " shall mean a Product covered by the Licensed Technology relating to the Ixsys Patents in the Ixsys Field that is (i) a diagnostic product, containing one or more Program Materials (as such term is defined in the Ixsys Agreement), for use in the in vivo detection of solid tumors in humans, or (ii) the final dosage formulation of a product incorporating pharmaceutical compositions containing Program Materials for use in the treatment of solid tumors in humans, regardless of the route of administration.

    1.16 " Know-How " shall mean any and all technical data, information, material and other know-how, if any, currently owned, developed or acquired by BMS that (i) arise from the Residual Program, or (ii) are necessary or useful to practice the Patents.

    1.17 " Licensed Technology " shall mean the Patents and antibodies set forth in Exhibit A , and, with respect to each Patent, the Know-How that is necessary or useful to practice such Patent, collectively. When no Patent(s) is specified, "Licensed Technology" shall mean all of the Patents, antibodies and Know-How, collectively.

    1.18 " Major Market " shall mean each of France, Germany, Japan, Italy, Spain, the United Kingdom and the United States.

    1.19 " Net Sales " shall mean, with respect to any Product, the gross amount invoiced for such Product by SGI, its Affiliates, and sublicensees to Third Parties, less deductions for: (i) trade, quantity

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and/or cash discounts, allowances and rebates (including, without limitation, promotional or similar allowances) actually allowed or given; (ii) freight, postage, shipping, insurance and transportation expenses and similar charges (in each instance, if separately identified in such invoice); (iii) credits or refunds actually allowed for rejections, defects or recalls of such Product, outdated or returned Product, or because of rebates or retroactive price reductions; and (iv) sales, value-added, excise taxes, tariffs and duties, and other taxes directly related to the sale, to the extent that such items are included in the gross invoice price (but not including taxes assessed against the income derived from such sale). Such amounts shall be determined from the books and records of SGI, its Affiliates or its sublicensees, maintained in accordance with the reasonable accounting principles used by such entity, consistently applied.

    In the event that a Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product (calculated using the standard Net Sales definition) during the applicable royalty reporting period by the fraction A/A+B, where A is the average sale price of the Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Product and all other product(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product (calculated using the standard Net Sales definition) by the fraction C/C+D, where C is the fair market value of the Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product. In such event, SGI shall in good faith make a determination of the respective fair market values of the Product and all other pharmaceutical products included in the Combination Product, and shall notify BMS of such determination and provide BMS with data to support such determination. BMS shall have the right to review such determination and supporting data, and to notify SGI if it disagrees with such determination.

    As used above, the term "Combination Product" shall mean any pharmaceutical product which comprises the Product and any other active compounds and/or ingredients.

    1.20 " Party " shall mean BMS or SGI and, when used in the plural, shall mean BMS and SGI.

    1.21 " Patents " shall mean all patents and patent applications throughout the Territory, and any substitutions, extensions, renewals, continuations, continuations-in-part, divisions, patents-of-addition and/or reissues or extensions thereof, which (i) are at present owned or controlled by BMS and are set forth in Exhibit A , or (ii) are owned or controlled by SGI or jointly by BMS and SGI, as the case may be, and cover any Improvement.

    1.22 " Person " shall mean any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or any agency or political subdivision thereof.

    1.23 " Product " shall mean any pharmaceutical formulation developed by SGI, its Affiliates or sublicensees during the term of this Agreement, the manufacture, use or sale of which is either: (i) based upon or derived from any of the Know-How; or (ii) covered by one or more Patents and, but for this Agreement, would constitute an infringement of a Valid Claim thereof. "Product" shall include Residual Product.

    1.24 " Research Program " shall have the meaning assigned thereto in Section 5.2(f).

    1.25 " Residual Product " shall mean any Product, the manufacture, use or sale of which is based upon or derived from any of the Residual Program Licensed Technology.

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    1.26 " Residual Program " shall have the meaning assigned thereto in Section 5.2(f).

    1.27 " Results " shall mean any and all technical data, information, material and other know-how, whether patentable or not, including but not limited to analytical methodology, chemical, toxicological, pharmacological and clinical data, formulae, procedures, drafts and/or protocols, techniques, and results of experimentation and testing, developed or acquired by SGI, its Affiliates or sublicensees during the term of this Agreement which relate to the Licensed Technology, except Improvements. "Results" shall include data and information generated for the purpose of obtaining marketing approvals of the Products in any country in the Territory. The Results shall be owned by SGI.

    1.28 " Royalty Term " shall mean, with respect to each Product in each country in the Territory, the period of time commencing on the Effective Date and ending on the date that is the latest of (i) [*] years from the date of the first Commercial Sale of such Product in such country, (ii) the expiration of the [*], or (iii) with respect only to the Licensed Technology that relates to, or is necessary or useful to practice, the Washington Patents, the [*] anniversary from the First Commercial Sale of Unpatented Product (as such term is defined in the Washington Agreement).

    1.29 " Territory " shall mean the world.

    1.30 " Third Party " shall mean any Person who or which is neither a Party nor an Affiliate of a Party.

    1.31 " Valid Claim " shall mean a claim of any Patent which has not been held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

    1.32 " Washington Patents " shall have the meaning assigned thereto in Exhibit A .

    1.33 " Washington Product " shall mean a Product covered by the Licensed Technology relating to the Washington Patents that (i) the manufacture, use or sale of which would, but for the license to BMS under the Washington Agreement and the sublicense to SGI hereunder with respect to the Washington Licensed Technology, infringe a Valid Claim of the Assigned Patent Rights (as such term is defined in the Washington Agreement), or (ii) is not covered by such Assigned Patent Rights which contains antibody G28-5, fragments of antibody G28-5, a chimeric antibody made using antibody G28-5 or the Hybridoma (as such term is defined in the Washington Agreement), or fragments of such chimeric antibody.

2.   EXCHANGE OF DATA AND MATERIALS.

    2.1   Licensed Technology.   As soon as practicable after the Effective Date, but in any event within 90 days thereafter, BMS shall deliver to SGI copies of all data, studies and materials comprising the Licensed Technology in BMS's possession then reasonably available. During the term of this Agreement, BMS shall deliver to SGI copies of all material clinical data that relate to the Licensed Technology that come into BMS's possession after the Effective Date. BMS shall have no obligation to provide any scientific, technical or other consulting or assistance of any kind to SGI with respect to the Licensed Technology.

    2.2   Transfer of INDs.   Promptly after the Effective Date, but in any event within 90 days thereafter, BMS shall transfer to SGI ownership of all INDs and other regulatory filings, if any, filed by BMS with respect to any products based upon, derived from or related to any of the Know-How or covered by one or more Patents. In addition, within 10 days after the Effective Date, BMS shall deliver to the FDA a letter transferring to SGI sponsorship of BMS's BR96-sFv-PE4O program. All INDs and other regulatory filings filed with respect to any Products after the Effective Date shall be owned by SGI.

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    2.3   Supply of Materials by SGI.   Within 14 days after BMS's request therefor, SGI will supply BMS with samples of any materials previously transferred to SGI by BMS. BMS shall be responsible for, and pay within 60 days after receipt of an invoice therefor, all of the reasonable out-of-pocket costs incurred by SGI in connection with the shipment of such samples.

    2.4   Exceptions and Limitations.   All of the information exchanged by the Parties pursuant to this Section 2 shall be deemed to be Confidential Information and shall be subject to the confidentiality provisions of Section 12.

3.   DEVELOPMENT AND COMMERCIALIZATION.

    3.1   Development Obligations.   Subject to Section 3.5, SGI shall, at its own expense, use all commercially reasonable efforts, consistent with the efforts of companies of comparable size and financial resources as SGI, to develop Products, which efforts shall include the performance of all studies necessary to obtain approval for each indication of such Products from governmental agencies in all Major Markets in the Territory where governmental approval is necessary in order to market Products in such countries. During the 18-month period commencing on the Effective Date, such efforts also shall include the activities set forth in Section 13.2(ii).

    3.2   Conduct of Development by SGI.   During the term of this Agreement, SGI shall:

    (a) undertake its development obligations, as set forth in this Agreement, and such other activities which are reasonably contemplated to be necessary for the commercial success of the Products;

    (b) conduct all research pursuant to this Agreement in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations, and all other requirements of any applicable good laboratory or clinical practices to attempt to achieve its objectives efficiently and expeditiously;

    (c) within 60 days following the end of each six-month period during the term of this Agreement, furnish BMS with written status reports, in summary form, on all SGI activities under this Agreement during such six-month period;

    (d) file for marketing approval following the completion of the development of any Product in all Major Markets in the Territory, in a time-frame consistent with the size and financial resources of SGI; and

    (e) allow representatives of BMS, upon reasonable notice and during normal business hours, to visit the facilities where the research is being conducted; provided that such visits shall not be made more than two times per calendar year.

    3.3   Records.   SGI shall maintain records, in sufficient detail and in good scientific manner, which shall be complete and accurate and shall fully and properly reflect all work done and results (including, without limitation, the Results) achieved in the performance of its development obligations under this Agreement (including all data in the form required under all applicable laws and regulations).

    3.4   Commercialization Responsibilities.   Subject to Section 3.5, during the term of this Agreement, following the completion of the development of any Product, SGI and/or its Affiliates or sublicensees shall:

    (a) Market and sell such Product under a trademark or trademarks owned or acquired by SGI. SGI shall be solely responsible for all matters relating to such trademark(s), including without limitation the registration, maintenance and prosecution of such trademark(s) in each country in the Territory where such Product is being marketed and sold. SGI shall bear all liability of any

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kind with respect to such trademark(s) and the use of such trademark(s) by SGI, its Affiliates and its sublicensees.

    (b) Promptly provide BMS with a copy of all reasonably material correspondence to or from health authorities in any country in the Territory relating to any material development affecting such Product (including both its approval and labeling), and, within one month of receipt by SGI, its Affiliates or sublicensees, SGI shall provide, or cause its Affiliates or sublicensees to provide, BMS with copies of all approvals and labeling changes received from the health authorities in any country in the Territory.

    (c) Initiate a commercial launch and diligently promote the sale of such Product in each Major Market in the Territory as soon as practicable after receiving all governmental approvals (including reimbursement price approval, if any) necessary to market and sell such Product in such country.

    3.5   Market Conditions.   SGI's development and commercialization diligence obligations set forth in this Section 3 with respect to any Product shall be required only to the extent that such Product warrants such efforts in light of then prevailing market conditions, including the existence of new or more competitive technologies.

4.   GRANT OF LICENSE AND OTHER RIGHTS.

    4.1   License Grant.   

    (a) Subject to the terms and conditions of this Agreement and, with respect to the licenses granted to BMS thereunder, of the respective BMS In-Licenses, BMS hereby grants to SGI a right and license (or, in the case of Patents licensed to BMS under the BMS In-Licenses, a sublicense), under the Licensed Technology, to make, have made, use, offer to sell, sell and have sold Products (except as set forth in Section 4.1(b)) in the relevant Field, as determined under Section 4.1(d), and in the Territory.

    (b) Notwithstanding Section 4.1(a):

    (i)  The right and sublicense granted in Section 4.1(a) under the Licensed Technology relating to the Enzon Patents shall be to make, have made, use, sell and have sold Enzon Products only;

    (ii) The right and sublicense granted in Section 4.1(a) under the Licensed Technology relating to the Ixsys Patents shall be to make, have made, use, sell and have sold Ixsys Products only; and

    (iii) The right and sublicense granted in Section 4.1(a) under the Licensed Technology relating to the Washington Patents shall be to make, have made, use, sell and have sold Washington Products only.

    (c) With respect to the Licensed Technology, the right and license granted to SGI under Section 4.1(a) shall be either exclusive or partially exclusive or non-exclusive, as set forth in Exhibit A . Except as set forth in this Agreement: (i) BMS shall retain no right to use the Licensed Technology for which SGI is granted a right and license that is exclusive; (ii) BMS shall retain the right to use outside the Field the Licensed Technology for which SGI is granted a right and license that is partially exclusive; and (iii) BMS shall retain all rights to use the Licensed Technology for which SGI is granted a right and license that is non-exclusive. SGI acknowledges that the right and license granted to SGI under this Agreement with respect to Licensed Technology licensed to BMS under the BMS In-Licenses is subject to all of the rights therein retained by the respective licensors thereunder.

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    (d) Subject to the limitations set forth in Section 4.1(b), the field (the "Field") with respect to Licensed Technology for which SGI is granted a right and license that is exclusive under Section 4.1(c) shall be the treatment and diagnosis of conditions and diseases in humans and animals. The Field with respect to Licensed Technology for which SGI is granted a right and license that is partially exclusive under Section 4.1(c) shall be: (i) if Exhibit A indicates that such license is partially exclusive for linkers, all monoclonal antibody targeting applications; or (ii) if Exhibit A indicates that such license is partially exclusive for cancer, the treatment and diagnosis of cancer in humans. The Field with respect to Licensed Technology for which SGI is granted a right and license that is non-exclusive under Section 4.1(c) shall be the treatment and diagnosis of cancer in humans. Notwithstanding the foregoing, the Field with respect to the G28-5 Licensed Technology shall be for the use of the antibody G28-5 fused with a toxin for the treatment of cancer in humans.

    4.2   Right to Sublicense or Sub-sublicense.   

    (a) Subject to Sections 4.2(b) and (c), SGI shall have the right to grant sublicenses or sub-sublicenses, without restriction on use, to Third Parties under the license and sublicense granted exclusively to SGI under this Agreement. Subject to Sections 4.2(b) and (c), SGI shall have the right to grant sublicenses or sub-sublicenses, solely for purposes of sponsoring research consistent with SGI's development obligations under Section 3 or for purposes of manufacturing, marketing or selling Products the development of which was commenced by SGI during the term of this Agreement, to Third Parties under the license and sublicense granted partially exclusively or non-exclusively to SGI under this Agreement. In the event of any such sublicensing or sub-sublicensing, SGI shall submit to BMS all material terms of any proposed sublicense or sub-sublicense for approval by BMS, which submission BMS shall consider in good faith and which approval BMS shall not unreasonably withhold. BMS shall provide to SGI its approval, or the basis for withholding approval, of such sublicense or sub-sublicense within 20 days after submission by SGI of a proposed term sheet containing all of the material terms of the proposed sublicense or sub-sublicense. The only basis upon which BMS may reasonably withhold its approval of a proposed sublicense or sub-sublicense shall be its reasonable determination that the proposed sublicensee or sub-licensee does not have the resources or experience necessary to fulfill its obligations under the proposed sublicense or sub-sublicense. BMS may not reasonably withhold its approval based on competitive concerns. [*]

    (b) SGI shall be primarily responsible for all payments due and the making of reports under this Agreement by its sublicensees and shall guarantee their compliance with all applicable terms of this Agreement. Each prospective sublicensee or sub-sublicensee shall agree in writing (i) (A) to maintain insurance coverage at the same levels and on the same terms and conditions as set forth in Section 11.5, which insurance shall name BMS as an additional insured, or (B) to maintain a self-insurance plan that substantially complies with the requirements of Section 11.5, provided that BMS reasonably determines in advance in writing that such sublicensee's or sub-sublicensee's self-insured plan is adequate given its financial condition, and, at BMS's request (but not more than annually), such sublicensee or sub-sublicensee provides written evidence of such self-insurance; and (ii) to keep books and records and permit BMS to review such books and records pursuant to Sections 7.3, 7.4 and 7.5 and to observe all other applicable terms of this Agreement.

    (c) In the event of a breach by a sublicensee of SGI in the observance of applicable terms of this Agreement, BMS shall be entitled to proceed, at BMS's sole discretion, against such sublicensee and/or SGI to enforce this Agreement. In furtherance of the foregoing and BMS's rights thereunder, each sublicense granted by SGI pursuant to this Section 4.2 shall explicitly provide that BMS is a third party beneficiary of such sublicense.

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    4.3   Reservation of Rights by BMS.   SGI acknowledges and agrees that, notwithstanding the right and license granted to SGI under this Agreement, BMS retains the right to use the Licensed Technology for internal research purposes and in connection with any research collaboration with a Third Party(ies) commenced prior to the Effective Date; provided, however, that BMS may sublicense the Licensed Technology relating to one or more of the Patents set forth in Table 5 of Exhibit A to Third Parties only for purposes of developing, manufacturing, marketing or selling products the development of which was commenced by BMS.

5.   INITIAL PAYMENT; ROYALTIES.

    5.1   Initial Payment.   In partial consideration of the right and license granted by BMS to SGI under this Agreement, SGI shall pay BMS a license fee of $[*] within 10 days after the date of this Agreement (the date on which such payment is made, the "Effective Date"). Notwithstanding any other provision of this Agreement, such fee shall be non-refundable and non-creditable against any other payments to be made by SGI under this Agreement.

    5.2   Royalties.   In further consideration of the right and license granted by BMS to SGI under this Agreement, subject to Sections 5.3, 5.4 and 9.1(b), during the Royalty Term, SGI shall pay to BMS a royalty on Net Sales of Products commencing on the First Commercial Sale of any Product by SGI, its Affiliates or its sublicensees in any country in the Territory, as follows:

    (a) With respect to Products covered by Licensed Technology relating to one or more of the Patents set forth in Table 1 of Exhibit A (such Licensed Technology, the "BR96 sFv-PE4O Program"), at the rate of [*]%.

    (b) With respect to Products covered by Licensed Technology relating to one or more of the Patents set forth in Table 2 of Exhibit A (such Licensed Technology, the "BR96/Drug Conjugate Program"), at the rate of [*]% on annual Net Sales up to and including $[*], and [*]% on annual Net Sales in excess of $[*]; provided that such thresholds shall be reduced pro rata with respect to any partial year for which royalties under this Section 5.2(b) are to be calculated.

    (c) With respect to Products covered by Licensed Technology relating to one or more of the Patents set forth in Table 3 of Exhibit A (such Licensed Technology, the "G28-5 sFv/Immunotoxin Program"), at the rate of [*]%.

    (d) With respect to Products covered by Licensed Technology relating to one or more of the Patents set forth in Table 4 of Exhibit A (such Licensed Technology, the "BDl Program"), at the rate of [*]%.

    (e) With respect to Products covered by Licensed Technology relating to one or more of the Patents set forth in Table 5 of Exhibit A (such Licensed Technology, the "Adept Program"), at the rate of [*]%.

    (f)  With respect to Residual Products covered by Licensed Technology relating to one or more of the Patents or the antibodies set forth in Table 6 of Exhibit A (such Licensed Technology, the "Residual Program") (each of the BR96 sFv-PE4O Program, BR96/Drug Conjugate Program, G28-5 sFv/ Immunotoxin Program, BD1 Program, Adept Program and the Residual Program, a "Research Program"), at the rate of [*]%.

    (g) With respect to Products covered by Licensed Technology relating solely to one or more of Patents 5,491,088, 5,204,244, 5,202,238, 5,482,856 and [*], [*], [*] and [*] and not covered by any of the other Licensed Technology comprising any Research Program, at the rate of [*]%.

    (h) Notwithstanding the royalty rates set forth in Sections 5.2(a)-(g), with respect to Products having an ex vivo application that are covered by Licensed Technology, at the rate of [*]%.

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    5.3   Third Party Royalties.   

    (a) SGI, at its sole expense, shall pay all royalties accruing to any Third Party after the Effective Date that result from SGI's or its Affiliates' or sublicensees' activities and that SGI determines, in its reasonable business judgment, are necessary in order to exercise SGI's rights hereunder to make, have made, use, sell or have sold any Product (all such royalties, "Third Party Royalties").

    (b) SGI shall be entitled to a credit against royalties payable to BMS under this Agreement as follows:

    (i)  If the aggregate Third Party Royalties and royalties under Section 5.2(a) payable to BMS by SGI with respect to Net Sales of Products covered by the BR96-sFv-PE4O Program during a calendar quarter exceed an amount equal to [*]% of such Net Sales, then SGI shall be entitled to a credit against royalties payable to BMS under Section 5.2(a) with respect to such Net Sales in an amount equal to [*]% of such excess, but in no event shall the royalties due under Section 5.2(a) be reduced to less than [*]% of such Net Sales.

    (ii) If the aggregate Third Party Royalties and royalties under Section 5.2(b) payable to BMS by SGI with respect to Net Sales of Products covered by the BR96/Drug Conjugate Program during a calendar quarter exceed an amount equal to [*]% of such Net Sales, then SGI shall be entitled to a credit against royalties payable to BMS under Section 5.2(b) with respect to such Net Sales in an amount equal to [*]% of such excess, but in no event shall the royalties due under Section 5.2(b) be reduced to less than [*]% of such Net Sales.

    (iii) If the aggregate Third Party Royalties and royalties under Section 5.2(c) payable to BMS by SGI with respect to Net Sales of Products covered by the G28-5 sFv/Immunotoxin Program during a calendar quarter exceed an amount equal to [*]% of such Net Sales, then SGI shall be entitled to a credit against royalties payable to BMS under Section 5.2(c) with respect to such Net Sales in an amount equal to [*]% of such excess, but in no event shall the royalties due under Section 5.2(c) be reduced to less than [*]% of such Net Sales.

    5.4   Reduction for Generic Competition.   With respect to any country in the Territory where a Product is a Generic Product, the royalties payable to BMS under Section 5.2 with respect to Net Sales of such Product in such country shall be reduced by [*]%, commencing with the calendar quarter during which such Product first becomes a Generic Product in such country. Such reduction shall be in lieu of any other reduction with respect to such royalties under this Agreement to which SGI otherwise would be entitled.

    5.5   Obligation to Pay Royalties.   In the event that more than one royalty rate under Section 5.2 applies with respect to the Net Sales of any Product, SGI shall pay royalties with respect to such Net Sales at the highest applicable rate. There shall be no obligation to pay royalties to BMS under this Section 5 on sales of Products among SGI, its Affiliates and its sublicensees, but in such instances the obligation to pay royalties shall arise upon the sale by SGI, its Affiliates or its sublicensees to unrelated Third Parties.

6.   BMS IN-LICENSE EXPENSES.

    6.1   Generally.   In further consideration of the right and license granted to SGI under this Agreement, SGI shall be solely responsible for the payment of all costs, fees, milestone payments, royalties and other expenses (collectively, "BMS In-License Expenses") that accrue and become payable by BMS under the several BMS In-Licenses, as may be amended or renegotiated from time to time, on or after the Effective Date, and for the making of all required reports associated with any such payments. All royalties paid by SGI with respect to Net Sales of a Product that is covered by the BR96-sFv-PE4O Program, the BR96/Drug Conjugate Program or the G28-5 sFv/Immunotoxin Program

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that constitute BMS In-License Expenses shall be deemed to be Third Party Royalties with respect to Net Sales of such Product for purposes of Section 5.3. SGI acknowledges that it has received a complete and correct copy of all of the BMS In-Licenses.

    6.2   Notices of Payment.   

    (a) Within 20 days after SGI pays any BMS In-License Expense other than royalties, SGI shall provide notice of such payment to BMS. Each such notice shall set forth the amount of such payment and the reason such payment was made.

    (b) In conjunction with each royalty statement provided by SGI under Section 7.1, SGI shall provide a statement of all royalties paid by SGI as BMS In-License Expense since the date of the last previous such statement provided by SGI. Each such report shall set forth the calculation of the royalties paid by SGI as BMS In-License Expenses during the relevant period.

    6.3   Payments Non-Creditable.   Except as expressly set forth in Section 5.3(b), SGI's payment of BMS In-License Expenses shall not be creditable against any other payments to be paid by SGI under this Agreement.

7.   PAYMENTS AND REPORTS.

    7.1   Payment.   All royalty payments payable to BMS under this Agreement shall be paid quarterly within 60 days of the end of each calendar quarter. Each such payment shall be accompanied by a statement, Product-by-Product and country-by-country of the amount of Net Sales during such quarter and the amount of royalties due on such Net Sales.

    7.2   Mode of Payment.   SGI shall make all payments required under this Agreement as directed by BMS from time to time in U.S. Dollars. Whenever for the purpose of calculating royalties, conversion from any foreign currency shall be required, such conversion shall be at the rate of exchange published in The Wall Street Journal, Eastern U.S. edition, for the last business day of the calendar quarter in which such sales were made.

    7.3   Records Retention.   SGI, its Affiliates and its sublicensees shall keep complete and accurate records (specifically including originals or copies of documents supporting entries in the books of account) pertaining to the sale of Products in the Territory and covering all transactions from which Net Sales are derived for a period of three calendar years after the year in which such sales occurred or such longer period as may be required under the respective BMS In-Licenses, and in sufficient detail to permit BMS to confirm the accuracy of royalty calculations hereunder.

    7.4   Audit Request.   At the request of BMS, SGI, its Affiliates and its sublicensees shall permit an independent certified public accountant appointed by BMS, at reasonable times and upon reasonable notice (but in no event more than once per calendar year), to examine those records and all other material documents relating to or relevant to Net Sales in the possession or control of SGI, its Affiliates or its sublicensees, for a period of three years after such royalties have accrued, as may be necessary to: (i) determine the correctness of any report or payment made under this Agreement; or (ii) obtain information as to the royalties payable for any calendar quarter in the case of SGI's failure to report or pay pursuant to this Agreement. Said accountant shall not disclose to BMS any information other than information relating to said reports, royalties, and payments. The results of any such examination shall be made available to both Parties. BMS shall bear the full cost of the performance of any such audit except as hereinafter set forth. If, as a result of any inspection of the books and records of SGI or its Affiliates or its sublicensees, it is shown that SGI's royalty payments under this Agreement were less than the amount which should have been paid, then SGI shall make all payments required to be made to eliminate any discrepancy revealed by said inspection within 15 days after BMS's demand therefor. Furthermore, if the royalty payments made by SGI were less than 95%

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of the amount of royalty payments which should have been paid with respect to the period in question, SGI shall also reimburse BMS for the cost of such examination.

    7.5   Taxes.   All payments due under this Agreement shall be paid in full without deduction except for withholding taxes, if any, required by law in any country in the Territory with respect to such payment. In the event that SGI is required to withhold any tax to the revenue authorities in any country in the Territory regarding any payment to BMS due to the laws of such country, such amount shall be deducted by SGI, and it shall notify BMS and promptly furnish BMS with copies of any tax certificate or other documentation evidencing such withholding.

    7.6   Interest on Late Payments.   SGI shall pay interest on any payment to BMS under this Agreement that is not made by the date due hereunder at a rate equal to the prime rate plus 2%, compounded monthly, obtained from The Wall Street Journal, Eastern U.S. edition, on the business day next preceding the date such payment was due, from such date until payment in full has been made.

    7.7   Obligations Under Ixsys Agreement.   Notwithstanding any other provision of this Agreement, with respect to Ixsys Products, SGI shall make reports to Ixsys, keep and maintain records of Net Sales and grant access to such records by an independent accountant to the same extent required of BMS under the Ixsys Agreement.

8.   REPRESENTATIONS AND WARRANTIES.

    8.1   Representations and Warranties of Both Parties.   Each Party represents and warrants to the other Party that: (i) it is free to enter into this Agreement; (ii) in so doing, it will not violate any other agreement to which it is a party; and (iii) it has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement.

    8.2   Representation and Warranty of BMS.   BMS represents and warrants to SGI that: (i) BMS has obtained all consents necessary to grant the right and license granted to SGI under this Agreement, including without limitation all consents required under the respective BMS In-Licenses; (ii) all payments and obligations that accrue under the BMS In-Licenses prior to the Effective Date have been paid, fulfilled or otherwise discharged, or will be paid, fulfilled or discharged when due; (iii) neither party to the respective BMS In-Licenses has given the other party notice that such other party is in breach under such BMS In-License; and (iv) BMS has provided to SGI a complete copy of the BMS In-License Agreements.

    8.3   BMS Disclaimer of All Representations and Warranties.   EXCEPT AS SET FORTH IN SECTIONS 8.1 AND 8.2, BMS DOES NOT MAKE ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE LICENSED TECHNOLOGY, THE PRODUCTS OR ANY MATERIALS TRANSFERRED TO SGI UNDER THIS AGREEMENT. SGI acknowledges and agrees that BMS is licensing the Licensed Technology to SGI strictly on an "AS IS, WHERE IS" basis and that SGI shall have no claims or causes of action of any kind against BMS with respect thereto.

9.   PATENTS; IMPROVEMENTS .

    9.1   Patent Filing, Maintenance and Prosecution.   

    (a) Subject to Section 9.3, with respect to Patents that are licensed to SGI exclusively under this Agreement and with respect to Improvements relating to or arising from such Patents, SGI shall have the first right, in its sole discretion and at its sole cost and expense, to determine the strategies for prosecuting such Patents and to determine whether to maintain such Patents in each country in the Territory. With respect to Patents that are licensed to SGI partially exclusively or non-exclusively under this Agreement and with respect to Improvements relating to or arising front

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such Patents, BMS shall have the first right, in its sole discretion and at its sole cost and expense, to determine the strategies for prosecuting such Patents and to determine whether to maintain such Patents in each country in the Territory.

    (b) In the event that the Party having the first right to prosecute and maintain a Patent under Section 9.1(a) elects to abandon the prosecution or maintenance of any such Patents in any country in the Territory, such Party shall give the other Party notice thereof at least 60 days prior to the date on which such other Party is required by law to make a filing in order to preserve rights to patent protection in such country, and the other Party shall have the right to do so, at its own expense, in the name of the owning or controlling Party. In the event that BMS elects to abandon the prosecution or maintenance in any country in the Territory of any Patent licensed to SGI partially exclusively or non-exclusively under this Agreement and SGI elects to assume such prosecution or maintenance, then SGI shall be entitled to a credit against royalties payable to BMS pursuant to Section 5.2 with respect to Net Sales of any Product covered by such Patent equal to the amount of the actual costs and expenses (including reasonable attorneys' fees) incurred by SGI in connection with such prosecution or maintenance. In the event that SGI elects to abandon the prosecution or maintenance in any country in the Territory of any Patent licensed to SGI exclusively under this Agreement and BMS elects to assume such prosecution or maintenance, then SGI's right and license under this Agreement in such country with respect to the Licensed Technology relating to such Patent shall terminate.

    9.2   Information; Consultation; Cooperation.   

    (a) With respect to the filing, prosecution and maintenance of any Patent pursuant to Section 9.1(a), the filing Party shall keep the other Party informed of its decisions and actions in this regard by providing a report thereof to such other Party. Further, in connection with any such filing, prosecution or maintenance by either Party, such Party shall consult with the other Party and in good faith consider and give due respect to such other Party's position with respect thereto. In the event that the sole owning or controlling Party elects not to file for patent protection or prosecute or maintain such Patents and the other Party elects to do so, such owning or controlling Party shall cooperate with the other Party in such filing, prosecution or maintenance.

    (b) In addition, with respect to the filing, prosecution and maintenance of any Patent pursuant to Section 9.1(a) that covers an Improvement by a Party that does not solely own such Improvement, the filing Party shall cooperate with the other Party in determining strategies for such filing, prosecution and maintenance, and the filing Party shall make its patent counsel available for consultation with patent counsel for the other Party for this purpose.

    9.3   Prior Patent Rights.   Notwithstanding anything to the contrary in this Agreement, with respect to any Patents that have been licensed to BMS under the BMS In-Licenses, the rights and obligations of the Parties under Sections 9.1 and 9.2 with respect thereto shall be subject to BMS's licensors' rights to participate in prosecution and maintenance thereof, in accordance with the terms and conditions of the relevant BMS In-Licenses.

    9.4   Improvements.   

    (a) Improvements that are made by an employee or agent of SGI, solely or jointly other than with an employee or agent of BMS, shall be owned by SGI. Improvements that are made jointly by employees or agents of SGI and BMS shall be jointly owned by SGI and BMS and treated as joint inventions under U.S. laws applicable to joint inventions. Improvements that are made by an employee or agent of BMS, solely or jointly other than with an employee or agent of SGI, shall be owned by BMS. Except as otherwise set forth in this Agreement, each of BMS and SGI shall retain its unrestricted rights to make, have made, use, sell and have sold all Improvements that are owned by it either solely or jointly with the other Party.

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    (b) In the event that, during the term of this Agreement, either Party (the "proprietor Party") develops or acquires the rights to (including the right to license or sublicense) any Improvements to Licensed Technology that is licensed to SGI under this Agreement partially exclusively or non-exclusively, the proprietor Party shall promptly disclose full and complete information relating to such Improvements to the other Party (the "non-proprietor Party").

    (c) With respect to any such Improvements, the proprietor Party shall grant to the non-proprietor Party a royalty-free, non-exclusive right and license, including the right to grant sublicenses thereof, to use such Improvements during the term of this Agreement: (i) with respect to such right and license granted to SGI by BMS, solely for the manufacture, use or sale of the Products pursuant to the right and license granted to SGI under this Agreement, and (ii) with respect to such right and license granted to BMS by SGI, (A) if such Improvement is to Licensed Technology that is licensed to SGI under this Agreement partially exclusively for cancer, for any purpose that does not relate to human cancer; (B) if such Improvement is to Licensed Technology that is licensed to SGI under this Agreement partially exclusively for linkers, for any purpose that does not relate to monoclonal antibody targeting applications; and (C) if such Improvement is to Licensed Technology that is licensed to SGI under this Agreement non-exclusively, for any purpose. Notwithstanding the foregoing, the non-proprietor party shall not be entitled to use any Improvement relating to or arising from the Adept Program to develop, make, use or sell any product (including any Product) having the same primary mode of action as any product (including any Product) being developed, marketed or sold by the proprietor party.

    9.5   Prior Improvement Rights; Reporting.   Notwithstanding anything to the contrary in this Agreement, SGI's rights in and to any Improvements relating to or arising from any Patents that have been licensed to BMS under the BMS In-Licenses shall be subject to BMS's licensors' rights therein under the respective BMS In-Licenses. Each Party shall be responsible for making all reports to such licensors concerning its respective Improvements.

10.     PATENT ENFORCEMENT: INFRINGEMENT.

    10.1   Patent Enforcement.   As soon as it shall have knowledge thereof, each Party shall promptly advise the other Party of any infringement of the Patents in the Territory by a Third Party. With respect to any Patent that is licensed to SGI exclusively under this Agreement, SGI shall have the first right, but not the duty, to institute infringement actions against Third Parties. With respect to any Patent that is licensed to SGI partially exclusively or non-exclusively under this Agreement, BMS shall have the first right, but not the duty, to institute infringement actions against Third Parties; provided, however, that SGI shall have the right, at its sole discretion, to participate therein at its own expense. For so long as SGI shall continue to participate materially in any such action, BMS shall consult with SGI and take into account each Party's relative interests in such Patent and such infringement action before entering into any settlement arrangement or other amicable arrangement with respect thereto. If the Party having the first right to institute an infringement proceeding against an offending Third Party does not do so within 90 days after receipt of notice from the other Party, such other Party shall have the right, but not the duty, to institute such an action. The costs and expenses of any such action (including reasonable fees of attorneys and other professionals) shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action, such costs and expenses shall be borne by the Parties in such proportions as they may agree in writing. Each Party shall execute all necessary and proper documents and take such actions as shall be appropriate to allow the other Party to institute and prosecute such infringement actions. Any award paid by Third Parties as a result of such an infringement action (whether by way of settlement or otherwise) shall be paid to the Party who instituted and maintained such action, or, if both parties instituted and maintained such action, such award shall be allocated among the Parties in proportion to their respective contributions to the costs and expenses incurred in such action.

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    10.2   Infringement Action by Third Parties.   As soon as it shall have knowledge thereof, each Party shall promptly advise the other Party of any infringement action instituted by a Third Party with respect to any Product or of any grounds for any such action, regardless of whether such action has been instituted. In the event of the institution of any suit by a Third Party against SGI for patent infringement involving the manufacture, sale, distribution or marketing of any Product in the Territory, SGI shall have the right to defend such suit at its own expense, and BMS hereby agrees to assist and cooperate with SGI, at its own expense, to the extent necessary in the defense of such suit; provided, however, that with respect to any suit involving Patents licensed to BMS under the BMS In-Licenses, BMS shall have the right, at its sole discretion, to participate therein at its own expense. For so long as BMS shall continue to participate materially in any such action, SGI shall not enter into any settlement arrangement or other amicable arrangement without the prior written consent of BMS. During the pendency of such action, SGI shall continue to make all payments due under this Agreement. If, as a result of any judgment, award, decree or settlement resulting from an action instituted by a Third Party, SGI is required to pay damages and/or a royalty to such Third Party, SGI shall be solely responsible for the payment of such damages and/or such royalties for such Products to such Third Party and shall continue to pay royalties pursuant to this Agreement in the country which is the subject of such action. All royalties paid by SGI pursuant to this Section 10.2 shall be deemed to constitute Third Party Royalties for purposes of Section 5.3.

    10.3   Prior Rights.   Notwithstanding anything to the contrary in this Agreement, with respect to any Patents that have been licensed to BMS under the BMS In-Licenses, the rights and obligations of the Parties under this Section 10 with respect thereto shall be subject to BMS's licensors' rights to enforce and defend against infringement claims with respect to same and all other applicable provisions of the respective BMS In-Licenses.

11.     INDEMNIFICATION.

    11.1   By SGI.   SGI, including any successor to SGI, shall, and shall obligate its Affiliates or its sublicensees, if any, to, indemnify and hold BMS and its Affiliates, and their respective directors, officers, employees and agents harmless from and against any and all liability, damage to or loss of property or injury to or death of any person or persons, costs and expenses (including reasonable attorney's fees) resulting from claims arising out of:

    (a) negligence, recklessness or wrongful intentional acts or omissions of SGI, its Affiliates or its sublicensees, if any, and their respective directors, officers, employees and agents, in connection with the use or development of any Licensed Technology; or

    (b) any warranty claims, Product recalls or any tort claims of personal injury (including death) or property damage relating to or arising out of the manufacture, use, distribution or sale of any Product or services by SGI, its Affiliates or its sublicensees, if any, due to any negligence, recklessness or wrongful intentional acts or omissions by, or strict liability of, SGI, its Affiliates or its sublicensees, if any, and their respective directors, officers, employees and agents.

    11.2   By BMS.   In the event that BMS makes, has made, uses, sells or has sold any Product pursuant to Section 13.6(c) or (d), BMS shall, and shall obligate its sublicensees, if any, to, indemnify SGI and its Affiliates, and their respective directors, officers, employees and agents with respect thereto to the same extent as the indemnification required to be provided by SGI in Section 11.1.

    11.3   Notice.   In the event that either Party is seeking indemnification under Section 11.1 or Section 11.2, such Party shall inform the indemnifying Party of a claim as soon as reasonably practicable after it receives notice of the claim, shall permit the indemnifying Party to assume direction and control of the defense of the claim (including the sole right to settle it at the sole discretion of the indemnifying Party, provided that such settlement does not impose any obligation on the indemnified

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Party), and shall cooperate as requested (at the expense of the indemnifying Party) in the defense of the claim.

    11.4   Complete Indemnification.   As the Parties intend complete indemnification, all costs and expenses of enforcing this Section 11 shall also be reimbursed by the indemnifying Party.

    11.5   Insurance.   

    (a) In furtherance and not in limitation of any indemnity obligations of SGI under this Agreement: (i) commencing on the Effective Date and thereafter for the period of time required hereinbelow, SGI shall obtain and maintain on an on-going basis comprehensive general liability insurance in the amount of $[*] per occurrence and $[*] annual aggregate combined single limit for bodily injury and property damage liability; and (ii) commencing not later than [*] prior to the first use in humans of the first potential Product and thereafter for the period of time required hereinbelow, SGI shall obtain and maintain on an on-going basis products liability insurance (including contractual liability coverage on SGI's indemnification obligations under this Agreement) in the amount of at least $[*] per occurrence and annual aggregate combined single limit for bodily injury and property damage liability. All of such insurance coverage shall be maintained with a insurance company or companies having an A. M. Best rating of "A-" or better and an aggregate deductible not to exceed $[*] per occurrence.

    (b) Not later than the Effective Date with respect to the comprehensive general liability coverage, and not later than 30 days prior to the first use in, humans of the first potential Product with respect to the products liability coverage, SGI shall provide to BMS a certificate(s) evidencing all such required coverage hereunder. Thereafter SGI shall maintain such insurance coverage without interruption during the term of this Agreement and for a period of at least 10 years after the expiration or termination of the term and shall provide certificates evidencing such insurance coverage without interruption on an annual basis (by no later than the annual renewal date for such coverage) during the period of time for which such coverage must be maintained.

    (c) SGI's insurance shall name BMS as an additional insured, shall state that such insurance is primary to any valid and collectible insurance available to BMS that also insures the same loss for which SGI has liability pursuant to this Agreement (including, without limitation, under the indemnification provisions hereof), shall contain a cross-liability or severability of interest clause, and shall state that BMS shall be provided at least [*] prior written notice of any cancellation or material change in the insurance policy. SGI shall promptly provide BMS with a copy of all communications passing between SGI and the carrier(s) providing the coverage required under this Section 11.5. SGI's failure to comply with the provisions of this Section 11.5 shall be deeded to be a material breach of this Agreement.

12.     PUBLICATION; CONFIDENTIALITY.

    12.1   Notification.   Both Parties recognize that the Parties may wish to publish the results of its development efforts relating to the Products. However, both Parties also recognize the importance of acquiring patent protection on inventions. Consequently, any proposed publication by either Party on the subject matter of any of the Licensed Technology that is licensed to SGI hereunder partially exclusively or non-exclusively, or any subject matter related thereto, shall comply with this Section 12. At least 30 days before a manuscript is to be submitted to a publisher, the publishing Party will provide the other Party with a copy of the manuscript. If the publishing Party wishes to make an oral presentation, it will provide the other Party with a copy of the abstract (if one is submitted) at least 30 days before it is to be submitted. The publishing Party will also provide to the other Party a copy of the text of the presentation, including all slides, posters and any other visual aids, at least 30 days before the presentation is made.

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    12.2   Review of Proposed Publications.   The receiving Party will review the manuscript, abstract, text or any other material provided under Section 12.1 for the express purpose of determining whether patentable subject matter or Confidential Information (as such term is defined herein) is disclosed. The other Party will notify the publishing Party within 30 days of receipt of the proposed publication if the other Party, in good faith, determines that patentable subject matter is or may be disclosed, or if the other Party, in good faith, believes Confidential Information or proprietary information is or may be disclosed. If it is determined by the other Party that patent applications should be filed, the publishing Party shall delay its publication or presentation for a period not to exceed 90 days from the other Party's receipt of the proposed publication to allow time for the filing of patent applications covering patentable subject matter. In the event that the delay needed to complete the filing of any necessary patent application will exceed the 90-day period, the Parties will discuss the need for obtaining an extension of the publication delay beyond the 90-day period. If it is determined in good faith by the other Party that Confidential Information or proprietary information is being disclosed, the Parties will consult in good faith to arrive at an agreement on mutually acceptable modifications to the proposed publication to avoid such disclosure. The publishing Party of any manuscript, text or oral presentation will acknowledge the other Party for its contribution to the material being published or presented. In addition, to the foregoing, SGI shall cooperate with BMS to allow BMS to fulfill any obligations it may have under the respective BMS In-Licenses on account of any proposed publication by SGI.

    12.3   Confidentiality; Exceptions.   Except to the extent expressly authorized by or required for the performance of this Agreement or otherwise agreed in writing, the Parties agree that, for the term of this Agreement and for five years thereafter (or any longer term provided for in any BMS In-License) the receiving Party, its Affiliates and its sublicensees (collectively, the "receiving Party") shall keep, and shall ensure that its officers and directors keep, completely confidential and shall not publish or otherwise disclose and shall not use for any purpose inconsistent with this Agreement any information furnished to it by the disclosing Party, its Affiliates or its sublicensees that is marked as confidential or, if furnished orally, that the disclosing Party notifies the receiving Party is confidential within 10 days after such information is furnished, or any information developed pursuant to this Agreement (collectively, "Confidential Information"). This Section 12.3 shall not apply to information that the receiving Party can establish: (i) is or hereafter becomes generally available to the public other than by reason of any default with respect to a confidentiality obligation; (ii) was already known to the receiving Party when disclosed by the disclosing Party, as evidenced by prior written records; or (iii) is disclosed to the receiving Party by a Third Party who reasonably was not known by the receiving Party to be in default of any confidentiality obligation to the disclosing Party.

    12.4   Exceptions.   

    (a) The restrictions contained in Section 12.3 shall not apply to Confidential Information that (i) is submitted by the receiving Party to governmental authorities to facilitate the issuance of marketing approvals for a Product, provided that reasonable measures shall be taken to assure confidential treatment of such information; (ii) is provided by the receiving Party to Third Parties under appropriate terms and conditions, including confidentiality provisions equivalent to those in this Agreement, for consulting, manufacturing development, manufacturing, external testing and marketing trials; or (iii) is otherwise required to be disclosed in compliance with applicable laws or regulations or order by a court or other regulatory body having competent jurisdiction; provided that if a receiving Party is required to make any such disclosure of the other Party's Confidential Information it will, except where impracticable for necessary disclosures, for example to physicians conducting studies or to health authorities, give reasonable advance notice to the other Party of such disclosure requirement and, except to the extent inappropriate in the case of patent applications, will use its best efforts to secure confidential treatment of such Confidential Information required to be disclosed.

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    (b) Nothing in Section 12.3 shall prevent SGI: (i) in connection with efforts to secure financing at any time during the term of this Agreement, from issuing statements and sharing information as to SGI's agreements with BMS, achievements made, and the status of the work being done, under this Agreement, so long as such statements or information do not jeopardize the ability to obtain patent protection on Improvements or disclose technical or scientific Confidential Information; or (ii) from issuing statements that SGI determines to be necessary to comply with applicable law (including the disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange on which securities issued by SGI are traded); provided that, in the case of statements made to or information shared with the general public, to the extent practicable under the circumstances, SGI shall provide BMS with a copy of the proposed text of such statements sufficiently in advance of the scheduled release thereof to afford BMS a reasonable opportunity to review and comment upon the proposed text.

    12.5   Limitations on Use.   Each Party shall use, and cause each of its Affiliates and its sublicensees to use, any Confidential Information obtained by it from the other Party, its Affiliates or its sublicensees, pursuant to this Agreement or otherwise, solely in connection with the activities or the transactions contemplated hereby.

    12.6   Remedies.   Each Party shall be entitled, in addition to any other right or remedy it may have, at law or in equity, to an injunction, without the posting of any bond or other security, enjoining or restraining the other Party, its Affiliates and/or its sublicensees from any violation or threatened violation of this Section 12.

13.     TERM; TERMINATION.

    13.1   Term.   The term of this Agreement shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall terminate as follows:

    (a) As to each Product in each country in the Territory, this Agreement shall terminate upon the expiration of the Royalty Term.

    (b) This Agreement shall terminate in its entirety upon its termination in all countries in the Territory.

    13.2   Termination by BMS.   BMS shall have the right to terminate this Agreement in the event that on or before the 18-month anniversary of the Effective Date SGI shall not have both:

    (i)  Obtained and received unconditional cash payment of an aggregate of at least $[*] in working capital; and

    (ii) Completed each of the following to the reasonable satisfaction of BMS, to the extent that the scientific results obtained by SGI and prevailing market conditions do not, in the reasonable determination of BMS, indicate that same should be abandoned:

    (A) Evaluation of assays to evaluate clinical grade BR96 sFv-PE4O for use in the re-commencement of Phase I studies thereof;

    (B) Production and in vitro analysis of anti-CD4O-immunotoxins as anti-cancer agents for purposes of treating hematologic malignancy;

    (C) Design of studies to evaluate novel BR96-based drugs; and

    (D) Design of studies to evaluate the utilization of human enzymes in mAb-sFv-enzyme fusion proteins.

    13.3   Termination by SGI.   

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    (a) SGI shall have the right to terminate this Agreement in its entirety at any time by giving written notice thereof to BMS, which shall be effective three months from the date such notice is given.

    (b) SGI shall have the right to terminate this Agreement partially by terminating a specific Research Program due to reasonable scientific considerations, including without limitation toxicity, inefficacy and lack of bioavailability, by giving written notice thereof to BMS, which shall be effective three months from the date such notice is given.

    13.4   Breach.   Failure by either Party to comply with any of the material obligations contained in this Agreement (including, without limitation, SGI's obligation to pay BMS In-License Expenses under Section 6) shall entitle the other Party to give to the Party in default notice specifying the nature of the default and requiring it to cure such default. If such default is not cured within 90 days after the receipt of such notice (or, if such default cannot be cured within such 90-day period, if the Party in default does not commence and diligently continue actions to cure such default), the notifying Party shall be entitled, without prejudice to any of its other rights conferred on it by this Agreement and in addition to any other remedies available to it by law or in equity, to terminate this Agreement by giving written notice to take effect immediately upon delivery of such notice. The right of either Party to terminate this Agreement, as hereinabove provided, shall not be affected in any way by its waiver or failure to take action with respect to any previous default.

    13.5   Failure to Maintain Insurance.   This Agreement shall terminate automatically and without necessity of any action by either Party in the event that (i) SGI fails to maintain all insurance coverage that it is required to maintain under Section 11.5, or (ii) a sublicensee or sub-sublicensee of SGI fails to maintain all insurance coverage that it is required to maintain under Section 4.2(b) and SGI does not, prior to the cancellation or non-renewal of such coverage, either (A) terminate such sublicense, or (B), obtain the requisite coverage on behalf and for the benefit of such sublicense or sub-sublicensee, unless, in each event, such termination of this Agreement is waived in writing by BMS.

    13.6   Effect of Termination.   

    (a) Following the expiration of SGI's obligation to pay royalties with respect to any Product in any country in the Territory pursuant to Section 13.1(a), SGI shall have the royalty-free, non-exclusive, perpetual right and license to continue to use the Licensed Technology to make, have made, use, sell and have sold such Product in such country.

    (b) Following either the expiration of the term of this Agreement in its entirety pursuant to Section 13.1(b) or the termination of this Agreement by SGI pursuant to Section 13.4, SGI shall have the royalty-free, non-exclusive, perpetual right and license to continue to use the Licensed Technology to make, have made, use, sell and have sold the Product in all countries in the Territory, and the license granted to SGI under Section 9.4(c) shall become perpetual. Further, following the expiration of the term of this Agreement in its entirety pursuant to Section 13.1(b), the license granted to BMS under Section 9.4(c) shall become perpetual. Further, following the termination of this Agreement by SGI pursuant to Section 13.4, the license granted to BMS under Section 9.4(c) with respect to Improvements relating to such Licensed Technology shall terminate

    (c) Upon the termination of this Agreement by SGI pursuant to Section 13.3(a), by BMS pursuant to Section 13.2 or 13.4, or automatically pursuant to Section 13.5, SGI shall promptly: (i) return to BMS all relevant records, materials or confidential information, including the Results, concerning the Patents, the Know-How and any Products in the possession or control of SGI or any of its Affiliates or sublicensees; and (ii) assign to BMS, or BMS's designee, its registrations with governmental health authorities, licenses, and approvals of the Products in the Territory, at SGI's sole expense. Thereafter, SGI shall have no rights whatsoever to use the Licensed Technology for any purpose, and BMS shall have a royalty-free right and license, including the

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right to grant sublicenses, under the Patents and know-how covering SGI's Improvements, to make, have made, use, sell and have sold any Products. In such event, BMS shall indemnify SGI as provided in Section 11.2. Further, the license granted to BMS under Section 9.4(c) shall become perpetual, and the license granted to SGI under Section 9.4(c) with respect to Improvements relating to such Licensed Technology shall terminate.

    (d) Upon the termination of any Research Program by SGI pursuant to Section 13.3(b), SGI's right and license and obligations under this Agreement and any applicable BMS In-License with respect to the Licensed Technology associated with such Research Program shall cease, and SGI shall promptly: (1) return to BMS all relevant records, materials or confidential information, including the Results, concerning the Patents, the Know-How and any Products in the possession or control of SGI or any of its Affiliates or sublicensees with respect to such' Licensed Technology; and (ii) assign to BMS, or BMS's designee, its registrations with governmental health authorities, licenses, and approvals of any such Products in the Territory, at SGI's sole expense. Thereafter, SGI shall have no rights or obligations whatsoever relating to such Licensed Technology, and BMS shall have an exclusive (even as to SGI), royalty-free right and license, including,the right to grant sublicenses, under the Patents, to make, have made, "use, sell and have sold any such Products. In such event, BMS shall indemnify SGI as provided in Section 11.2. Further, the license granted to SGI under Section 9.4(c) with respect to Improvements relating to such Licensed Technology shall terminate, and the license granted to BMS under Section 9.4(c) shall become perpetual. All licenses, rights and obligations relating to all Research Programs not identified in SGI's notice of termination shall remain in full force and effect and shall be unaffected by such notice.

    (e) Upon the termination of any BMS In-License, SGI's right and license and obligations under this Agreement and such BMS In-License with respect to the Licensed Technology licensed to BMS thereunder shall cease, and SGI shall promptly: (i) return to BMS all relevant records, materials or confidential information, including the Results, concerning the Patents, the Know-How and any Products in the possession or control of SGI or any of its Affiliates or sublicensees with respect to such Licensed Technology; and (ii) assign to BMS, or BMS's designee, its registrations with governmental health authorities, licenses, and approvals of any such Products in the Territory. Thereafter, SGI shall have no rights or obligations whatsoever relating to such Licensed Technology. Further, the licenses granted to each Party under Section 9.4(c) with respect to Improvements relating to such Licensed Technology shall terminate.

    13.7   Termination of Sublicenses.   Upon any termination of this Agreement, all sublicenses and sub-sublicenses granted by SGI under this Agreement shall terminate simultaneously.

    13.8   Accrued Rights, Surviving Obligations.   

    (a) Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement.

    (b) Termination of this Agreement shall not terminate SGI's obligation to make all payments which have accrued through the date of such termination. All of the Parties' rights and obligations under Sections 2.4, 7, 8.3, 10, 11, 12.3, 12.4, 12.5, 12.6, 13.6, 15.1, 15.15 and 15.16 shall survive termination.

14.     FORCE MAJEURE.

    14.1   Events of Force Majeure.   Neither Party shall be held liable or responsible to the other Party or be deemed to be in default under or in breach of any provision of this Agreement for failure

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or delay in fulfilling or performing any obligation of this Agreement when such failure or delay is due to force majeure , and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement, force majeure shall be defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event SGI or BMS, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused front such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and the 30 days thereafter. However, the Party giving such notice shall use all reasonable efforts to remedy such inability as soon as reasonably possible or seek an alternative arrangement during the period of such inability.

15.     MISCELLANEOUS.

    15.1   Non-Solicitation.   Prior to the First Commercial Sale of the first Product, and for a period of one year thereafter, neither Party shall solicit, induce, encourage or attempt to induce or encourage any employee of the other Party to terminate his or her employment with such other Party or to breach any, other obligation to such other Party.

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

    15.3   Assignment.   Neither Party shall be entitled to assign its rights hereunder without the express written consent of the other Party hereto, except that both SGI and BMS may otherwise assign their respective rights and transfer their respective duties hereunder to any assignee of all or substantially all of their respective businesses or in the event of their respective merger or consolidation or similar transaction. No assignment and transfer shall be valid and effective unless and until the assignee/transferee shall agree in writing to be bound by the provisions of this Agreement. Any assignment not in accordance with this Section 15.3 shall be void.

    15.4   Binding Effect.   This Agreement shall be binding upon the successors and permitted assigns of the Parties and the name of a Party appearing herein shall be deemed to include the names of such Party's successors and permitted assigns to the extent necessary to carry out the intent of this Agreement.

    15.5   Further Actions.   Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

    15.6   Costs and Expenses.   Except as otherwise expressly provided in this Agreement, each Party shall bear all costs and expenses associated with the performance of such Party's obligations under this Agreement.

    15.7   Inconsistency.   If there is any inconsistency between the provisions of this Agreement and any other document passing between the Parties, the provisions of this Agreement shall control and be determinative.

    15.8   Notice.   Any notice, request or other communication required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by registered or certified mail (return receipt requested),

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facsimile transmission (receipt verified), express courier service (signature required), or telegram, prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon receipt thereof. If sent by mail, facsimile transmission, express courier service, or telegram, the date of mailing or transmission shall be deemed to be the date on which such notice or request has been given.

    15.9   Use of Name.   Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party for any purpose in connection with the performance of this Agreement.

    15.10   Public Announcements.   Except as required by law, neither Party shall make any public announcement concerning this Agreement or the subject matter hereof prior to the Effective Date. Thereafter, neither Party shall make any such public announcement without the prior written consent of the other, which shall not be unreasonably withheld. In the event of a, required public announcement, the Party making such announcement shall provide the other Party with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford such other Party a reasonable opportunity to review and comment upon the proposed text. Following approval of a proposed text, such text may be used in subsequent public announcements without further approval, to the extent it remains accurate, complete and not misleading.

    15.11   Waiver.   A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future,

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or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

    15.12   Compliance with Law.   Nothing in this Agreement shall be deemed to permit a Party to: (i) import, export, reexport, store, sell, distribute or otherwise transfer any Product sold under this Agreement without compliance with applicable laws; or (ii) make any claims with respect to any Product, in promotional materials or otherwise, in any country that is inconsistent with applicable laws.

    15.13   Severability.   When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. In such event, the Parties agree to substitute a valid and enforceable provision therefor which, as nearly as possible, achieves the desired economic effect and mutual understanding of the Parties under this Agreement.

    15.14   Amendment.   No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

    15.15   Governing Law.   This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to its choice of law principles.

    15.16   Arbitration.   

    (a) Any dispute arising out of or relating to any provisions of this Agreement shall be finally settled by arbitration to be held in San Diego, California, under the auspices and then current commercial arbitration rules of the American Arbitration Association. Such arbitration shall be conducted by three arbitrators appointed according to said rules. The Parties shall instruct such arbitrators to render a determination of any such dispute within 30 days after their appointment. Judgment upon any award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

    (b) Section 15.16(a) shall not prohibit a Party from seeking injunctive relief from a court of competent jurisdiction in the event of a breach or prospective breach of this Agreement by the other Party which would cause irreparable harm to the first Party.

    15.17   Entire Agreement.   This Agreement sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby.

    15.18   Counterparts.   This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement.

    15.19   Descriptive Headings.   The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

* * *

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    IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written.

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QuickLinks

1. DEFINITIONS.
2. EXCHANGE OF DATA AND MATERIALS.
3. DEVELOPMENT AND COMMERCIALIZATION.
4. GRANT OF LICENSE AND OTHER RIGHTS.
5. INITIAL PAYMENT; ROYALTIES.
6. BMS IN-LICENSE EXPENSES.
7. PAYMENTS AND REPORTS.
8. REPRESENTATIONS AND WARRANTIES.
9. PATENTS; IMPROVEMENTS .
10. PATENT ENFORCEMENT: INFRINGEMENT.
11. INDEMNIFICATION.
12. PUBLICATION; CONFIDENTIALITY.
13. TERM; TERMINATION.
14. FORCE MAJEURE.
15. MISCELLANEOUS.

Exhibit 10.6
Confidential treatment requested

Seattle Genetics, Inc.
22215 26 ^th Avenue SE
Bothell, Washington 98021
(425) 489-4798 (Fax)

July 29, 1999

Bristol-Myers Squibb Company
P.O. Box 4000
Princeton, New Jersey 08543-4000

    This letter sets forth the agreement of Bristol-Myers Squibb Company (" BMS ") and Seattle Genetics, Inc. (" SGI ") to amend that certain License Agreement dated March 30, 1998 between BMS and SGI (the " Agreement ") as set forth herein.

    For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

    1.  Section 5.2(b) is hereby amended to add the following phrase at the beginning of Section 5.2(b):

"5.2(b) Except as set forth in subsections 5.2(i) and 5.2(j),..."

    2.  A new Section 5.2(i) relating to use of the peptidic linker technology is added to the Agreement, which shall read in its entirety as follows:

"5.2(i) With respect to Products covered by Licensed Technology relating only to [*], at the rate of [*]%

    3.  A new Section 5.2(j) relating to use of BR96 technology is added to the Agreement, which shall read in its entirety as follows:

"5.2(j) With respect to Products covered by Licensed Technology relating to the use of BR96 with any active agent other than [dox], at the rate of [*]%."

    4.  BMS hereby acknowledges and agrees that SGI has completed, to the satisfaction of BMS, all of the milestones set forth in Section 13.2 of the Agreement.

    5.  Table 5 of Exhibit A to the Agreement shall be amended to add the following U.S. Patent:

    6.  All other terms and conditions of the Agreement shall remain unchanged and in full force and effect.

[*]   Confidential treatment requested

1

    BMS and SGI, intending to be legally bound, have caused this Amendment to be executed by their authorized representatives below.

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AMENDMENT TO LICENSE AGREEMENT
BETWEEN
BRISTOL-MYERS SQUIBB COMPANY
AND
SEATTLE GENETICS, INC.

    This Amendment to License Agreement (the " Amendment ") is made as of July 26, 2000 by and between Bristol-Myers Squibb Company, a Delaware corporation having offices at P.O. Box 4000, Route 206 and Province Line Road, Princeton, New Jersey, 08543-4000 (" BMS "), and Seattle Genetics, Inc., a Delaware corporation having offices at 22215 26th Avenue SE, Bothell, WA 98021 (" SGI ")

    WHEREAS, BMS and SGI are parties to that certain License Agreement dated March 30, 1998 as amended by that certain letter dated June 8, 1998 (the " Agreement ");

    WHEREAS, BMS and SGI wish to amend the Agreement as set forth in this Amendment;

    NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

    1.  Section 13.7 of the Agreement is deleted in its entirety and replaced with the following:

"13.7 Sublicenses and Sub-Sublicenses. Upon any termination of this Agreement, all sublicenses and sub-sublicenses granted by SGI under this Agreement and approved by BMS in accordance with Section 4.2 hereof (the " Approved Sublicense Agreements "), shall automatically convert to direct licenses between BMS and the respective sublicensee or sub-sublicensee; provided that such sublicensee or sub-sublicensee is then in full compliance with all terms and conditions of the Approved Sublicense Agreement, all payments owed thereunder to SGI and BMS have been paid, and such sublicensee or sub-sublicensee agrees at least ten (10) days prior to the effective date of termination of this Agreement to assume all obligations of SGI under this Agreement."

    The Parties, intending to be legally bound, have caused this Amendment to be executed by their authorized representatives on the dates set forth below.

QuickLinks

Exhibit 10.8
Confidential treatment requested

LICENSE AGREEMENT

    This License Agreement (this "Agreement"), is entered into as of June 14, 1998 (the "Effective Date") by and between MABTECH AB, formed under the laws of Sweden ("MAB") and SEATTLE GENETICS, INC., a Delaware corporation ("SGI").

RECITALS

    A.  MAB owns intellectual property rights relating to the [*] antibody ("[*]")

    B.  SGI desires to acquire access to [*] and an exclusive license to make, use offer for sale, sell, import or otherwise distribute products that embody [*].

    C.  MAB is willing to provide SGI with access to [*] and to grant SGI an exclusive license to make, use, offer for sale, sell, import or otherwise distribute products that embody [*] worldwide in accordance with the terms and conditions set forth in this Agreement.

AGREEMENT

    The parties hereto agree as follows:

    1.   Definitions   

     "Affiliate" shall mean any corporation or other business entity controlled by, controlling, or under common control with another entity, with "control" meaning direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of such corporation, or more than a fifty percent (50%) interest in the decision-making authority of such other unincorporated business entity; and a corporation in which the maximum amount of stock permitted by law to be held by another entity is beneficially owned by such other entity.

     "Confidential Information" shall have the meaning assigned thereto in Section 10.

     "First Commercial Sale" shall mean, with respect to any product, the first sale for use or consumption by the general public of such product in any country after all required marketing and pricing approvals have been granted, or otherwise permitted, by the governing health authority of such country. "First Commercial Sale" shall not include the sale of any Product for use in clinical trials or research.

     "Licensed Products" shall mean any product incorporating the [*] antibody or derived from the [*] antibody or its sequence.

     "Licensed Technology" shall mean all rights to the [*] including, but not limited to:

    (a) the patents and patent applications currently existing or filed hereafter covering the [*], including any addition, continuation, continuation-in-part or division thereof or any substitute application therefor; and

    (b) all trade secrets and other information, including but not limited to present and future techniques, inventions, discoveries, developments, practices, methods, formulations, specifications, processes, apparatus, knowledge, know-how, skill, biological materials, design data, pharmacological, toxicological and clinical test data, sequence data, analytical and quality control data, manufacturing data and all other information and data relating to the [*] antibody.

[*]   Confidential treatment requested

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     "Net Sales" shall mean the amount actually received by SGI or its Affiliates or sublicensees for the sale to an unaffiliated third party of a Licensed Product, less the following deductions for amounts actually incurred related to the sale:

    (a) normal, customary trade and cash discounts (including volume discounts), credits and rebates and allowances and adjustments for rejections, recalls or returns; and

    (b) transportation and delivery charges actually incurred, including shipping, freight and insurance and all sales, use, excise, value-added and similar taxes or duties imposed on the sale and included in the amount invoiced.

    In the event that a Licensed Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product (calculated using the standard Net Sales definition) during the applicable royalty reporting period by the fraction A/A+B, where A is the average sale price of the Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Product and all other product(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product (calculated using the standard Net Sales definition) by the fraction C/C+D, where C is the fair market value of the Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product. In such event, SGI shall in good faith make a determination of the respective fair market values of the Product and all other pharmaceutical products included in the Combination Product, and shall notify MAB of such determination and provide MAB with data to support such determination. MAB shall have the right to review such determination and supporting data, and to notify SGI if it disagrees with such determination.

    As used above, the term "Combination Product" shall mean any pharmaceutical product which comprises a Licensed Product and any other active compounds and/or ingredients.

    Net Sales shall not include transfer of Licensed Products at or below cost by or on behalf of SGI in connection with research or clinical trials.

    2.   License Grant.   Subject to the terms of this Agreement, MAB hereby grants to SGI and its Affiliates a worldwide exclusive license, with right to sublicense, to the Licensed Technology to make, use, offer for sale, sell, import, offer to import or otherwise distribute Licensed Products in all fields.

    3.   Reservation.   The license granted in Section 2 is subject to rights reserved by MAB to use the Licensed Technology for research purposes only and to transfer the Licensed Technology to third parties for research purposes only provided such Licensed Technology bears a legend stating that such Licensed Technology may only be used for research purposes.

    4.   Payments   

    4.1   License Fee.   SGI shall pay MAB a license fee of [*] U.S. Dollars (U.S.$[*]) within ten (10) days following the execution of this Agreement.

    4.2   Milestone Payment.   SGI shall pay MAB a one-time milestone payment of [*] U.S. Dollars (U.S.$[*]) within thirty (30) days following SGI's first filing of an investigational new drug application with the U.S. Food and Drug Administration, or an equivalent filing in one or more European countries, covering a Licensed Product.

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    4.3   Royalties   

    4.3.1  SGI shall pay MAB a royalty equal to [*] percent ([*]%) on Net Sales of Licensed Products, commencing with the First Commercial Sale of a Licensed Product.

    4.3.2  Royalties shall be calculated on a calendar quarterly basis and shall be due and payable within sixty (60) days after the end of such calendar quarter. Such royalties shall be calculated on the Net Sales in the local currency of each country, and converted into U.S. Dollars and paid in U.S. Dollars, on the basis of the currency exchange rate published in the Wall Street Journal or comparable newspaper of international circulation on the last day of such preceding calendar quarter; provided, however, that royalties with respect to Net Sales denominated in U.S. Dollars shall be calculated in U.S. Dollars. SGI shall withhold any taxes on such royalties as required by law.

    4.3.3  SGI shall furnish to MAB a written report which includes financial information relevant to the calculation of royalties, including the relevant, current standard list prices. Such reports shall be due together with the royalty payments under Section 4.3.1 within thirty (30) days after the end of each calendar quarter.

    4.3.4  SGI shall, and SGI shall cause its Affiliates and sublicensees to, keep full, complete and proper records and accounts of Net Sales of Licensed Products in sufficient detail to enable the royalties payable to MAB to be determined by an independent audit. Upon reasonable notice to SGI, MAB shall have the right to have an independent certified public accountant audit SGI's or its Affiliates' records pertaining to Licensed Products during normal business hours to verify the royalties payable pursuant to this Agreement; provided, however , that (a) such audit shall not take place more frequently than once a year and (b) shall not cover such records for more than the preceding three (3) years. Such audits shall be at MAB's expense unless such audit determines that SGI or any of its Affiliates has paid MAB less than ninety percent (90%) of the amount determined to be due for a given time period, in which case such audit shall be at SGI's expense. SGI shall, and SGI shall cause its Affiliates and sublicensees to, preserve and maintain all such records and accounts required for audit for a period of three (3) years after the quarter to which such records and accounts apply.

    5.   Commercial Development   

    5.1 SGI shall, upon MAB's request, keep MAB generally informed of SGI's and its Affiliates' updated development plans for Licensed Products, including SGI's and its Affiliates' and sublicensees' planned timing for Licensed Product launch dates. All dates and other information provided by SGI to MAB shall be Confidential Information (as defined below), shall used by MAB for planning purposes only and shall be subject to modification by SGI, at any time, based on its or its Affiliates' and sublicensees' actual progress in the development process.

    5.2 SGI shall provide MAB with notice of regulatory approvals received by SGI or its Affiliates or sublicensees' regarding Licensed Products.

    6.   Governmental Approvals.   SGI shall be responsible for obtaining all necessary governmental approvals for the development, testing, production, distribution, sale and use of Licensed Products, as applicable, in any country where Licensed Products shall be manufactured or sold or otherwise distributed. MAB agrees to provide SGI, at SGI's expense, with any assistance reasonably requested by SGI, in obtaining such governmental approvals.

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    7.   Representations and Warranties   

    7.1  Representations of SGI . SGI hereby represents and warrants to MAB as follows:

    (a) SGI has full power and authority to enter into and perform this Agreement. This Agreement is a legal and valid obligation binding upon SGI and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by SGI does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

    7.2  Representations of MAB . MAB hereby represents and warrants to SGI as follows:

    (a) MAB has full power and authority to enter into and perform this Agreement and grant the rights granted to SGI hereunder. This Agreement is a legal and valid obligation binding upon MAB and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by MAB, including but not limited to the grant of the licenses set forth herein, does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

    (b) MAB is the sole and exclusive owner of the Licensed Technology, free of any liens, encumbrances or ownership interests of any individual or entity, commercial, academic or otherwise. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated hereunder requires MAB to obtain any permits, authorizations or consents from any governmental body or from any other body, person, form or corporation and such execution, delivery and consummation shall not result in the breach of or give rise to cause for termination of any agreement or contract to which SGI or its Affiliates may be a party. Neither MAB nor its Affiliates shall take any action after the Effective Date that would in any way restrict its legal right to grant to SGI the rights and licenses contemplated under this Agreement or otherwise conflict with such rights and licenses.

    (c) To the best of its actual knowledge, the Licensed Technology does not infringe or conflict with any patent or other proprietary right of any third party and there is not claim or basis therefor that might limit the use of the Licensed Technology as provided in the license grants to SGI herein.

    8.   Intentionally Omitted   

    9.   Limitation of Liability.   IN NO EVENT WILL EITHER PARTY HERETO BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES SUFFERED BY THE OTHER PARTY ARISING IN ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION ANY ACT OR FAILURE TO ACT OF ANY NATURE BY EITHER PARTY. THIS LIMITATION WILL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

    10.   Confidentiality   

    10.1 "Confidential Information" shall mean any proprietary information that is specifically designated as such and that is disclosed by either party to the other in any form in connection with this Agreement. For a period of five (5) years from the date of disclosure, each party (a) shall treat as confidential all Confidential Information provided by the other party, (b) shall not use such Confidential Information except as expressly permitted under the terms of this Agreement or otherwise authorized in writing by the disclosing party, (c) shall implement reasonable procedures

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