CONFIDENTIAL TREATMENT ASSIGNMENT AND LICENSE AGREEMENT

ARTICLE 1

DEFINITIONS

As used throughout this Agreement, the following terms shall have the meanings indicated in this Article.

1.00 “Affiliate” means any corporation or other entity which directly or indirectly controls, is controlled by or is under common control with a party to this Agreement. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the outstanding voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to manage, direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. Any such other relationship as in fact results in actual control over the management, business and affairs of a corporation or other entity shall also be deemed to constitute control.

1.01 “Assigned Patents” shall mean those patents and patent applications listed in Exhibit 3 which have been assigned to CUBIST by ELI LILLY.

1.02 “Average Market Price” shall mean the average closing price for CUBIST common stock for twenty consecutive trading days, the last day of which is immediately prior to five days prior to the event that triggered such payment of CUBIST common stock to ELI LILLY.

1.03 “Compound” means [ ]* or a pharmaceutically acceptable salt thereof or a pharmaceutically acceptable formulation thereof which is in Lilly’s possession on November 7, 1997.

1.04 “Confidential Information” means any information and data received by a party from the other party, as well as the terms of this Agreement. Notwithstanding the foregoing, Confidential Information shall not include any part of such Confidential Information that: (i) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such Confidential Information; (u) can be shown by written documents to have been disclosed to the receiving party by a third party, provided such Confidential Information was not obtained by such third party directly or indirectly from the disclosing party with an obligation for such third party to maintain the confidentiality of such information; (iii) prior to disclosure under this Agreement, was already in the possession of the receiving party and such possession can be evidenced by written documents, provided such Confidential Information was not obtained directly or indirectly from the disclosing party with an obligation to maintain the confidentiality of such information; (iv) can be shown by written documents to have been independently developed by the receiving party without breach of any of the provisions of this Agreement and such independent development can be evidenced by written documents; or (v) is disclosed by the receiving party pursuant to interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency or as otherwise required by law, provided, however, that the receiving party notifies the disclosing party immediately upon receipt thereof, giving such disclosing party sufficient advance notice to permit it to seek a protective order or other similar order with respect to such Confidential Information and provided, further, that the receiving party furnishes only that portion of the Confidential Information which it is advised by counsel is legally required whether or not a protective order or other similar order is obtained by the disclosing party.

1.05 “ELI LILLY Program” shall mean a research, development and/or marketing project that ELT LILLY, its Affiliates, and/or a third party, pursuant to an Agreement with ELI LILLY, have been committing non-trivial financial and/or human resources to advance.

*Confidential treatment requested: Material has been omitted and filed with the Commission

1.06 “Field” shall mean the treatment of infectious diseases.

1.07 “Know-How” means all information and data reasonably useful for the development, process development, regulatory approval, manufacture, use, formulation or sale of Compound in the Field which (i) is in the possession of ELI LILLY as of the November 7, 1997 or is created by ELI LILLY after the November 7, 1997, (u) ELI LILLY can provide using reasonable efforts and (iii) ELI LILLY is free to provide without obligation to any third party. Such Know-How may include information that is secret, whether or not patentable, relating to materials, methods, processes, procedures, protocols, techniques, formulae and data reasonably useful for the development, regulatory approval, manufacture or use of Compound in the Field.

1.08 “Major Market Country” shall mean the United States, Canada, Japan, the United Kingdom, Germany, France, Italy, Spain, Switzerland, Netherlands and Belgium.

1.09 “Net Sales” means the amounts received by CUBIST and/or its sublicensees on sales or other transfers for commercial use of Compound, and products incorporating Compound, to independent third parties in bona fide arms length transactions, less the following deductions actually allowed and taken by such independent third parties and not otherwise recovered by or reimbursed by CUBIST or its sublicensees:

(a) trade, cash and quantity discounts, including, without limitation, chargebacks and rebates;

(b) taxes, duties and other governmental charges set forth separately in the amount invoiced;

(c) freight, insurance and other transportation expenses to the extent added to the sales prices and set forth separately as such in the total amount invoiced; and

(d) credits or allowances on account of refunds, returns, rejections, or price adjustments.

If CUBIST or its sublicensees sell or transfer Compound, or any products incorporating Compound for commercial use, other than (i) reasonable quantities of promotional samples or (u) to an independent third party in a bona fide arm’s length transaction, Net Sales shall be determined based upon the resale or other retransfer to an independent third party in an arm’s length transaction by the entity to whom such Compound, or product, was sold or transferred by Cubist or its sublicensee. If there is no such resale or retransfer, Net Sales shall be determined based on the average Net Sales price as determined in the immediately preceding royalty accounting period as set forth in Section 4.02.

In the event Compound is sold as a component of a combination of functional elements, Net Sales for purposes of determining royalty payments on such combination shall be calculated by multiplying the Net Sales price of such combination by the fraction A over A+B, in which “A” is the gross selling price of the Compound portion of the combination when sold separately during the accounting period in which the sale was made, and “B” is the gross selling price of the non-Compound portion of the combination sold separately during the accounting period. In the event no separate sale of either such above-designated Compound or such above-designated non-Compound portion of the combination is

*Confidential treatment requested: Material has been omitted and filed with the Commission

made during the accounting period in which the sale of the combination was made. Net Sales shall be calculated by multiplying the Net Sales price of the combination by the fraction C over C+D, in which “C” is the standard fully allocated cost of the Compound portion of such combination, and “D” is the standard fully allocated cost of the other component(s). For purposes of the foregoing sentence, “fully allocated cost” shall mean all direct and indirect labor and overhead, materials and supplies, fringe benefits, taxes and charges and direct and indirect general and administration charges incurred by CUBIST or its sublicensees, and accounted for according to CUBIST’s or its sublicensees’ standard accounting practices consistent with generally accepted accounting principles.

1.10 “Patent(s)” means any of ELI LILLY’s patents, pending patent applications, and future patent applications, including, but not limited to, those set forth on Exhibit 2 attached hereto, which claim Compound, formulations of Compound, processes for preparing Compound or use of Compound in the Field, any United States or foreign counterpart patents and applications, and any continuing, divisional, reissue, re-examination and substitute patents and applications based, in whole or in part, on any of the foregoing patents and patent applications, together with all continuations, continuations-in-part, divisions, patents of addition, reissues, renewals, extensions, supplementary protection certificates and complementary protection certificates of any of the foregoing which are owned by ELI LILLY and under which ELI LILLY has rights to grant a sub-licenses.

1.11 “Phase II Clinical Trial” shall mean clinical studies conducted in accordance with Good Clinical Practices (“GCPs”) in a small number of healthy volunteers to establish efficacy and obtain a preliminary indication of the dosage of Compound.

1.12 “Phase BI Clinical Trial” shall mean large scale clinical studies in patients conducted in accordance with GCPs primarily to establish safety and efficacy of Compound.

1.13 “Valid Claim” shall mean a claim of an issued and unexpired Assigned Patent and/or Patent which has not been withdrawn, canceled, revoked, disclaimed, or held invalid, unenforceable or unpatentable by a final and unappealed (within the time allowed for appeals) or unappealable judgment or decision of a court or other governmental agency of competent jurisdiction

ARTICLE 2

LICENSE GRANT

2.00 As of the Effective Date, ELI LILLY shall assign, transfer, convey and deliver to CUBIST all rights to Assigned Patents in a separate assignments) for each of such Assigned Patents. ELI LILLY shall further file copies of such assignments) in the United States Patent and Trademark Office. Such assignments shall be treated by both parties as sales for United States federal income tax purposes.

2.01 ELI LILLY grants to CUBIST the following worldwide, exclusive

*Confidential treatment requested: Material has been omitted and filed with the Commission

licenses subject to the conditions set forth herein below in Section 2.02:

(a) Under the Patents, to develop, manufacture, formulate, have manufactured, import, use, distribute for sale, market and sell Compound in the Field; and

(b) To use the Know-How for the development, manufacture, formulation, use, distribution for sale, marketing, and sale of Compound consistent with the terms of this Agreement.

2.02 (i) Subject to Section 2.02(u) below, CUBIST shall have the right to grant sublicenses under the Patents and Know-How, for use in the Field; provided that the terms and conditions of such sub-licenses are consistent with and no less restrictive than the terms and conditions of this Agreement, and any such disclosure or transfer of Compound shall be limited to use solely in the Field.

(ii) In the event that, during the term of this Agreement, CUBIST actively seeks to grant a sub-license to a third party for the development of the Compound in the Field, which sublicense includes, but is not necessarily limited to, the right to develop and/or commercialize an oral or intravenous formulation of the Compound, CUBIST agrees to inform ELI LILLY of such determination by written notice, which notice shall include (a) a description in reasonable detail of the subject matter of the proposed sub-license and (b) the terms on which CUBIST would be willing to grant ELI LILLY such rights (the “Sublicense Notice”). ELI LILLY shall thereupon have a period of [ ]* days (the “Notice Period”) to either accept CUBIST’s terms in writing or to make a written counter-proposal. If ELI LILLY accepts CUBIST’s proposal or makes a counter-proposal, the parties will, for a period of up to [ ]* days from receipt by ELI LILLY of the Sublicense Notice (the “Negotiation Period”), seek in good faith to enter into a definitive agreement for such rights. If ELI LILLY does not by the expiration of the Notice Period either accept CUBIST’S proposal or make a counter-proposal, or if the parties negotiate in good faith and fail to reach agreement by the expiration of the Negotiation Period, CUBIST shall be free to enter into a sub-license for such rights with a third party, provided that such sub-license is granted on no better terms to the sub-licensee, taken as a whole, than the terms for such rights, if any, which ELI LILLY last offered to CUBIST during the Negotiation Period.

2.03 CUBIST shall notify ELI LILLY within [ ]* days of the identity of each sublicensee together with a summary of the principal terms of any sub-license, and shall take all reasonable steps in the event of a breach of any sub-license by the sub-licensee to enforce the same.

2.04 CUBIST acknowledges that ELI LILLY has disclosed certain Know-How to CUBIST prior to the execution of this Agreement and CUBIST shall treat such Know-How in accordance with the terms of this Agreement. During the term of this Agreement, ELI LILLY shall disclose to CUBIST such other Know-How as is directly related to CUBIST’S activities under the license granted in Article 2.01 and which ELI LILLY can provide to CUBIST using reasonable efforts.

2.05 Promptly after the Effective Date, ELI LILLY may provide CUBIST with reasonable access to consult with pertinent ELI LILLY employees that have had prior experience working with Compound in the Field at ELI LILLY to enhance the preclinical or clinical development and manufacturing of the Compound, provided that such consultation shall occur at a mutually agreeable time and place and that ELI LILLY will only provide such access to current employees

*Confidential treatment requested: Material has been omitted and filed with the Commission

which are reasonably able to provide CUBIST with ELI LILLY Know-How relating to the scaleup, manufacture, or formulation of Compound for use in the Field. CUBIST shall be responsible for all reasonable expenses its own personnel and ELI LILLY personnel incur in association with any such consultations. Upon CUBIST’s request, ELI LILLY shall provide CUBIST and its sublicensees with all Know-How, information and data owned by ELI LILLY which ELI LILLY can provide using reasonable efforts to the extent such Know-How, information and data is reasonably required to further CUBIST’s or its sub-licensees’ ability to develop, scale-up, obtain regulatory approval for, manufacture, distribute, use, formulate or sell Compound for use in the Field. CUBIST agrees to treat all Know-How disclosed to it as Confidential Information of ELI LILLY.

2.06 ELI LILLY shall deliver to CUBIST, ELI LILLY’s available inventory of Compound. ELI LILLY shall not be required to perform any manufacturing of Compound for CUBIST.

ARTICLE 3

DILIGENCE AND REGULATORY

3.00 CUBIST shall use commercially reasonable efforts to develop and test the Compound in the Field, to perform all pre-clinical, clinical and other studies of such Compound necessary to obtain regulatory approval for the manufacture, use and sale of Compound, and to market and sell Compound in the Field in all countries in which it is commercially reasonable to market such Compound. CUBIST shall fully fund these efforts, as well as any other work that is required for CUBIST to develop and market Compound in the Field.

CUBIST has prepared and provided to ELI LILLY a preliminary development plan as of November 7, 1997, which contained CUBIST’s estimate, based upon data currently available to CUBIST concerning the subject matter of this Agreement, of the probable course of Compound development hereunder. CUBIST will provide ELI LILLY with bi-annual status reports regarding the development progress of the Compound; however, any material events or changes in the Compound development plan will be reported to ELI LILLY as soon as reasonably possible after such event occurs.

3.01 CUBIST represents that it intends to conduct clinical testing of Compounds to the extent that such testing is supported by safety and efficacy data required by the applicable regulatory agency.

3.02 ELI LILLY hereby grants CUBIST the right of reference to the Investigational New Drug Application filed with the United States Food and Drug Administration (“FDA”) relating to the Compound, and ELI LILLY agrees to provide to CUBIST copies of all related contact reports, minutes and other regulatory correspondence filed with or communicated to the FDA. ELI LILLY shall transfer all reasonably transferable information used in regulatory filings, laboratory data, clinical data, toxicology data, and scale-up, manufacturing and formulation information relating to Compound to CUBIST in a commercially reasonable time frame.

3.03 CUBIST shall comply with all applicable laws and regulations regarding the care and use of experimental animals, in a country where the development is carried out. All animals used to evaluate Compound shall be provided humane care and treatment in accordance with the most acceptable veterinary practices.

*Confidential treatment requested: Material has been omitted and filed with the Commission

ARTICLE 4

PAYMENTS

4.00      CUBIST will pay to ELI LILLY the following payments:

(a) [ ]* as a license fee, to be paid upon the earlier of (i) completion of CUBIST or CUBIST’S sub-licensee’s first Phase II Clinical Trial in a Major Market Country or (u) upon the initiation of CUBIST or CUBIST’s sub-licensees of patient dosing in the first Phase III Clinical Trial in a Major Market Country; said license fee to be paid in CUBIST common stock based on the Average Market Price for such CUBIST common stock;

(b) [ ]* as a license fee, to be paid upon the date of CUBIST’S or CUBIST’S sub-licensee’s first regulatory submission in a Major Market Country for a license to market Compound, said license fee to be paid in CUBIST common stock, based on the Average Market Price for such CUBIST Common Stock; and

(c) [ ]* as a license fee, to be paid upon the date of CUBIST’s or CUBIST’S sub-licensee’s first regulatory approval in a Major Market Country for their application to market Compound, said license fee to be paid in CUBIST common stock, based on the Average Market Price for such CUBIST Common Stock.

4.01 During the first [ ]* months after the first commercial sale of Compound in a Major Market Country, CUBIST will pay ELI LILLY royalties of [ ]* on the first [ ]* of aggregate annual Net Sales of Compounds and [ ]* on aggregate Net Sales between [ ]* and [ ]* on aggregate annual Net Sales in excess of [ ]* in all countries (“Protected Countries”) for so long as (a) the manufacture, use or sale of Compound is covered by a Valid Claim, or (b) there is no significant generic competition which causes a reduction of Net Sales of Compound by [ ]* percent or more in any twelve month period.

4.02 After the expiration of the first [ ]* months after first commercial sale in a Major Market Country, CUBIST will pay ELI LILLY royalties of [ ]* on the first [ ]* of aggregate annual Net Sales of Compound and 13.5% on aggregate annual Net Sales between [ ]* and [ ]* in aggregate annual Net Sales in excess of [ ]* in all countries (“Protected Countries”) for so long as (a) the manufacture, use or sale of a Compound is covered by a Valid Claim, or (b) there is no significant generic competition which causes a reduction of Net Sales of Compound by [ ]* percent or more in any twelve month period.

4.03 For a period often [ ]* years following first commercial sale in a Major Market Country, CUBIST will pay ELI LILLY royalties of [ ]* of aggregate annual Net Sales in all countries that are not Protected Countries, but where the manufacture, use, sale or transfer of Compound utilizes Know-How provided to CUBIST by ELI LILLY. [ ]* of Net Sales in countries that are not Protected Countries shall be included in aggregate annual Net Sales of Compound calculated pursuant to Section 4.02 for purposes of determining the appropriate royalty percentage in Section 4.02.

*Confidential treatment requested: Material has been omitted and filed with the Commission

4.04 In the event that CUBIST can demonstrate that external factors beyond its control (such as government-imposed price controls) have materially reduced CUBIST’S profitability on sales of Compound in any Country, ELI LILLY agrees to consider in good faith an equitable reduction in the royalty rate applicable to such country under Section 4.02 or 4.03, as applicable.

4.05 The first payment under Articles 4.01, 4.02 and 4.03 shall be due within [ ]* days after December 31 or June 30, whichever such date occurs first after the first commercial sale or transfer of Compound. Thereafter, payments under Articles 4.01, 4.02 or 4.03 shall be made within [ ]* days of each of December 31 and June 30 of each year. Payments shall be accompanied by a report showing all facts necessary to the calculation of amounts due.

4.06 All royalty payments to ELI LILLY shall be in United States dollars. Royalty payments based on Net Sales in currencies other than United States dollars shall be converted to US dollars according to the average official rate of exchange for that currency as published in the Wall Street Journal on the first and last days of the six-month period in which that royalty accrued (or, if not published on that day, the first and last publication days for the Wall Street Journal during that six month period). If such exchange rate is not published in the Wall Street Journal, then the rate shall be determined using average conversion rates that are accepted in the industry on the first and last days of the six month period in which the royalty accrued. All payments that are not to be made in CUBIST common stock, as specified herein, shall be paid in United States dollars.

4.07 If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, CUBIST shall give ELI LILLY prompt written notice and shall pay the royalty due under this Article 4 through such means or methods as are lawful in such country as ELI LILLY may reasonably designate. Failing the designation by ELI LILLY of such lawful means or methods within [ ]* days after such written notice is given to ELI LILLY, CUBIST shall deposit such royalty payment in local currency to the credit of ELI LILLY in a recognized banking institution designated by ELI LILLY, or if none is designated by ELI LILLY within the [ ]* day period described above, in a recognized banking institution selected by CUBIST and identified in a written notice to ELI LILLY by CUBIST, and such deposit shall fulfill all obligations of CUBIST with respect to such royalties.

4.08 CUBIST and its sub-licensees,