AMENDED CONFIDENTIAL COLLABORATION AGREEMENT

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EXHIBIT 10.27

*** TEXT OMITTED AND FILED SEPARATELY

PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST

UNDER 17 C.F.R. SECTION 200.80(b)(4)

AND RULE 406 UNDER THE SECURITIES

ACT OF 1933, AS AMENDED

CONFIDENTIAL

COLLABORATION AGREEMENT

THIS COLLABORATION AGREEMENT (the "AGREEMENT") is made and entered into as

of December 1, 2003 (the "EFFECTIVE DATE") by and between STRUCTURAL GENOMIX,

INC. a Delaware corporation located at 10505 Roselle Street, San Diego, CA

92121, U.S.A., ("SGX"), and UROGENE, S.A., a corporation incorporated under the

laws of France with a principal place of business at 4 Rue Pierre Fontaine -

Genopole, 91058 Evry, Cedex, France, ("UG"). SGX and UG may be referred to

herein individually as a "Party" and collectively as the "Parties".

BACKGROUND

WHEREAS, SGX has expertise in the field of structure directed drug

discovery;

WHEREAS, UG has research and development programs in the area of urology;

WHEREAS, the Parties wish to collaborate in the development of therapeutic

products directed at inhibiting the protein kinase RON, primarily for

application in the field of bladder cancer;

NOW, THEREFORE, in consideration of the foregoing and the covenants and

promises contained in this Agreement, the Parties hereby agree as follows:

1. DEFINITIONS

1.1 "Active Party" has the meaning ascribed to such term in Section 6.1.

1.2 "Affiliate" means, with respect to a Party hereto, a corporation,

company or other entity that is owned or controlled by such Party by virtue of

such Party's direct or indirect ownership or control of fifty percent (50%) or

more of the outstanding shares or securities (representing the right to vote for

the election of directors or other managing authority) of such corporation,

company or other entity, but such corporation, company or other entity shall be

deemed to be an Affiliate only so long as such ownership or control exists.

1.3 "Clinical Development" means development activities conducted on a

Collaboration Product commencing upon the filing of an IND, up to and including

generation of an International Registration Dossier.

1.4 "Collaboration" means the activities conducted by the Parties under

the Research Plan and the Development Plan.

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1.5 "Collaboration Product" means any product that comprises or contains

or is developed or manufactured based on a Safety Assessment Candidate, and is

directed at inhibiting, modulating or altering the activity of the Target.

Collaboration Products do not include SGX Products or UG Products.

1.6 "Collaboration Technology" means Patent Rights and Know-How which are

conceived or reduced to practice or otherwise developed by or on behalf of UG or

SGX, or jointly by UG and SGX, in each case during and in the performance of the

Collaboration, including without limitation, Collaboration Products and

Information but excluding SGX Compounds, UG Compounds, SGX Background

Technology, and UG Background Technology.

1.7 "Collaboration Term" means the period commencing on the Effective Date

and ending on a Collaboration Product-by-Collaboration Product and

country-by-country basis, upon Registration of each such Collaboration Product.

1.8 "Competing Product" means a product developed outside of the

Collaboration for application in the Therapeutic Field, which has activity in an

[...***...] against the Target.

1.9 "Controls" or "Controlled" means possession of the ability to grant

the licenses or sublicenses as provided for herein, without violating the terms

of any agreement or other arrangement with a Third Party.

1.10 "Development Budget" has the meaning ascribed to such term in Section

3.7.

1.11 "Development Plan" means, with respect to a particular Collaboration

Product, the plan prepared by the JDC and approved by the Parties pursuant to

Section 3.7 setting forth the detailed plan, Development Budget and process for

the Parties' collaborative efforts to conduct development of, and seek

Registration for, such Collaboration Product in the UG Territory and SGX

Territory.

1.12 "Drug Candidate" means a Safety Assessment Candidate selected by the

JDC for Clinical Development under Section 3.2(b).

1.13 "Excess Expenses" means, with respect to a particular Collaboration

Product, the costs and expenses associated with such Collaboration Product that

the Parties have agreed pursuant to Section 3.9 shall be creditable against

certain royalty payments in accordance with Section 4.3.

1.14 "Expanded Therapeutic Field" means the Therapeutic Field, [...***...]

cancer, [...***...] carcinomas, and [...***...] cancer.

1.15 "FTE" means a full time equivalent person year (consisting of

[...***...] hours per year) of scientific or technical work carried out by or on

behalf of SGX or UG under the Collaboration.

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1.16 "First Commercial Sale" means the first sale of a Collaboration

Product to a Third Party in a Territory after all Registrations required to

permit such sale have been granted, or such sale is otherwise permitted by the

regulatory authority in such country.

1.17 "IND" means an Investigational New Drug application, as defined in

the U.S. Food, Drug and Cosmetic Act ("FDCA") and the regulations promulgated

thereunder or any corresponding foreign application, registration or

certification.

1.18 "Inactive Party" has the meaning ascribed to such term in Section

6.1.

1.19 "Information" means data specifically relating to research,

development, Registration, manufacture, sale or use of Collaboration Products,

including without limitation, pharmacological, toxicological and clinical test

data, analytical and quality control data, regulatory submissions,

correspondence and communications, and data relating to adverse events.

1.20 "International Registration Dossier" means the collection of

Information comprising the requirements for applications for Registration of

Collaboration Products under the FDCA and any regulations promulgated

thereunder, and as required by the Committee for Proprietary Medicinal Products

representing the medicine authorities of the European Community member states.

1.21 "Joint Research Committee" or "JRC" means the Joint Research

Committee established pursuant to Section 2.4.

1.22 "Joint Development Committee or "JDC" means the Joint Development

Committee established pursuant to Section 3.2.

1.23 "Know-How" means all ideas, data (including without limitation data

from clinical and preclinical studies and test data including pharmacological,

toxicological and clinical test data), inventions, information, (including

without limitation information related to compounds and their structure,

function and formulation, regulatory filings and submissions), instructions,

designs, processes, formulas, software, materials, methods, processes and

techniques.

1.24 "Lead Compound" means a compound with the properties designated by

the JRC as required properties for a Lead Compound, which is designated by the

JRC as a Lead Compound in accordance with Section 2.4(b)(v).

1.25 "Net Sales" means the total amount received by UG or SGX or their

respective Affiliates or sublicensees, as the case may be, for sales to third

parties (other than sublicensees) in arm's length transactions of Products less:

(i) ordinary and customary prompt payment and other trade or quantity discounts

actually allowed and taken; (ii) credits, rebates and returns (including, but

not limited to, wholesaler and retailer returns) actually extended and taken;

(iii) freight, postage and duties (including insurance premiums) actually

incurred; (iv) excise taxes, other consumption taxes, customs duties and

compulsory payments to governmental authorities actually paid and separately

identified on the invoice or other documentation maintained in the ordinary

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course of business. A "sale" shall include any transfer or other disposition for

consideration, and Net Sales shall include the fair market value of all other

consideration received by UG or SGX or their respective Affiliates or

sublicensees in respect of any grant of rights to make, use, sell or otherwise

distribute Products, whether such consideration is in cash, payment in kind,

exchange or other form.

1.26 "NDA" means a New Drug Application, as defined in the U.S. Food, Drug

and Cosmetic Act and the regulations promulgated thereunder, and any

corresponding foreign application, registration or certification.

1.27 "Patent Rights" means patent applications filed in any country

worldwide, including provisionals, utilities, continuations (in whole or in

part), divisionals, reissues, reexaminations and foreign counterparts thereof,

any patents issued on such applications and any extensions of term,

registrations or confirmations of such patents.

1.28 "Phase 1", "Phase 2", "Phase 3" and "Phase 4" means Phase 1, Phase 2,

Phase 3 and Phase 4 clinical trials, respectively, in each case as prescribed by

the U.S. Food and Drug Administration or any successor entity (the "FDA"), and

agencies of other governments of other countries having similar jurisdiction

over the development, manufacturing and marketing of pharmaceuticals.

1.29 "Phase 2A" means the Phase 2A or Phase 1/2 clinical trials, as

prescribed by the FDA and agencies of other governments of other countries

having similar jurisdiction over the development, manufacturing and marketing of

pharmaceuticals, designed to evaluate efficacy and initial clinical proof of

concept.

1.30 "Preclinical Development" means drug development activities conducted

by the Parties from the nomination by the JRC of a Safety Assessment Candidate

for Preclinical Development, and up to but not including filing of an IND.

1.31 "Product" means a Collaboration Product, SGX Product or UG Product.

1.32 "Registration" means any approvals (including supplements, amendments

and post-approvals and price approvals), licenses, registrations or

authorizations of any national, supra-national (e.g., the European Commission or

the Council of the European Union), regional or local regulatory agency,

department, bureau, or other governmental entity, necessary for the manufacture,

distribution, use, sale, pricing or reimbursement, of Collaboration Products in

a regulatory jurisdiction.

1.33 "Research Plan" has the meaning ascribed to such term in Section 2.1

1.34 "Safety Assessment Candidate" or "SAC" means a Lead Compound with the

properties designated by the JRC as required properties for a SAC, which is

designated by the JRC as a SAC in accordance with Section 2.4(b)(vi).

1.35 "SGX Background Technology" means all Patent Rights and Know-How

which are: (a) owned or Controlled by SGX prior to the Effective Date or during

the Collaboration Term; (b) developed by or on behalf of SGX (i) outside the

Collaboration

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or (ii) within the Collaboration and comprise methodologies, protocols or

technologies which have application to targets or compounds in addition to the

Target and compounds the subject of the Collaboration; and (c) necessary for the

conduct of the Collaboration.

1.36 "SGX Compounds" means all Patent Rights and Know-How which are

conceived or reduced to practice or otherwise developed by or on behalf of SGX

during and in the performance of the Collaboration, covering compounds

identified and developed by SGX, which are not selected by the JRC as Lead

Compounds.

1.37 "SGX Product" means any product that comprises or contains or is

developed or manufactured based on or utilizing or is derived from, a Lead

Compound or any part thereof which was selected by the JRC for lead

optimization, and which has primary application in the SGX Retained Field.

1.38 "SGX Retained Field" means kinase inhibitors (other than MET)

developed for clinical indications other than the Expanded Therapeutic Field.

1.39 "SGX Territory" means the United States, Canada and Mexico.

1.40 "Sublicensee Information" has the meaning ascribed in Section 4.6.

1.41 "Sublicensing Revenue" means all amounts (including, without

limitation, payments received for the purchase of equity in excess of the fair

market value of such equity, license fees, milestone and other time or event

based payments and royalties on sales of products, but excluding any research

funding payments received and actually used for such purpose) received by a

Party under an agreement or license attributable to Collaboration Products or

from sales of Collaboration Products to end users less any withholding tax or

other tax related reductions.

1.42 "Target" means the human protein kinase RON.

1.43 "Territory" means UG Territory or SGX Territory.

1.44 "Therapeutic Field" means superficial and invasive bladder cancer.

1.45 "Third Party" or "Third Parties" means any entity other that UG or

SGX or their respective Affiliates.

1.46 "UG Background Technology" means all Patent Rights and Know-How which

are: (a) owned or Controlled by UG prior to the Effective Date or during the

Collaboration Term; (b) developed by or on behalf of UG (i) outside the

Collaboration or (ii) within the Collaboration and comprises methodologies,

protocols or technologies which have application to targets or compounds in

addition to the Target and compounds that are the subject of the Collaboration;

and (c) necessary for the conduct of the Collaboration.

1.47 "UG Compounds" means all Patent Rights and Know-How which are

conceived or reduced to practice or otherwise developed by or on behalf of UG

during

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and in the performance of the Collaboration, covering compounds

identified and developed by UG, which are not selected by the JRC as Lead

Compounds.

1.48 "UG Product" means any product that comprises or contains or is

developed or manufactured based on or utilizing or is derived from, a Lead

Compound or any part thereof which was selected by the JRC for lead

optimization, and which has primary application in the UG Retained Field.

1.49 "UG Retained Field" means non-kinase inhibitors developed for

urological clinical application other than the Therapeutic Field.

1.50 "UG Territory" means the countries listed in the attached Exhibit A

("Europe")

1.51 "Valid Claim" means a claim of a pending patent application within

the Patent Rights or an issued and unexpired patent within the Patent Rights

which has not been held unenforceable or invalid by a court or other

governmental agency of competent jurisdiction, and which has not been disclaimed

or admitted to be invalid or unenforceable through reexamination, reissue,

opposition, or otherwise.

2. RESEARCH COLLABORATION.

2.1 Research Collaboration. Subject to the terms and conditions of this

Agreement UG and SGX will use commercially reasonable efforts to perform under

the Research Plan attached to this Agreement as Exhibit B ("Research Plan"),

based on the budget attached as Exhibit B1 ("Research Budget"). Research Plan

activities will be overseen by the JRC. The JRC will review the Research Plan on

an ongoing basis and may make changes to the Research Plan then in effect,

provided that the JRC may not increase the applicable Research Budget without

the written approval of each Party. On an annual basis commencing on the first

anniversary of the Effective Date and continuing until the conclusion of the

Parties' activities under the Research Plan, the JRC shall review the Research

Budget to ensure that the number of full time equivalent personnel (FTEs) of

each Party engaged under the Research Plan and the other costs of the Research

Plan activities, are being shared between the Parties on a 50/50 basis, and

shall make adjustments to each Party's responsibilities under the Research Plan

in order to effect such sharing to the greatest extent possible, taking into

account each Party's experience and expertise in the various Research Plan

activities.

2.2 Performance Standards; Records. Each Party shall conduct its

activities under the Collaboration in good scientific manner, and in compliance

in all material respects with the requirements of applicable laws and

regulations, to attempt to achieve its objectives efficiently and expeditiously.

Each Party shall maintain laboratories, offices and other facilities reasonably

necessary to carry out the activities to be performed by such Party pursuant to

the Collaboration. In conformity with standard pharmaceutical and biotechnology

industry practices and the terms and conditions of this Agreement, each Party

shall prepare and maintain, or shall cause to be prepared and maintained,

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complete and accurate written records, accounts, notes, reports and data with

respect to activities conducted pursuant to the Research Plan and Development

Plan and all results (including without limitation any inventions, discoveries

and developments) made pursuant to its efforts under the Collaboration, and,

upon the other Party's written request, shall send legible copies of the

aforesaid to the other Party. Such records shall be complete and accurate and

shall fully and properly reflect all work done and results achieved in the

performance of the Collaboration in sufficient detail and in good scientific

manner. Upon reasonable advance notice, each Party agrees to make its employees

and non-employee consultants reasonably available at their respective places of

business to consult with the other Party on issues arising in connection with

any request from any regulatory agency with respect to activities under this

Agreement, including, without limitation, regulatory, scientific, technical and

clinical testing issues. At least quarterly during the performance of the

Research Plan, the Parties shall have the obligation to prepare and provide to

the JRC written reports summarizing the progress of the work performed by such

Party in connection with the Research Plan during the preceding quarter.

2.3 Provision of Materials and Know-How. In the course of the

Collaboration, the Parties will provide each other, promptly upon request, with

materials and data within Collaboration Technology, as required for each Party

to perform its respective obligations under the Research Plan and Development

Plan. Neither Party will have the right to transfer or disclose materials

received from the other Party to any Third Party other than permitted

sublicensees or approved Third Party contractors under the Research Plan,

without the other Party's prior written consent.

2.4 Joint Research Committee

(a) Membership; Decisions. SGX and UG will establish a JRC to

oversee, review and recommend direction of the Research Plan. The JRC shall be

comprised of six (6) members, with three (3) members being appointed by SGX and

three (3) members being appointed by UG. Additional representatives of each

Party (for example the members of the individual project teams or consultants)

may attend JRC meetings at the election of each Party. The Parties may

subsequently agree to change the size of the JRC as appropriate to meet the

needs of the Parties' collaborative efforts under this Agreement. Each Party may

replace its JRC representatives at any time, with written notice to the other

Party. Each representative of SGX and UG shall have one vote on the JRC, which

vote may be cast by proxy. Decisions of the JRC shall be made by unanimous vote.

Any matter upon which the JRC is unable to agree shall be submitted to a senior

executive officer designated by each Party for such purpose.

(b) Responsibilities. The JRC will review, direct and supervise the

performance of the Research Plan. The JRC will be responsible for (i)

coordinating, monitoring and reporting research progress and ensuring open

exchange between the Parties with respect to Collaboration activities; (ii)

determining the research strategy, budget and time lines for the Research Plan;

(iii) determining whether to obtain licenses from Third Parties with respect to

intellectual property useful for the conduct of the Research Plan; (iv)

determining the required properties for compounds to be deemed

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Lead Compounds, including without limitation, potency, selectivity, in vivo

efficacy and bioavailability; and (v) selecting Lead Compounds for entry into

lead optimization; provided that no more than four (4) Lead Compound series will

be pursued in lead optimization under the Collaboration at any one time; and

(vi) determining the required properties for Lead Compounds to be deemed Safety

Assessment Candidates and selecting Safety Assessment Candidates for entry into

Preclinical Development.

(c) Meetings. During the term during which the Parties are

performing under the Research Plan, the JRC shall meet quarterly, in person or

via video-conference, or as the JRC may otherwise agree, to discharge its

responsibilities, with the expectation that meetings will alternate between

appropriate offices of each Party. Each Party will be responsible for paying its

own expenses in connection with participating in the meetings of the JRC. The

JRC shall prepare written minutes of each meeting and a written record of all

JRC decisions, whether made at a JRC meeting or otherwise.

3. DEVELOPMENT

3.1 Overview. SGX and UG agree that they will collaborate on development

of Collaboration Products pursuant to the terms of this Agreement, in a

coordinated international program aimed at producing an International

Registration Dossier and obtaining Registration of Collaboration Products in the

UG Territory and SGX Territory. All such collaborative development efforts of

the Parties, or either Party, shall be in accordance with the Development Plan

for each Collaboration Product. Except as otherwise provided in this Agreement,

each Party agrees that neither Party may conduct Preclinical Development or

Clinical Development on a Collaboration Product for sale or distribution, or

license any Third Party to do so, except collaboratively with the other Party or

as permitted by this Agreement. However, as discussed further in Article 6, it

is agreed that, if one Party determines that it does not wish to proceed with

such joint development of a particular Collaboration Product, the other Party

shall be permitted to do so on its own pursuant to the terms of Article 6.

3.2 Joint Development Committee. On a Collaboration Product-by-

Collaboration Product basis, once a Safety Assessment Candidate is selected by

the JRC for progression to Preclinical Development, the Parties shall form a JDC

for the development of such SAC, comprised of six (6) members, with three (3)

members being appointed and replaced by SGX and three (3) members being

appointed and replaced by UG. Additional representatives of each Party (for

example members of the individual project teams or consultants) may attend JDC

meetings at the election of each Party. The Parties may subsequently agree to

change the size of each JDC, as appropriate to meet the needs of the Parties in

managing the joint efforts under this Agreement. The JDC shall (a) prepare the

Development Plan for the Preclinical Development of the SAC, and modify or amend

it as appropriate, based on the results of the development efforts on such SAC,

during the development process; (b) select one or more SACs for Clinical

Development and prepare the Development Plan for such Clinical Development, (c)

determine whether and when to commence Phase 1, Phase 2 and Phase 3 for each

Collaboration Product; (d) oversee the Parties' activities under the Development

Plan, including supervision of

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regulatory activities and (e) perform such other duties and obligations as the

Parties specifically delegate to it in writing by mutual written agreement of

the Parties.

3.3 JDC Meetings. JDC meetings shall take place at such mutually

convenient times and places as determined by the JDC, with the expectation that

meetings will alternate between appropriate offices of each Party. Each Party

will be responsible for paying its own expenses in connection with participating

in JDC meetings. The JDC shall determine the frequency of its meetings and how

such meetings will be conducted and recorded.

3.4 Decision-Making and Issue Resolution. All decisions of the JDC shall

be unanimous by the members of such committee. If the JDC fails to reach

unanimous agreement on an issue needing resolution, the matter shall be referred

for good faith discussion and resolution by a senior executive officer

designated by each Party for such purpose.

3.5 Joint Development. For each SAC selected by the JRC for joint

development as a Collaboration Product hereunder by mutual written agreement,

SGX and UG agree that they will collaborate to generate an International

Registration Dossier, and will conduct, or have conducted, all Preclinical

Development and Clinical Development on such Collaboration Product in accordance

with the Preclinical and Clinical Development Plans developed by the JDC for

such Collaboration Product. The Parties will work together to develop a common

brand name for each Collaboration Product to be marketed under worldwide. Each

Party agrees not to incur any expenses or costs in excess of the Development

Budget (as defined below) within such Development Plan except as mutually agreed

in writing by the Parties. The collaborative development program will follow the

most expeditious path to the production of an International Registration Dossier

and Registration of Collaboration Products in the UG Territory and SGX

Territory, provided however it is understood that unless otherwise agreed by the

Parties, all commercialization activities with respect to such Collaboration

Product once Registration has been obtained, will be conducted by the Parties

independently, in each Party's respective Territory for such Collaboration

Product and that each Party will bear its own costs of such commercialization

activities. On a Collaboration Product-by-Collaboration Product basis, each

Party will be primarily responsible for regulatory activities in its applicable

Territories after Registration in such Territory, comprising regulatory

compliance, safety surveillance, adverse event reporting and all other necessary

support services, however the Parties will keep each other informed of such

activities and will work together in the conduct of such activities where

necessary or useful. The Parties will mutually agree on (i) the

commercialization strategy for countries outside of the Territories, including

outlicensing as necessary; and (ii) the engagement of a Third Party(ies) to

manufacture and supply bulk drug substance for Collaboration Product

development, and Collaboration Products for commercialization purposes, in the

Territories.

3.6 Access to Information. During the term of this Agreement each Party

(the "Providing Party") will provide the other Party (the "Recipient") in

English, for use in the Recipient's development and commercialization efforts

relating to a Collaboration

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Product, all Information that the Providing Party owns or Controls regarding

such Collaboration Product (including, without limitation, Sublicensee

Information), necessary or useful for making regulatory filings and seeking and

maintaining Registration, for Collaboration Products in the Recipient's

Territory for such Collaboration Product, as such Information becomes available.

The Recipient will have a right of access, and the right to use and incorporate

all Information provided by the Providing Party in regulatory filings for such

Collaboration Products in the Recipient's Territory. The Parties will report and

take other actions in relation to, adverse events with Collaboration Products,

to each other in accordance with a reporting protocol in a form to be agreed by

the JDC. Each Party will be entitled to receive copies of all correspondence

with regulatory authorities and will be entitled to be present at all meetings

with regulatory authorities in any Territory related to Collaboration Products.

3.7 Development Plans and Budgets. Promptly after the selection by the JRC

of a SAC for development as a Collaboration Product by the Parties, the JDC

shall prepare and provide to each Party for final approval a development plan

for such SAC (the "Development Plan"). The Development Plan shall include all

needed details regarding the Preclinical and Clinical Development, and other

work to be undertaken to develop and produce the International Registration

Dossier for such Collaboration Product, including an allocation of all such work

as appropriate to each Party (or to selected Third Party contractors, as

agreed), and shall establish a budget (the "Development Budget") for all costs

and expenses to be incurred by each Party in conducting the work allocated to it

under such Development Plan. The budget will be based on (i) an allocation of

Full Time Equivalent (FTE) personnel of each Party working under the Development

Plan, with each FTE costed at an annualized rate of U.S.$[...***...] (which rate

will be increased on each anniversary of the Effective Date by [...***...]%);

(ii) the actual extraordinary direct costs approved by the JDC, and (iii) the

actual costs of work performed by Third Parties as approved by the JDC. Each

Party shall diligently review the proposed Development Plan and shall either

approve the plan or provide the JDC any requested changes and comments. If a

Party provides such requested changes or comment to a proposed Development Plan,

the JDC shall review the proposed changes within thirty (30) days, and as

appropriate, thereafter prepare a revised draft of the Development Plan,

accommodating such changes and comments, and resubmit such revised Development

Plan for approval by the Parties as provided above. Once the Parties have agreed

on the Development Plan proposed by the JDC, such Development Plan shall be

effective and shall control and govern the Parties' development effort with

respect to the applicable Product, subject to any subsequent amendments or

modifications to such Development Plan as provided below. From time to time

during the development of such Collaboration Product, the JDC shall review the

Development Plan in light of the results of the development work and any other

relevant Information and shall amend or modify the Development Plan as

appropriate, provided that the JDC may not increase the applicable Development

Budget without the written approval of each Party. At least sixty (60) days

prior to January 1 of any year in which the Parties are developing a particular

Collaboration Product hereunder, the JDC shall review the applicable Development

Budget for such Collaboration Product and shall submit a revised and updated

Development Budget for the coming calendar year to each of the Parties for

approval as provided above. Upon such approval, the Development Budget shall be

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effective for the development of such Collaboration Product during such calendar

year, subject further to amendment of the applicable Development Plan.

3.8 Costs of the Collaboration. All costs and expenses incurred or

expended by a Party hereunder under the Research Budget and Development Budget

("Collaboration Costs") shall initially be borne by the Party incurring such

costs and expenses, subject to creditability of Excess Expenses as provided in

Section 4.3, provided however, on a Collaboration Product-by-Collaboration

Product basis, the costs of any country specific regulatory requirement (outside

of the International Registration Dossier and any Phase 4 studies required by a

regulatory body in a Territory), will be borne by the Party whose Territory for

such Collaboration Product includes such country. Each Party shall calculate and

maintain records of all the Collaboration Costs incurred or expended by the

Party during its performance of development on a Collaboration Product, in

accordance with generally accepted accounting procedures consistently applied

throughout such Party's organization and such other procedures to be agreed upon

between the Parties. Commencing on the formation of the JDC, each Party shall

report quarterly to the other on the Collaboration Costs it has incurred in each

calendar quarter, on a Collaboration Product-by- Collaboration Product basis,

and the purpose (referencing the activities within the applicable Development

Plan) for which such costs were incurred or expended, with such reports to be

submitted within sixty (60) days after the end of each of the first three (3)

calendar quarters and ninety (90) days after the end of the calendar year. The

Parties shall seek to resolve promptly and in good faith any questions or issues

related to such accounting statements, and in any event within ninety (90) days

following receipt.

3.9 Excess Expenses.

(a) For each particular calendar year during which Collaboration

Costs are incurred hereunder, and promptly following the First Commercial Sale

of each Collaboration Product hereunder, each Party shall review the

Collaboration Costs report submitted by the other Party and compare such

submission to the applicable Research Budget and Development Budget. The Parties

will then meet, if necessary, via designated senior officers from each Party

with financial accounting responsibility, to discuss the reports and reach

agreement on the total amount of Collaboration Costs that each Party may

properly apply to the Collaboration activities hereunder. It is understood and

agreed that a Party will not be entitled to obtain credit for any Collaboration

Costs incurred by the Party in excess of the amount set forth in the applicable

Research Budget or Development Budget for accomplishing the relevant task or

objective unless approved by the JRC or JDC. If such officers cannot reach

agreement promptly, the matter will be submitted to senior executive officers of

each Party for prompt resolution, with the understanding that each Party will

provide access to any information relating to the Collaboration activities

undertaken by such Party, and the actual calculation of costs and expenses

incurred therefor, with respect to Collaboration Products during such calendar

year for which such Party seeks credit hereunder for the related Collaboration

Costs .

(b) UG and SGX will share the total amount of Collaboration Costs

incurred by the Parties within the applicable Research Budget and Development

Budget

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for each Collaboration Product, up to and including the costs of Clinical

Development, on a 50/50 basis. Any Collaboration Costs incurred by a Party in

excess of [...***...]% of the total amount of Collaboration Costs incurred by

both Parties, will be deemed Excess Expenses of such Party (the "First Party")

and in the event that the Party which has not incurred Excess Expenses (the

"Second Party") does not elect to pay the First Party the amount of the Excess

Expenses in cash within [...***...] ([...***...]) months of the First Commercial

Sale of a Collaboration Product, the First Party may credit such Excess Expenses

in accordance with Section 4.3.

3.10 Audit Rights. Each Party shall have the right to have an independent

accounting firm audit the other Party's relevant records to determine the

accuracy of the Collaboration Costs reported by such other Party under Section

3.8 above. Such audit right shall be exercised under the terms of the audit

provisions set forth in Section 4.11 below.

3.11 Diligence. Each Party shall use commercially reasonable diligent

efforts to (i) develop and bring Safety Assessment Candidates nominated by the

JRC for Preclinical Development, to the market as Collaboration Products in such

Party's applicable Territory as soon as reasonably practicable, (ii) obtain such

Registrations as may be necessary to market such Collaboration Products in such

Territory, and (iii) after obtaining Registration for any such Collaboration

Products, launch such Collaboration Products and promote and meet the market

demand therefore. In connection with the above, each Party shall use efforts not

less than those efforts made by similarly situated companies in the

biotechnology industry with respect to comparable products of comparable

commercial potential, stage of development and patent protection.

3.12 Lack of Diligence. In the event that either Party fails to use or

continue to use diligent efforts to actively develop and commercialize a

Collaboration Product in accordance with Section 3.11 above (the "First Party"),

and the First Party fails to initiate diligent efforts within sixty (60) days of

receipt of notice from the other Party (the "Second Party") of such failure,

then the Second Party may terminate the First Party's rights under this

Agreement with respect to such Collaboration Product and, in such event, the

Second Party shall have the exclusive right to commercialize any such

Collaboration Product in the First Party's Territory and the Second Party shall

make payments to the First Party in accordance with Section 6.3.

3.13 Competing Products. During the period from the Effective Date to the

tenth anniversary of the Effective Date, each Party agrees not to, and to cause

its Affiliates not to, directly or indirectly, develop and commercialize a

Competing Product in any country in the other Party's Territory for the

applicable Collaboration Product. In the event that a Party (an "Acquiring

Party") purchases or otherwise takes control of a Third Party ("Acquisition")

which has developed or commercialized (and is continuing to produce or sell), or

is developing or commercializing a Competing Product (directly or indirectly) in

any such case, within the other Party's Territory for the applicable

Collaboration Product, the Parties will negotiate in good faith to agree on the

appropriate sharing between the Parties of the Acquiring Party's rights and

obligations in connection with the development and commercialization of the

Competing Product, and in the event

12 ***CONFIDENTIAL TREATMENT REQUESTED

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CONFIDENTIAL

that such agreement is not reached within twelve months after such Acquisition,

the Acquiring Party shall divest, or cause its applicable Affiliate to divest,

the Competing Product.

4. ROYALTY PAYMENTS

4.1 Royalties on Net Sales of Collaboration Products. No later than six

(6) months prior to the filing of the International Registration Dossier for the

first Collaboration Product, the Parties will negotiate in good faith a

commercialization plan for Collaboration Products including an agreement on the

appropriate royalty payments and shares of Sublicensing Revenue due to each

Party, recognizing the guiding principle of a 50/50 collaboration with equal

sharing of expenses and returns. In the event that no agreement is reached by

the Parties by the date that is six (6) months prior to the First Commercial

Sale of the first Collaboration Product, (i) UG will pay to SGX a royalty of

[...***...]% of Net Sales of Collaboration Products by or on behalf of UG in the

UG Territory or [...***...]% of Sublicensing Revenue received by UG in

connection with Collaboration Products; and (ii) SGX will pay to UG a royalty of

[...***...]% of Net Sales of Collaboration Products by or on behalf of SGX in

the SGX Territory or [...***...]% of Sublicensing Revenue received by SGX in

connection with Collaboration Products.

4.2 Royalties on Net Sales of UG Products and SGX Products. In

consideration of the rights granted hereunder:

(a) SGX shall pay to UG [...***...]% of Net Sales of SGX Products by

or on behalf of SGX in the SGX Territory or [...***...]%] of Sublicensing

Revenue received by SGX in connection with SGX Products; and

(b) UG shall pay to SGX [...***...]% of Net Sales of UG Products by

or on behalf of UG worldwide or [...***...]% of Sublicensing Revenue received by

UG in connection with UG Products.

4.3 Creditable Payments. Each Party may credit any Excess Expenses

(including interest calculated at the rate equal to the prime rate as reported

by the Chase Manhattan Bank, New York, New York, plus [...***...] percent

([...***...]%), compounded annually) it has incurred, as determined in

accordance with Section 3.9, against any royalty payments it is required to make

under Section 4.1, up to a maximum of [...***...]% of the royalties due from

such Party in any calendar quarter. In the event that a Collaboration Product

has been registered in one Party's Territory but the First Commercial Sale of a

Collaboration Product in the other Party's Territory is delayed or likely to be

delayed by more than twelve (12) months,