COLLABORATION, LICENSE & SUPPLY AGREEMENT 12-8-00

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EXHIBIT 10.19

CONFIDENTIAL TREATMENT REQUESTED BY QLT INC.

COLLABORATION, LICENSE AND SUPPLY AGREEMENT

BETWEEN

ATRIX LABORATORIES, INC.

AND

SANOFI-SYNTHELABO INC.

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TABLE OF CONTENTS

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SECTION PAGE NO.

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Article I DEFINITIONS........................................................... 1

Article II COLLABORATION........................................................ 8

Section 2.01. Objectives..................................................... 8

Section 2.02. Development Program............................................ 8

Section 2.03. Atrix Obligations.............................................. 9

Section 2.04. Sanofi-Synthelabo Obligations.................................. 9

Section 2.05. Availability of Resources; Cooperation......................... 9

Article III LICENSE............................................................. 10

Section 3.01. License Fee.................................................... 10

Section 3.02. License Terms.................................................. 10

Section 3.03. Marks.......................................................... 11

Article IV ROYALTY AND MILESTONE PAYMENTS....................................... 11

Section 4.01. Research and Development Expenses.............................. 11

Section 4.02. Royalty Payments............................................... 11

Section 4.03. Milestone Payments............................................. 11

Section 4.04. Additional Milestone Payments.................................. 11

Section 4.05. Reports........................................................ 11

Article V NEW PRODUCT........................................................... 13

Section 5.01. New Product.................................................... 13

Section 5.02. Right of First Negotiation..................................... 13

Article VI COMMERCIALIZATION.................................................... 14

Section 6.01. Promotion And Marketing Obligations............................ 14

Article VII MANUFACTURE AND SUPPLY.............................................. 16

Section 7.01. Agreement to Supply Product.................................... 16

Section 7.02. Quality Assurance.............................................. 16

Section 7.03. Atrix's Duties................................................. 17

Section 7.04. Compliance with Applicable Laws................................ 18

Section 7.05. Second Manufacturing Source.................................... 18

Section 7.06. Failure to Supply.............................................. 18

Section 7.07. Allocation..................................................... 19

Article VIII PURCHASE AND SALE.................................................. 19

Section 8.01. Purchase Price and Payment..................................... 19

Section 8.02. Adjustment to Purchase Price/Audit............................. 20

Section 8.03. Labeling....................................................... 21

Section 8.04. Purchase Forms................................................. 21

Section 8.05. Confirmation................................................... 21

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Section 8.06. Delivery....................................................... 21

Section 8.07. Forecasts and Orders........................................... 21

Section 8.08. Demonstration Samples.......................................... 23

Article IX WARRANTY, REJECTION AND INSPECTIONS.................................. 23

Section 9.01. Atrix Warranty................................................. 23

Section 9.02. Rejection of Product for Failure to Conform to Specifications.. 23

Section 9.03. Sanofi-Synthelabo Inspections.................................. 24

Article X REGULATORY COMPLIANCE................................................. 24

Section 10.01. Marketing Authorization Holder................................. 24

Section 10.02. Maintenance Of Marketing Authorizations........................ 24

Section 10.03. Interaction with Competent Authorities......................... 24

Section 10.04. Adverse Drug Event Reporting and Phase IV Surveillance......... 25

Section 10.05. Post - First Commercial Sale Testing And Reporting............. 26

Section 10.06. Assistance..................................................... 26

Section 10.07. Compliance..................................................... 26

Article XI PATENTS AND TRADEMARKS............................................... 27

Section 11.01. Maintenance of Patents or Marks................................ 27

Section 11.02. Cooperation.................................................... 27

Section 11.03. Atrix to Prosecute Infringement................................ 27

Section 11.04. Infringement Claimed by Third Parties.......................... 28

Article XII CONFIDENTIALITY..................................................... 28

Section 12.01. Confidentiality................................................ 28

Section 12.02. Disclosure of Agreement........................................ 28

Article XIII ATRIX'S OPTION TO MARKET THE PRODUCT UNDER CERTAIN CIRCUMSTANCES... 29

Section 13.01. Co-Marketing Rights............................................ 29

Article XIV REPRESENTATIONS AND WARRANTIES...................................... 29

Section 14.01. Corporate Power................................................ 29

Section 14.02. Due Authorization.............................................. 29

Section 14.03. Binding Obligation............................................. 29

Section 14.04. Ownership of Atrigel(R) Patent Rights.......................... 30

Section 14.05. Patent Proceedings............................................. 30

Section 14.06. Legal Proceedings.............................................. 30

Section 14.07. Atrix's Manufacturing Facility................................. 30

Section 14.08. Limitation on Warranties....................................... 30

Section 14.09. Limitation of Liability........................................ 30

Article XV INDEMNIFICATION...................................................... 31

Section 15.01. Sanofi-Synthelabo Indemnified by Atrix......................... 31

Section 15.02. Atrix Indemnified by Sanofi-Synthelabo......................... 31

Section 15.03. Prompt Notice Required......................................... 31

Section 15.04. Indemnitor May Settle.......................................... 31

Article XVI COVENANTS........................................................... 32

Section 16.01. Covenant Not To Launch Competitive Product..................... 32

Section 16.02. Limitation To The Territory.................................... 33

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Section 16.03. Access to Books and Records.................................... 33

Section 16.04. A&S Spending Levels............................................ 33

Section 16.05. Marketing Expenses............................................. 34

Section 16.06. Compliance..................................................... 34

Section 16.07. Protection of the Marks........................................ 34

Section 16.08. Launch Quantities.............................................. 34

Section 16.09. Further Actions................................................ 34

Article XVII PRODUCT RECALL..................................................... 35

Section 17.01. Product Recalls or Withdrawal.................................. 35

Section 17.02. Recall Costs................................................... 35

Section 17.03. Notification Of Complaints..................................... 36

Section 17.04. Notification Of Threatened Action.............................. 36

Article XVIII INSURANCE......................................................... 36

Section 18.01. Insurance...................................................... 36

Article XIX TERM; DEFAULT AND TERMINATION....................................... 37

Section 19.01. Term........................................................... 37

Section 19.02. Termination by Either Party.................................... 37

Section 19.03. Termination by Either Party for Cause.......................... 37

Section 19.04. Termination by Atrix........................................... 37

Section 19.05. Termination by Sanofi-Synthelabo............................... 38

Section 19.06. Remedies....................................................... 38

Section 19.07. Effect of Termination.......................................... 38

Article XX MISCELLANEOUS........................................................ 41

Section 20.01. No-Solicitation................................................ 41

Section 20.02. Commercially Reasonable Efforts................................ 41

Section 20.03. Assignment..................................................... 41

Section 20.04. Force Majeure.................................................. 41

Section 20.05. Governing Law.................................................. 42

Section 20.06. Waiver......................................................... 42

Section 20.07. Severability................................................... 42

Section 20.08. Notices........................................................ 42

Section 20.09. Independent Contractors........................................ 43

Section 20.10. Rules of Construction.......................................... 43

Section 20.11. Publicity...................................................... 43

Section 20.12. Entire Agreement; Amendment.................................... 43

Section 20.13. Headings....................................................... 44

Section 20.14. Counterparts................................................... 44

Exhibit A - Atrigel(R) Patent Rights............................................ A-1

Exhibit B - Form of Certificate of Compliance................................... B-1

Exhibit C - Specifications...................................................... C-1

Exhibit D - Form of Stock Purchase Agreement.................................... D-1

Exhibit E - Development Program................................................. E-1

Exhibit F - Sanofi-Synthelabo's SOP............................................. F-1

Exhibit G - Six Month Product Development Program............................... G-1

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COLLABORATION, LICENSE AND SUPPLY AGREEMENT

This Collaboration, License and Supply Agreement (the "Agreement") is made

as of December 8, 2000 by and between Atrix Laboratories, Inc., a Delaware

corporation having offices at 2579 Midpoint Drive, Fort Collins, CO, 80525-4417

("Atrix"), and Sanofi-Synthelabo Inc. a Delaware corporation having offices at

90 Park Avenue, New York, NY, 10016 ("Sanofi-Synthelabo"). Atrix and

Sanofi-Synthelabo are sometimes referred to collectively herein as the "Parties"

or singly as a "Party."

RECITALS

WHEREAS, Atrix possesses proprietary drug delivery systems including

"Atrigel(R)" and has substantial experience and expertise in the discovery,

design and development of products based on these proprietary drug delivery

systems for medical, dental and veterinary applications;

WHEREAS, Sanofi-Synthelabo possesses substantial resources and expertise in

the development, commercialization and marketing of pharmaceutical products;

WHEREAS, Atrix wishes to grant to Sanofi-Synthelabo, and Sanofi-Synthelabo

wishes to obtain from Atrix, an exclusive license under Atrix's Atrigel(R)

Technology to market, advertise, promote, distribute, offer for sale, sell and

import the Product in the Territory for use in the Field on the terms and

subject to the conditions set forth herein; and

WHEREAS, Sanofi-Synthelabo wishes Atrix to manufacture and Atrix desires to

manufacture each of the Product to be sold in the Territory by

Sanofi-Synthelabo.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual

covenants and agreements contained herein, the Parties hereto, intending to be

legally bound, do hereby agree as follows:

AGREEMENT

ARTICLE I

DEFINITIONS

The following terms as used in this Agreement shall, unless the context

clearly indicates to the contrary, have the meaning set forth below:

"Acceptance for Filing" means Atrix's receipt of a letter issued by the FDA

indicating acceptance for filing of an NDA pursuant to 21 CFR Section 314.101.

"ADE" has the meaning set forth in Section 10.04.

"Affiliate" means an individual, trust, business trust, joint venture,

partnership, corporation, association or any other entity which owns, is owned

by or is under common ownership with, a Party. For the purposes of this

definition, the term "owns" (including, with

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correlative meanings, the terms "owned by" and "under common ownership with") as

used with respect to any Party, shall mean the possession (directly or

indirectly) of more than 50% of the outstanding voting securities of a

corporation or comparable equity interest in any other type of entity.

"Applicable Laws" means all applicable laws, rules, regulations and

guidelines within or without the Territory that may apply to the development,

marketing, manufacturing, packaging or sale of the Product in the Territory or

the performance of either Party's obligations under this Agreement including

laws, regulations and guidelines governing the import, export, development,

marketing, distribution and sale of the Product in the Territory, to the extent

applicable and relevant, and including all cGMP or Good Clinical Practices

standards or guidelines promulgated by the FDA or the Competent Authorities and

including trade association guidelines, where applicable, as well as United

States' export control laws and the United States' Foreign Corrupt Practices

Act.

"Approval Letter" means a letter issued by the FDA indicating approval of a

product, as defined in 21 CFR Section 314.105, or a similar letter issued by a

Competent Authority in any other country in the Territory.

"A&S" means Sanofi-Synthelabo's advertising and selling expenditures

incurred in and associated with the promotional support of the Product,

including the creation, development and acquisition of advertising and selling

materials, including, but not limited to, expenditures for samples, detailing

materials, journal advertising, in-office waiting room materials, educational

programs, including Web-site programs for physicians and patients, convention

booths, direct mail, consumer support, third party support, managed care

programs, post-marketing Phase IV studies to support existing indications,

market research, market surveys, market analysis and the training and costs of

the pharmaceutical detail force, the medical therapeutic liaisons and the

telesales staff used with regard to support of the Product. The costs of

warehousing and physical distribution, post-marketing Phase IV studies to

support new indications, and discounts given to managed care organizations shall

not be considered to be A&S expenses for purposes of this Agreement.

"Atrigel(R)" means Atrix's proprietary drug delivery system consisting of

flowable compositions (e.g., solutions, gels, pastes and putties) of

biodegradable polymers and biocompatible solvents.

"Atrigel(R) Know-How" means all Know-How related to Atrix's proprietary

Atrigel(R) drug delivery system as of the Effective Date, which is not covered

by the Atrigel(R) Patent Rights, but is necessary or useful to develop,

manufacture and commercialize the Product in the Territory for use in the Field,

and which is under the Control of Atrix as of the Effective Date.

"Atrigel(R) Patent Rights" means all Patent Rights related to Atrix's

proprietary Atrigel(R) drug delivery system as of the Effective Date and at any

time during the Term of this Agreement, which are necessary or appropriate to

develop, manufacture and commercialize the Product in the Territory for use in

the Field, which are under the Control of Atrix as of the Effective Date and

Improvements thereto developed during the Term. The Atrigel(R) Patent Rights as

of the Effective Date are set forth on Exhibit A.

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"Atrigel(R) Technology" means the Atrigel(R) Patent Rights and the

Atrigel(R) Know-How.

"Atrix Manufacturing Cost" means the actual cost of the Manufacture by

Atrix of the Product under a Manufacturing Process, including the related

quality assurance and quality control activities as required by Applicable Laws

(other than the costs set forth in Section 2.03), which actual cost shall be

comprised of the cost of goods produced as determined in accordance with GAAP,

and shall include direct labor, direct material, including raw materials and

packaging materials, and the allocable portion of the manufacturing overhead of

Atrix directly attributable to the Manufacture of the Product. The allocable

portion of the manufacturing overhead shall be determined by taking the total

facility cost for the period, less an adjustment for idle capacity, and

allocating the remaining facility cost by labor usage to each of the products

produced in the facility during the period. For example: If the facility cost

for the period was $1,000,000 and it was operating at 80% capacity, the

allocable facility cost would be $800,000. If the Product represented 30% of

labor usage during the period, the allocable portion of the manufacturing

overhead directly attributable to the Manufacture of the Product would be

$240,000. Atrix Manufacturing Cost shall exclude selling, general and

administrative, research and development, and interest expenses and any and all

debt service payments of Atrix. For a period of twelve (12) months from the date

of First Commercial Sale of each Product the Atrix Manufacturing Cost for each

Product will be set as follows (the "Twelve Month Cost"):

One Month Product - [**]

Three Month Product - [**]

Four Month Product - [**]

"Certificate of Compliance" means the certificate of compliance in the form

attached hereto as Exhibit B.

"cGMP" means current good manufacturing practices as defined in 21 CFR

Section 110 et seq.

"CMC" means chemistry manufacturing and controls.

"Collaboration" means the activities of the Parties carried out in

performance of, and the relationship between the Parties established by, this

Agreement.

"Competent Authorities" means collectively the governmental entities in

each country in the Territory responsible for the regulation of medicinal

products intended for human use.

"Competitive Product" means any leuteinizing hormone releasing hormone

(LHRH) or derivative or analog thereof, whether agonist or antagonist, whether

naturally-occurring or synthetic, used for the treatment of prostate cancer,

endometriosis or uterine fibroids.

"Confidential Information" means any confidential information of a Party

relating to any use, process, method, compound, research project, work in

process, future development, scientific, engineering, manufacturing, marketing,

business plan, financial or personnel matter relating to the disclosing Party,

its present or future products, sales, suppliers, customers,

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employees, investors or business, whether in oral, written, graphic or

electronic form. Confidential Information shall not include any information

which the receiving Party can prove by competent evidence:

is now, or hereafter becomes, through no act or failure to act on the

part of the receiving Party, generally known or available;

is known by the receiving Party at the time of receiving such

information, as evidenced by its written records maintained in the ordinary

course of business;

is hereafter furnished to the receiving Party by a Third Party, as a

matter of right and without restriction on disclosure;

is independently developed by the receiving Party, as evidenced by its

written records, without knowledge of, and without the aid, application or

use of, the disclosing Party's Confidential Information; or

is the subject of a written permission to disclose provided by the

disclosing Party.

"Consumer Price Index" means the Consumer Price Index for all Urban

Consumers (Consumer Prices - All Urban Consumers, 1982-84 = 100) as published by

the Bureau of Labor Statistics of the Department of Labor of the United States

Department of Commerce.

"Control" means the possession of the ability to grant a license or

sublicense as provided for herein without violating the terms of any agreement

or other arrangement with any Third Party.

"Demonstration Samples" means Units, absent leuprolide acetate, used to

demonstrate the manner in which the Product is prepared and used, and labeled

"demonstration samples, for demonstration purposes only, not for human use."

"Development Program" has the meaning set forth in Section 2.02.

"Effective Date" means 3:00 p.m., Eastern Standard Time on the third

business day after any waiting period (and any extension thereof) and/or

approvals applicable to the consummation of the Agreement under the HSR Act

shall have expired, been terminated or obtained, as applicable.

"FDA" means the United States Food and Drug Administration.

"Field" means the primary indication for the palliative treatment of

prostate cancer and the secondary indication for the treatment of endometriosis

and uterine fibroids.

"First Commercial Sale" means (i) with respect to a country in the

Territory, the first sale for use, consumption or resale of each Product by

Sanofi-Synthelabo in such country and (ii) with respect to the Territory, the

First Commercial Sale in any country within the Territory. A sale to an

Affiliate shall not constitute a First Commercial Sale unless the Affiliate is

the end user of the Product.

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"Four Month Product" means the formulation comprised of leuprolide acetate

in an Atrigel(R) delivery system that provides for the sustained release of

leuprolide acetate over a period of about one hundred and twenty (120) days and

not less than one hundred and twelve (112) days with a primary indication for

the palliative treatment of prostate cancer.

"GAAP" means United States generally accepted accounting principles

consistently applied on a basis consistent throughout the periods indicated and

consistent with each other.

"Good Clinical Practices" means good clinical practices as defined in 21

CFR Section 50 et seq. and Section 312 et seq.

"Governmental Approval" means all permits, licenses and authorizations,

including but not limited to, Marketing Authorization and Pricing and

Reimbursement Approvals required by the FDA or any other Competent Authority as

a prerequisite to the manufacturing, packaging, marketing and selling of the

Product or the Units; excluding, however, import permits.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,

as amended.

"Improvements" means any and all developments, inventions or discoveries in

the Field relating to the Atrigel(R) Technology developed, or acquired by Atrix

at any time during the Term and shall include, but not be limited to,

developments intended to enhance the safety and/or efficacy of the Product.

"Know-How" means all know-how, trade secrets, inventions, data, processes,

techniques, procedures, compositions, devices, methods, formulas, protocols and

information, whether or not patentable, which are not generally publicly known,

including, without limitation, all chemical, biochemical, toxicological, and

scientific research information.

"Launch Quantity" means a quantity of Product adequate to meet the

requirements set forth for the first six (6) months in the initial forecast to

be provided by Sanofi-Synthelabo to Atrix as provided in Section 8.07.

"Manufacture" or "Manufacturing Process" means the storage, handling,

production, processing and packaging of a Product or a Demonstration Sample, in

accordance with this Agreement.

"Marketing Authorization" means all necessary and appropriate regulatory

approvals, excluding Pricing and Reimbursement Approvals, where applicable, to

put the Product on the market in a particular country in the Territory.

"Marks" means "Atrigel(R)" or "Leuprogel(TM)" or any additional trademarks

selected by the Parties pursuant to Section 6.01(b) in either case, alone or

accompanied by any logo or design and any foreign language equivalents in sound

or meaning, whether registered or not.

"NDA" means a New Drug Application, and all amendments and supplements

thereto, filed or to be filed, with the FDA seeking authorization and approval

to manufacture, package, ship and sell a product as more fully defined in 21 CFR

Section 314.5 et seq.

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"Net Sales" means the [**]

Components of Net Sales shall be determined in the ordinary course of

business in accordance with historical practice and using the accrual method of

accounting in accordance with GAAP.

In the event Sanofi-Synthelabo transfers Product to a Third Party in a bona

fide arm's length transaction, for consideration, in whole or in part, other

than cash or to a Third Party in other than a bona fide arm's length

transaction, the Net Sales price for such Product shall be deemed to be the

standard invoice price then being invoiced by Sanofi-Synthelabo in an arms

length transaction with similar customers. In the event that Sanofi-Synthelabo

includes one or more Product as part of a bundle of products, Sanofi-Synthelabo

agrees not to offer or sell any such Product as a loss leader (i.e. sold at less

than the invoice price at which any such Product is sold when not part of a

bundle of products) in determining the price of the bundled products.

"Net Selling Price" means with respect to a given time period and for a

given country, Net Sales with respect to such country divided by the number of

Units sold in such country during such time period.

"New Product" means a product consisting of a combination of leuprolide

acetate in the Atrigel(R) delivery system (other than the Product and

substantially differentiable from the Product on the basis of leuprolide acetate

concentration or duration of action).

"One Month Product" means the formulation comprised of leuprolide acetate

in an Atrigel(R) delivery system that provides for the sustained release of

leuprolide acetate over a period of about thirty (30) days and not less than

twenty-eight (28) days with a primary indication for the palliative treatment of

prostate cancer.

"Packaging Specifications" means the packaging and labeling specifications

for the Unit, as may be mutually determined by Atrix and Sanofi-Synthelabo, from

time to time.

"Patent Rights" means all rights under patents and patent applications, and

any and all patents issuing therefrom (including utility, model and design

patents and certificates of invention), together with any and all substitutions,

extensions (including supplemental protection certificates), registrations,

confirmations, reissues, divisionals, continuations, continuations-in-part,

re-examinations, renewals and foreign counterparts of the foregoing, and all

improvements, supplements, modifications or additions.

"Pricing and Reimbursement Approvals" means any pricing and reimbursement

approvals which must be obtained before placing the Product on the market in any

country in the Territory in which such approval is required.

"Prime Rate of Interest" means the prime rate of interest published from

time to time in the Wall Street Journal as the prime rate; provided, however

that if the Wall Street Journal does not publish the Prime Rate of Interest,

then the term "Prime Rate of Interest" shall mean the rate

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of interest publicly announced by Bank of America, N.A., as its Prime Rate, Base

Rate, Reference Rate or the equivalent of such rate, whether or not such bank

makes loans to customers at, above, or below said rate.

"Product" means collectively the One Month Product, the Three Month

Product, the Four Month Product, and the Six Month Product (should the Parties

agree to develop it) supplied in Unit packages or any formulation of leuprolide

acetate, in any concentration, in the Atrigel(R) delivery system for the

palliative treatment of prostate cancer.

"Royalty" means the royalty to be paid by Sanofi-Synthelabo to Atrix as set

forth in Section 4.02.

"Royalty Term" means the period of time commencing on the First Commercial

Sale of the Product in any country in the Territory and ending on the expiration

of the last to expire of the Atrigel(R) Patent Rights covering the Product in

such country.

"Shipment" means each individual group of Product received by

Sanofi-Synthelabo from Atrix.

"Six Month Product" means the formulation comprised of leuprolide acetate

in an Atrigel(R) delivery system that provides for the sustained release of

leuprolide acetate over a period of about one hundred and eighty (180) days and

not less than one hundred and sixty eight (168) days with a primary indication

for the palliative treatment of prostate cancer.

"Specifications" means the specifications for the Product attached hereto

as Exhibit C, and as may be amended from time to time by the Parties.

"Stock Purchase Agreement" means that certain Stock Purchase Agreement

dated as of the same date as this Agreement between Atrix and Sanofi-Synthelabo

attached hereto as Exhibit D.

"Term" has the meaning set forth in Section 19.01.

"Territory" means the United States and Canada.

"Third Party" means any entity other than: (a) Atrix, (b) Sanofi-Synthelabo

or (c) an Affiliate of Atrix or Sanofi-Synthelabo.

"Three Month Product" means the formulation comprised of leuprolide acetate

in an Atrigel(R) delivery system that provides for the sustained release of

leuprolide acetate over a period of about ninety (90) days and not less than

eighty-four (84) days with a primary indication for the palliative treatment of

prostate cancer.

"Unit" means the Product packaged in a two-part system consisting of (a)

one syringe of Atrigel(R) delivery system and a needle in a moisture proof pouch

and sterilized by gamma irradiation; (b) one syringe containing sufficient

leuprolide acetate for a One Month Product, Three Month Product, Four Month

Product or Six Month Product, aseptically filled and lyophilized in the syringe,

and packaged in a moisture-proof pouch; (c) instructions for use, as

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such trade or sample package may be changed or reformulated by Atrix and

Sanofi-Synthelabo from time to time; and (d) a commercial trade or sample

package.

"United States" means the United States of America, its territories and

possessions, including the Commonwealth of Puerto Rico.

ARTICLE II

COLLABORATION

Section 2.01. OBJECTIVES. Pursuant to the Development Program, Atrix shall

conduct research and development activities using the Atrigel(R) Technology to

develop a Product for the palliative treatment of prostate cancer. During the

Term, Atrix will have primary responsibility for the activities described in

Section 2.03 and Sanofi-Synthelabo will have primary responsibility for the

activities described in Section 2.04.

Section 2.02. DEVELOPMENT PROGRAM. (a) Development Program. Atrix shall

utilize the Atrigel(R) Technology to conduct research and development of the One

Month Product, the Three Month Product and the Four Month Product, pursuant to a

written, development program to which Atrix and Sanofi-Synthelabo have given

their prior written approval (the "Development Program"), a copy of which is

attached hereto as Exhibit E.

(b) Six Month Product. If Sanofi-Synthelabo elects to have Atrix

develop the Six Month Product in accordance with Exhibit G,

Sanofi-Synthelabo shall be solely responsible for all costs and expenses

incurred (i) in developing the Six Month Product; and (ii) in obtaining the

Marketing Authorizations for the Six Month Product (collectively the "Six

Month Cost"). Sanofi-Synthelabo shall pay such Six Month Cost within thirty

(30) days of receipt of each invoice from Atrix for such Six Month Cost. If

Sanofi-Synthelabo in good faith disputes the amount of any such invoice for

the Six Month Cost, then Sanofi-Synthelabo shall notify Atrix that it in

good faith disputes the amount of any such invoice for the Six Month Cost

and any such dispute shall be resolved by the Parties within thirty (30)

days from the date of receipt of the disputed invoice; provided however if

the dispute cannot be resolved to the mutual satisfaction of the Parties

within such thirty (30) day period then either Party may request that the

dispute be submitted to the Chief Executive Officers of Atrix and

Sanofi-Synthelabo, respectively, for joint resolution. If the dispute is

not jointly resolved by the Parties' respective Chief Executive Officers

within ten (10) days from submission to the Parties' respective Chief

Executive Officers, then Atrix shall be entitled to pursue any and all

remedies at law available to it. In no event will the dispute resolution

period exceed a maximum of forty (40) days unless otherwise agreed to in

writing by the Parties. Further, Sanofi-Synthelabo may in its discretion

determine to pay any such disputed amount and in the event amounts are

finally determined not to be due by Sanofi-Synthelabo, Atrix shall repay,

with interest paid at a rate equal to the Prime Rate of Interest, such

excess amounts determined not to be due.

(c) License for Six Month Product. Upon satisfaction of the provisions

of Section 2.02(b) above, Sanofi-Synthelabo shall be deemed to have an

exclusive license to

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the Six Month Product on the same basis, terms and conditions set forth in

this Agreement for the license for each other Product except that

notwithstanding the foregoing, [**] shall be credited against the

additional Six Month Product Milestone as set forth in Section 4.04 of this

Agreement and [**], if any, shall be credited against amounts owed by

Sanofi-Synthelabo to Atrix as set forth in Section 4.04(ii).

Audit of Six Month Cost. Sanofi-Synthelabo shall have the right to

cause an independent, certified public accountant reasonably acceptable to

Atrix to audit those records of Atrix relating to the calculation of the

Six Month Cost for the sole purpose of verifying the Six Month Cost. Such

audits may be exercised during normal business hours nor more than once in

a twelve (12) month period upon at least ten (10) days prior written

notice.

Section 2.03. ATRIX OBLIGATIONS. Pursuant to the time table established for

its doing so in the Development Program, Atrix will, at its own expense, except

as provided in Section 2.02, be responsible for (a) validation, formulation and

development of the Product, (b) animal toxicology studies required for

commercial launch of the Product, (c) scale-up, initial and on-going stability

studies in primary closure package system(s), (d) supporting commercialization

of the final formulation of the Product in accordance with the Development

Program, and (e) except as provided in Section 2.02, Atrix shall also secure any

and all Governmental Approvals and Marketing Authorizations. Except as otherwise

provided in this Agreement, Atrix shall own and maintain all Governmental

Approvals and related information and shall disclose all such information to

Sanofi-Synthelabo, as soon as possible; provided, however, that information

related to Atrigel(R) Technology shall be subject to the confidentiality

provisions of this Agreement in Article XII, below.

Section 2.04. SANOFI-SYNTHELABO OBLIGATIONS. Sanofi-Synthelabo, at its own

expense, will be responsible for (a) all market research related to the Product;

and (b) commercialization of the Product (including all sales and marketing

activities related to the Product). Sanofi-Synthelabo will obtain import permits

and pay all duties, fees, tariffs and similar obligations required to market the

Product in each country in the Territory.

Section 2.05. AVAILABILITY OF RESOURCES; COOPERATION. Each Party shall

maintain laboratories, offices and/or other facilities reasonably necessary to

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

Development Program. Upon reasonable advance notice, each Party agrees to make

its employees and non-employee consultants reasonably available at their

respective places of employment to consult with the other Party on issues

arising in connection with any request from any regulatory agency, including,

without limitation, regulatory, scientific, technical and clinical testing

issues.

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ARTICLE III

LICENSE

Section 3.01. LICENSE FEE. In partial consideration for the License granted

under Section 3.02(a), Sanofi-Synthelabo shall pay to Atrix an initial one-time

non-refundable license fee equal to Eight Million Dollars ($8,000,000) on the

Effective Date by wire transfer of immediately available funds to an account to

be designated by Atrix to Sanofi-Synthelabo prior to the Effective Date. On the

Effective Date, Sanofi-Synthelabo shall also purchase from Atrix Fifteen Million

Dollars ($15,000,000) of Atrix's common stock, as provided in the Stock Purchase

Agreement.

Section 3.02. LICENSE TERMS. The terms and conditions of the exclusive

license (the "License") granted by Atrix to Sanofi-Synthelabo shall be as

follows:

(a) License Grant. Atrix hereby grants to Sanofi-Synthelabo an

exclusive license under the Atrigel(R) Technology to market, advertise,

promote, distribute, offer for sale, sell and import the Product in the

Territory for use in the Field subject to the terms and conditions herein.

This exclusive license can only be transferred by Sanofi-Synthelabo on the

basis set forth in Section 20.03 of this Agreement, below.

(b) License Termination.

(i) If Sanofi-Synthelabo has not undertaken commercially

reasonable efforts to begin distribution and marketing of the One

Month Product, the Three Month Product, the Four Month Product and/or

the Six Month Product, if applicable, in the United States within

ninety (90) days following receipt of written notice from Atrix that

Governmental Approval has been received for each respective Product

for the United States and provided that Atrix has available Launch

Quantities of the respective Product, then the following shall occur

with respect to each Product not launched within such ninety (90)

days: (i) Atrix shall have the right to grant a license to a Third

Party, to market, advertise, promote, distribute, offer for sale, sell

or import the One Month Product, the Three Month Product, the Four

Month Product and/or the Six Month Product, if applicable,

respectively, in the United States and (ii) the license granted to

Sanofi-Synthelabo pursuant to Sections 3.02(a) and 3.03 shall

automatically terminate with respect to the applicable Product in the

United States and the United States shall no longer be included in the

Territory for such Product.

(ii) The Parties will negotiate in good faith the launch date in

Canada for each Product taking into account market conditions in

Canada and the United States and any reimbursement issues, as they

relate to each Product, in Canada. If the Parties cannot in good faith

agree on a launch date in Canada for each Product the matter shall be

submitted to the Advisory Board for resolution.

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Section 3.03. MARKS. Subject to the terms and conditions of this Agreement,

Atrix hereby grants to Sanofi-Synthelabo an exclusive in the Field, royalty-free

right to use the Marks in connection with the marketing, advertising, promotion,

distribution and sale of the Product.

ARTICLE IV

ROYALTY AND MILESTONE PAYMENTS

Section 4.01. RESEARCH AND DEVELOPMENT EXPENSES. Except as set forth in

Section 2.02, Atrix shall, at its sole expense, be responsible for all research

and development expenses pertaining to the Product.

Section 4.02. ROYALTY PAYMENTS. Sanofi-Synthelabo shall pay to Atrix a

royalty consisting of [**] for a period equal to the Royalty Term for each

Product in each country in the Territory. All royalty payments due to Atrix

under this Agreement shall be paid within thirty (30) days of the end of each

calendar quarter, unless otherwise specifically provided herein.

Section 4.03. MILESTONE PAYMENTS. Sanofi-Synthelabo shall pay to Atrix, as

licensing fees, the following milestone payments within thirty (30) days after

Atrix gives notice to Sanofi-Synthelabo of the occurrence of the specified

milestone event:

(i) [**]

(ii) [**]

(iii) [**]

(iv) [**]

(v) [**]

(vi) [**]

Section 4.04. ADDITIONAL MILESTONE PAYMENTS. Should the Parties agree to

develop the Six Month Product, Sanofi-Synthelabo shall pay to Atrix, as

licensing fees, the following milestone payments within thirty (30) days after

Atrix gives notice to Sanofi-Synthelabo of the occurrence of the specified

milestone event:

(i) [**]

(ii) [**]

provided however, [**] shall be credited against [**] and [**], if any,

shall be credited against amounts owed by Sanofi-Synthelabo to Atrix as set

forth in Section 4.04(ii).

Section 4.05. REPORTS.

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(a) Reports. Sanofi-Synthelabo shall furnish to Atrix a quarterly

written report showing in reasonably specific detail, on a Product by

Product and country by country basis, (a) the calculation of Net Sales; (b)

royalties payable in United States' Dollars, if any, which shall have

accrued hereunder based upon Net Sales; (c) withholding taxes, if any,

required by law to be deducted with respect to such sales; (d) the dates of

the First Commercial Sales of any Product in any country in the Territory

during the reporting period; and (e) the exchange rates used to determine

the amount of United States' Dollars (the "Royalty Statement"). Reports

shall be due as soon as possible, but in any event no later than thirty

(30) days following the close of each calendar quarter.

(b) Exchange Rate; Manner and Place of Payment. All payments hereunder

shall be payable in United States dollars. With respect to each quarter,

for countries other than the United States, whenever conversion of payments

from any foreign currency shall be required, such conversion shall be made

at the rate of exchange reported in The Wall Street Journal on the last

business day of the applicable calendar quarter. All payments owed under

this Agreement shall be made by wire transfer to a bank account designated

by Atrix, unless otherwise specified in writing by Atrix.

(c) Late Payments. In the event that any payment, including contingent

payments, due hereunder is not made when due, each such payment shall

accrue interest from the date due at the rate of one and one half percent

(1.50%) per month; provided, however, that in no event shall such rate

exceed the maximum legal annual interest rate. The payment of such interest

shall not limit Atrix from exercising any other rights it may have under

this Agreement as a consequence of the lateness of any payment.

(d) Records and Audits. During the Term and for a period of two (2)

years thereafter or as otherwise required in order for Atrix to comply with

Applicable Law, Sanofi-Synthelabo shall keep complete and accurate records

in sufficient detail to permit Atrix to confirm the completeness and

accuracy of: (i) the information presented in each Royalty Statement and

all payments due hereunder; (ii) the calculation of A&S and (iii) the

calculation of Net Sales. Sanofi-Synthelabo shall permit Atrix to inspect

those records of Sanofi-Synthelabo (including but not limited to financial

records) that relate to Net Sales, Royalty Statements and A&S for the sole

purpose of verifying the completeness and accuracy of the Royalty

Statements, the calculation of the Net Selling Price and Net Sales and the

calculation of A&S. Such inspection shall be at Atrix's expense and shall

be subject to reasonable advance notice to Sanofi-Synthelabo, during

Sanofi-Synthelabo's usual business hours. Further, Atrix shall have the

right to cause an independent, certified public accountant reasonably

acceptable to Sanofi-Synthelabo to audit such records to confirm royalty

payments and A&S expenditures for the Product for the preceding year. Such

audits may be exercised during normal business hours no more than once in

any twelve (12) month period upon at least ten (10) days prior written

notice by Atrix to Sanofi-Synthelabo. If such accounting firm concludes

that such payments were underpaid, Sanofi-Synthelabo shall pay Atrix the

amount of any such underpayments, plus interest at a rate equal to the

Prime Rate of Interest, within thirty (30) days of the date Atrix delivers

to Sanofi-Synthelabo such accounting firm's report so concluding that such

payments were underpaid. If such accounting firm concludes that such

payments were overpaid, Atrix shall pay to Sanofi-Synthelabo the amount of

any

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such overpayments, without interest, within thirty (30) days of the date

Atrix delivers to Sanofi-Synthelabo such accounting firm's report so

concluding that such payments were overpaid. Atrix shall bear the full cost

of such audit unless such audit discloses an underpayment by more than five

percent (5%) of the amount due under this Agreement. In such case,

Sanofi-Synthelabo shall bear the full cost of such audit.

(e) Taxes. All taxes levied on account of the payments accruing to

Atrix under this Agreement shall be paid by Atrix for its own account,

including taxes levied thereon as income to Atrix. If provision is made in

law or regulation for withholding, such tax shall be deducted from the

payment made by Sanofi-Synthelabo, paid to the proper taxing authority and

a receipt of payment of the tax secured and promptly delivered to Atrix.

Each Party agrees to assist the other Party in claiming exemption from such

deductions or withholdings under any double taxation or similar agreement

or treaty from time to time in force.

(f) Prohibited Payments. Notwithstanding any other provision of this

Agreement, if Sanofi-Synthelabo is prevented from paying any payments by

virtue of the statutes, laws, codes or governmental regulations of the

country from which the payment is to be made, then such payment may be paid

by depositing funds in the currency in which it accrued to Atrix's account

in a bank acceptable to Atrix in the country whose currency is involved.

ARTICLE V

NEW PRODUCT

Section 5.01. NEW PRODUCT. Subject to Sanofi-Synthelabo's right of first

negotiation under Section 5.02 below, Atrix may or, at Sanofi-Synthelabo's

request, will seek to develop and have the FDA approve a New Product.

Section 5.02. RIGHT OF FIRST NEGOTIATION. For a period of thirty (30) days

following the receipt of notice from (i) Atrix of its intention to develop a New

Product or (ii) Sanofi-Synthelabo of its intention to have Atrix develop a New

Product, Sanofi-Synthelabo shall have the first right to negotiate binding

material terms for a definitive license agreement for the New Product. In the

event (a) Sanofi-Synthelabo does not determine within such thirty (30) day

period to pursue a license for the New Product, (b) the Parties are unable to

reach agreement on binding material terms of such a license within such thirty

(30) day period, or (c) if the Parties have reached agreement on binding

material terms of such a license within such thirty (30) day period, but are

unable to enter into a definitive agreement within ninety (90) days following

the written notice from Atrix, Atrix shall have no further obligation to

Sanofi-Synthelabo under this Section 5.02. If Sanofi-Synthelabo and Atrix cannot

agree to the terms of such license, then Atrix may enter into an agreement with

a Third Party, provided that the terms of the agreement are no less favorable to

Atrix, in any material respect (individually or in the aggregate), than those

last proposed in writing by Sanofi-Synthelabo. The rights of Sanofi-Synthelabo

under this Section 5.02 shall only apply to those countries for which

Sanofi-Synthelabo retains a license under Sections 3.02 and 3.03 as of the date

of Atrix's written notice that the FDA has approved a New Product.

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ARTICLE VI

COMMERCIALIZATION

Section 6.01. PROMOTION AND MARKETING OBLIGATIONS.

(a) Marketing Efforts. Sanofi-Synthelabo agrees to use commercially

reasonable efforts to promote the sale, marketing and distribution of the

Product in the Territory, consistent with accepted business practices

devoting the same level of efforts as it devotes to its own products of

comparable market potential. "Comparable market potential" shall be fairly

determined by Sanofi-Synthelabo in good faith and shall be based upon

market size, price, competition and general marketing parameters. Each

Party shall promptly advise the other Party of any issues that materially

and adversely affect its ability to market the Product in the Territory. In

such event, senior executives of Sanofi-Synthelabo and Atrix shall meet and

in good faith discuss what actions should be taken in light of such issues.

(b) Trademarks. Sanofi-Synthelabo shall be the exclusive licensee of

the Marks in the Territory for use in connection with the promotion,

marketing and sale of the Product, which trademarks shall remain the sole

property of Atrix. If either Sanofi-Synthelabo or Atrix desires that the

Product subsequently be sold under a different name, or if any Competent

Authority requires that Product be sold under a different name, the

following provisions shall apply: (i) the different name (the "New

Trademark") must be acceptable to Atrix, (ii) the New Trademark must be

legally obtainable by Atrix in each jurisdiction where the New Trademark is

sought, (iii) the New Trademark must be acceptable to the Competent

Authority in each jurisdiction where a variation making the change to the

applicable Marketing Authorization is sought, (iv) all costs (including

reasonable attorneys' fees) for obtaining any change to a Marketing

Authorization and for obtaining the right to use the New Trademark in each

jurisdiction will be paid by (A) Sanofi-Synthelabo if Sanofi-Synthelabo

requested the New Trademark, (B) Atrix if Atrix requested the New

Trademark, and (C) one-half by Sanofi-Synthelabo and one-half by Atrix if a

Competent Authority required the New Trademark, and (v) any New Trademarks

obtained or authorized shall be owned by and be the sole property of Atrix;

provided, however that any New Trademark requested by Sanofi-Synthelabo,

and all costs for which are paid by Sanofi-Synthelabo, shall be owned by

and be the sole property of Sanofi-Synthelabo.

(c) Packaging. Atrix shall package and label the Product, the Units

and the Demonstration Samples in compliance with the Packaging

Specifications and Applicable Laws. Atrix, in consultation with

Sanofi-Synthelabo, shall be responsible for assuring that such packaging

and labeling conform with all Applicable Laws, if any, of the FDA for

export of the Product and the Demonstration Samples to the countries in the

Territory other than the United States and that the Units comply with the

Packaging Specifications. Atrix, in consultation with Sanofi-Synthelabo,

shall also be responsible for assuring that packaging and labeling comply

with all Applicable Laws where such Product is to be distributed for sale.

All additional incremental costs resulting from changes to the Packaging

Specifications made at the request of Sanofi-Synthelabo that are not

required

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to export the Product to countries in the Territory on a country by country

basis under Applicable Laws shall be borne by Sanofi-Synthelabo.

(d) Proposed Pricing Of Product. Within thirty (30) days of Atrix's

receipt of the Marketing Authorization in each country in the Territory,

Sanofi-Synthelabo shall provide the Advisory Board (as defined below) with

a detailed copy of the expected selling price schedule of the Units in such

country in the Territory (including any (i) prompt payment or other trade

or quantity discounts which Sanofi-Synthelabo expects to offer and (ii)

commission rates or rebates which Sanofi-Synthelabo expects to offer to

distributors and agents).

(e) Marketing Plans And Reports. Thirty (30) days prior to the

expected date of First Commercial Sale in any country in the Territory and

at the beginning of each calendar year thereafter, Sanofi-Synthelabo shall

submit to the Advisory Board in writing the annual marketing, sales and

distribution plan for each such country detailing Sanofi-Synthelabo and its

Affiliates' proposed marketing, sales and distribution strategy and tactics

for the sale and distribution of Product during such calendar year, or

portion thereof. In addition, Sanofi-Synthelabo shall submit to the

Advisory Board copies of any market research reports relating to Product

sales and Product competition which Sanofi-Synthelabo or its Affiliates

commission or otherwise obtain to the extent permissible by the agency

preparing the report. To the extent the foregoing information is contained

in plans or reports which contain information about other products or

markets, Sanofi-Synthelabo may submit to the Advisory Board only those

excerpts from such plans or reports which relate to the Product and Product

competition.

(f) Advisory Board. The Parties agree to form an advisory board (the

"Advisory Board") comprised of three (3) representatives from each of

Sanofi-Synthelabo and Atrix. An officer of each Party shall serve as the

co-chairmen of the Advisory Board. Except as set forth in Section 13.01,

the Advisory Board will meet on a quarterly basis and at such time will be

consulted by Sanofi-Synthelabo on all major decisions in the marketing of

the Product in each country in the Territory, but Sanofi-Synthelabo, alone,

will be responsible for making the final decisions on all sales, marketing,

promotion and distribution issues, regardless of the action or inaction of

the Advisory Board, including, without limitation, the following areas as

they relate to the sales, marketing, promotion and distribution of the

Product:

(i) Product positioning in the marketplace;

(ii) quantity of direct selling efforts, including the number of

sales details to be made;

(iii) extent and degree of non-personal selling and promotional

efforts;

(iv) quantity and content of workshops and medical symposia;

(v) design and implementation of a Phase IV clinical study

program to support the Product;

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(vi) design and implementation of a consumer awareness program;

(vii) selection of physicians for a medical advisory board and

speakers bureau;

(viii) planning for international regulatory submissions;

(ix) dispute resolution regarding sales, marketing and

promotional activities related to the Product; and

(x) internet presence.

(g) Co-Promotional Activities of Atrix. Beginning in month twenty-four

(24) following the launch of the first of any Product on a

country-by-country basis within the Territory, Atrix shall have the right,

[**] to participate in the sales, marketing and promotion of the Product.

If Atrix so elects, Atrix will provide additional field sales

representatives (the "Atrix Sales Force") and/or funding to augment the

sales, marketing and promotional activities of the Product by

Sanofi-Synthelabo as the Parties may agree. [**].

ARTICLE VII

MANUFACTURE AND SUPPLY

Section 7.01. AGREEMENT TO SUPPLY PRODUCT. Subject to the terms hereof,

Sanofi-Synthelabo agrees to purchase exclusively from Atrix, and Atrix agrees to

Manufacture for, and sell exclusively to Sanofi-Synthelabo during the Term of

this Agreement, Sanofi-Synthelabo's total requirements for the Product and the

Demonstration Samples in the Territory on the terms and conditions set forth

herein. Subject to Sanofi-Synthelabo's prior written approval, such approval not

to be unreasonably withheld, conditioned or delayed by Sanofi-Synthelabo, Atrix

may subcontract any part of the Manufacturing Process for the Product and the

Demonstration Samples to a Third Party provided: (a) the Product, the

Demonstration Samples and the facilities continue to meet the requirements as

defined in this Agreement and (b) Atrix has obtained all required Governmental

Approvals. If subcontracting is initiated by Atrix, for any Manufacturing

Process, Atrix will bear the cost of validation and necessary stability work, as

well as any other directly related costs.

Section 7.02. QUALITY ASSURANCE. Atrix shall Manufacture the Product in

accordance with the Specifications. Atrix shall consult with Sanofi-Synthelabo

as to any proposed changes in the Specifications, manufacturing processes, or in

Atrix's quality assurance procedures which might render Atrix unable to supply

Product in accordance with the terms of this Agreement, prior to making those

changes, and obtain Sanofi-Synthelabo's prior, written consent thereto, which

consent will not be unreasonably withheld, conditioned or delayed by

Sanofi-Synthelabo. Atrix shall immediately notify Sanofi-Synthelabo in writing

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of any changes required by a Competent Authority in the Specifications or

Atrix's quality assurance procedures that would render Atrix unable to supply

the Product and/or Demonstration Samples in accordance with the terms of this

Agreement. The Parties agree to develop and execute an appropriate action plan

in such situation.

Section 7.03. ATRIX'S DUTIES. Atrix agrees to Manufacture the Product in

accordance with the Specifications, applicable cGMP and NDA requirements and to

furnish to Sanofi-Synthelabo with every shipment a written certificate of

analysis and Certificate of Compliance that confirms conformity of the Product

to the Specifications and cGMP. The Product may be subjected to testing by

Sanofi-Synthelabo at its designated facility in order to verify conformance of

the Product with the Specifications. In addition, Atrix shall:

(a) Provide Sanofi-Synthelabo with a copy of the written sampling and

testing procedures used by Atrix to confirm conformity of the Product to

the Specifications;

(b) Retain a sample of each batch of Product and, upon request, make

it available to Sanofi-Synthelabo for inspection. The retained sample shall

be sufficient in size to allow Sanofi-Synthelabo and Atrix to perform tests

to determine whether or not the Product conforms to the Specifications. The

retained sample shall be kept under the same conditions as those under

which the Product is stored at Sanofi-Synthelabo's facilities;

(c) Maintain records to ensure Atrix's ability to perform a complete

lot history via lot tracing of the Product; and

(d) Keep on file all manufacturing records and analytical results

pertaining to the manufacture of each batch of Product for a period

expiring not earlier than two (2) years after the expiration date of the

last lot of Sanofi-Synthelabo's Product manufactured with that batch of

Product. Atrix shall make all such records available to Sanofi-Synthelabo

upon request.

(e) Consult closely on an ongoing basis with the Advisory Board on all

aspects of the manufacturing and development of the Product, including the

use of any subcontractors to perform part of the Manufacturing Process, the

obtaining of any and all required Governmental Approval(s) for the

Manufacture of the Product and the obtaining of any and all required

Marketing Authorizations to permit the marketing, sale and distribution of

the Product in the Territory. In this regard, Atrix will provide monthly

reports to the Advisory Board on the status of the Manufacture and

development of the Product including, without limitation, to the extent

applicable, all current information on: (i) any material issues, problems

or developments with regard to (x) any subcontractors being utilized to

perform part of the Manufacture of the Product, or (y) any customer service

issues; (ii) the current status of all pending applications seeking any

Governmental Approval(s) or Marketing Authorization(s) for the Product from

any Competent Authority; and (iii) as to the status or progress of

obtaining any patent rights pertaining to any aspect of the Product.

(f) Provide to Sanofi-Synthelabo within twenty-four (24) hours of

receipt by Atrix, complete copies of any and all inspection reports

pertaining to the Manufacture

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and development of the Product which Atrix receives from any Competent

Authority, or which is obtained by Atrix from any third party agency, and

promptly provide to Sanofi-Synthelabo any such report which is internally

produced by Atrix's staff or that of any of its Affiliates.

(g) Provide Sanofi-Synthelabo with complete access to all existing and

hereafter produced: (i) batch records of the Product; (ii) quality

inspection reports of the Product, whether internally or externally

generated; (iii) any and all investigation reports of the Product, whether

internally or externally generated; and (iv) packaging records pertaining

to the Product; and

(h) Provide Sanofi-Synthelabo with notice within twenty-four (24)

hours of notification of any scheduled inspection by any Competent

Authority of Atrix's facilities, books or records, or of the facilities,

books or records of any subcontractor being utilized by Atrix to perform

any portion or all of the Manufacture or development of the Product. Atrix

shall inform such Competent Authority that Sanofi-Synthelabo may desire to

be present at such inspection; provided that Sanofi-Synthelabo's right to

be present is subject to approval by such Competent Authority and subject

to Sanofi-Synthelabo being available at the time and date established by

such Competent Authority. Atrix shall use reasonable efforts to secure a

time and date for such inspection that is reasonably acceptable to

Sanofi-Synthelabo; provided however that Atrix alone has the right to make

the final decision on all such matters.

Section 7.04. COMPLIANCE WITH APPLICABLE LAWS. Sanofi-Synthelabo and Atrix

(if Atrix has exercised its co-promotion and/or co-marketing rights pursuant to

Sections 6.01(g) and 13.01, respectively, of this Agreement) shall be

responsible for compliance with Applicable Laws relating to the promotion,

marketing, sale and distribution of the Product, Units and the Demonstration

Samples, as applicable. Atrix shall be responsible for compliance with

Applicable Laws relating to the Manufacture, design and production of the

Product and the Demonstration Samples, as applicable, and with cGMP relating to

the Manufacture and testing of the Product.

Section 7.05. SECOND MANUFACTURING SOURCE. Atrix, at its own cost and

expense, shall validate, qualify and obtain all Governmental Approvals for a

Third Party as a second source (the "Second Source") to Manufacture the Product.

Atrix will file a supplement to the NDA for each Product with the FDA no later

than six (6) months after the NDA for each Product is approved to seek FDA

approval for such Second Source to Manufacture each such Product. After such

filing, Atrix shall use reasonable efforts to obtain final FDA approval for such

Second Source to Manufacture each such Product including modifying the NDA

supplement if required by the FDA. Upon prior written notice to Atrix,

Sanofi-Synthelabo shall have the right to inspect and audit the Second Source's

facilities used to Manufacture the Product to confirm that such facilities are

in compliance with Applicable Laws and the Governmental Approvals. Atrix, at its

sole cost and expense, may have a representative(s) accompany

Sanofi-Synthelabo's representative(s) on any such inspection or audit.

Section 7.06. FAILURE TO SUPPLY. Atrix shall immediately notify

Sanofi-Synthelabo if Atrix is unable to fill any order placed by

Sanofi-Synthelabo pursuant to Section 8.07. If Atrix is unable to cure such

failure within thirty (30) days after such notice, Atrix shall, upon such

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failure, make arrangements with the Second Source to Manufacture and sell to

Atrix the Product until such time as Atrix is again able to Manufacture the

Product; provided, however, any consequent incremental costs which result by

reason of the use of the Second Source under this Section 7.06 shall be the sole

cost and liability of Atrix.

Subject to the following paragraph, if Atrix is unable (including due to

reasons of Force Majeure) to supply Product to Sanofi-Synthelabo for a period of

ninety (90) days or more or if Atrix notifies Sanofi-Synthelabo that Atrix will

be unable to perform under this Section 7.06 (or that the Second Source will be

unable to perform under Section 7.05), Atrix hereby grants to Sanofi-Synthelabo

a nonexclusive, royalty-free license under the Atrigel(R) Technology and any

other relevant technology necessary to make or have made the Product, for use

solely for sale or distribution in the Territory and solely until such time as

Atrix is again able to Manufacture the Product at which time Atrix will regain

its exclusive right to Manufacture and supply the Product to Sanofi-Synthelabo.

Sanofi-Synthelabo may grant sublicenses under the foregoing license with the

consent of Atrix, such consent not to be unreasonably withheld. At the request

of Sanofi-Synthelabo, Atrix shall provide reasonable technical assistance in

connection with the transfer of manufacturing described in this Section.

Notwithstanding the foregoing, Atrix shall not be deemed to be unable to

fill any order placed by Sanofi-Synthelabo as follows: (a) if Atrix's inability

to fill any order arises as a result of [**] increase in Sanofi-Synthelabo's

order over Sanofi-Synthelabo's prior forecast; or (b) in the event that Atrix

must purchase additional equipment or construct a new facility in order to

expand its capacity in order to meet purchase orders hereunder, Atrix will be

deemed to have satisfied this paragraph by placing a purchase order for such

equipment or signing a contract for such construction within sixty (60) days of

Atrix's receipt of Sanofi-Synthelabo's purchase order showing firm quantities in

excess of Atrix's capacity; provided that Atrix diligently pursues and completes

within a reasonable time thereafter such purchase or construction.

Section 7.07. ALLOCATION. If Atrix exercises its rights to co-market under

Article XIII and if Atrix is unable to supply all of the requirements of the

Product, and quantities ordered by Sanofi-Synthelabo in accordance with Section

8.07, then Atrix shall allocate the resources available to it so that

Sanofi-Synthelabo receives at least its proportional share of available supplies

as determined based on reasonable forecasts (taking into consideration past

sales and sales performance against forecast) of Sanofi-Synthelabo and Atrix.

ARTICLE VIII

PURCHASE AND SALE

Section 8.01. PURCHASE PRICE AND PAYMENT. Atrix shall sell, and

Sanofi-Synthelabo shall purchase, each Product at a price equal to the Atrix

Manufacturing Cost, including any adjustments pursuant to Section 8.02 (the

"Purchase Price"). Atrix shall invoice Sanofi-Synthelabo monthly for all Product

and Demonstration Samples shipped by Atrix to Sanofi-Synthelabo and payment

shall be due thirty (30) days from receipt of the invoice.

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Section 8.02. ADJUSTMENT TO PURCHASE PRICE/AUDIT.

(a) The Atrix Manufacturing Cost will be adjusted on a Product by

Product basis annually commencing with the first day of the first calendar

month twelve (12) months from the date of the First Commercial Sale of each

Product (the "Adjusted Atrix Manufacturing Cost"). [**]:

(i) if Sanofi-Synthelabo in good faith disputes the amount of the

Adjusted Atrix Manufacturing Cost, then Sanofi-Synthelabo shall notify

Atrix of a good faith dispute and such dispute shall be resolved by

the Parties within thirty (30) days from the date of notice of the

Adjusted Atrix Manufacturing Cost; provided however if the dispute

cannot be resolved to the mutual satisfaction of the Parties within

such thirty (30) day period then either Party may request that the

dispute be submitted to the Chief Executive Officers of Atrix and

Sanofi-Synthelabo, respectively, for joint resolution. If the dispute

is not jointly resolved by the Parties' respective Chief Executive

Officers within ten (10) days from submission to the Parties'

respective Chief Executive Officers then Atrix shall be entitled to

pursue any and all remedies at law available to it. In no event will

the dispute resolution period exceed a maximum of forty (40) days

unless otherwise agreed in writing by the Parties; and

(ii) Sanofi-Synthelabo shall pay for Product ordered during the

dispute period at the Purchase Price in effect prior to Atrix's notice

of an adjustment of the Atrix Manufacturing Cost. If upon resolution

of any dispute the Purchase Price is greater than the Purchase Price

paid by Sanofi-Synthelabo during the dispute period, Atrix will

invoice Sanofi-Synthelabo for the difference and Sanofi-Synthelabo

shall pay the same promptly upon receipt of such invoice.

(b) If at any time following twelve (12) months from the date of the

First Commercial Sale of each Product, on a Product by Product basis, the

Atrix Manufacturing Cost is in excess of the Twelve Month Cost then

Sanofi-Synthelabo may request that the Parties meet to review and discuss

the Atrix Manufacturing Cost. [**] Notwithstanding the foregoing, in the

event that increases [**] result in an increased Atrix Manufacturing Cost

which becomes, in Sanofi-Synthelabo's sole judgment to be commercially

non-viable, Sanofi-Synthelabo may terminate this Agreement pursuant to

Section 19.05.

(c) Commencing twelve (12) months from the date of First Commercial

Sale of each Product Sanofi-Synthelabo shall have the right to cause an

independent, certified public accountant reasonably acceptable to Atrix to

audit those records of Atrix relating to the calculation of the Atrix

Manufacturing Cost for the sole purpose of verifying the Atrix

Manufacturing Cost. Such audits may be exercised during normal business

hours nor more than once in a twelve (12) month period upon at least ten

(10) days prior written notice.

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Section 8.03. LABELING.

(a) After execution of this Agreement, Sanofi-Synthelabo shall have

the right to review and comment upon any proposed changes to the labeling

for the Product and to participate in discussions with the Competent

Authorities concerning any labeling change. Notwithstanding the above,

Atrix shall have the authority to make the final decision with regard to

any labeling revisions.

(b) Both Parties will approve all artwork developed for inclusion in

the Product packaging, including carton labels, package inserts, etc.,

which approval will not be unreasonably withheld, conditioned or delayed by

either Party. If Sanofi-Synthelabo wishes to institute changes in labeling

artwork, both Parties will develop a mutually acceptable implementation

schedule. Neither Party shall alter, change or in any way modify the

artwork, which has previously been approved, for any reason, without prior

written authorization from the other Party which authorization shall not be

unreasonably withheld, conditioned or delayed by either Party, provided

that such approved artwork shall conform to all Applicable Laws.

Section 8.04. PURCHASE FORMS. Purchase orders, purchase order releases,

confirmations, acceptances and similar documents submitted by a Party in

conducting the activities contemplated under this Agreement are for

administrative purposes only and shall not add to or modify the terms of the

Agreement. To the extent of any conflict or inconsistency between this Agreement

and any such document, the terms of this Agreement shall govern.

Section 8.05. CONFIRMATION. Atrix shall confirm each purchase order within

ten (10) business days from the date of receipt of a purchase order and shall

supply the Product within a maximum of sixty (60) days from the date of

acceptance of a purchase order, or later if so specified in the purchase order.

Failure of Atrix to confirm any purchase order shall not relieve Atrix of its

obligation to supply Product ordered by Sanofi-Synthelabo in conformity with

this Agreement.

Section 8.06. DELIVERY. Delivery terms for Product and Demonstration

Samples shall be FOB Atrix's manufacturing facility at Fort Collins, Colorado.

Atrix shall ship Product and Demonstration Samples in accordance with

Sanofi-Synthelabo's purchase order form or as otherwise directed by

Sanofi-Synthelabo in writing. Title to any Product or Demonstration Samples

purchased by Sanofi-Synthelabo shall pass to Sanofi-Synthelabo upon the earlier

of (i) a common carrier accepting possession or control of such Product or

Demonstration Samples, as applicable, or (ii) passage of such Product or

Demonstration Samples, as applicable, from the loading dock of Atrix's

facilities to Sanofi-Synthelabo or its agent.

Section 8.07. FORECASTS AND ORDERS. (a)Not later than six (6) months

following submission of the NDA or other applicable regulatory filing on a

country by country basis, Sanofi-Synthelabo will provide Atrix with a twelve

(12) month forecast of Sanofi-Synthelabo's requirement of Product on a Product

by Product basis, including Demonstration Samples, on a country by country basis

as follows:

(i) For the first twelve (12) months of the forecast, the

forecasts shall be provided quarterly, no less than forty-five (45)

days prior to the beginning of each

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quarter. Said requirements will be based on standard production

planning parameters including but not limited to sales forecasts,

sales demand forecasts, promotional forecasts, inventory requir