LOAN AGREEMENT

1.

LOAN FACILITY: AMOUNT AND TERMS

(a)

During the availability period described below, the Bank will provide the Loan Facility to the Borrower. The maximum principal amount of the Loan Facility is Nine Million and 00/100 ($9,000,000.00) Dollars, subject to permanent reduction in accordance with the terms, conditions, and provisions set forth and described in Section 1.6 of this Loan Agreement (hereinafter, as it may be from time to time increased or decreased, referred to as the “ Loan Facility Commitment ”). The Borrower agrees not to permit the principal balance outstanding under the Loan Facility to exceed the Loan Facility Commitment at any time. If the Borrower exceeds this limit, the Borrower shall immediately repay the excess to the Bank upon the Bank’s demand.

(b)

The Loan Facility is a revolving credit loan facility. As a result, during the availability period, the Borrower may repay or prepay principal amounts outstanding under the Loan Facility and reborrow them at any time and from time to time.

(c)

Subject to the terms, conditions, and provisions set forth in this Loan Agreement and provided no “Event of Default” (as such term is defined in Article 9 of this Loan Agreement) shall have occurred and be continuing, the Bank hereby agrees to make available to the Borrower from time to time during the availability period, revolving credit loans (hereinafter each individually referred to as a “ Revolving Credit Loan ” and collectively referred to as the “ Revolving Credit Loans ”) in principal amounts which shall not exceed, in the aggregate for all Revolving Credit Loans at any time outstanding, the Loan Facility Commitment. If the outstanding principal amount of the Revolving Credit Loans shall exceed the Loan Facility Commitment at any time, such excess amount shall be (i) immediately due and payable by the Borrower to the Bank, (ii) secured by the “Collateral” (as such term is hereinafter defined in Section 3.1 ) securing the Borrower’s obligations under this Loan Agreement, and (iii) subject to the terms, conditions and provisions of this Loan Agreement and all of the other loan documents executed in connection herewith (hereinafter, as they may be from time to time amended, modified, extended, renewed, substituted, and/or supplemented, collectively referred to as the “ Loan Documents ”). The Bank is hereby authorized to record the dates and amounts of each Revolving Credit Loan made by the Bank and the dates and amounts of each payment or prepayment of principal thereof made by the Borrower, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded.

(d)

For the purposes of this Loan Agreement, the following defined terms shall have the following meanings:

(a)

The Loan Facility is available during the period commencing on the date of this Loan Agreement and continuing up through and including June 5, 2009, or such earlier date as such availability may terminate upon the occurrence of an Event of Default, all as provided in this Loan Agreement (hereinafter referred to as the “ Expiration Date ”).

(b)

Whenever the Borrower desires to borrow under the Loan Facility, the Borrower shall deliver to the Bank a written notice in the form of Exhibit “A” attached hereto and made a part hereof (hereinafter referred to as a “ Notice of Borrowing ”) no later than 12:00 Noon (New York, New York time) on the “LIBOR Banking Day” (as such term is defined in Section l.5(a) below) preceding the day on which the “London Inter-Bank Offered Rate” (as such term is defined in Section 1.5(c)(i) below) will be set, as specified in Section 1.5 below. Each Notice of Borrowing shall specify (1) the proposed borrowing date (which shall be a business day) and (2) the amount of the proposed borrowing, which shall not be less than $100,000.00.

(c)

At no time during the term of the Loan Facility shall the Borrower be permitted to have more than six (6) tranches outstanding.

(a)

The Borrower will pay interest quarterly in arrears on all Revolving Credit Loans at an interest rate in accordance with the terms, conditions, and provisions of Section 1.4 below, with the first such payment of interest being due and owing on July 1, 2008, and with each subsequent payment of interest being due and owing on the first day of each calendar quarter thereafter until the required payment in full of all principal outstanding under the Loan Facility on the Expiration Date.

(b)

The Borrower will repay in full all principal, unpaid accrued interest, fees, costs, or other charges outstanding under the Loan Facility on the Expiration Date.

(c)

The Borrower may prepay Revolving Credit Loans in full or in part at any time, without premium or fee; provided , however , any principal prepayment made by the Borrower shall be accompanied by the payment of any and all accrued and unpaid interest then outstanding on the Loan Facility, together with all other fees, expenses and sums due and owing under the Loan Facility, if any.

(d)

In the event there is any principal outstanding under the Loan Facility on the date the Borrower (i) receives the proceeds of any additional source of capital, whether such additional capital is in the form of debt, equity, or otherwise, from any source or sources (other than issuances pursuant to the Borrower’s 2006 Stock Incentive Plan), or (ii) receives in excess of $25,000,000.00 in cash from a third-party licensor of intellectual property relating to a pipeline product candidate of the Borrower, then, to the extent such principal is outstanding, the Borrower shall pay such amount(s) to the Bank immediately upon the Borrower’s receipt thereof for application to said outstanding principal balance of the Loan Facility.

(a)

The interest period during which the LIBOR Rate will be in effect will be one, two, or three months. The first day of the interest period must be a day other than a Saturday or a Sunday on which banks are open for business in New York and London and dealing in offshore dollars (hereinafter referred to as a “ LIBOR Banking Day ”). The last day of the interest period and the actual number of days during the interest period will be determined by the Bank using the practices of the London inter-bank market.

(b)

Each Revolving Credit Loan will be for an amount not less than One Hundred Thousand and 00/100 ($100,000.00) Dollars.

(c)

The term “ LIBOR Rate ” means the interest rate determined by the following formula (all amounts in the calculation will be determined by the Bank as of the first day of the interest period):

(i)

“ London Inter-Bank Offered Rate ” means, for any applicable interest period, the rate per annum equal to the British Bankers Association LIBOR Rate (hereinafter referred to as “ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of such interest period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period. If such rate is not available at such time for any reason, then the rate for such interest period will be determined by such alternate method as reasonably selected by the Bank. A “London Banking Day” is a day on which banks in London are open for business and dealing in offshore dollars.

(ii)

“ Reserve Percentage ” means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages.

(d)

The Borrower shall irrevocably request a Revolving Credit Loan no later than 12:00 noon (New York, New York time) on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate will be set, as specified above. For example, if there are no intervening holidays or weekend days in any of the relevant locations, the request must be made at least three days before the LIBOR Rate takes effect.

(e)

If any of the following described events has occurred and is continuing, (i) the right of the Borrower to elect to have Revolving Credit Loans bear interest based on the LIBOR Rate shall be suspended and (ii) each outstanding Revolving Credit Loan that is then bearing interest based on the LIBOR Rate shall be converted into a Revolving Credit Loan bearing interest based on the Prime Rate on the last day of the then current interest period therefor, notwithstanding any prior election by the Borrower to the contrary:

(i)

Dollar deposits in the principal amount, and for periods equal to the interest period, of a Revolving Credit Loan are not available in the London inter-bank market; or

(ii)

the LIBOR Rate does not accurately reflect the cost of a Revolving Credit Loan.

(f)

Each prepayment of a Revolving Credit Loan, whether voluntary, by reason of acceleration or otherwise, will be accompanied by (i) the amounts described in Section 1.3(c) of this Loan Agreement and (ii) the amount of any of the Bank’s losses, costs, and expenses, if any, described in Section 1.5(g) below. A “prepayment” is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Loan Agreement.

(g)

In connection with the prepayment of a Revolving Credit Loan as described in Section 1.5(f) above, the Borrower shall pay to the Bank, at the Bank’s request, such amount or amounts as shall be sufficient (in the reasonable judgment of the Bank) to compensate the Bank for any and all losses, costs, and expenses (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds required by the Bank to fund or maintain the Revolving Credit Loans to the Borrower) incurred as a result of any payment of a Revolving Credit Loan on a date other than the last day of the interest period applicable thereto. The Bank shall deliver to the Borrower a written statement as to such losses, expenses and liabilities which statement shall be conclusive as to such amounts in the absence of manifest error. Notwithstanding the foregoing to the contrary, in no event shall the Bank’s losses, costs, and expenses as a result of such occurrence exceed an amount computed as follows: The current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the expiration of the then-current interest period as to which prepayment is made, shall be subtracted from the LIBOR Rate in effect at the time of prepayment. If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the then-current interest period as to which prepayment is made. Said amount shall be reduced to present value calculated by using the above-referenced United States Treasury securities rate and the number of days remaining in the then-current interest period as to which prepayment is made. The resulting amount shall be the amount due to the Bank upon the prepayment of the applicable portion of the Revolving Credit Loan. For purposes of this Section 1.5(g), the Bank shall be deemed to have funded each Revolving Credit Loan by a matching deposit or other borrowing in the applicable interbank market, whether or not such Revolving Credit Loan was in fact so funded.

(a)

At any time as the Borrower (i) receives the proceeds of any additional source of capital, whether such additional capital is in the form of debt, equity, or otherwise, from any source or sources (other than issuances pursuant to the Borrower’s 2006 Stock Incentive Plan), or (ii) receives in excess of $25,000,000.00 in cash from a third-party licensor of intellectual property relating to a pipeline product candidate of the Borrower, the amount of the Loan Facility Commitment shall be automatically and permanently reduced on a dollar-for-dollar basis by such amount(s).

(b)

At any time as the Borrower sells or otherwise liquidates the auction rate securities on deposit in the “Collateral Account” (as such term is hereinafter defined), the Loan Facility Commitment shall be automatically and permanently reduced on a dollar-for-dollar basis by the proceeds of such sale or liquidation and any principal outstanding under the Loan Facility in excess of said reduced Loan Facility Commitment shall be repaid to the Bank simultaneously with such reduction in the Loan Facility Commitment.

2.

FEES AND EXPENSES

3.

COLLATERAL

(a)

A first priority security interest in and to a portfolio of auction rate securities maintained by the Borrower with the Bank in securities account number 395070 (hereinafter referred to as the “ Collateral Account ”), together with all proceeds and products thereof. Notwithstanding the foregoing to the contrary, to the extent the Borrower sells or otherwise liquidates the aforesaid auction rate securities, such sold or liquidated securities and the cash proceeds therefrom (and

only such sold or liquidated securities and the cash proceeds therefrom) shall be released from the Collateral Account and the related security interest simultaneously with the permanent reduction in the Loan Facility Commitment and the repayment of any principal outstanding under the Loan Facility in excess of said reduced Loan Facility Commitment, all as described in Section 1.60(b) above; and

(b)

Such additional collateral as may be required to be deposited into the Collateral Account pursuant to the terms, conditions, and provisions set forth and described in Section 7.20 of this Loan Agreement.

4.

DISBURSEMENTS, PAYMENTS AND COSTS

(a)

Each payment made by the Borrower under this Loan Agreement will be made in U.S. Dollars and immediately available funds by debit to a deposit account of the Borrower, as described in and required by this Loan Agreement or otherwise authorized by the Borrower. For payments not made by direct debit, payments will be made by mail to the address shown on the Borrower’s statement or at one of the Bank’s banking centers in the United States, by wire transfer to an account designated by the Bank, or by such other method as may be permitted by the Bank from time to time.

(b)

The Bank may honor instructions for advances or repayments given by the Borrower (if an individual), or by any one of the individuals authorized to sign loan agreements on behalf of the Borrower, or any other individual designated by any one of such authorized signers (hereinafter each referred to as an “ Authorized Individual ”).

(c)

For any payment under this Loan Agreement made by debit to a deposit account, the Borrower will maintain sufficient immediately available funds in the deposit account to cover each debit. If there are insufficient immediately available funds in the deposit account on the date the Bank enters any such debit authorized by this Loan Agreement, the Bank may reverse such debit.

(d)

Each disbursement by the Bank and each payment by the Borrower will be evidenced by records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign a promissory note evidencing the Loan Facility.

(e)

Prior to the date each payment of principal, interest and/or any fees from the Borrower becomes due hereunder (hereinafter each such date shall be referred to as a “ Due Date ”), the Bank will mail to the Borrower a statement of the amounts that will be due on that Due Date (hereinafter referred to as the “ Billed Amount ”). The calculations in the bill will be made on the assumption that no new extensions of credit or payments will be made between the date of the billing statement and the Due Date, and that there will be no changes in the applicable interest rate. If the Billed Amount differs from the actual amount due on the Due Date (hereinafter referred to as the “ Accrued Amount ”), the discrepancy will be treated as follows:

(i)

If the Billed Amount is less than the Accrued Amount, the Billed Amount for the following Due Date will be increased by the amount of the discrepancy. The Borrower will not be in default by reason of any such discrepancy.

(ii)

If the Billed Amount is more than the Accrued Amount, the Billed Amount for the following Due Date will be decreased by the amount of the discrepancy.