DISTRIBUTORSHIP AGREEMENT


     THIS DISTRIBUTORSHIP AGREEMENT ("Agreement"), is entered into as of
February 28, 2001 between:

LIGAND PHARMACEUTICALS INCORPORATED, a corporation organized and existing under
the laws of the State of Delaware, U.S.A., with its principal place of business
at 10275 Science Center Drive, San Diego, California, U.S.A. and Seragen, Inc.,
a corporation organized and existing under the laws of the State of Delaware,
U.S.A. and a wholly owned subsidiary of Ligand Pharmaceuticals Incorporated,
with its principal place of business at 10275 Science Center Drive, San Diego,
California, U.S.A. (collectively referred to herein as "Ligand")

and

ELAN PHARMA INTERNATIONAL LIMITED, a corporation organized and existing under
the laws of the Republic of Ireland, with its principal place of business at WIL
House, Shannon Business Park, Shannon, County Clare, Ireland ("Elan").

                              W I T N E S S E T H:
                               -------------------

     A. Ligand is a leading researcher, developer and manufacturer of
biopharmaceutical products, including the Products, and is the exclusive owner
or licensee of proprietary rights in such Products.

     B. Elan is engaged in the marketing of pharmaceutical products and has
represented to Ligand that it has the facilities, personnel and technical
expertise to market and distribute the Products in the Territory.

     C. Ligand is willing to exclusively sell Products in the Territory to Elan
on the terms and conditions set forth in this Agreement.

         NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings:

          1.1 "AFFILIATE" means any corporation or business entity which,
directly or indirectly, is controlled by, controls, or is under common control
with Ligand or Elan, as applicable. For purposes of this Agreement, "control"
means the direct or indirect ownership or control of more than ***% of the
issued voting shares or other voting rights of the subject entity to elect
directors, or if not meeting the preceding criteria, any entity owned or
controlled by or owning or controlling at the maximum control or ownership right
permitted in the country where such entity exists.



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          1.2 "CIP" means carriage and insurance paid in accordance with the ICC
Incoterms 2000, International Rules for the Interpretation of Trade Terms, ICC
Publication No. 560.

          1.3 "CONFIDENTIAL INFORMATION" means any and all preclinical and
clinical data, trade secrets, confidential knowledge, specifications, clinical
data and protocols and other proprietary information, not in the public domain,
relating to the Products and/or the business or affairs of either Party (the
"Disclosing Party"). Confidential Information shall also include the present
Agreement and the terms set forth herein to the extent that it has not been
placed into the public domain by the Disclosing Party. Confidential Information
may be communicated to the other Party (the "Receiving Party") orally, visually,
in writing, or in any other recorded or tangible form. All data and information
will be considered to be Confidential Information hereunder (1) if the
Disclosing Party has marked them as such, (2) if the Disclosing Party, orally or
in writing, has advised the Receiving Party of the confidential nature, provided
that, if disclosed orally, the Disclosing Party confirms such confidential
nature in writing within two weeks thereafter; or (3) if, due to their character
or nature, a reasonable person in a like position and under like circumstances
as the Receiving Party would treat them as secret and confidential.

          1.4 "DEALER" means Affiliates of Elan or Third Parties, which
Affiliates or Third Parties have been appointed by Elan and, in the case of
Third Parties, approved by Ligand pursuant to Clause 2.1 to promote, market and
distribute Products in the Territory. For the avoidance of doubt, Dealer does
not include any entity engaged by Elan for the purposes of providing logistical
support of such promotion, marketing or distribution, including storage,
transportation, packaging and invoicing.

          1.5 "EFFECTIVE DATE" means the date of this Agreement as designated in
preamble to this Agreement on the first page.

          1.6 ***

                           ***
                           ***
                           ***

          1.7 "EUROPEAN STRATEGIC MARKETING PLAN" means a plan which summarizes
the competitive environment for each Product and the key elements of the
strategy for the marketing of such Product in (a) each country of the Territory
and (b) Spain, Portugal, Greece, Italy, San Marino and the Vatican City, as such
plan may be updated pursuant to Clause 7.2 of this Agreement.

          1.8 "EXTENDED INDICATIONS"means ***

                           ***

          1.9 "FDA"means the United States Food and Drug Administration or
successor agency whose approval is necessary to market the Products in the
United States.



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          1.10 "FLOOR PRICE"means, with respect to each Product in each country
of the Territory, the price set forth below:



Product Description                                              Floor Price
-------------------                                              -----------
                                                                  
100 count 75 mg Targretin(R)capsules                                  ***
60 gram tube of Targretin(R)gel                                       ***
60 gram tube of Panretin(R)gel                                        ***
Single 2 ml vial of Denileukin Diftitox (Ontak)                       ***


          1.11 "GOVERNMENTAL AUTHORITY" means and includes all governmental and
regulatory bodies, agencies, departments or entities, whether or not located in
the Territory, which regulate, direct or control commerce in or with the
Territory.

          1.12 "INTELLECTUAL PROPERTY RIGHTS" means and includes all copyrights,
designs, databases, mask works, patents, trademarks, trade names, trade secrets
and other proprietary rights, and all registrations and applications therefor,
which Ligand may at any time own, adopt, use, license or register with respect
to a Product or its business, and includes the Trademarks.

          1.13 "NET SALE PRICE" means, with respect to each Product, the actual
price ( *** ) at which Elan or its Dealer sells such Product to their respective
customers, in each country of the Territory, deducting, or as the case may be
excluding:

                           ***
                           ***
                           ***

         in each of the above cases only if charged against Elan or its Dealers
and evidenced in Elan's or its Dealers' books and records of account.

          1.14 "NON-EMEA TERRITORIES" means all countries within the Territory
not included in the EMEA Territories.

          1.15 "PARTIES" means Ligand and Elan, and "PARTY" means either of
Ligand or Elan, as the context requires..

          1.16 "PERSON" means and includes any agency, association, company,
individual, or other entity regardless of the type or nature thereof.

          1.17 "PRICING APPROVAL(S)" means any approval or authorization of any
Governmental Authority establishing a pricing scheme and/or health insurance
reimbursement scheme for the Products or any of them in any country of the
Territory, but excluding Regulatory Approval(s).



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          1.18 "REGULATORY APPROVAL(S)" means and includes all filings,
approvals, registrations and authorizations relating to pharmaceutical or
medicinal products which are necessary or which, in the reasonable opinion of
Ligand, are desirable, to be made with or obtained from any Governmental
Authority in order for Elan to lawfully market, promote, offer for sale and sell
the Products in the Territory, including, without limitation, authorizations
required from the European Medicines Evaluation Agency ("EMEA"), but excluding
Pricing Approvals.

          1.19 "PRODUCTS" means the biopharmaceutical products manufactured by
or on behalf of Ligand, for the indications and applications specified, which
are listed in APPENDIX A, including for the avoidance of doubt, any and all
additional formulations, indications and applications which may be approved from
time to time, including any approved Extended Indication; and "Product" shall
have a corresponding meaning.

          1.20 "SUMMARY OF PRODUCT CHARACTERISTICS" means the summary of the
Products (or, as the context may require, any of them) in a Regulatory Approval
in the EMEA Territories, or an application therefor.

          1.21 "TECHNICAL ASSISTANCE" means and includes advice, training,
information and other support regarding the manufacture, specifications,
clinical trials and marketing specifically related to the Products.

          1.22 "TERM" means the term of this Agreement as determined in
accordance with Clause 3.1 and, where the context permits, includes the
extensions as per Clause 3.2.

          1.23 "TERRITORY" ***

                                            ***
                                            ***
                                            ***

          1.24 "THIRD PARTY(IES)" means any person or entity other than Ligand,
Elan or their respective Affiliates.

          1.25 "TRADEMARKS" means the trademarks owned or licensed to Ligand
(with the right to sublicense) pertaining to Products which are listed in
APPENDIX C. Trademarks and trade names that are owned and used by Elan to
identify itself as the distributor of Products are specifically excluded from
this definition.

     In this Agreement, unless a contrary intention appears, the singular shall
include the plural, each gender shall include each other gender and the terms
"include" and "including" shall be construed without limitation.



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     2. GRANT OF RIGHTS.

          2.1 DISTRIBUTION RIGHTS. Subject to the terms and conditions of this
Agreement, Ligand grants to Elan, and Elan accepts, the exclusive right to
market the Products in the Territory. Right to market under this Agreement shall
mean Elan's right (1) to hold itself out as Ligand's exclusive authorized
distributor in the Territory; and (2) to acquire the Products from Ligand for
resale to customers on its own account in the Territory. In addition, Elan shall
have the right to appoint its Affiliates and Third Parties as a Dealer to
market, promote and distribute Products in the countries of the Territory on
terms substantially similar to those set forth herein, where applicable;
provided that Ligand gives its prior written approval for any such Third
Parties. Ligand shall not unreasonably withhold such approval and shall either
grant or deny such approval in writing within *** calendar days from receipt of
a written request from Elan which shall include, at Ligand's request, background
information on such Third Party Dealer. Elan shall remain primarily responsible
and liable to Ligand for the performance of this Agreement by its Dealers.

          2.2 ADDITIONAL RIGHTS. Ligand further grants Elan the royalty-free and
(except to the extent that Ligand reasonably requires the same for the
performance of its rights and obligations under this Agreement) exclusive right
to use the Confidential Information and the assistance and information related
thereto pursuant to Clause 4.7 solely to the extent reasonably necessary for the
distribution and marketing of the Products within the Territory in accordance
with this Agreement.

          2.3 INDEPENDENT CONTRACTORS. The relationship of Ligand and Elan
established by this Agreement is of seller and buyer, or independent
contractors, and nothing in this Agreement shall be construed: (1) to give
either Party the power to direct or control the daily activities of the other
Party, or (2) to constitute the Parties as principal and agent, partners, or
otherwise as participants in a joint undertaking. Ligand shall have no
obligation or authority, express or implied, to exercise any control whatsoever
over the employees or the business affairs of Elan. Except as specifically
provided in this Agreement, Elan shall have no power or authority to make or
give any representation or warranty or to incur any liability or obligation, or
to waive any right, on Ligand's behalf.

          2.4 LIGAND'S RIGHTS. Ligand reserves the right to modify and/or to
discontinue developing or producing the Products, on a Product-by-Product basis,
for distribution in the Territory at its discretion at any time, following due
consultation with Elan, due to legal or regulatory requirements, administrative
or court orders, or safety risks; provided, however, that Elan shall be entitled
to market any modified versions of Products pursuant to the terms of this
Agreement. To the extent permissible by law, Ligand is prohibited from
advertising, circulating price lists or otherwise soliciting orders for the
Products, and from establishing or maintaining branches, sales offices or
distribution depots, in the Territory for the distribution of the Products
(other than any of such activities in furtherance of its obligations hereunder);
and Ligand shall impose upon its other distributors restrictions on their active
marketing in the Territory similar to that imposed on Elan in respect of its
marketing of Products outside the Territory under Clause 11.1(a), to the extent
that such restrictions are legally permissible. For the avoidance of doubt,



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subject to the foregoing, nothing in this Agreement shall be deemed to restrict
Ligand from appointing distributors in countries outside the Territory who may
be permitted, by operation of law, to sell the Products in the Territory, and
neither party shall receive any compensation for such sales by Ligand or any
other distributor.

          2.5 LIGAND EXCLUSIVE SUPPLIER. During the Term, Elan shall purchase
all of its requirements of the Products from Ligand or any party designated by
Ligand for this purpose.

          2.6 TERMINATION OF LIGAND'S EUROPEAN CO-PROMOTION OPTION FOR
MORPHELAN(TM). The Parties have agreed to amend the Development, Licence and
Supply Agreement with Elan Corporation, plc, dated as of November 9, 1998 (as
amended August 20, 1999) to terminate the option granted to Ligand under article
2.2.2 to co-promote the Product (as defined therein) in the European Union (as
defined therein). The form of amendment is attached hereto as APPENDIX E.

     3. TERM.

          3.1 TERM. The term of this Agreement shall commence on the Effective
Date and shall continue, with respect to a particular Product on a
country-by-country basis, until the greater of *** from the date of the
Agreement or the expiration date set forth in APPENDIX D of the last to expire
patent set forth in APPENDIX D owned or licensed by Ligand in the Territory that
covers the Product, unless the Agreement is earlier terminated in accordance
with Clause 16.

          3.2 EXTENSIONS. Elan shall, at its option, be entitled in respect of
each Product in a particular country, but not obliged, by giving notice no later
than *** before the end of the initial Term in respect of the same, to extend
the initial Term of this Agreement by a period of *** Not less than *** before
the end of such extended Term in respect of each Product in a particular
country, the Parties shall enter into good-faith discussions for a period not to
exceed *** concerning the further extension of the Term. Such further extended
Term shall: (a) not be conditional upon Elan making any further payment in the
nature of an upfront fee, fee for distribution rights, license fee or milestone
payment; and (b) be on such other terms as the Parties shall mutually agree. ***
                                      ***
                                      ***

     4. AUTHORIZATIONS.

          4.1 *** Ligand shall be responsible at its cost and in its name for
the preparation and filing of regulatory submissions for the Products in ***
                                      ***
*** After receipt of any such Regulatory Approval, Ligand shall be responsible
at its cost and in its name thereafter for the pursuit and maintenance of such
Regulatory Approval.

          4.2 *** Elan shall thereafter be responsible at its cost and in its
name for the preparation and filing of regulatory submissions for the Products
in *** and thereafter for



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the pursuit and maintenance of any Regulatory Approval relating thereto. Neither
Party shall be required to conduct any clinical studies required to receive
Regulatory Approval in ***

          4.3 CONSULTATION; APPROVAL OF SUMMARY OF PRODUCT CHARACTERISTICS. The
Parties shall consult on an ongoing basis as to the preparation, filing, pursuit
and maintenance of regulatory submissions for which they are responsible under
this Clause 4. *** *** *** ***

          4.4 EFFORTS TO COMPLY WITH RESPONSIBILITIES. Each Party shall use its
reasonable efforts to carry out its responsibilities as set out in this Clause 4
with the object of satisfying the requirements of the Governmental Authorities
in each market as effectively and expeditiously as possible. The Parties shall
co-operate with one another at all stages to facilitate the timely achievement
of the given objective and to enhance the prospects of its overall success. Each
Party shall keep the other Party informed, in writing, of the status of its
applications for Regulatory Approvals (including approvals sought for any
Extended Indications) on a regular basis, and in any event no less frequently
than once every *** and shall immediately notify the other Party in writing of
any substantial change in the status of any Regulatory Approval or any
substantive questions received from any Governmental Authority in respect of
such Regulatory Approval. Each Party shall provide copies of all Regulatory
Approvals for which it is responsible to the other Party at such other Party's
request. In any given case when Elan seeks Regulatory Approval, Ligand shall
provide Elan with all reasonably necessary and available clinical data,
documentation and assistance to such effect.

          4.5 MANUFACTURING APPROVALS. It shall be Ligand's responsibility,
without any additional cost to Elan, to maintain all necessary governmental
approvals and permissions which may be required for Ligand to manufacture (or
have manufactured) the Products for distribution in the Territory.

          4.6 PRICING APPROVALS. Elan shall be solely responsible for pricing,
including agreeing pricing with any Governmental Authority, within the
Territory.                            ***
                                      ***
                                      ***

          4.7 LIGAND TO PROVIDE ASSISTANCE. Ligand shall provide to Elan such
assistance as is reasonably necessary in respect of Elan's Regulatory Approval
obligations under this Clause 4, and in particular shall provide:

               (a) written materials and information concerning the Products,
including copies, or summaries, of materials prepared for submission to the
United States (or, at Ligand's discretion, European) Governmental Authorities
concerning the Products or their labeling, to the extent that Ligand is legally
and contractually permitted or required to do so, for Elan's use in obtaining
Regulatory Approvals in respect of each of the Products; and



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               (b) access to such clinical data and documentation in respect of
the Products generated by research and trials funded by Ligand or to which
Ligand may have access with the right to disclose, as Ligand may reasonably deem
to be relevant and useful to Elan in obtaining Regulatory Approvals in respect
of each Product; and

               (c) access to such safety information in respect of the Products
generated by other distributors of the Products; provided, however, that such
access will only be provided to the extent that Ligand has the right to disclose
such information and provided further that to the extent such information is
confidential, Elan shall ensure the confidentiality of such information.

          4.8 ELAN TO PROVIDE ASSISTANCE. Elan shall provide to Ligand such
assistance as is reasonably necessary in respect of Ligand's Regulatory Approval
obligations under this Clause 4, and in particular shall provide:

               (a) written materials and information concerning the Products,
including copies, or summaries, of materials prepared for submission to the
Governmental Authorities in the Non-EMEA Territories concerning the Products or
their labeling, to the extent that Elan is legally and contractually permitted
or required to do so, for Ligand's use in maintaining Regulatory Approvals
outside the Non-EMEA Territories in respect of each of the Products; and

               (b) access to such clinical data and documentation in respect of
the Products generated by research and trials funded by Elan or to which Elan
may have access with the right to disclose, as Elan may reasonably deem to be
relevant and useful to Ligand in obtaining Regulatory Approvals in respect of
each Product; and

               (c) access to such safety information in respect of the Products
generated by Dealers of the Products; provided, however, that such access will
only be provided to the extent that Elan has the right to disclose such
information and provided further that to the extent such information is
confidential, Ligand shall ensure the confidentiality of such information.

          4.9 EXTENDED INDICATIONS - DEVELOPMENT PROGRAMS. Ligand has ongoing
programs to develop Products for the Extended Indications. In the event that
Elan expresses interest in participating in any development programs for any
Product, the Parties shall discuss mutually satisfactory terms for Elan's
participation in such programs.

          4.10 EXTENDED INDICATIONS - LIGAND'S EFFORTS TO DEVELOP. Ligand shall
use its commercially reasonable efforts to apply its technical skill and
expertise, including the Intellectual Property Rights and the Confidential
Information, in the development of the Products for Extended Indications and to
obtain Regulatory Approval for the same. Elan acknowledges that pharmaceutical
research and development incorporates inherent risk in terms of outcomes. Ligand
shall have no liability to Elan as a result of any failure or delay of the
Products to obtain Regulatory Approvals in respect of Extended Indications in
one or more of the countries in the Territory. For the avoidance of doubt, the
provisions of this Clause 4 shall apply to Extended Indications MUTATIS
MUTANDIS.


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          4.11 NO MARKETING OF PRODUCTS WITHOUT REGULATORY APPROVAL. Except to
the extent permitted by law and as may be agreed in writing between the Parties,
Elan shall not market, promote, offer for sale or sell any one of the Products
unless and until Elan or, as the case may be, Ligand obtains the appropriate
Regulatory Approvals in respect of such Product. In the event that Elan is
legally permitted, due to an individual pre-approval in respect of any Product,
to market any Product prior to obtaining the relevant Regulatory Approvals, Elan
shall not do so without obtaining the prior written consent of Ligand, which
will not be unreasonably withheld. This clause shall not prevent Elan from
offering for sale or selling a Product which has Regulatory Approval for some
use in circumstances where it may properly and lawfully be used for some other
clinical use without the need for further Regulatory Approval.

     5. ORDERS AND FORECASTS.

          5.1 FORECASTS.(a) In order to permit Ligand and its suppliers to
allocate their manufacturing capacity, Elan shall provide Ligand monthly with
written *** rolling bona fide forecasts of its Product requirements. Such
forecasts shall be broken down on a country-by-country basis by Product,
quantities, and shipping dates.

               (b) In addition, Elan shall provide Ligand with a non-binding
preliminary forecast of its Product requirements within *** of the Effective
Date for Ligand planning purposes only.

               (c) A forecast shall be binding to the extent that, unless
otherwise agreed:

                    (i)  Elan shall be bound to *** of the forecast required
                         quantities of each Product in each respective month of
                         the period of *** immediately following the forecast;
                         and

                    (ii) Elan shall be bound to order not less than *** and not
                         more than *** of the forecast required quantities of
                         each Product in each respective month of the period
                         beginning *** from the date of the forecast and ending
                         *** later.

               (d) Elan shall place with Ligand a written purchase order not
less than *** in advance of the time for shipment from Ligand's place of
manufacture. Such order shall, unless otherwise agreed, be for the quantities of
each Product specified in Clause 5.1(c).

               (e) Ligand shall supply the Products in accordance with such
purchase orders, free from any liens or encumbrances.

               (f) Subject to Clause 5.1(c), Elan shall be entitled to increase
or decrease the quantities of Products required, and to amend any forecast
accordingly, to the extent



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necessary to take into account (i) any delay in the launch of, (ii) any
shortfall in supply of, or (iii) any defect, in the Products, or any of them,
whether or not such delay, shortfall or defect is due to the default of Ligand.

               (g) For the avoidance of doubt, a forecast shall not be binding
on either Party and shall be indicative only insofar as it concerns Elan's
projected requirements more than *** from the date of the forecast.

          5.2 NOTIFY OF PROBLEMS. Ligand shall, as soon as practicable and in
any event not later than *** after receipt of each such *** rolling forecast,
notify Elan of any prospective problems it might have with respect to meeting
Elan's forecasted order quantities or estimated shipment dates.

          5.3 ORDERS. Purchase of Products by Elan hereunder shall be made only
pursuant to written orders executed by Elan, and shall be for a minimum of
Elan's quarterly requirements for the Territory. The orders of each Product
shall separately specify the labeling requirements by country so as to allow
Ligand to label those products before shipment. The orders shall be accepted in
writing by Ligand at the offices specified in Clause 19.8. No order shall be
binding upon Ligand until accepted by Ligand in writing and Ligand reserves the
right to accept or reject any order, offer or request for Products in its sole
discretion to the extent that such order, offer or request is outside the
limitations set forth in Clause 5.1. The terms and conditions of this Agreement
shall apply to all orders placed by Elan and shall override and supersede any
different or additional terms on orders from or any general conditions
maintained by Elan. If any order exceeds the forecasts for that month provided
by Elan under Clause 5.1, and which pursuant to that Clause has become binding,
by more than *** Ligand shall use its reasonable efforts, but shall not be
obligated, to ship the requested quantities of Products over and above that
level, with the normal lead time stated above. If the order cannot be fully
shipped, Ligand will notify Elan within *** of receipt of the order, and the
Parties will jointly determine an appropriate shipment schedule.

          5.4 SHIPMENT FREQUENCY. The Products shall be shipped at such
frequency as Elan shall specify, no greater than once per month with a minimum
purchase price to Elan of *** per shipment for shipments made during the first
*** following the Effective Date and thereafter *** per shipment; provided,
however, that Elan may request shipments at a frequency greater than *** at the
same minimum purchase price during the *** of the Agreement .

          5.5 PACKAGING. The Products shall be delivered to Elan in suitable
packaging, in particular as required pursuant to any Regulatory Approval and so
as to permit safe storage and transport. Ligand shall be responsible for damages
to the Products resulting from inadequacies of the packaging in accordance with
Clause 14.6.

          5.6 CERTIFICATE OF ANALYSIS. Each Product shall be delivered with a
certificate of analysis, as reasonably agreed by the Parties. Elan shall be
entitled to rely upon such certificate of analysis without the necessity of
performing additional testing.



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          5.7 INSPECTION. Upon receipt of each Product, Elan shall promptly
inspect each shipment visually. If the product supplied does not meet the
product specifications therefor, Elan shall within *** from receipt of the
Product notify Ligand (to the attention of its Quality Assurance Director) of
such non-compliance, including a description thereof. Failure to give such
notice within the aforesaid *** period shall constitute acceptance of the
Product by Elan as to defects reasonably discoverable upon visual inspection
(and in particular without prejudice to Clause 5.6). Such period shall not, for
the avoidance of doubt, apply in the event that there are hidden defects, but
Elan shall promptly notify Ligand after discovery of the hidden defect.

          5.8 REMEDY PROBLEMS. Where Elan notifies Ligand that any shipment of
Product or any portion thereof is not accepted, Ligand shall use its
commercially reasonable efforts promptly to remedy the problem.

          5.9 NON-CONFORMING PRODUCT. Where Elan alleges that any delivered
Product does not meet the Product specifications contained in the applicable
Regulatory Approval, it shall, on request, provide Ligand (or Ligand's designee)
with a sample of such allegedly non-conforming Product which will be examined by
Ligand (or such designee) as soon as reasonably practicable but in any event
within *** If Ligand agrees that the Product fails to meet the product
specifications therefor:

               (a) Elan shall be entitled to cancel its order in respect of that
Product and Ligand shall thereupon give credit in respect of that Product;

               (b) if Elan does not notify Ligand of its intention to cancel the
order pursuant to Clause 5.9(a), Ligand shall use its commercially reasonable
efforts to dispatch to Elan replacement Products as soon as is reasonably
practicable but in any event within *** following Elan's notification of
non-conformity, all costs in respect of which shall be borne by Ligand; and

               (c) Elan agrees, if so requested by Ligand, to return to Ligand
at Ligand's expense, such Product as does not meet the Product specifications
therefor, or otherwise to dispose of such Product, at Ligand's expense and in
compliance with all applicable rules and regulations, as Ligand may direct. If
Ligand does not so direct, within *** following Elan's notification of
non-conformity, Elan may dispose of such Product at Ligand's expense as Elan may
deem reasonably appropriate.

     Elan shall be under no obligation to accept and/or purchase any
non-conforming Product.

          5.10 INDEPENDENT TESTING. If the Parties disagree as to whether any
delivered Product meets the applicable Product specifications, or Ligand alleges
that the defects are not attributable to the manufacture of the Product, the
Parties will then submit representative samples of the shipment to a mutually
acceptable independent testing laboratory or in default of agreement to an
independent testing laboratory designated by the *** *** and the results of said
laboratory shall be binding on the Parties and the costs associated with
submission shall be borne by the Party against which the



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laboratory decided. Furthermore, if the laboratory confirms Elan's position,
Ligand shall forthwith comply with Clauses 5.9 (a) through (c).

          5.11 NOTIFICATION OF PROPOSED CHANGES IN MANUFACTURING FACILITIES.
Ligand and Elan shall consult on any planned change of manufacturing facility
used to manufacture any of the Products for distribution in the Territory which
would require a change in the Regulatory Approvals for any of the Products in
the Territory; and no such change in manufacturing facility shall be made unless
all requisite Regulatory Approvals for the same have been obtained.

          5.12 MODIFICATION OF PROCESS. Ligand shall not be entitled to modify
any process described in a Regulatory Approval for a Non-EMEA Territory without
first having consulted with Elan and then only with Elan's express written
consent.

          5.13 PRODUCT DATA. Ligand shall, upon receiving a written request from
Elan, supply technical information on the Product and methods of manufacture to
the extent that such information is necessary both to enable Elan to fulfill its
obligations under this Agreement, including compliance with any statutory or
regulatory requirements of or a request by any Governmental Authority.

          5.14 INSPECTION. Ligand will ensure that upon receiving *** advance
notice in writing from Elan, it shall permit Elan, Dealers and any Governmental
Authority to inspect its facilities and records and the facilities and records
of any Third Party manufacturer of the Products (in each case in the company of
a representative of Ligand) to the extent reasonably necessary to enable Elan,
Dealers and any Governmental Authority to verify compliance with any relevant
statutory or regulatory requirements which are applicable to the manufacture of
the Products.

          5.15 INVENTORY REQUIREMENTS. Elan shall use all reasonable efforts to
maintain at all times a supply of Products in each country of the Territory
equivalent to at least *** forecasted requirements.

          5.16 CANCELLATION AND RESCHEDULING. Ligand will use its reasonable
best efforts to honor any request of Elan to reschedule shipment of any order
accepted by Ligand. For Panretin(TM) and Targretin(TM) capsules, orders for bulk
capsules or capsules in unlabeled bottles accepted by Ligand may be canceled by
Elan, provided that Elan cancels the order at least *** in advance of the
shipment date and pays a cancellation charge equal to *** of the order price. No
cancellation shall be allowed for any other Products once a firm order has been
accepted by Ligand.

          5.17 TERMS OF SHIPMENT AND TRANSFER OF TITLE. All shipments of
Products shall be made in Ligand's standard shipping packages CIP to Elan to a
single port of entry agreed upon by the Parties. Unless otherwise agreed in
writing between the Parties, Ligand shall select the method of shipment and the
carrier, and Elan shall be responsible for all actions and documents necessary
to obtain clearance to import the Products into the Territory.



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          5.18 PRODUCT AVAILABILITY; ALLOCATION OF PRODUCT. Ligand will use its
reasonable efforts to deliver to Elan the Products in the quantities and at the
dates specified on the orders submitted by Elan. In the event of a shortage of
any Product (whether or not such shortage is due to any breach of this Agreement
by Ligand), Ligand shall notify Elan as soon as practicable. Elan shall be
entitled as a minimum to receive that quantity of the Product in question which
bears the same proportion to the total quantity of that Product available as the
quantity of that Product sold to Elan in the *** preceding the supply shortage
(or, for those countries where that Product has not yet been launched, the most
recent forecasts for the next *** ) bears to all orders for that Product
received by Ligand or for Ligand itself during that same *** period. Nothing in
this Clause 5.18 shall prejudice Elan's other rights in respect of shortage of a
Product.

          5.19 COMPENSATION FOR SHORTFALL. In the event that Ligand fails to
supply Elan with all of its requirements (subject to the limitations set forth
in Clauses 5.1 and 5.3) of one or more Products for a continuous period of time
*** which results in a failure by Elan to supply the market (whether or not such
failure to supply is due to any breach of this Agreement by Ligand, but not in
circumstances where such failure is due to any breach of this Agreement by
Elan), Ligand shall pay to Elan on a monthly basis an amount equal to the
Compensation (as defined below) for each Product in question for the relevant
Undersupply Period (as defined below); provided that

               (a) Elan shall have a duty to mitigate its losses arising
therefrom (but for the avoidance of doubt, not including taking up by itself or
a Third Party the manufacture of the Product(s) under Clause 5.20 in
circumstances where the same would be uncommercial or impractical or before
Ligand has itself used commercially reasonable efforts to qualify an alternative
source of supply as required by Clause 5.20(b)); and

               (b) ***
                   ***
                   ***

                                            ***
                                            ***
                                            ***

         For purposes of this Clause 5.19,           ***
                                                     ***
                                                     ***

                                                     ***
                                                     ***
                                                     ***



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          5.20 ELAN'S RIGHTS TO MANUFACTURE PRODUCT(S). If Ligand determines
that it will not be able to fulfil at least *** of Elan's aggregate forecasted
requirements for one or more Product(s) for *** or more:

               (a) it shall promptly notify Elan; and

               (b) thereafter Ligand shall use commercially reasonable efforts
to qualify, or to have a Third Party (which Ligand may appoint with Elan's
consent, not to be unreasonably withheld or delayed) manufacture the Product(s)
in question in place of Ligand or its then-Third Party manufacturer. *** *** ***

               (c) in the event that Ligand does not meet its obligations under
Clause 5.20(b) or reasonably determines that it cannot meet such obligations and
notifies Elan thereof, or in any event, is unable within *** of notifying Elan
under Clause 5.20(a) to commence the process of obtaining any necessary
Regulatory Approvals, then Elan may, after due consultation with Ligand and at
its expense, take such steps as are appropriate to enable manufacture of the
Products in question through itself or a Third Party reasonably acceptable to
Ligand. Ligand shall reasonably cooperate in and assist with such steps,
including:

                    (i)                     ***
                                            ***
                                            ***

                    (ii) providing Elan with access to the Intellectual Property
                         Rights which are related to such Product(s) and which
                         are necessary to give effect to the provisions of this
                         Clause 5.20(c), all to the extent Ligand has the right
                         to provide access, including providing practical
                         performance advice, shop practice, specifications as to
                         materials to be used and control methods, and
                         reasonably assisting Elan with the working up and use
                         of such Intellectual Property Rights related to such
                         Product(s) and with the training of Elan's or the
                         nominated Third Party's personnel to the extent which
                         may reasonably be necessary; or

                    (iii) at its cost, taking such steps as are required for
                         obtaining any necessary Regulatory Approval of Elan's
                         or such nominated Third Party's manufacture of the
                         Product(s) in question in the EMEA Territories and
                         providing such assistance to Elan as may be reasonably
                         necessary to enable Elan to obtain any necessary
                         Regulatory Approval of Elan's or such nominated Third
                         Party's manufacture of the Product(s) in question in
                         the Non-EMEA Territories.




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     6. REGISTRATION SERVICES AND PAYMENTS.

          6.1 INITIAL PAYMENT. On execution of this Agreement Elan shall make a
non-refundable initial payment to Ligand in the sum of *** in consideration of
the grant of rights under this Agreement for the Products discovered and
developed by Ligand and listed in APPENDIX A.

          6.2 ADDITIONAL PAYMENTS. In consideration of the grant of rights under
this Agreement, Elan shall make the following additional non-refundable payments
to Ligand, if and when the indicated milestones are achieved:

               (a) *** upon submission of an application for Marketing
Authorization Approval to the EMEA for Targretin(R)gel;

               (b) *** upon the grant of Marketing Authorization Approval for
the European Union for Targretin(R)gel;

               (c) *** upon the grant of Marketing Authorization Approval for
the European Union for Targretin(R)capsules;

               (d) *** upon submission of an application for Marketing
Authorization Approval to the EMEA for Ontak;

               (e) *** upon the grant of Marketing Authorization Approval for
the European Union for Ontak; and

               (f) *** upon the grant of Marketing Authorization Approval for
the European Union for Targretin capsules for a breast cancer indication or a
non-small cell lung cancer indication.

          6.3 INITIAL SUPPLY PAYMENT. Due to the difficulty of estimating future
Net Sale Prices, Ligand shall invoice Elan for all Products supplied at the US
dollar denominated Floor Price and payment of such invoice shall be due within
*** of the date of the invoice.

          6.4 ADJUSTING PAYMENT. Within *** of the end of each calendar quarter
(commencing after Elan has made the first commercial sale of any Product), Elan
shall calculate the amount of an additional payment from Elan to Ligand (if any)
as follows: in respect of each Product and for the quantities supplied in each
country of the Territory, Elan shall pay to Ligand the amount (if any) by which
the product of the Net Sale Price and the relevant proportion for that Product
set out in APPENDIX B exceeds the Floor Price in respect of the Product in each
country of the Territory. Such adjusting payment shall be made within *** from
the end of each calendar quarter (commencing after Elan has made the first
commercial sale of any Product). For purposes of this calculation, the Net Sale
Price shall be converted into US dollars at the mid-price exchange rate between
the local currencies and the US dollar as published in THE FINANCIAL TIMES on
the day on which such additional payment is calculated. For the



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avoidance of doubt, in no instance shall the result of these calculations cause
a negative adjustment to the Floor Price.

          6.5 LATE PAYMENTS. Whenever a late payment is due to a cause
attributable to a Party, all amounts not paid to the other Party when due shall
accrue interest daily at the lesser of an annual rate of *** *** until paid in
full.

          6.6 TAXES. All sums payable hereunder are expressed to be exclusive of
VAT or other similar tax. Notwithstanding the foregoing, any income or other
taxes on any monies payable to Ligand which Elan is required by law to pay or
withhold on behalf of Ligand, shall be deducted by Elan from such monies due.
Elan shall furnish Ligand with proof of such payments. Any such tax required to
be paid or withheld shall be an expense borne solely by Ligand. Elan shall
promptly provide Ligand with a certificate or other documentary evidence to
enable Ligand to support a claim for a refund or a foreign tax credit with
respect to any such tax so withheld or deducted by Elan. At Ligand's request,
Elan shall reasonably cooperate to support any claim by Ligand for such a refund
or credit. The Parties will reasonably cooperate in completing and filing
documents under the provisions of any applicable tax treaty or under any other
applicable law, in order to enable Elan to make such payments to Ligand without
any deduction for withholding.

     7. MARKETING AND PROMOTION.

          7.1 ***


                                    ***
                                    ***
                                    ***

          7.2 ***


                                    ***
                                    ***
                                    ***

          7.3 MARKETING MATERIALS. In the promotion and marketing of each
Product, Elan shall, at its sole discretion and in accordance with each European
Strategic Marketing Plan, develop sales literature and promotional materials
from materials provided by Ligand pursuant to Clause 7.4. Elan shall have the
right to prepare other product descriptions and other promotional and marketing
materials relating to the Products; provided however, that (a) all costs and
expenses incurred by Elan in the preparation and distribution of such product
descriptions and other promotional and marketing materials shall be borne solely
by Elan; (b) Elan shall provide to Ligand all such product descriptions and
promotional and marketing materials on a timely basis to allow Ligand to fulfill
its obligations with the relevant European Union Marketing Authorization
Approval(s) and/or all other applicable rules and regulations in the EMEA
Territories; and (c) Elan shall ensure that all such product descriptions and
promotional and



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<PAGE>

marketing materials comply with the relevant European Union Marketing
Authorization Approval(s) and/or all other applicable rules and regulations in
the Non-EMEA Territories.

          7.4 PRODUCT LITERATURE. To the extent that it is legally and
contractually permitted to do so, Ligand will share with Elan samples of product
descriptions, sales aids and advertising and promotional materials developed and
used by Ligand, its other distributors or licensees (collectively "Promotional
Materials") in respect of each Product as soon as practicable. Elan shall bear
all costs of reproducing and/or adapting such Promotional Materials for use
within the Territory, and Ligand hereby grants to Elan a royalty free,
non-exclusive license during the Term to reproduce and/or adapt the Promotional
Materials only for the purpose of promoting the Products in the Territory. Elan
shall retain the copyright in any such adaptation of the Promotional Materials
(the "Elan Promotional Materials"). Elan agrees to provide to Ligand on request
samples of the Elan Promotional Materials, and Elan hereby grants to Ligand a
royalty free, non-exclusive license during the Term to reproduce and/or adapt
the Elan Promotional Materials only for the purpose of promoting the Products or
assisting other distributors of the Products in their own promotional campaigns.

     8. OBLIGATIONS OF ELAN.


          8.1 DILIGENT EFFORTS. Elan shall use its diligent efforts to market
and sell the Products within the Territory at its own expense, including but not
limited to professional sales calls on target medical audiences (e.g.
physicians, hospitals, pharmacists, etc.), advertising the Products in
appropriate media and participating in trade shows, conferences, expositions,
and promotional seminars, all with due consideration for the local marketing
environment in the Territory. Elan shall conduct its marketing activities in a
lawful manner with appropriate or applicable standards of pharmaceutical product
promotional practices, fair trade, fair competition, and business ethics, and
shall cause its employees and Dealers to do the same. Elan shall also comply
with the following diligence obligations:

               (a) following the Effective Date, Elan shall submit an
application for marketing authorization approval in each country of the
Territory for each Product within the time after the Effective Date set forth in
the corresponding second column of the table below (subject to the receipt by
Elan of the complete EMEA dossier for such Product no less than *** prior to the
time set forth in the corresponding second column of the table below and subject
to the timely provision by Ligand of such information as Elan may reasonably
request for the purposed of obtaining such approval in the Non-EMEA
Territories); and

               (b) after receipt of Pricing Approval for a Product in a country
of the Territory and subject to an appropriate level of supply being available
to Elan, Elan shall launch such Product in such country within the time after
such receipt of Pricing Approval set forth in the corresponding third column of
the table below.

                                            ***
                                            ***
                                            ***



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     Failure to meet either diligence obligation for a Product in a country
shall give Ligand the right, in its sole discretion, with *** prior written
notice (if Elan has failed to cure either such diligence obligation within such
*** period), to either (i) *** in which case *** *** or (ii) *** In the event
that Ligand determines to *** as set forth in the immediately preceding
sentence, any *** *** in that country shall be on *** *** *** The right of
Ligand so to *** in respect of any failure of Elan to comply with its
obligations under this Clause 8.1.

          8.2 OFFICES AND PERSONNEL. Elan shall maintain offices adequate to
market and support the Products within the Territory and shall retain and have
at its disposal at all times an adequate staff of trained and qualified
personnel to perform its obligations under this Agreement.

          8.3 DEALERS. Elan may appoint only Dealers pursuant to the terms and
conditions set forth in Clause 2.1. Any such appointment shall be made in
writing, and shall terminate upon the expiration, non-renewal, or termination of
this Agreement for any reason; provided, however, that:

               (a) Elan shall not undertake to grant to any Dealer any rights
greater than those which are granted by Ligand to Elan under this Agreement;

               (b) in order to protect the goodwill of Ligand and the Products
in the Territory, Elan shall secure the agreement of each and every Dealer that
it shall assume the same obligations where applicable as have been assumed by
Elan under this Agreement; and

               (c) Elan shall defend, indemnify and hold Ligand harmless against
any claim, loss, liability or expense (including attorney's fees and court
costs) arising out of or based upon (1) any act or omission of any Dealer, or
(2) any claim made by any Dealer against Ligand, other than a claim arising from
any alleged design or manufacturing defect in any Product.

          8.4 ALTERATIONS. Elan shall ensure that the Products are distributed,
sold, and advertised in the form and with the labeling or marking designated by
Ligand and in accordance with the applicable regulations in the Territory and,
in particular, shall not alter, remove, or deface any Trademark. Elan
acknowledges that it shall have no right to sell any products under Ligand's
name or trademark if they were not originally manufactured or supplied by, or on
behalf of, Ligand.

          8.5 CLINICAL EVALUATIONS. Elan may formulate and conduct clinical
evaluations of the Products which are approved by Ligand, such approval not to
be unreasonably withheld. Results from any such clinical evaluation shall be
shared with Ligand and shall not be publicly disclosed or disclosed in
confidence to any Third Party without Ligand's prior written approval, such
approval not to be unreasonably withheld.




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          8.6 INSURANCE. Both Parties shall obtain and at all times during the
term of this Agreement maintain, and bear the cost of, adequate and appropriate
insurance including comprehensive general liability insurance which is adequate
to cover their respective activities under this Agreement, subject to the use by
either Party of such self-insured excess as it shall from time to time
reasonably implement. A certificate of insurance and any other documentation
necessary to prove compliance with this provision will be provided to the other
Party upon request. Each Party shall notify the other not less than *** prior to
the termination or reduction of such coverage.

     9. REPORTING OBLIGATIONS AND PRODUCT RECALL.

          9.1 RECORD KEEPING. At all times during the term of this Agreement,
Elan shall maintain at its principal place of business full, complete and
accurate books of account and records with regard to its activities under this
Agreement, including, without limitation, records of all sales of the Products
including the names of customers to whom Products are sold and total gross sales
and net sales for each calendar quarter. Upon reasonable notice, and not more
than twice a year, Elan shall grant Ligand or its representatives access during
normal business hours to any premises of Elan in order that Ligand, at its
expense, may inspect Elan's books and premises related to the Products for the
sole purpose of verifying and enforcing compliance by Elan with its obligations
under this Agreement; provided, however, that Elan shall reimburse Ligand for
the full amount of the inspection costs if any inspection under this Clause 9.1
reveals an underpayment by Elan of not less than *** of the total amount payable
by Elan to Ligand hereunder with respect to the period in question; provided
that Ligand shall have the burden of establishing the same.

          9.2 REPORTS. Elan shall provide Ligand with quarterly operation
reports of Elan's activities to register, develop and market the Products in the
Territory. Elan shall cause its Dealers to prepare and submit to Elan on a
timely basis similar reports and shall include information from such reports in
the quarterly operation reports provided by Elan hereunder. Each such report
shall be due within *** after the end of the quarter to which it relates. Each
report shall include:

               (a) a monthly compilation of all Products distributed by Elan and
its Dealers, if any, including the revenues derived therefrom and a breakdown of
the prices charged in respect of each Product; and

               (b) a list of the amount of inventory by country on hand as of
the end of each quarter; and

               (c) monthly gross and net sales on a per Product, per country
basis in local currency only.

          9.3 ANNUAL STATEMENTS. Elan shall provide Ligand with annual
statements within *** after the end of each calendar year showing annual sales
figures and the amount of inventory on hand as at December 31 of each year. Elan
shall cause its Dealers to prepare and submit to Elan on a timely basis similar
reports and shall include information from such reports



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<PAGE>

in the annual statements provided by Elan hereunder. Such annual statements
shall also contain a summary of all promotional activities undertaken by Elan
with respect to the Product during the preceding calendar year, and current
credit references.

          9.4 ADVERSE EVENT REPORTING. Each Party shall give the other Party
immediate notice, which shall be promptly confirmed in writing, of any
occurrence that involves any material complaint about the safety or
effectiveness of any Product, including a claim for death or injury following
administration of the Product (that is plausibly related to the administration
of the Product). Further, during the term of this Agreement, each Party shall
give the other Party prompt written notice of any occurrence that involves any
other matter arising out of this Agreement that must be reported to a
Governmental Authority. The Parties agree that within *** following the
Effective Date representatives of each Party with responsibility for the safety
surveillance and pharmacovigilance of the Products shall meet to develop
detailed procedures regarding the format, timing and content of the safety
information to be exchanged between the Parties, and shall meet periodically
thereafter to update the procedures.

          9.5 PRODUCT RECALL.(a) Voluntary Recall. If either Party establishes a
need to recall a Product for non-conformities with the Product specifications
therefor (other than such non-conformities that would require recall pursuant to
the requirements of applicable laws or regulations), it shall so notify the
other Party. If the other Party does not agree that the relevant Product does
not comply with such specifications, the dispute shall be settled as set forth
in Clause 5.10. If the Parties agree as to such non-conformity or such
non-conformity is determined pursuant to Clause 5.10, then a decision shall be
made mutually as to the appropriate Party that will lead/coordinate the recall
in a commercially reasonable manner with the other Party's full cooperation. The
lead/coordination role shall typically be taken by the holder of the Regulatory
Approval in the country in which the recall is to take place with full
consultation by the other Party. A joint recall administration team shall be
established with an equal number of nominated individuals from both Parties
participating. A final report must be completed by the recall administration
team and delivered promptly to the other Party.

               (b) Required/Requested Recall. In the event that the relevant
regulatory authority requests or otherwise advises of the probable need for a
recall of a Product for any reason whatsoever, then an individual from one of
the Parties shall be nominated to lead/coordinate the recall. The
lead/coordination role shall typically be taken by the holder of the Regulatory
Approval in the country in which the recall is to take place with full
consultation by the other Party. A joint recall administration team shall be
established with an equal number of nominated individuals from both Parties
participating. If the Parties are unable to agree as to whether or not the
underlying reason for the recall is a non-conformity of the Product in question
with its specification, and/or whether or not Ligand or Elan is responsible for
such non-conformity, the Parties shall submit a sample of the recalled Product
for analysis pursuant to Clause 5.10. If a Party is notified by a regulatory
authority that a recall is required or requested, it shall promptly give to the
other Party written notice and full details of the request to recall.



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               (c) Cost of Recall.

                    (i)  In the event that the principal reason for the recall
                         under this Clause 9.5 of the Product in question is
                         Ligand's negligence or willful misconduct, its failure
                         to supply Products conforming to the specifications
                         therefor, or Ligand's failure to comply with applicable
                         laws or regulations, then *** *** In the event that the
                         principal reason for the recall under this Clause 9.5
                         is Elan's negligence or willful misconduct, its failure
                         to handle or store Products in conformity with the
                         specifications therefor, or Elan's failure to comply
                         with applicable laws or regulations, *** *** ***

                    (ii) In the event that the reason that the recall of the
                         Products under this Clause 9.5 was legally required is
                         not one of those set forth in Clause 9.5(c)(i), *** ***
                         *** ***

     10. NON-DISCLOSURE OF AGREEMENT AND PUBLICITY. Neither Party shall disclose
any information about this Agreement without the prior written consent of the
other. Consent shall not be required, however, for (a) disclosures to tax
authorities or to bona fide potential Dealers, to the extent required or
contemplated by this Agreement, provided, that in connection with such
disclosure, each Party agrees to use its commercially reasonable efforts to
secure confidential treatment of such information; (b) disclosures of
information for which written consent has previously been obtained, or (c)
information which had previously been publicly disclosed. Each Party shall have
the further right to disclose the terms of this Agreement as required by
applicable law, including the rules and regulations promulgated by the
Securities and Exchange Commission and/or the regulatory bodies/authorities
governing securities issues in foreign jurisdictions and to disclose such
information to stockholders or potential investors as is customary for
publicly-held companies (as the case may be at the time of disclosure), provided
the disclosing Party provides to the other Party, to the extent practicable, a
copy of the information to be disclosed and an opportunity to comment thereon
prior to such disclosure, and, to the extent practicable, consults within a
reasonable time in advance of the proposed disclosure with the other on the
necessity for the disclosure and the text of the proposed release. Any copy of
this Agreement to be filed with the Securities and Exchange Commission shall be
redacted to the reasonable satisfaction of both Parties; provided, however, in
the event that the Securities and Exchange Commission objects to the redaction
of any portion of the Agreement after the initial submission, the filing Party
shall inform the other Party of the objections and shall in good faith respond
to the objections in an effort to limit the disclosure required by the
Securities and



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Exchange Agreement, but in any event the filing Party shall be free to include
any portions of the Agreement it deems necessary to respond to the objections in
any future filings.

     11. COVENANTS OF ELAN.

          11.1 RESTRICTIONS. To the extent permissible by law, Elan is
prohibited from:

               (a) advertising, circulating price lists or otherwise soliciting
orders for the Products, and from establishing or maintaining branches, sales
offices or distribution depots, in any territory reserved by Ligand or allocated
by Ligand to another distributor for the distribution of the Products;

               (b)             ***
                               ***
                               ***

     12. INTELLECTUAL PROPERTY RIGHTS.

          12.1 ACKNOWLEDGMENT. Elan acknowledges that, prior to entering into
this Agreement, it has no right, title or interest in and to any and all
Intellectual Property Rights pertaining to the Products. Elan shall not at any
time during or after the term of this Agreement take any act or step impairing
the Intellectual Property Rights or do anything that may otherwise adversely
affect the Intellectual Property Rights, provided that any legal proceedings or
oppositions shall not be deemed to be such an act or step.

          12.2 TRADEMARKS AND TRADE NAMES.(a) Subject to the terms and
conditions of this Agreement, Ligand hereby grants to Elan an exclusive license
within the Territory to use the Trademarks solely for the purposes of marketing,
promoting, selling and distributing the Products under this Agreement.

               (b) Elan shall use and have used the Trademarks, as indicated on
APPENDIX C, and no other trademarks or trade names other than a brand name in
connection with Elan's oncology franchise, in connection with its marketing,
promotion, sale and distribution of the Products in each country of the
Territory, unless otherwise agreed by the Parties; provided, however, that Elan
may use its own trademarks and trade names on product packaging, brochures and
other promotion materials to identify itself as the distributor of the Products.

               (c) Elan's use of the Trademarks shall be consistent with
standards for trademark use that are generally accepted within the
pharmaceutical industry. Ligand shall have the right to audit Elan's trademark
use. Elan shall remedy any non-compliant use identified by Ligand as soon as is
possible using commercially reasonable efforts after notification by Ligand.
Elan further agrees to provide copies of all such materials to Ligand for review
and approval prior to publication and distribution. Ligand agrees that its
approval of such materials will not be unreasonably withheld. The Parties agree
that Ligand will have been deemed to approve any such materials if it does not
respond to Elan within *** after having received said materials.



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               (d) Elan hereby agrees to and recognizes Ligand's exclusive
ownership of the Trademarks. Elan agrees not to take any action inconsistent
with such ownership and further agrees to take any action, at Ligand's expense,
which Ligand reasonably deems necessary to establish and preserve Ligand's
exclusive rights in and to the Trademarks including but not limited to
cooperating in the registration of the Trademarks on the trademark registry or
other appropriate registration procedure within the Territory.

               (e) The Parties agree that all use of the Trademarks by Elan
shall be for the sole and exclusive benefit of Ligand and the goodwill and
reputation accrued in connection with Elan's use of the Trademarks shall accrue
to Ligand. In the event Elan acquires any right, title or interest in or to or
relating to the Trademarks for any reason, effective immediately upon the
expiration or termination of this Agreement Elan hereby assigns, at no cost, all
such right, title and interest, together with any related goodwill or
reputation, to Ligand. Elan agrees to promptly execute all documents reasonably
requested by Ligand in connection with such assignment.

               (f) Elan shall not adopt, use, or register any acronym,
trademark, trade names, service mark or other marketing name that is confusingly
similar to the Trademarks or the Ligand name, and shall not use the Trademarks
or the Ligand name other than in connection with distribution of Products
pursuant to this Agreement.

               (g) Ligand shall have the right to select additional Trademarks
and register them at its expense, and such Trademarks shall be owned by Ligand
and added to APPENDIX C, initially as secondary Trademarks. If (i) a regulatory
agency does not approve the then-current primary Trademark indicated on APPENDIX
C, (ii) a Third Party asserts that such Trademark infringes its trademarks,
(iii) such Trademark is successfully opposed by a Third Party, (iv) a petition
to cancel such Trademark is filed by a Third Party, (v) there is an infringement
of such Trademark by any Third Party against which Ligand does not enforce its
rights pursuant to Clause 12.3 or (vi) there is a bona fide issue with such
Trademark which is supported by an opinion of Elan's outside trademark
attorneys, then Ligand shall designate one of the secondary Trademarks (as
indicated on APPENDIX C) as a replacement primary Trademark. If there are no
remaining secondary Trademarks, Elan shall have the right to select another
trademark of its choosing with the consent of Ligand, which consent shall not be
unreasonably withheld. Any such trademark selected by Elan shall be registered
in the name of Ligand, at Ligand's expense, shall be added as a Trademark to
APPENDIX C and shall be owned by Ligand.

          12.3 THIRD PARTY CLAIMS.(a) Elan shall promptly notify Ligand of any
claims or objections that its use of the Intellectual Property Rights in
connection with the marketing, support or service of the Products may or will
infringe the copyrights, patents, trademarks or other proprietary rights of
another Person ("Ligand Third Party Claim"). If Elan is served with a legal
action or otherwise forced to respond in a legal proceeding due to a Ligand
Third Party Claim, Ligand shall conduct the defense of such Ligand Third Party
Claim at its own cost. For that purpose, Elan shall (1) without delay, tender
the defense of such Ligand Third Party Claim to Ligand; and (2) render Ligand
all reasonable assistance, at Ligand's expense, in connection with the defense
of any such Ligand Third Party Claim or objection, whether in the courts, before
administrative agencies, or otherwise. Elan shall not, except as required by
law,



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                                       23

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knowingly make any admission to jeopardize, compromise or otherwise limit the
validity of Intellectual Property Rights.

               (b) Ligand shall promptly notify Elan of any claims or objections
that Elan's use of the Elan Promotional Materials in connection with the
marketing, support or service of the Products may or will infringe the
copyrights, patents, trademarks or other proprietary rights of another Person
("Elan Third Party Claim"). If Ligand is served with a legal action or otherwise
forced to respond in a legal proceeding due to an Elan Third Party Claim, Elan
shall conduct the defense of such Elan Third Party Claim at its own cost. For
that purpose, Ligand shall (1) without delay, tender the defense of such Elan
Third Party Claim to Elan ; and (2) render Elan all reasonable assistance, at
Elan's expense, in connection with the defense of any such Elan Third Party
Claim or objection, whether in the courts, before administrative agencies, or
otherwise. Ligand shall not, except as required by law, knowingly make any
admission to jeopardize, compromise or otherwise limit the validity of
intellectual property rights related to the Elan Promotional Materials.

          12.4 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS. Elan shall promptly
notify Ligand of any infringement or suspected infringement of Intellectual
Property Rights in the Territory relating to the Products of which it becomes
aware, and provide Ligand with any available evidence of such infringement or
suspected infringement. Unless: (a) otherwise agreed in writing by Elan; or (b)
Ligand has a bona fide belief to the effect that proceedings in respect of such
infringement or suspected infringement of the Intellectual Property rights would
not have a reasonable prospect of success, which belief is supported by an
opinion of Ligand's outside intellectual property attorneys ("Counsel"), or to
the effect that such proceedings would otherwise not be commercially reasonable,
Ligand shall institute enforcement proceedings ("Enforcement Proceedings") in
respect of such infringement or unauthorized use of Intellectual Property Rights
in the Territory and shall use reasonable efforts to pursue such proceedings.
Ligand shall not make any admission, settle or compromise such proceedings save
with the consent of Elan or upon written advice of Counsel. Elan agrees to
provide all reasonable co-operation and assistance to Ligand in relation to any
such Enforcement Proceedings (and agrees to be named as a party if legally
required). Any reasonable fees and costs borne by Elan shall be reimbursed by
Ligand. Ligand shall be entitled to deduct its reasonable expenses in relation
to such Enforcement Proceedings (including reasonable attorney's fees and
expenses and reimbursements to Elan) from any recovery and any remaining amount
shall be distributed pro rata among the Parties in which Elan shall receive ***
of any remaining recovery and Ligand shall receive *** of any remaining
recovery.

     13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

          13.1 NON-DISCLOSURE OBLIGATIONS. During the term of this Agreement,
the Disclosing Party will disclose certain Confidential Information to the
Receiving Party to permit the Receiving Party to perform its obligations under
this Agreement. The Receiving Party shall refrain from using or exploiting any
and all Confidential Information for any purposes or activities other than those
expressly authorized in this Agreement. The Receiving Party agrees that such
Confidential Information shall be kept secret by the Receiving Party during the
term of



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this Agreement and after the expiration hereof. The Receiving Party shall
disclose Confidential Information only to its agents, representatives or
employees with a need to know and shall implement appropriate security measures
in order to avoid the disclosure or misappropriation of such Confidential
Information.

          13.2 CONFIDENTIALITY AGREEMENTS. Both Parties shall ensure that each
of their directors, officers and employees and the directors, officers and
employees of, respectively, Dealers and agents, and Ligand's assignees, who will
receive Confidential Information pursuant to Clause 13.1 shall at all material
times be bound by appropriate undertakings as to the confidentiality of such
information. Elan and Ligand, respectively, shall at their own expense undertake
the enforcement of any such obligations of confidentiality in the event of any
breach thereof.

          13.3 OWNERSHIP OF OTHER PARTY'S MATERIALS. All files, lists, records,
documents, drawings, specifications and records, whether in written or
electronic form, which incorporate or refer to all or a portion of a Party's
Confidential Information shall remain the sole property of that Party. Such
materials shall be promptly returned (a) upon that Party's reasonable request,
or (b) in accordance with Clause 17.2 of this Agreement upon termination of this
Agreement, whichever is earlier.

          13.4 EXCEPTIONS. The provisions of this Clause 13 shall not apply, or
cease to apply, to information supplied by Ligand if it (a) was already known to
Elan (the burden of establishing which shall be Elan's); (b) came into the
public domain without breach of confidence by Elan or any other Person; (c) was
received by Elan from a Third Party without restrictions on their use in favor
of Ligand; or (d) is required to be disclosed pursuant to any statutory or
regulatory provision or court order.

     14. LIGAND REPRESENTATIONS, WARRANTIES, INDEMNITIES AND LIMITATIONS OF
LIABILITY.

          14.1 PRODUCTS AND THIRD-PARTY AGREEMENTS. Ligand represents and
warrants to Elan that as of the Effective Date:

               (a) the patents set forth in APPENDIX D owned or licensed by
Ligand in the Territory that covers the Products are, to the best of Ligand's
knowledge, not invalid or unenforceable, in whole or in part;

               (b) Ligand is not in any material breach (including any such
breach which would or might prejudice the rights of Elan) of any agreement with
Third Parties relating to the Products or the Intellectual Property Rights (the
"Third Party Agreements");

               (c) each Third Party Agreement is in full force and effect and
has not been terminated;

               (d) there are no existing or claimed defaults under any Third
Party Agreement by Ligand and, to the best of Ligand's knowledge, by the other
party to such Third Party Agreement and no event, act or omission has occurred
which (with or without notice, lapse of time or the happening or occurrence of
any other event) would result in a default under a Third Party Agreement by
Ligand, or, to the best of Ligand's knowledge, by any other party,


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<PAGE>

other than a default, act or omission which would not have a material adverse
effect on the rights granted to Elan hereunder ("Material Adverse Effect");

               (e) there are no existing or, to the best of Ligand's knowledge,
threatened actions, suits or claims pending against Ligand with respect to the
Products or the Intellectual Property Rights in the Territory; and

               (f) to the best of Ligand's knowledge, the sale and use of the
Products in the Territory does not infringe the proprietary rights of any Third
Party in the Territory.

          14.2 PRODUCT SUPPLY WARRANTIES. Ligand represents and warrants that
each Product supplied hereunder shall:

               (a) conform in all material respects to the Product
specifications therefor, as published by Ligand from time to time consistent
with the data contained in the Regulatory Approvals;

               (b) be manufactured in accordance with current Good Manufacturing
Process ("cGMP") as set forth in the US Food, Drug, and Cosmetic Act, as amended
from time to time, and applicable regulations and guidelines thereunder and
other applicable FDA and other rules and regulations of the United States or
applicable non-United States regulatory authorities in the Territory;

               (c) not be adulterated or misbranded; and

               (d) have a shelf life of one year or more (or in the case of
Ontak, nine months or more) from the date of shipment to Elan. The
aforementioned shelf life terms shall be proportionally increased from time to
time in accordance with improved stability data.

     The representations and warranties set forth in this Clause 14.2 shall be
deemed to be repeated upon each occasion when Ligand supplies Product to Elan
under this Agreement.

          14.3 MANUFACTURING FACILITIES. Without prejudice to Clause 14.2, Elan
acknowledges that Ligand uses Third Party manufacturers to manufacture the
Products. Ligand shall notify Elan promptly following notification itself of any
failure of such Third Party manufacturer to manufacture any of the Products in
accordance with applicable laws and regulations.

          14.4 MATERIAL MATTERS. Ligand represents and warrants that, as of the
Effective Date, it has made to Elan appropriate disclosure of, and has not
misrepresented, any material matters relating to the Intellectual Property
Rights, marketing, adverse events, supply, clinical and regulatory information
pertaining to the Products in the Territory.

          14.5 GENERAL WARRANTIES AND COVENANTS. Ligand represents, warrants and
covenants that:


                                       26

<PAGE>


               (a) it is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware U.S.A. and has the
corporate power to execute this Agreement and to perform its obligations
hereunder;

               (b) the person or persons executing this Agreement on behalf of
Ligand have been duly authorized to do so by all requisite corporate or other
actions of Ligand;

               (c) this Agreement is the legal, valid and binding obligation of
Ligand, enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditor rights and judicial principles affecting the
availability of specific performance and general principles of equity whether
enforceability is considered a proceeding at law or equity;

               (d) the execution, delivery and performance of this Agreement by
Ligand does not and will not conflict with or result in a breach of any material
agreement, instrument or understanding, oral or written, to which Ligand is a
party or by which Ligand may be bound, nor violate any law or regulation of any
court or Governmental Authority having jurisdiction over Ligand;

               (e) Ligand will maintain at all times during this Agreement all
necessary Regulatory Approvals which are, according to Clause 4, the
responsibility of Ligand;

               (f) Ligand shall throughout the Term keep Elan adequately
informed of the following, insofar as they reasonably could be expected to have
a material adverse effect on the rights granted to Elan hereunder ("Material
Adverse Effect"):

                    (i)  any matter which comes to Ligand's knowledge which does
                         or might affect the validity or enforceability in the
                         Territory, in whole or in part, of the patents set
                         forth in APPENDIX D;

                    (ii) any matter which comes to Ligand's knowledge whereby
                         the sale of the Products by Elan does or may infringe
                         the proprietary rights of a Third Party in the
                         Territory;

                    (iii)the termination of any Third Party Agreement or any
                         other matter which materially affects the continuance
                         of such Third Party Agreement in force;

                    (iv) Ligand's transactions, arrangements and business under
                         the Third Party Agreements that relate to the
                         transaction contemplated hereunder, and Ligand shall
                         provide Elan with any written notices delivered by any
                         other party thereunder that relate to the transactions
                         contemplated hereunder;

                    (v)  any existing or claimed defaults under any Third Party
                         Agreement by Ligand or any other party thereto; and any
                         event, act or omission has occurred which (with or
                         without notice, lapse of time or the happening or
                         occurrence of any


                                       27

<PAGE>

                         other event) would result in a default under a Third
                         Party Agreement by Ligand, or, to Ligand's knowledge,
                         by any other party; and

                    (vi) any actions, suits or claims threatened in writing or
                         pending against Ligand with respect to the Products or
                         the Intellectual Property Rights; and

               (g) during the Term, Ligand (i) shall comply with all of the
material terms and conditions of the Third Party Agreements and (ii) shall not
assign its rights under any Third Party Agreement, other than a failure to
comply or an assignment which would not have a Material Adverse Effect.

          14.6 INDEMNITY. Ligand shall defend, indemnify and hold Elan and its
shareholders, managers, officers, directors, agents and employees harmless
against any and all losses, damages, claims, liabilities, costs and expenses
(including reasonable attorney's fees) resulting from (a) the personal injury to
or death of any person caused by the defective design and/or manufacture of the
Products when supplied to Elan by Ligand or by Ligand's appointee, including the
failure of any Products to meet their Product specification; (b) Ligand's
transportation, storage, use and handling of the Products and the disposal of
hazardous materials in connection with the manufacture thereof; (c) any claim
that may be made by reason of any damage caused by an act or omission of Ligand
or any of its shareholders, managers, officers, directors, agents or employees
whenever such act or omission is in connection with this Agreement contrary to
the law and is so declared by a court of competent jurisdiction or as agreed by
the Parties; or (d) any breach by Ligand of any of Ligand's representations and
warranties set forth in this Agreement or of any other material term of this
Agreement, so declared by a court of competent jurisdiction or as agreed by the
Parties, provided that Elan promptly notifies Ligand in writing of any claim,
action or suit potentially giving rise to an indemnification obligation
hereunder. Ligand shall have the sole and absolute control of, and discretion
in, the handling of the defense and/or settlement of any such claim, action or
suit, including, without limitation, the selection of defense counsel, and Elan
shall fully cooperate with Ligand in the defense and settlement of all such
claims, actions or suits, provided, however, that Elan may take any appropriate
action necessary to preserve or avoid prejudice to its interests, or the
interests of Ligand as indemnitor, in the event that (1) notice to Ligand cannot
be given in sufficient time for Ligand to take action, or (2) Ligand, after
prompt notice and inquiry from Elan, fails to acknowledge its obligation to
indemnify Elan under this clause.

          14.7 DISCLAIMERS. TO THE FULL EXTENT PERMITTED BY LAW, APART FROM THE
FOREGOING WARRANTIES AND INDEMNITY, LIGAND MAKES NO ADDITIONAL REPRESENTATIONS
OR WARRANTIES AND HEREBY DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, AND
LIABILITIES, WHETHER EXPRESS OR IMPLIED, ARISING FROM CONTRACT OR TORT (EXCEPT
FRAUD), IMPOSED BY STATUTE OR OTHERWISE, RELATING TO THE PRODUCTS AND/OR ANY
PATENTS OR TECHNOLOGY USED OR INCLUDED IN THE PRODUCTS, INCLUDING ANY WARRANTIES
AS TO MERCHANTABILITY, FITNESS FOR PURPOSE, CORRESPONDENCE WITH DESCRIPTION, OR
NON-INFRINGEMENT.


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<PAGE>

          14.8 LIMITATION. IN NO EVENT WILL LIGAND BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL OR SPECIAL DAMAGES, INCLUDING ANY LOSS OF PROFITS, EVEN IF LIGAND HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT THAT THIS LIMITATION
SHALL NOT APPLY TO DAMAGES DIRECTLY OR INDIRECTLY ARISING FROM PERSONAL INJURY
OR DEATH CAUSED BY THE DEFECTIVE DESIGN AND/OR MANUFACTURE OF THE PRODUCTS.

     15. ELAN'S WARRANTIES, INDEMNITY AND LIMITATIONS OF LIABILITY.

          15.1 GENERAL WARRANTIES AND COVENANTS. Elan represents, warrants and
covenants to Ligand that:

               (a) it is a corporation duly organized, validly existing and in
good standing under the laws of the Republic of Ireland and has the corporate
power to execute this Agreement and to perform its obligations hereunder;

               (b) the person or persons executing this Agreement on behalf of
Elan have been duly authorized to do so by all requisite corporate or other
actions of Elan;

               (c) this Agreement is the legal, valid and binding obligation of
Elan, enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditor rights and judicial principles affecting the
availability of specific performance and general principles of equity whether
enforceability is considered a proceeding at law or equity;

               (d) the execution, delivery and performance of this Agreement by
Elan does not and will not conflict with or result in a breach of any material
agreement, instrument or understanding, oral or written, to which Elan is a
party or by which Elan may be bound, nor violate any law or regulation of any
court or Governmental Authority having jurisdiction over Elan;

               (e) Elan will maintain at all times during this Agreement all
necessary Regulatory Approvals and Pricing Approvals which are, according to
Clause 4, the responsibility of Elan;

               (f) all Affiliates of Elan are duly organized, validly existing
and in good standing under the laws of the country in which they operate and
have the power to perform all obligations under this Agreement that they are
assigned by Elan;

               (g) it has made to Ligand appropriate disclosure of, and has not
misrepresented, any material matters relating to Elan's promotion, marketing and
distribution capabilities in the Territory; and

               (h) it shall at all times during the Term (including any
extension thereof) comply with all rules and regulations applicable to the
promotion, marketing and distribution of the Products in the Territory,
including complying with storage requirements for any such Products as set forth
in the applicable Regulatory Approvals, other than a failure to so


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<PAGE>

comply which would not have a material adverse effect on the promotion,
marketing or distribution of the Products in the Territory.

          15.2 INDEMNITY. Elan shall indemnify and hold Ligand and its
shareholders, managers, officers, directors, agents and employees (the "Ligand
Indemnitees") harmless against any and all losses, damages, claims, liabilities,
costs and expenses (including reasonable attorneys' fees) resulting from (a)
Elan's transportation, storage, use and handling of the Products; (b) any claim
that may be made by reason of any damage caused by an act or omission of Elan or
any of its shareholders, managers, officers, directors, agents or employees
whenever such act or omission is in connection with this Agreement contrary to
the law and is so declared by a court of competent jurisdiction or as agreed by
the Parties; or (c) any breach by Elan of any of Elan's representations and
warranties set forth in this Agreement or of any other material term of this
Agreement, so declared by a court of competent jurisdiction or as agreed by the
Parties, provided that a Ligand Indemnitee promptly notifies Elan in writing of
any claim, action or suit potentially giving rise to an indemnification
obligation hereunder. Elan shall have the sole and absolute control of, and
discretion in, the handling of the defense and/or settlement of any such claim,
action or suit, including, without limitation, the selection of defense counsel,
and the Ligand Indemnitees shall fully cooperate with Elan in the defense and
settlement of all such claims, actions or suits, provided, however, that a
Ligand Indemnitee may take any appropriate action necessary to preserve or avoid
prejudice to its interests, or the interests of Elan as indemnitor, in the event
that (1) notice to Elan cannot be given in sufficient time for Elan to take
action, or (2) Elan, after prompt notice and inquiry from a Ligand Indemnitee,
fails to acknowledge its obligation to indemnify such Ligand Indemnitee under
this clause.

          15.3 LIMITATION. IN NO EVENT WILL ELAN BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL OR SPECIAL DAMAGES, INCLUDING ANY LOSS OF PROFITS, EVEN IF ELAN HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT THAT THIS LIMITATION
SHALL NOT APPLY TO DAMAGES DIRECTLY OR INDIRECTLY ARISING FROM PERSONAL INJURY
OR DEATH CAUSED BY THE DEFECTIVE DESIGN AND/OR MANUFACTURE OF THE PRODUCTS.

     16. TERMINATION.

          16.1 TERMINATION BY LIGAND. Ligand may terminate this Agreement, at
its sole discretion: (1) in its entirety; or (2) in respect of any specified
part of the Territory and/or any one or more of the Products only, by giving
Elan *** written notice of termination, effective on the date such notice is
received, in the event that:

               (a) Elan breaches any of its material obligations under this
Agreement, and fails to cure such breach within *** of receiving a written
notice from Ligand specifying such breach and requiring it to be cured; provided
that such termination shall not be effective where such breach is incapable of
cure within such *** period and where Elan has commenced good faith and
commercially reasonable efforts to cure such breach within such *** period and
cures such breach within *** after the receipt of notice of material breach;



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<PAGE>

               (b) Elan enters into insolvency or bankruptcy or is unable to pay
its debts as they fall due, or a trustee or receiver or the equivalent is
appointed to Elan, or proceedings are instituted against Elan in the Territory
relating to dissolution, liquidation, winding up (other than on a
reconstruction), bankruptcy, insolvency or the relief of creditors, if such
proceedings are not terminated or discharged within ***

               (c) *** following a change of control of Elan, beyond its
corporate structure and owners on the Effective Date, or a sale or disposition
by Elan to a Third Party other than its owners and companies in its corporate
structure on the Effective Date of substantially all of its assets, if within
such *** period following such change of control Ligand has suffered
demonstrable and material harm to Ligand's commercial interests in the Products
and Elan fails to cure such harm within *** of receiving a written notice from
Ligand specifying such harm and requiring it to be cured. For the purposes of
this Clause 16.1(c), the transfer (whether direct or indirect) of all or a
majority of the capital stock of Elan or the merger, consolidation or
reorganization of Elan beyond its corporate structure and owners on the
Effective Date shall be considered a "change of control" of Elan;

               (d) any event of Force Majeure, as defined in Clause 19.7 hereof,
occurs and prevents Elan from performing its obligations under this Agreement
for a period of *** or more, provided there is no commercially reasonable
alternative;

               (e) Elan ceases to carry on business in the marketing of
pharmaceutical products in the Territory; or

               (f) an adverse event occurs which has substantially impaired the
ability of Elan to continue to perform its obligations hereunder and Elan is
unable to provide Ligand with adequate assurance of future performance.

          16.2 TERMINATION BY ELAN. Elan may terminate this Agreement, at its
sole discretion: (1) in its entirety; or (2) in respect of any specified part of
the Territory and/or any one or more of the Products only, by giving Ligand ***
written notice of termination, effective on the date such notice is received, in
the event that:

               (a) Ligand breaches any of its material obligations under this
Agreement, and fails to cure such breach within *** of receiving a written
notice from Elan specifying such breach and requiring it to be cured; provided
that such termination shall not be effective where such breach is incapable of
cure within such *** period and where Ligand has commenced good faith and
commercially reasonable efforts to cure such breach within such *** period and
cures such breach within *** after the receipt of notice of material breach;

               (b) any event of Force Majeure, as defined in Clause 19.7 hereof,
occurs and prevents Ligand from performing its obligations under this Agreement
for a period of *** or more, provided there is no commercially reasonable
alternative; or



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                                       31

<PAGE>

               (c) an adverse event occurs which has substantially impaired
Ligand's ability to continue to perform its obligations hereunder and Ligand is
unable to provide Elan with adequate assurance of future performance.

     17. RIGHTS AND OBLIGATIONS UPON TERMINATION/NONRENEWAL.

          17.1 CESSATION OF RIGHTS. Upon expiration or termination
(collectively, the "Termination") of this Agreement for any reason whatsoever as
provided herein all rights and obligations of the Parties hereunder shall cease,
except as provided in Clauses 17.5 of this Agreement; provided, however, that
Termination of this Agreement shall not relieve the Parties hereto of any
obligations accrued prior to said Termination. Elan, following notice of
Termination by Ligand, shall be entitled to purchase under the terms and
conditions of this Agreement, any Products the orders which were accepted by
Ligand prior to the effective date of Termination, even though shipment of the
Products may be made subsequent to the date of Termination. Upon Termination by
Ligand pursuant to Clauses 16.1, Elan shall immediately cease to use any
advertising or promotional materials relating to the Products and discontinue
any previously authorized use of the Trademarks and Confidential Information
(except for activities permitted by the last sentence of Clause 17.3), and shall
cease all conduct that might cause any Person to believe that Elan is a
distributor of the Products or otherwise connected with Ligand. Upon Termination
howsoever arising, Elan shall cease using the Promotional Materials and Ligand
shall cease using the Elan Promotional Materials, and shall ensure that all
other distributors of the Products cease to use the same.

          17.2 RETURN OF CONFIDENTIAL INFORMATION. Upon Termination, each Party
shall promptly return to the other Party, or deliver to a Third Party designated
by that other Party, and shall cause employees and Dealers, in the case of Elan,
to return or deliver, all of the other's Confidential Information in written,
recorded or other tangible form and other items in Elan's possession, which
Ligand has furnished or supplied to Elan, or which Elan has furnished to its
Dealers and employees, and all customer lists for the Products. If Elan
purchased any such materials or other items, Elan shall be reimbursed in an
amount equal to the net price paid by Elan for the same. For the avoidance of
doubt, Ligand shall not be entitled to Elan's sales materials or customer lists
for the Products.

          17.3 REPURCHASE OF INVENTORY. Ligand shall have the option,
exercisable at its sole discretion by written notice to Elan within *** after
Termination but subject to Elan's non-cancelable contractual obligations
existing as of the Termination, to repurchase all or part of Elan's remaining
inventory of Products. The price payable by Ligand upon the exercise of the
option shall be the net price paid by Elan to Ligand for the Products, plus the
costs of re-shipment to San Diego, California, or to such other destination as
Ligand may designate. Upon receipt of Ligand's notice of exercise of its option
pursuant to this clause, Elan shall ship its inventory of Products on hand to
such location as Ligand may designate. If Ligand does not exercise its rights
under this clause, Elan shall have the right to sell its existing inventory for
a period of *** following the date of Termination.



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          17.4 REGULATORY APPROVALS, PRICING APPROVALS, TRADEMARKS AND OTHER
PRODUCT RIGHTS. Upon Termination of this Agreement as provided herein for any
reason whatsoever, Elan shall immediately take all steps necessary to transfer
to Ligand, or to Ligand's designee, any and all rights Elan may have to
Regulatory Approvals, Pricing Approvals, Trademarks (including any related
documents) and any other rights associated with the Products including
Product-specific Approvals necessary for Ligand or its designee to commercialize
the Products in the Territory, to the extent permitted by applicable law and at
Elan's cost. Elan shall, at the time for application for Regulatory Approvals
and Pricing Approvals, take all reasonable steps to ensure that such transfers
may later be completed. If such transfer is not possible, Elan shall use its
best efforts to arrange for Ligand or its designee to rely upon such Regulatory
Approvals and Pricing Approvals and shall permit Ligand or its designee to use
and reference such Regulatory Approvals or Pricing Approvals in its own
applications.

          17.5 SURVIVAL OF NON-DISCLOSURE OBLIGATION. Notwithstanding the
Termination of this Agreement, both Parties shall continue to abide by the terms
of its non-disclosure obligations with respect to Confidential Information under
Clause 12 of this Agreement.

     18. [RESERVED].

     19. GENERAL PROVISIONS.

          19.1 WAIVERS. The waiver by either Party of a breach or default in any
of the provisions of this Agreement by the other Party shall not be construed as
a waiver of any succeeding breach of the same or other provisions.

          19.2 ENTIRE AGREEMENT AND AMENDMENTS. This Agreement constitutes the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements between the Parties, whether written or
oral, relating to the same subject matter. No modification, amendments or
supplements to this Agreement shall be effective for any purpose unless in
writing, signed by each Party.

          19.3 THIRD PARTY RIGHTS. Nothing in this Agreement shall be deemed to
confer on any person who is not a Party any right arising under the Contracts
(Rights of Third Parties) Act 1999 Section 1(1) or otherwise.

          19.4 GOVERNING LANGUAGE. This Agreement has been prepared and executed
in the English language. No authorized translation has been prepared or
executed. In the event that any translation is prepared, the English language
version of this Agreement shall govern. All written correspondence between the
Parties shall be in the English language.

          19.5 FURTHER ASSURANCES. Each Party agrees to do such acts and execute
such further documents as may be necessary or desirable to enable the
performance of and to fulfill the provisions and intent of this Agreement.

          19.6 ASSIGNMENTS. This Agreement is entered into by Ligand in reliance
upon the facilities, personnel and technical expertise of Elan, and Elan may
only transfer or delegate the performance of the Agreement or any part thereof
to a Dealer pursuant to the terms and conditions of Clause 2.1. Nothing herein
contained, however, shall prevent Ligand or Elan from


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<PAGE>

assigning this Agreement in whole or in part to, or causing any order or orders
to be filled in whole or in part by, any Affiliate of Ligand or Elan,
respectively; provided that such Affiliate is duly organized, validly existing
and in good standing under the laws of the country in which it operates and has
the power to perform all of the obligations of that Party under this Agreement
which are assigned to such Affiliate; and provided, further, that such
assignment does not result in adverse tax consequences for any other Party. Each
Party shall also have the right to assign this agreement in a merger or
acquisition in which such Party is not the surviving entity, or as part of a
transfer of all or substantially all of the assets of its business to which this
Agreement pertains; provided that such assignment does not result in adverse tax
consequences for any other Party.

          19.7 FORCE MAJEURE. Neither Party shall be liable to the other Party
for any delay or omission in the performance of any obligation under this
Agreement, other than the obligation to pay monies, where the delay or omission
is due to any cause or condition beyond the reasonable control of the Party
obliged to perform, including acts of God, acts of government (in particular
with respect to the refusal to issue necessary import or export licenses), fire,
flood, earthquake, war, riots or embargoes, but excluding strikes or other labor
difficulties affecting Ligand or Ligand's inability to obtain supplies howsoever
arising ("Force Majeure"). If Force Majeure prevents or delays the performance
by a Party of any obligation under this Agreement, then the Party claiming Force
Majeure shall promptly notify the other Party thereof in writing.

          19.8 NOTICES. Unless otherwise specifically provided, all notices
required or permitted by this Agreement shall be in writing and in English,
effective upon receipt, and may be delivered personally, or may be sent by
facsimile, commercial express courier, or first class air mail, postage prepaid,
addressed as follows:

                  If to Ligand:

                  Ligand Pharmaceuticals Incorporated
                  10275 Science Center Drive
                  San Diego, California 92121
                  Attention:  General Counsel
                  Facsimile:  (+) (1) (858) 550-1825

                  If to Elan:

                  Elan Pharma International Ltd.
                  WIL House
                  Shannon Business Park
                  Shannon, County Clare
                  Ireland
                  Attention:  President
                  Facsimile:  (+) 011-353-61-362-097

          19.9 SEVERABILITY. If any term or provision of this Agreement is held
to be invalid, illegal or unenforceable by a court or other governmental
authority of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term


                                       34

<PAGE>

or provision of this Agreement, which shall remain in full force and effect. The
holding of a term or provision to be invalid, illegal or unenforceable in a
jurisdiction shall not have any effect on the application of the term or
provision in any other jurisdiction.

     20. CHOICE OF LAW AND DISPUTE RESOLUTION.

          20.1 CHOICE OF LAW. This Agreement is governed by, and shall be
construed in accordance with, the laws of England, excluding conflicts of laws
rules. The Parties shall endeavor to resolve amicably any and all disputes
arising under or in connection with this Agreement, including but not limited to
the interpretation of this Agreement, its validity and the performance
hereunder.

          20.2 DISPUTES. Any dispute between the Parties relating to the
validity, performance, interpretation or construction of this Agreement that
cannot be resolved amicably between the Parties shall be submitted to the
exclusive jurisdiction of the courts of England. Each Party hereto irrevocably
submits to the personal jurisdiction of the courts in England, for the
resolution of all disputes hereunder.

          20.3 RIGHT TO JUDICIAL REMEDIES. Nothing in this Clause 20 shall be
construed to impair or restrict either Party's right to judicial remedies,
including preliminary and permanent injunctions from any court of competent
jurisdiction to prevent any infringement of the Intellectual Property Rights,
representation of competitive products, and/or disclosure of the Confidential
Information.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]















                                       35

<PAGE>

     IN WITNESS WHEREOF, each Party has caused its duly authorized
representative to execute and deliver this Agreement in reliance on the due
authority of the representative of the other Party, to be effective as of
February __, 2001.

                               ELAN PHARMA INTERNATIONAL LIMITED

                               By:        /S/DAVID HURLEY
                                        -------------------------------------

                               Name:      DAVID HURLEY
                                        -------------------------------------

                               Title:     DIRECTOR
                                        -------------------------------------



                               LIGAND PHARMACEUTICALS INCORPORATED

                               By:        /S/PAUL MAIER
                                        -------------------------------------

                               Name:      PAUL MAIER
                                        -------------------------------------

                               Title:     SENIOR VP & CFO
                                        -------------------------------------



                               SERAGEN, INC.

                               By:        /S/PAUL MAIER
                                        -------------------------------------

                               Name:      PAUL MAIER
                                        -------------------------------------

                               Title:     CEO
                                        -------------------------------------


                  [SIGNATURE PAGE TO DISTRIBUTORSHIP AGREEMENT]

<PAGE>


                                   APPENDIX A

                                    PRODUCTS



PRODUCT                                              COVERED INDICATIONS
-------                                              -------------------
                                                        
Panretin(R)Gel (alitretinoin)                        All human indications
Panretin(R)Capsules (alitretinoin)                   All human indications
Ontak(R)(denileukin diftitox)                        All human indications
Targretin(R)Gel (bexarotene)                         All human indications
Targretin(R)Capsules (bexarotene)                    All human indications





                                  Appendix A-1



<PAGE>


                                   APPENDIX B

                      PRICE SCHEDULE FOR ADJUSTING PAYMENT



                                                        ***
                       PRODUCT
                       -------
                                                    

             Targretin(R)capsule and gel                ***
                   Ontak(R)products                     ***
             Panretin(R)capsules and gel                ***








*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                  Appendix B-1




<PAGE>

                                   APPENDIX C

                                   TRADEMARKS



TRADEMARK        GENERIC PRODUCT NAME         COUNTRY       TRADEMARK STATUS
---------        --------------------         -------       ----------------
                                                         
Panretin(R)          alitretinoin               ***            Registered
                                                ***            Registered
                                                ***            Registered
                                                ***            Registered
                                                ***              Unfiled

Targretin(R)          bexarotene                ***            Registered
                                                ***            Registered
                                                ***            Registered
                                                ***            Registered
                                                ***            Registered
                                                ***              Pending
                                                ***              Pending
                                                ***              Pending
                                                ***              Pending
                                                ***              Pending
                                                ***              Unfiled

Ontak(R)          denileukin diftitox           ***            Registered
                                                ***             Abandoned
                                                ***              Unfiled

Onzar(TM)         denileukin diftitox           ***              Pending
                                                ***              Pending
                                                ***              Unfiled




*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                  Appendix C-1

<PAGE>

                                   APPENDIX D

                  LIGAND PRODUCT PATENT RIGHTS IN THE TERRITORY




                                       ***
                                       ***
                                       ***





*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                  Appendix D-1



<PAGE>


                                   APPENDIX E

                           SECOND AMENDMENT AGREEMENT




                                  Appendix E-1
<PAGE>



THIS SECOND AMENDMENT AGREEMENT ("SECOND AMENDMENT") is made on February __,
2001.


BETWEEN:

(1) ELAN CORPORATION, PLC, a company incorporated in Ireland having its
registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland ("ELAN")
and

(2) LIGAND PHARMACEUTICALS INCORPORATED, a company organized under the laws of
Delaware, with offices at 10275 Science Center Drive, San Diego, California
92121, United States of America ("LIGAND").


RECITALS:

A. ELAN and LIGAND entered into a Development, Licence and Supply Agreement
dated 9 November, 1998 (the "Agreement") that was amended 20 August, 1999 (the
"FIRST AMENDMENT");

B. Elan Pharma International Limited, an affiliate of ELAN, has entered into a
Distributorship Agreement with LIGAND dated as of the date hereof (the
"DISTRIBUTORSHIP AGREEMENT"); and

C. Under the terms of the Distributorship Agreement, LIGAND has agreed to amend
this Agreement to terminate the option granted to Ligand under Clause 2.2.2 of
the Agreement, as amended by the First Amendment, to co-promote the Product in
the Member States of the EU;

All capitalized terms used in this Second Amendment shall have the same meanings
as are assigned thereto in the Agreement, as amended by the First Amendment,
except where expressly provided to the contrary in this Second Amendment.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1 AMENDMENT TO THE AGREEMENT:

          20.4 ELAN AND LIGAND HEREBY AGREE THAT THE AGREEMENT, AS AMENDED BY
THE FIRST AMENDMENT, SHALL BE FURTHER AMENDED AS FOLLOWS:

          By the deletion of Clause 2.2.2 and 2.3.2 of the Agreement and removal
          of the reference to Clause 2.2.2 in Clause 2.3.3 of the Agreement.

          20.5 EXCEPT AS SET FORTH IN THIS SECOND AMENDMENT, THE AGREEMENT AS
AMENDED BY THE FIRST AMENDMENT SHALL REMAIN IN FULL FORCE AND EFFECT.

2 GOVERNING LAW AND JURISDICTION:


<PAGE>

This Second Amendment is construed under and ruled by the laws of New York. For
the purposes of this Second Amendment the parties submit to the non-exclusive
jurisdiction of the courts of New York.

IN WITNESS of which the parties have executed this Second Amendment.


Executed by LIGAND on February __, 2001

By:
     ------------------------------------

Name:
       ----------------------------------

Title:
       ----------------------------------



Executed by ELAN on February __, 2001

By:
     ------------------------------------

Name:
       ----------------------------------

Title:
        ---------------------------------

Source: OneCLE Business Contracts.