As filed with the Securities and Exchange Commission on January 27, 2004
Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CYTOKINETICS, INCORPORATED
(Exact name of Registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	2834	 	94-3291317	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	
280 East Grand Avenue
South San Francisco, California 94080
(650) 624-3000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

James H. Sabry, M.D., Ph.D.
President and Chief Executive Officer
Cytokinetics, Incorporated
280 East Grand Avenue
South San Francisco, California 94080
(650) 624-3000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
 	 	 	 	 	
Michael J. O’Donnell, Esq.
Martin J. Waters, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300	 	 	 	Alan C. Mendelson, Esq.
Patrick A. Pohlen, Esq.
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
(650) 328-4600	

    Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

    If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.     o

    If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.    o

CALCULATION OF REGISTRATION FEE

	

	
 	 	Proposed Maximum	 	Amount of	
Title of Each Class of	 	Aggregate	 	Registration	
Securities to be Registered	 	Offering Price(1)	 	Fee	

	
Common Stock $0.001 par value	 	$86,250,000	 	$6,977.63	

	

	

(1) 	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933.	

    The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

 
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
	
Subject to Completion. Dated January 27, 2004.

Shares

Common Stock

       This is an initial public offering of shares of common stock of Cytokinetics, Incorporated. All of the                    shares of common stock are being sold by the company.

       Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $                    and $                    . Application has been made for the quotation of the common stock on the Nasdaq National Market under the symbol “CYTK”.

      See “Risk Factors” on page 6 to read about factors you should consider before buying shares of the common stock.

      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 	 	 	 	 	 	 	 	 	
 	 	Per Share	 	Total	

	 	

	
Initial public offering price	 	$	 	 	 	$	 	 	
Underwriting discount	 	$	 	 	 	$	 	 	
Proceeds, before expenses, to Cytokinetics	 	$	 	 	 	$	 	 	
       To the extent that the underwriters sell more than                    shares of common stock, the underwriters have the option to purchase up to an additional                     shares from Cytokinetics at the initial public offering price less the underwriting discount.

       The underwriters expect to deliver the shares against payment in New York, New York on                     , 2004.
 	 	
Goldman, Sachs	& Co.	
Credit Suisse First Boston
Pacific Growth Equities, LLC
Lazard

Prospectus dated                     , 2004.

 

PROSPECTUS SUMMARY

      You should read the following summary together with the more detailed information regarding us, the sale of our common stock in this offering, our financial statements and notes to those financial statements that appear elsewhere in this prospectus.

Cytokinetics, Incorporated

       We are the leading biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs that specifically target the cytoskeleton. The cytoskeleton is a complex biological infrastructure that plays a fundamental role within every human cell. A number of commonly used drugs and a growing body of research validate the role that the cytoskeleton plays in a wide array of human diseases. Our focus on the cytoskeleton enables us to develop novel and potentially safer and more effective classes of drugs directed at treatments for cancer, cardiovascular disease, fungal diseases and other diseases. We have developed a cell biology driven approach and proprietary technologies to evaluate the function of many interacting proteins in the complex environment of the intact human cell. We believe that our approach enhances the speed, efficiency and yield of our drug discovery and development process by accurately and rapidly identifying drug candidates with attractive properties. Our approach has yielded two drug candidates for the treatment of cancer, potential drug candidates for the treatment of congestive heart failure, and more than ten other research programs. Our most advanced drug candidate, SB-715992, is the subject of a broad Phase II clinical trials program designed to evaluate its effectiveness in many different types of cancer. An investigational new drug application, or IND, was filed with the U.S. Food and Drug Administration, or FDA, in 2003 for our second cancer drug candidate, SB-743921, which we expect will enter Phase I clinical development in early 2004. In addition, we expect to initiate Phase I clinical development for a drug candidate for the treatment of acute congestive heart failure in the second half of 2004.

Our Focus on the Cytoskeleton

       The cytoskeleton is one of a few biological areas with broad potential for drug discovery and development and has been scientifically and commercially validated in a wide variety of human diseases. For example, the cytoskeleton plays a fundamental role in the cell proliferation process, and cancer is a disease of unregulated cell proliferation. A number of commonly used cancer drugs inhibit cell proliferation by disrupting aspects of cytoskeletal function. However, these drugs also interrupt cytoskeletal functions unrelated to cell proliferation. This limits their clinical benefit and results in dose-limiting toxicities. As another example, the cytoskeleton plays a fundamental role in cardiac muscle contraction and has been linked to the origins of congestive heart failure, a disease of impaired cardiac function. Certain commonly used congestive heart failure drugs that work by indirectly modulating cytoskeletal function have limited therapeutic value due to their clinical side effects. We believe that our understanding of the cytoskeleton will allow us to develop potentially safer and more effective drugs for cancer and congestive heart failure. Our other research programs are also focused on diseases in which we believe the cytoskeleton plays a significant role.

Our Drug Candidates in Development
 	 	 	
 	• 	Cancer:SB-715992 has entered a Phase II clinical trial for the treatment of non-small cell lung cancer and is expected to enter multiple Phase II clinical trials in other solid and hematologic cancers throughout 2004.  SB-715992 is a novel small molecule drug candidate that inhibits cell proliferation and promotes cancer cell death by specifically disrupting the function of a cytoskeletal protein known as kinesin spindle protein, or KSP. KSP is essential for cell proliferation, a process that when unregulated results in tumor growth. KSP plays no role outside of cell proliferation. Current drugs that inhibit cell proliferation, such as Taxol® (paclitaxel) and Taxotere® (docetaxel), are standard treatments	
1

 
 	 	 	
 	 	for many types of cancers, but these drugs target tubulin, a cytoskeletal protein that is essential not only to cell proliferation but also to many other important cellular functions. Because SB-715992 inhibits only cell proliferation, we believe it may exhibit a lower incidence of toxicities than many existing cancer drugs. In addition, SB-715992’s novel mechanism of action may be effective against a broader range of tumor types.	

 	 	SB-715992 is being developed by GlaxoSmithKline, or GSK, with us through our strategic alliance. GSK commenced a Phase II clinical trial for SB-715992 in non-small cell lung cancer in late 2003. A number of parallel Phase II monotherapy clinical trials and Phase Ib combination therapy clinical trials are scheduled to begin throughout 2004. These clinical trials are expected to evaluate this novel drug candidate in multiple tumor types including colorectal, breast, ovarian, and other solid and hematologic cancers. Also in 2004, the National Cancer Institute, or NCI, plans to sponsor additional Phase I and Phase II clinical trials designed to evaluate SB-715992 in other tumor types and other dosing regimens.	

 	• 	Cancer: SB-743921 is expected to enter Phase I clinical trials in early 2004. This drug candidate also inhibits KSP but is structurally distinct from SB-715992. We believe that having two KSP inhibitors for the potential treatment of cancer in concurrent clinical development increases the likelihood that a commercial drug will be developed. SB-743921 is also being developed by GSK through our strategic alliance.	
 	 	 	
 	• 	Cardiovascular Disease: We expect to file an IND and initiate a Phase I clinical trial for a drug candidate for the treatment of acute congestive heart failure in the second half of 2004.  Our potential drug candidates specifically target a cytoskeletal protein, cardiac myosin, which is essential for cardiac muscle contraction. In animal models, compounds arising from this program improve cardiac function without detrimental effects on heart rhythm, heart rate or blood pressure that limit the effectiveness of existing drugs.	
Our Research Programs

       We have more than ten research programs that address multiple therapeutic areas, such as fungal diseases, inflammatory diseases, high blood pressure and asthma. We structure our research programs in these therapeutic areas around cytoskeletal protein targets to discover and develop novel small molecule drug candidates that may address unmet clinical needs as well as the shortcomings of existing drugs.

Our Cell Biology Driven Approach to Drug Discovery and Development

       All of our compounds in research and development have been discovered internally using our unique cell biology driven approach. We develop a detailed understanding of multiple proteins within a cytoskeletal pathway or multi-protein system to identify various intervention points to modulate the pathway or system to treat disease. We can then direct our discovery activities to specific cytoskeletal proteins that may be attractive targets for the development of potentially safer and more effective drugs.

       We have also developed proprietary automated technologies, including our PUMA system and Cytometrix technologies, to enable early identification and prioritization of compounds that are highly selective for their intended protein targets without other cellular effects, and are thereby less likely to give rise to clinical side effects. The integrated use of these technologies enables us to efficiently focus our research efforts and resources on those compounds directed at novel cytoskeletal protein targets that are more likely to yield attractive drug candidates. We have advanced our Cytometrix technologies through technical development activities conducted with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc.

2

 

Our Strategic Alliances

       We selectively seek strategic alliances that enable us to maintain financial and operational flexibility while retaining significant economic and commercial rights to our drug candidates. In June 2001, we entered into a strategic alliance with GSK to discover, develop and commercialize small molecule drugs for the treatment of cancer as well as other diseases by targeting KSP and certain other related cytoskeletal proteins involved in cell proliferation. Under this strategic alliance, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse our full time equivalents, or FTEs, conducting research in connection with the strategic alliance and to make additional precommercialization milestone payments to us and pay royalties to us based on product sales. As of December 31, 2003, we have received $17.2 million in FTE reimbursement and $3.2 million in precommercialization milestone payments from GSK. We will receive future FTE reimbursement and could receive significant precommercialization milestone payments and royalties based on product sales. In addition, we retain both a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate, and an option to secure additional co-promotion rights. In December 2003, we entered into a strategic alliance with AstraZeneca AB to fund and participate in the development of a new application of our Cytometrix technologies for use by both parties.

Our Corporate Strategy

       Our goal is to become a fully-integrated biopharmaceutical company focused on discovering, developing and commercializing novel drugs to treat cancer, cardiovascular disease and other diseases. We intend to achieve this goal by:
 	 	 	
 	• 	focusing on the cytoskeleton;	
 	 	 	
 	• 	leveraging our cell biology driven approach and proprietary technologies to increase the speed, efficiency and yield of our drug discovery and development process;	
 	 	 	
 	• 	pursuing multiple drug candidates for each cytoskeletal protein target and broad clinical trials for each drug candidate;	
 	 	 	
 	• 	establishing select strategic alliances to accelerate our drug development programs while preserving significant development and commercial rights; and	
 	 	 	
 	• 	building development and commercialization capabilities directed towards large concentrated markets.	
Risks

       Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in “Risk Factors”. All of our drug candidates, including SB-715992 and SB-743921, are in clinical or earlier stages of development. Accordingly, we have not received regulatory approval for, nor commercial revenues from, any of our drug candidates. It is possible that neither we nor our partners may ever successfully commercialize any of our drug candidates. As of September 30, 2003, we had incurred $85.1 million in net losses since inception. Because our initial drug candidates are in the early stages of clinical testing, we expect to continue to incur increasing losses over the next several years, and we may never become profitable.

Company Information

       We were incorporated in Delaware in August 1997 as Cytokinetics, Incorporated. Our principal executive offices are located at 280 East Grand Avenue, South San Francisco, California 94080, and our telephone number is (650) 624-3000. Our website address is http://www.cytokinetics.com. Information contained in our website is not a part of this prospectus. References in this prospectus to “we,” “us” and “our” refer to Cytokinetics, Incorporated.

3

 

The Offering

Common stock offered	 	                    shares	
 	 	 	
Common stock to be outstanding after this offering	 	                    shares	
 	 	 	
Use of proceeds	 	For general corporate purposes, including the potential co-funding of certain later-stage development activities with respect to SB-715992 or SB-743921; preclinical activities and clinical development of a drug candidate for the treatment of acute congestive heart failure; research programs; development, sales, marketing and manufacturing operations and the potential license or acquisition of complementary technologies. See “Use of Proceeds.”	

Proposed Nasdaq National Market symbol	 	CYTK	
       The number of shares of common stock to be outstanding after this offering is based on 3,990,393 shares of common stock outstanding as of September 30, 2003 and also reflects the automatic conversion of preferred stock into 34,199,272 shares of common stock. This number does not include, as of September 30, 2003:
 	 	 	
 	• 	4,841,012 shares of common stock issuable upon exercise of options outstanding, at a weighted average exercise price of $0.54 per share; and	
 	 	 	
 	• 	up to 367,500 shares of common stock issuable upon exercise of warrants outstanding, at a weighted average exercise price of $1.13 per share; and	
 	 	 	
 	• 	                    shares of common stock reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan, 2004 Equity Incentive Plan and our 2004 Employee Stock Purchase Plan.	

       Except as otherwise indicated, all information in this prospectus:
 	 	 	
 	• 	gives effect to our certificate of incorporation which we will file immediately prior to the closing of this offering;	
 	 	 	
 	• 	gives effect to the automatic conversion of all outstanding shares of preferred stock into shares of common stock upon the closing of this offering; and	
 	 	 	
 	• 	assumes no exercise by the underwriters of their option to purchase                     additional shares from Cytokinetics in this offering.	
       CYTOKINETICS, our logo used alone and with the mark CYTOKINETICS, and CYTOMETRIX are our registered service marks and trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners.

4

 

Summary Financial Data

      The following table summarizes our financial data. The summary financial data for the years ended December 31, 2000, 2001 and 2002 are derived from our audited financial statements included in this prospectus. We have also included data from our unaudited financial statements for the nine months ended September 30, 2002 and 2003. You should read these data together with our financial statements and related notes and the information under “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Cumulative Period	
 	 	 	 	Nine Months Ended	 	from August 5, 1997	
 	 	Years Ended December 31,	 	September 30,	 	(date of Inception)	

	 	

	 	to September 30,	
 	 	2000	 	2001	 	2002	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	 	

	 	

	
 	 	 	
 	 	(in thousands, except for per share data)	
Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development and grant revenues	 	$	—	 	 	$	7,066	 	 	$	8,596	 	 	$	6,134	 	 	$	5,770	 	 	$	21,432	 	
 	License revenues	 	 	—	 	 	 	1,400	 	 	 	2,800	 	 	 	2,100	 	 	 	2,100	 	 	 	6,300	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	—	 	 	 	8,466	 	 	 	11,396	 	 	 	8,234	 	 	 	7,870	 	 	 	27,732	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development(1)	 	$	10,403	 	 	$	20,961	 	 	$	28,424	 	 	$	19,661	 	 	$	24,140	 	 	$	90,953	 	
 	General and administrative(1)	 	 	3,390	 	 	 	5,897	 	 	 	6,953	 	 	 	5,903	 	 	 	7,451	 	 	 	26,424	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	13,793	 	 	 	26,858	 	 	 	35,377	 	 	 	25,564	 	 	 	31,591	 	 	 	117,377	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Loss from operations	 	 	(13,793	)	 	 	(18,392	)	 	 	(23,981	)	 	 	(17,330	)	 	 	(23,721	)	 	 	(89,645	)	
Interest and other income (expense), net	 	 	714	 	 	 	2,518	 	 	 	901	 	 	 	736	 	 	 	26	 	 	 	4,561	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(16,594	)	 	$	(23,695	)	 	$	(85,084	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(6.78	)	 	$	(5.59	)	 	$	(6.62	)	 	$	(4.83	)	 	$	(6.28	)	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Pro forma net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted(2)	 	 	 	 	 	 	 	 	 	$	(0.78	)	 	 	 	 	 	$	(0.67	)	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	

 	 	
(1) 	Includes non-cash stock-based compensation.	
 	 	
(2) 	Gives effect to the conversion of all outstanding shares of preferred stock into 34,199,272 shares of our common stock effective upon the closing of this offering.	

 	 	As of September 30, 2003	

	
 	 	 	 	Pro Forma,	
 	 	Actual	 	Pro Forma	 	As Adjusted	

	 	

	 	

	
 	 	 	
 	 	(in thousands)	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents, short-term and long-term investments	 	$	44,397	 	 	$	44,397	 	 	 	 	 	
Restricted cash	 	 	13,904	 	 	 	13,904	 	 	 	 	 	
Working capital(1)	 	 	43,471	 	 	 	43,471	 	 	 	 	 	
Total assets	 	 	70,199	 	 	 	70,199	 	 	 	 	 	
Long-term portion of equipment financing lines	 	 	7,384	 	 	 	7,384	 	 	 	 	 	
Convertible preferred stock	 	 	133,175	 	 	 	—	 	 	 	 	 	
Deficit accumulated during the development stage	 	 	(85,084	)	 	 	(85,084	)	 	 	 	 	
Total stockholders’ (deficit) equity	 	 	(83,550	)	 	 	49,625	 	 	 	 	 	
The table above presents summary balance sheet data on an actual basis, on a pro forma basis and on a pro forma as adjusted basis. The pro forma numbers reflect the conversion of all of our preferred stock into an aggregate of 34,199,272 shares of our common stock immediately upon the closing of this offering and the pro forma as adjusted numbers reflect the sale of                      shares of our common stock at an assumed initial public offering price of $          per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 	 	
(1) 	Represents current assets less current liabilities.	
5

 

RISK FACTORS

      Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in this prospectus before making an investment decision. If any of the possible adverse events described below actually occurs, our business, results of operations or financial condition would likely suffer. In such an event, the market price of our common stock could decline and you could lose all or part of your investment in our common stock.

Risks Related to Our Business

Our initial drug candidates are in the early stages of clinical testing and we have a history of significant losses and may not achieve or sustain profitability and, as a result, you may lose all or part of your investment.

       Our initial drug candidates are in the early stages of clinical testing and we must conduct significant additional clinical trials before we can seek the regulatory approvals necessary to begin commercial sales of our drugs. We have incurred operating losses in each year since our inception in 1997 due to costs incurred in connection with our research and development activities and general and administrative costs associated with our operations. Our net loss for the nine-month period ended September 30, 2003, for the fiscal years ended December 31, 2002 and 2001 and for the period August 5, 1997 (inception) through December 31, 2000 was $23.7 million, $23.1 million, $15.9 million and $22.4 million, respectively. As of September 30, 2003, we had an accumulated deficit of $85.1 million. We expect to incur increasing losses for several years, as we continue our research activities and conduct development of, and seek regulatory approvals for, our initial drug candidates, and commercialize any approved drugs. If our initial drug candidates fail in clinical trials or do not gain regulatory approval, or if our drugs do not achieve market acceptance, we will not be profitable. If we fail to become and remain profitable, or if we are unable to fund our continuing losses, you could lose all or part of your investment.

We have never generated, and may never generate, revenues from commercial sales of our drugs and we may not have drugs to market for several years, if ever.

       We currently have no drugs for sale and we cannot guarantee that we will ever have marketable drugs. We must demonstrate that our drug candidates satisfy rigorous standards of safety and efficacy before the FDA and other regulatory authorities in the United States and abroad. We and our partners will need to conduct significant additional research, preclinical testing and clinical testing, before we or our partners can file applications with the FDA for approval of our drug candidates. In addition, to compete effectively, our drugs must be easy to use, cost-effective and economical to manufacture on a commercial scale. We may not achieve any of these objectives. SB-715992, our most advanced drug candidate for the treatment of cancer, is currently our only drug candidate in clinical trials and we cannot be certain that the clinical development of this or any other drug candidate in preclinical testing or clinical development will be successful, that it will receive the regulatory approvals required to commercialize it, or that any of our other research programs will yield a drug candidate suitable for entry into clinical trials. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for several years, if at all. We expect that SB-743921, our other cancer drug candidate, will enter Phase I clinical trials in early 2004. Because SB-743921 has a similar mechanism of action as SB-715992, the development of one or both of these drug candidates may be discontinued at any stage of our clinical trials programs and we may not generate revenue from either of these drug candidates.

       We have funded all of our operations and capital expenditures with proceeds from private placements of our securities and strategic alliances with GSK and others. We expect that the net proceeds of this offering, together with our existing cash resources, future payments from GSK and

6

 
AstraZeneca, proceeds from equipment financings, and interest earned on investments will be sufficient to meet our projected operating requirements for at least the next 24 months. For the nine months ended September 30, 2003, our cash outflow to fund operations was approximately $23.9 million. To meet our future cash requirements, we may raise funds through public or private equity offerings, debt financings or strategic alliances. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution. To the extent that we raise additional funds through debt financing, if available, this may involve covenants that restrict our business activities. To the extent that we raise additional funds through strategic alliance and licensing arrangements, we will likely have to relinquish valuable rights to our technologies, research programs or drug candidates, or grant licenses on terms that may not be favorable to us.

Clinical trials may fail to demonstrate the safety and efficacy of our drug candidates, which could prevent or significantly delay completion of clinical development and regulatory approval.

       Prior to receiving approval to commercialize any of our drug candidates, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities in the United States and abroad, that such drug candidate is both safe and effective. We will need to demonstrate efficacy for the treatment of specific indications and monitor safety throughout the clinical development process. To date, long-term safety and efficacy have not yet been demonstrated in clinical trials for any of our drug candidates. Through our strategic alliance, GSK is currently conducting a Phase II clinical trial to test the safety and efficacy of SB-715992 in non-small cell lung cancer. Additional Phase II and Phase Ib clinical trials for SB-715992 and Phase I clinical trials for SB-743921 are scheduled to begin throughout 2004. If these trials or future clinical trials are unsuccessful, our business and reputation would be harmed and our stock price would be negatively affected.

       All of our drug candidates are prone to the risks of failure inherent in drug development. The results of preclinical studies and early-stage clinical trials of our drug candidates do not necessarily predict the results of later-stage clinical trials. Drug candidates in later-stage clinical trials may fail to show desired safety and efficacy traits despite having progressed through initial clinical trials. Even if we believe the data collected from clinical trials of our drug candidates are promising, such data may not be sufficient to support approval by the FDA or any other United States or foreign regulatory approval. Preclinical and clinical data can be interpreted in different ways. Accordingly, FDA officials could interpret the data in different ways than we or our partners do, which could delay, limit or prevent regulatory approval. Administering any of our drug candidates to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials of our drug candidates and could result in the FDA or other regulatory authorities denying approval of our drug candidates for any or all targeted indications. The FDA, other regulatory authorities, our partners or we may suspend or terminate clinical trials at any time. Any failure or significant delay in completing clinical trials for our drug candidates, or in receiving regulatory approval for the sale of any drugs resulting from our drug candidates, may severely harm our business and reputation.

Clinical trials are expensive, time consuming and subject to delay.

       Clinical trials are very expensive and difficult to design and implement, especially in the cancer and congestive heart failure indications that we are pursuing, in part because they are subject to rigorous requirements. The clinical trial process is also time consuming. We estimate that clinical trials of our most advanced drug candidates will continue for several years, but may take significantly longer to complete. The commencement and completion of our clinical trials could be delayed or prevented by several factors, including:
 	 	 	
 	• 	delays in obtaining regulatory approvals to commence a study;	
7

 
 	 	 	
 	• 	delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;	
 	 	 	
 	• 	slower than expected rates of patient recruitment and enrollment;	
 	 	 	
 	• 	lack of effectiveness during clinical trials;	
 	 	 	
 	• 	unforeseen safety issues;	
 	 	 	
 	• 	uncertain dosing issues;	
 	 	 	
 	• 	inability to monitor patients adequately during or after treatment; and	
 	 	 	
 	• 	inability or unwillingness of medical investigators to follow our clinical protocols.	
       We do not know whether planned clinical trials will begin on time, will need to be restructured or will be completed on schedule, if at all. Significant delays in clinical trials will impede our ability to commercialize our drug candidates and generate revenue and could significantly increase our development costs.

We depend on GSK for the conduct, completion and funding of the clinical development and commercialization of our current drug candidates for the treatment of cancer.

       Under our strategic alliance with GSK, GSK is currently responsible for the clinical development and regulatory approval of SB-715992 and SB-743921. GSK is responsible for filing applications with the FDA or other regulatory authorities for approval of these drug candidates, and will be the owner of any marketing approvals issued by the FDA or other regulatory authorities. If the FDA or other regulatory authorities approve these drug candidates, GSK will also be responsible for the marketing and sale of these drugs. Because GSK is responsible for these functions, we cannot control whether GSK will devote sufficient attention and resources to the clinical trials program or will proceed in an expeditious manner. Under certain circumstances, GSK has discretion to elect whether to pursue the development of our drug candidates or to abandon the clinical trials program, and, after June 20, 2006, GSK may terminate our strategic alliance for any reason upon six months prior notice. Disputes may arise between us and GSK, which may delay or cause termination of the clinical trials program, result in significant litigation or arbitration, or cause GSK to act in a manner that is not in our best interest. If development of our drug candidates does not progress for these or any other reasons, we would not receive further milestone payments from GSK. Even if the FDA or other regulatory agencies approve one or more of our drug candidates, GSK may elect not to proceed with the commercialization of such drugs, or may elect to pursue commercialization of one drug but not others. In such event, we would have to undertake and fund the clinical development of our drug candidates or commercialization of our drugs, seek a new partner for clinical development or commercialization, or curtail or abandon the clinical development or commercialization programs. If we were unable to do so on acceptable terms, or at all, our business would be harmed, and the price of our common stock would be negatively affected.

If we fail to enter into and maintain successful strategic alliances for our drug candidates, we may have to reduce or delay our drug candidate development or increase our expenditures.

       Our strategy for developing, manufacturing and commercializing in certain therapeutic areas currently requires us to enter into and successfully maintain strategic alliances with pharmaceutical companies or other industry participants to advance our programs and reduce our expenditures on each program. We have formed a strategic alliance with GSK with respect to SB-715992, SB-743921 and certain other research activities. However, we may not be able to negotiate additional strategic alliances on acceptable terms, if at all. If we are not able to maintain our existing strategic alliances or establish and maintain additional strategic alliances, we may have to limit the size or scope of, or delay, one or more of our drug development programs or research programs or undertake and fund these programs ourselves. If we elect to increase our expenditures to fund drug development

8

 
programs or research programs on our own, we will need to obtain additional capital, which may not be available on acceptable terms, or at all.

The success of our strategic alliances depends in part on the performance of our partners, over which we have little or no control.

       Our ability to commercialize drugs that we develop with our partners and generate royalties from product sales depends on our partners’ abilities to assist us in establishing the safety and efficacy of our drug candidates, obtaining and maintaining regulatory approvals and achieving market acceptance of the drugs once commercialized. Our partners may elect to delay or terminate development of one or more drug candidates, independently develop drugs that could compete with ours, or fail to commit sufficient resources to the marketing and distribution of drugs developed through their strategic alliances with us. If our partners fail to perform as we expect, our potential for revenue from drugs developed through our strategic alliances with them could be dramatically reduced.

Our focus on the discovery of drug candidates directed against specific proteins and pathways within the cytoskeleton is unproven, and we do not know whether we will be able to develop any drug candidates of commercial value.

       Our focus on drug discovery and development directed at the cytoskeleton is novel and unique to us. While a number of commonly used drugs and a growing body of research validate the importance of the cytoskeleton in the origin and progression of a number of diseases, no existing drugs specifically and directly interact with the cytoskeletal proteins and pathways that our drug candidates seek to modulate. As a result, we cannot be certain that our drug candidates will appropriately modulate targeted cytoskeletal proteins and pathways or produce commercially viable drugs that safely and effectively treat cancer, congestive heart failure and potentially other diseases. In addition, if we are successful in developing and receiving regulatory approval for a commercially viable drug for the treatment of one disease focused to the cytoskeleton, we cannot be certain that we will also be able to develop and receive regulatory approval for drug candidates for the treatment of other forms of that disease or other diseases. If we or our partners fail to develop and commercialize viable drugs, we will not achieve commercial success.

Our proprietary rights may not adequately protect our technologies and drug candidates.

       Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technologies and drug candidates as well as successfully defending these patents against third-party challenges. We will only be able to protect our technologies and drug candidates from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them. Furthermore, the degree of future protection of our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

       The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. For example:
 	 	 	
 	• 	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;	
 	 	 	
 	• 	we or our licensors might not have been the first to file patent applications for these inventions;	
9

 
 	 	 	
 	• 	others may independently develop similar or alternative technologies or duplicate any of our technologies;	
 	 	 	
 	• 	it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;	
 	 	 	
 	• 	our issued patents and issued patents of our licensors may not provide a basis for commercially viable drugs, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties;	
 	 	 	
 	• 	we may not develop additional proprietary technologies or drug candidates that are patentable; or	
 	 	 	
 	• 	the patents of others may have an adverse effect on our business.	
       We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our or our strategic partners’ employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our information to competitors. If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time consuming, and the outcome would be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, if our competitors may independently develop equivalent knowledge, methods and know-how, it will be more difficult for us to enforce our patent rights and our business could be harmed.

       If we are not able to defend the patent or trade secret protection position of our technologies and drug candidates, then we will not be able to exclude competitors from developing or marketing competing drugs, and we may not generate enough revenue from product sales to justify the cost of development of our drugs and to achieve or maintain profitability.

If we are sued for infringing intellectual property rights of third parties, such litigation will be costly and time consuming, and an unfavorable outcome would have a significant adverse effect on our business.

       Our ability to commercialize drugs depends on our ability to sell such drugs without infringing the patents or other proprietary rights of third parties. Numerous United States and foreign issued patents and pending applications, which are owned by third parties, exist in the areas that we are exploring. In addition, because patent applications can take several years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that our drug candidates may infringe. There could also be existing patents of which we are not aware that our drug candidates may inadvertently infringe.

       In particular, we are aware of an issued United States patent and at least one pending United States patent application assigned to Curis, Inc. relating to certain compounds in the quinazolinone class. SB-715992 falls into this class of compounds. The Curis patent claims a method of use for inhibiting signaling by what is called the hedgehog pathway using certain such compounds. We are also aware that Curis has pending applications in Europe, Japan, Australia and Canada with claims covering compositions of certain quinazolinone compounds. Curis or a third party may assert that the sale of SB-715992 may infringe one or more of these or other patents. We believe that we have valid defenses against an assertion that SB-715992 infringes the Curis patent. However, we cannot guarantee that a court would find such defenses valid. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       In addition, we are aware of a European patent application assigned to Cellomics, Inc. relating to an automated method for analyzing cells. The Cellomics application is proceeding to grant in

10

 
Europe. We are also aware that Cellomics has pending applications in the United States, Canada, Japan and Australia. Cellomics or a third party may assert that our Cytometrix technologies fall within the scope of the Cellomics European patent application and thus may infringe one or more of these or other patents. We believe that we have valid defenses to such an assertion. Moreover, the grant of the European patent may be opposed by one or more parties. However, we cannot guarantee that a court would find such defenses valid or that such opposition would be successful. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       If a third party claims that we infringe on their patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including:
 	 	 	
 	• 	infringement and other intellectual property claims which, with or without merit, can be costly and time consuming to litigate and can delay the regulatory approval process and divert management’s attention from our core business strategy;	
 	 	 	
 	• 	substantial damages for past infringement which we may have to pay if a court determines that our drugs or technologies infringe upon a competitor’s patent or other proprietary rights;	
 	 	 	
 	• 	a court prohibiting us from selling or licensing our drugs or technologies unless the holder licenses the patent or other proprietary rights to us, which it is not required to do; and	
 	 	 	
 	• 	if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights.	
To the extent we elect to fund the development of a drug candidate or the commercialization of a drug at our expense, we will need substantial additional funding.

       The discovery, development and commercialization of novel small molecule drugs focused on the cytoskeleton for the treatment of a wide array of diseases is costly. As a result, to the extent we elect to fund the development of a drug candidate or the commercialization of a drug at our expense, we will need to raise additional capital to:
 	 	 	
 	• 	expand our research and development and technologies;	
 	 	 	
 	• 	fund clinical trials and seek regulatory approvals;	
 	 	 	
 	• 	build or access manufacturing and commercialization capabilities;	
 	 	 	
 	• 	implement additional internal systems and infrastructure;	
 	 	 	
 	• 	maintain, defend and expand the scope of our intellectual property; and	
 	 	 	
 	• 	hire additional management and scientific personnel.	
       Our future funding requirements will depend on many factors, including:
 	 	 	
 	• 	the rate of progress and cost of our clinical trials and other research and development activities;	

 	• 	the costs associated with establishing manufacturing and commercialization capabilities;	

 	• 	the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;	
 	 	 	
 	• 	the costs and timing of seeking and obtaining regulatory approvals;	
 	 	 	
 	• 	the costs of acquiring or investing in businesses, products and technologies;	
 	 	 	
 	• 	the effect of competing technological and market developments; and	
11

 
 	 	 	
 	• 	the payment and other terms and timing of any strategic alliance, licensing or other arrangements that we may establish.	
       Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings or strategic alliances. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or future commercialization initiatives.

We currently have no marketing or sales staff, and if we are unable to enter into or maintain strategic alliances with marketing partners or if we are unable to develop our own sales and marketing capabilities, we may not be successful in commercializing our potential drugs.

       We currently have no sales, marketing or distribution capabilities. To commercialize our drugs that we determine not to market on our own, we will depend on strategic alliances with third parties, such as GSK, which have established distribution systems and direct sales forces. If we are unable to enter into such arrangements on acceptable terms, we may not be able to successfully commercialize such drugs.

       We plan to commercialize drugs on our own, with or without a partner, that can be effectively marketed and sold in concentrated markets that do not require a large sales force to be competitive. To achieve this goal, we will need to establish our own specialized sales force and marketing organization with technical expertise and with supporting distribution capabilities. Developing such an organization is expensive and time consuming and could delay a product launch. In addition, we may not be able to develop this capacity efficiently, or at all, which could make us unable to commercialize our drugs.

       To the extent that we are not successful in commercializing any drugs ourselves or through a strategic alliance, our product revenues will suffer, we will incur significant additional losses and the price of our common stock will be negatively affected.

We have no manufacturing capacity, depend on a single manufacturer to produce our clinical trial drug supplies, and anticipate continued reliance on third-party manufacturers for the development and commercialization of our potential drugs.

       We do not currently operate manufacturing facilities for clinical or commercial production of our drug candidates under development. We have no experience in drug formulation or manufacturing, and we lack the resources and the capabilities to manufacture any of our drug candidates on a clinical or commercial scale. As a result, we currently rely on a single contract manufacturer to supply, store and distribute drug supplies for our clinical trials and anticipate future reliance on a limited number of third-party manufacturers until we are able to expand our operations to include manufacturing capacities. Any performance failure on the part of our existing or future manufacturers could delay clinical development or regulatory approval of our drug candidates or commercialization of our drugs, producing additional losses and depriving us of potential product revenues.

       Our drug candidates require precise, high quality manufacturing. Our failure or our contract manufacturer’s failure to achieve and maintain high manufacturing standards, including the incidence of manufacturing errors, could result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could seriously hurt our business. Contract manufacturers often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified personnel. These manufacturers are subject to ongoing periodic unannounced inspection by the FDA, the United States Drug Enforcement Agency, or DEA, and corresponding state agencies to ensure strict compliance with current Good Manufacturing Practice, or GMP, and other applicable government regulations and corresponding foreign standards; however, we do not have control over third-party manufacturers’

12

 
compliance with these regulations and standards. If one of our manufacturers fails to maintain compliance, the production of our drug candidates could be interrupted, resulting in delays, additional costs and potentially lost revenues. Additionally, our third-party manufacturer must pass a preapproval inspection before we can obtain marketing approval for any of our drug candidates in development.

       If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, we will need to manufacture them in larger quantities. To date, our drug candidates have been manufactured in small quantities for preclinical testing and clinical trials and we may not be able to successfully increase the manufacturing capacity, whether in collaboration with third-party manufacturers or on our own, for any of our drug candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If we are unable to successfully increase the manufacturing capacity for a drug candidate, the regulatory approval or commercial launch of any related drugs may be delayed or there may be a shortage in supply. Even if any third-party manufacturer makes improvements in the manufacturing process for our drug candidates, we may not own, or may have to share, the intellectual property rights to such innovation.

       In addition, our existing and future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to successfully produce, store and distribute our drug candidates. We currently rely on a single third-party manufacturer as the sole supply source for our drug candidates. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable to replace such third-party manufacturer in a timely manner and the production of our drug candidates would be interrupted, resulting in delays and additional costs.

       Switching manufacturers may be difficult because the number of potential manufacturers is limited and the FDA must approve any replacement manufacturer prior to manufacturing our drug candidates. Such approval would require new testing and compliance inspections. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our drug candidates after receipt of FDA approval. It may be difficult or impossible for us to find a replacement manufacturer on acceptable terms quickly, or at all.

We expect to expand our development, clinical research and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

       We expect to have significant growth in expenditures, the number of our employees and the scope of our operations, in particular with respect to those drug candidates that we elect to commercialize independently or together with a partner. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

The failure to attract and retain skilled personnel could impair our drug development and commercialization efforts.

       Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel. We carry key person life insurance on James H. Sabry, M.D., Ph.D., our President and Chief Executive Officer. The loss of the services of any member of our senior management, scientific or technical staff may significantly delay or prevent the achievement of drug development and other business objectives by diverting management’s attention to transition

13

 
matters and identification of suitable replacements, and could have a material adverse effect on our business, operating results and financial condition. We also rely on consultants and advisors to assist us in formulating our research and development strategy. All of our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us.

       In addition, we believe that we will need to recruit additional executive management and scientific and technical personnel. There is currently intense competition for skilled executives and employees with relevant scientific and technical expertise, and this competition is likely to continue. The inability to attract and retain sufficient scientific, technical and managerial personnel could limit or delay our product development efforts, which would adversely affect the development of our drug candidates and commercialization of our potential drugs and growth of our business.

Risks Related to Our Industry

Our competitors may develop drugs that are less expensive, safer, or more effective, which may diminish or eliminate the commercial success of any drugs that we may commercialize.

       We compete with companies that are developing drug candidates that focus on the cytoskeleton, as well as companies that have developed drugs or are developing alternative drug candidates for cancer and cardiovascular and infectious diseases. For example, with respect to cancer, Bristol-Myers Squibb’s Taxol, Aventis Pharmaceuticals Inc.’s Taxotere, and generic equivalents of Taxol are currently available on the market and commonly used in cancer treatment. Furthermore, we are aware that Merck & Co., Inc. and Bristol-Myers Squibb are conducting KSP-directed research. In addition, Bristol-Myers Squibb, Novartis and other pharmaceutical and biopharmaceutical companies are developing other approaches to inhibiting mitosis. With respect to congestive heart failure, we are aware of a potentially competitive approach being developed by Orion in collaboration with Abbott Laboratories.

       Our competitors may:
 	 	 	
 	• 	develop drug candidates and market drugs that are less expensive or more effective than our future drugs;	
 	 	 	
 	• 	commercialize competing drugs before we or our partners can launch any drugs developed from our drug candidates;	
 	 	 	
 	• 	initiate or withstand substantial price competition more successfully than we can;	
 	 	 	
 	• 	have greater success in recruiting skilled scientific workers from the limited pool of available talent;	
 	 	 	
 	• 	more effectively negotiate third-party licenses and strategic alliances; and	
 	 	 	
 	• 	take advantage of acquisition or other opportunities more readily than we can.	
       We will compete for market share against large pharmaceutical and biotechnology companies and smaller companies that are collaborating with larger pharmaceutical companies, new companies, academic institutions, government agencies and other public and private research organizations. Many of these competitors, either alone or together with their partners, may develop new drug candidates that will compete with ours, as these competitors may, and in certain cases do, operate larger research and development programs or have substantially greater financial resources than we do. Our competitors may also have significantly greater experience in:
 	 	 	
 	• 	developing drug candidates;	
 	 	 	
 	• 	undertaking preclinical testing and clinical trials;	
 	 	 	
 	• 	building relationships with key customers and opinion-leading physicians;	
14

 
 	 	 	
 	• 	obtaining and maintaining FDA and other regulatory approvals of drug candidates;	
 	 	 	
 	• 	formulating and manufacturing drugs; and	
 	 	 	
 	• 	launching, marketing and selling drugs.	
       If our competitors market drugs that are less expensive, safer or more effective than our potential drugs, or that reach the market sooner than our potential drugs, we may not achieve commercial success. In addition, the life sciences industry is characterized by rapid technological change. Because our research approach integrates many technologies, it may be difficult for us to stay abreast of the rapid changes in each technology. If we fail to stay at the forefront of technological change we may be unable to compete effectively. Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies.

The regulatory approval process is expensive, time consuming and uncertain and may prevent our partners or us from obtaining approvals for the commercialization of some or all of our drug candidates.

       The research, testing, manufacturing, selling and marketing of drug candidates are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. Neither we nor our partners are permitted to market our potential drugs in the United States until we receive approval of a NDA from the FDA. Neither we nor our partners have received marketing approval for any of our drug candidates. Obtaining a NDA can be a lengthy, expensive and uncertain process. In addition, failure to comply with the FDA and other applicable foreign and United States regulatory requirements may subject us to administrative or judicially imposed sanctions. These include warning letters, civil and criminal penalties, injunctions, product seizure or detention, product recalls, total or partial suspension of production, and refusal to approve pending NDAs, or supplements to approved NDAs.

       Regulatory approval of a NDA or NDA supplement is never guaranteed, and the approval process typically takes several years and is extremely expensive. The FDA also has substantial discretion in the drug approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon clinical trials or to repeat or perform additional preclinical testing and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable to any particular drug candidate. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including:
 	 	 	
 	• 	a drug candidate may not be safe or effective;	
 	 	 	
 	• 	FDA officials may not find the data from preclinical testing and clinical trials sufficient;	
 	 	 	
 	• 	the FDA might not approve our or our third-party manufacturer’s processes or facilities; or	
 	 	 	
 	• 	the FDA may change its approval policies or adopt new regulations.	
If we or our partners receive regulatory approval for our drug candidates, we will also be subject to ongoing FDA obligations and continued regulatory review, such as continued safety reporting requirements, and we may also be subject to additional FDA post-marketing obligations, all of which may result in significant expense and limit our ability to commercialize our potential drugs.

       Any regulatory approvals that we or our partners receive for our drug candidates may also be subject to limitations on the indicated uses for which the drug may be marketed or contain requirements for potentially costly post-marketing follow-up studies. In addition, if the FDA approves any of our drug candidates, the labeling, packaging, adverse event reporting, storage, advertising,

15

 
promotion and record-keeping for the drug will be subject to extensive regulatory requirements. The subsequent discovery of previously unknown problems with the drug, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of the drug, and could include withdrawal of the drug from the market.

       The FDA’s policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are not able to maintain regulatory compliance, we might not be permitted to market our drugs and our business could suffer.

If physicians and patients do not accept our drugs, we may be unable to generate significant revenue, if any.

       Even if our drug candidates obtain regulatory approval, resulting drugs, if any, may not gain market acceptance among physicians, healthcare payors, patients and the medical community. Even if the clinical safety and efficacy of drugs developed from our drug candidates are established, physicians may elect not to recommend these drugs for a variety of reasons including:
 	 	 	
 	• 	timing of market introduction of competitive drugs;	
 	 	 	
 	• 	demonstration of clinical safety and efficacy;	
 	 	 	
 	• 	cost-effectiveness;	
 	 	 	
 	• 	availability of reimbursement from health maintenance organizations and other third-party payors;	
 	 	 	
 	• 	convenience and ease of administration;	
 	 	 	
 	• 	prevalence and severity of adverse side effects;	
 	 	 	
 	• 	other potential advantages over alternative treatment methods; and	
 	 	 	
 	• 	marketing and distribution support.	
If our drugs fail to achieve market acceptance, we may not be able to generate significant revenue and our business would suffer.

The coverage and reimbursement status of newly approved drugs is uncertain and failure to obtain adequate coverage and reimbursement could limit our ability to market any drugs we may develop and decrease our ability to generate revenue.

       There is significant uncertainty related to the coverage and reimbursement of newly approved drugs. The commercial success of our potential drugs in both domestic and international markets is substantially dependent on whether third-party coverage and reimbursement is available for the ordering of our potential drugs by the medical profession for use by their patients. Medicare, Medicaid, health maintenance organizations and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs, and, as a result, they may not cover or provide adequate payment for our potential drugs. They may not view our potential drugs as cost-effective and reimbursement may not be available to consumers or may not be sufficient to allow our potential drugs to be marketed on a competitive basis. Likewise, legislative or regulatory efforts to control or reduce healthcare costs or reform government healthcare programs could result in lower prices or rejection of our potential drugs. Changes in coverage and reimbursement policies or healthcare cost containment initiatives that limit or restrict reimbursement for our drugs may cause our revenue to decline.

16

 

We may be subject to costly product liability claims and may not be able to obtain adequate insurance.

       Because we conduct clinical trials in humans, we face the risk that the use of our drug candidates will result in adverse effects. We currently maintain product liability insurance in the amount of $10.0 million with a $5,000 deductible per occurrence, however, such liability insurance excludes coverage of liability resulting from clinical trials. We cannot predict the possible harms or side effects that may result from our clinical trials. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limit of, our insurance coverage.

       In addition, once we have commercially launched drugs based on our drug candidates, we will face exposure to product liability claims. This risk exists even with respect to those drugs that are approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA. We intend to secure limited product liability insurance coverage, but may not be able to obtain such insurance on acceptable terms with adequate coverage, or at reasonable costs. There is also a risk that third parties that we have agreed to indemnify could incur liability. Even if we were ultimately successful in product liability litigation, the litigation would consume substantial amounts of our financial and managerial resources and may create adverse publicity, all of which would impair our ability to generate sales of the litigated product as well as our other potential drugs. Moreover, product recalls may be issued at our discretion or at the direction of the FDA, other governmental agencies or other companies having regulatory control for drug sales. If product recalls occur, such recalls are generally expensive and often have an adverse effect on the image of the drugs being recalled as well as the reputation of the drug’s developer or manufacturer.

We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.

       Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain potential drugs, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

We use hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.

       Our research and development processes involve the controlled use of hazardous materials, including chemicals, radioactive and biological materials. Our operations produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from those materials. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development and production efforts.

       In addition, our partners may use hazardous materials in connection with our strategic alliances. To our knowledge, their work is performed in accordance with applicable biosafety regulations. In the event of a lawsuit or investigation, however, we could be held responsible for any injury caused to persons or property by exposure to, or release of, these hazardous materials used

17

 
by these parties. Further, we may be required to indemnify our partners against all damages and other liabilities arising out of our development activities or drugs produced in connection with these strategic alliances.

Our facilities in California are located near an earthquake fault, and an earthquake or other types of natural disasters or resource shortages could disrupt our operations and adversely affect results.

       Important documents and records, such as hard copies of our laboratory books and records for our drug candidates and compounds, are located in our corporate headquarters at a single location in South San Francisco, California near active earthquake zones. In the event of a natural disaster, such as an earthquake, drought or flood, or localized extended outages of critical utilities or transportation systems, we do not have a formal business continuity or disaster recovery plan, and could therefore experience a significant business interruption. In addition, California from time to time has experienced shortages of water, electric power and natural gas. Future shortages and conservation measures could disrupt our operations and cause expense, thus adversely affecting our business and financial results.

Risks Related To Our Common Stock and This Offering

We expect that our stock price will fluctuate significantly, and you may not be able to resell your shares at or above the initial public offering price.

       Prior to this offering, you could not buy or sell our common stock publicly. An active public market for our common stock may not develop or be sustained after this offering. We will negotiate and determine the initial public offering price with the representatives of the underwriters based on several factors. This price may vary from the market price of our common stock after this offering. You may be unable to sell your shares of common stock at or above the initial offering price due to fluctuation in the market price of the common stock arising from changes in our operating performance or prospects. In addition, the stock market, particularly in recent years, has experienced significant volatility particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Factors that could cause this volatility in the market price of our common stock include:
 	 	 	
 	• 	results from and any delays in the clinical trials programs, including the clinical trials for SB-715992 and SB-743921, our drug candidates for the treatment of cancer;	
 	 	 	
 	• 	failure or delays in entering additional drug candidates into clinical trials, including a drug candidate for the treatment of acute congestive heart failure;	
 	 	 	
 	• 	failure or discontinuation of any of our research programs;	
 	 	 	
 	• 	delays in establishing new strategic alliances;	
 	 	 	
 	• 	announcements concerning our strategic alliances with GSK or AstraZeneca or future strategic alliances;	
 	 	 	
 	• 	delays in the development of our drug candidates and commercialization of our potential drugs by GSK or any future partners or otherwise;	
 	 	 	
 	• 	market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;	
 	 	 	
 	• 	actual and anticipated fluctuations in our quarterly financial and operating results;	
 	 	 	
 	• 	developments or disputes concerning our intellectual property or other proprietary rights;	
18

 
 	 	 	
 	• 	introduction of technological innovations or new commercial products by us or our competitors;	
 	 	 	
 	• 	issues in manufacturing our drug candidates or drugs;	
 	 	 	
 	• 	market acceptance of our drugs;	
 	 	 	
 	• 	third-party healthcare reimbursement policies;	
 	 	 	
 	• 	FDA or other United States or foreign regulatory actions affecting us or our industry;	
 	 	 	
 	• 	litigation or public concern about the safety of our drug candidates or drugs; and	
 	 	 	
 	• 	additions or departures of key personnel.	
       These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

If the ownership of our common stock continues to be highly concentrated, it may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline.

       Our executive officers, directors and their affiliates will beneficially own or control approximately                     percent of the outstanding shares of our common stock (after giving effect to the conversion of all outstanding convertible preferred stock and the exercise of all outstanding vested and unvested options and warrants), following the completion of this offering. Accordingly, these executive officers, directors and their affiliates, acting as a group, will have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions. These stockholders may also delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Future sales of common stock by our existing stockholders may cause our stock price to fall.

       The market price of our common stock could decline as a result of sales by our existing stockholders of shares of common stock in the market after this offering, or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate. The lock-up agreements delivered by our executive officers and directors and substantially all of our stockholders and optionholders provide that Goldman, Sachs & Co., in its sole discretion, may release those parties, at any time or from time to time and without notice, from their obligation not to dispose of shares of common stock for a period of 180 days after the date of this prospectus. Goldman, Sachs & Co. has no pre-established conditions to waiving the terms of the lock-up agreements, and any decision by it to waive those conditions would depend on a number of factors, which may include market conditions, the performance of the common stock in the market and our financial condition at that time. Please see “Shares Eligible for Future Sale.”

19

 

We will have broad discretion in how we use the proceeds of this offering, and we may not use these proceeds effectively, which could affect our results of operations and cause our stock price to decline.

       We will have considerable discretion in the application of the net proceeds of this offering. We currently intend to use the net proceeds to:
 	 	 	
 	• 	co-fund certain later-stage development activities, if we exercise our option under our strategic alliance with GSK, for either or both of SB-715992 or SB-743921;	
 	 	 	
 	• 	continue preclinical activities and conduct clinical development of a drug candidate for the treatment of acute congestive heart failure;	
 	 	 	
 	• 	advance our other research programs;	
 	 	 	
 	• 	scale up our development, sales, marketing and manufacturing operations; and	
 	 	 	
 	• 	in-license technology and acquire or invest in businesses, products or technologies that we believe are complementary to our own.	
       We have not yet finalized the amount of net proceeds that we will use specifically for each of these purposes. We may use the net proceeds for corporate purposes that do not yield a significant return or any return at all for our stockholders.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for you to change management.

       Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove our current management. These provisions include:
 	 	 	
 	• 	a classified board of directors;	
 	 	 	
 	• 	a prohibition on stockholder action through written consent;	
 	 	 	
 	• 	a requirement that special meetings of stockholders be called only by the board of directors or a committee duly designated by the board of directors whose powers and authorities include the power to call such special meetings;	
 	 	 	
 	• 	advance notice requirements for stockholder proposals and nominations;	
 	 	 	
 	• 	a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend certain of our bylaws by stockholder action, or to amend certain provisions of our certificate of incorporation; and	
 	 	 	
 	• 	the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.	
       In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns or within the last three years has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Accordingly, Section 203 may discourage, delay or prevent a change in control of our company.

       As a result, these provisions in our charter and others available under Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock.

20

 

Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty.

       Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and Nasdaq National Market rules are creating uncertainty for public companies. We are presently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. These new or changed laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and we may be harmed.

We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.

       We have paid no cash dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our businesses. In addition, the terms of existing or any future debts may preclude us from paying these dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Investors in this offering will pay a much higher price than the book value of our common stock.

       If you purchase common stock in this offering, you will pay more for your shares than the amounts paid by existing stockholders for their shares. You will incur immediate and substantial dilution of $ per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and an assumed initial public offering price of $                    . In the past, we issued options and warrants to acquire common stock at prices significantly below the initial public offering price. To the extent these outstanding options or warrants are ultimately exercised, you will sustain further dilution.

21

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

       This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements.

       Forward-looking statements include, but are not limited to, statements about:
 	 	 	
 	• 	the initiation, progress, timing and completion of preclinical research, development, and clinical trials for our drug candidates and potential drug candidates;	
 	 	 	
 	• 	the time and costs involved in obtaining regulatory approvals;	
 	 	 	
 	• 	delays that may be caused by evolving requirements of regulatory agencies;	
 	 	 	
 	• 	the number of drug candidates we pursue;	
 	 	 	
 	• 	our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, including the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims;	
 	 	 	
 	• 	our options to co-fund the development of one or both of SB-715992 and SB-743921;	
 	 	 	
 	• 	the level of funding we may provide for future drug candidates, including a drug candidate for the treatment of acute congestive heart failure;	
 	 	 	
 	• 	our plans or ability to establish sales, marketing or manufacturing capabilities and to achieve market acceptance for drug candidates;	
 	 	 	
 	• 	our ability to establish, enforce and maintain selected strategic alliances and activities required for commercialization of our drug candidates;	
 	 	 	
 	• 	the acquisition of technologies, products and other business opportunities that require financial commitments;	
 	 	 	
 	• 	our estimates of future performance; and	
 	 	 	
 	• 	our estimates regarding anticipated operating losses, future revenues, if any, from successful development of our drug candidates and commercialization of our potential drugs, capital requirements and our needs for additional financing.	
       These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include those listed under “Risk Factors” and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We do not intend to update any of the forward-looking statements after the date of this prospectus or to conform these statements to actual results. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act of 1933 provides any protection for statements made in this prospectus.

22

 

USE OF PROCEEDS

       Our net proceeds from the sale of                    shares of common stock in this offering are estimated to be approximately $                     million, based on an assumed offering price of $          per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, which are payable by us.

       We intend to use the proceeds of this offering for general corporate purposes, including to:
 	 	 	
 	• 	co-fund certain later-stage development activities, if we exercise our option under our strategic alliance with GSK, for either or both of SB-715992 or SB-743921;	
 	 	 	
 	• 	continue preclinical activities and conduct clinical development of a drug candidate for the treatment of acute congestive heart failure;	
 	 	 	
 	• 	advance our other research programs;	
 	 	 	
 	• 	scale up our development, sales, marketing and manufacturing operations; and	
 	 	 	
 	• 	potentially in-license technology and acquire or invest in businesses, products or technologies that we believe are complementary to our own.	
       Although we periodically engage in preliminary discussions with respect to acquisitions, we are not currently a party to any agreements or commitments and we have no understandings with respect to any acquisitions.

       The amounts and timing of our actual expenditures depend on several factors, including the progress of our research and development efforts and the amount of cash used by our operations. We have not determined the amount or timing of the expenditures in the areas listed above. Pending their use, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.

DIVIDEND POLICY

       We have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.

23

 

CAPITALIZATION

       The following table sets forth our capitalization as of September 30, 2003:
 	 	 	
 	• 	on an actual basis;	
 	 	 	
 	• 	on a pro forma basis, reflecting the conversion of all of our preferred stock into an aggregate of 34,199,272 shares of common stock immediately upon the closing of this offering; and	
 	 	 	
 	• 	on a pro forma as adjusted basis, reflecting the sale of                               shares of common stock in this offering at an assumed initial public offering price of $          per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.	
       You should read this table in conjunction with the sections of this prospectus entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our financial statements and related notes.

 	 	As of September 30,	 	Pro	
 	 	2003	 	Forma	

	 	As	
 	 	Actual	 	Pro Forma	 	Adjusted	

	 	

	 	

	
 	 	 	
 	 	(in thousands)	
Long-term portion of equipment financing lines	 	$	7,384	 	 	$	7,384	 	 	$	 	 	

	 	 	 	

	 	 	 	

	 	
Convertible preferred stock, $0.001 par value, 37,300,000 shares authorized, 34,124,308 shares issued and outstanding, no shares issued and outstanding pro forma and pro forma as adjusted	 	 	133,175	 	 	 	—	 	 	 	 	 	
Stockholders’ equity (deficit):	 	 	 	 	 	 	 	 	 	 	 	 	
 	Common stock, $0.001 par value, 61,500,000 shares authorized, 3,990,393 shares issued and outstanding, actual; 38,189,665 shares outstanding pro forma;            shares outstanding pro forma as adjusted	 	 	4	 	 	 	38	 	 	 	 	 	
Additional paid-in capital	 	 	4,106	 	 	 	137,247	 	 	 	 	 	
Deferred stock-based compensation	 	 	(2,652	)	 	 	(2,652	)	 	 	 	 	
Accumulated other comprehensive income	 	 	76	 	 	 	76	 	 	 	 	 	
Deficit accumulated during the development stage	 	 	(85,084	)	 	 	(85,084	)	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	Total stockholders’ equity (deficit)	 	 	(83,550	)	 	 	49,625	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total capitalization	 	$	57,009	 	 	$	57,009	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
       The actual number of shares of common stock shown as issued and outstanding in the table above excludes:
 	 	 	
 	• 	4,841,012 shares subject to stock options outstanding as of September 30, 2003;	
 	 	 	
 	• 	1,053,226 shares reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan as of September 30, 2003; and	
 	 	 	
 	• 	367,500 shares of common stock underlying warrants to issue common and preferred stock outstanding as of September 30, 2003.	
24

 

DILUTION

       If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of common stock upon the completion of this offering. Our historical net tangible book value as of September 30, 2003 was approximately $(83.6) million. Pro forma net tangible book value per share represents our total tangible assets less total liabilities divided by the pro forma total number of shares of common stock outstanding after giving effect to the automatic conversion of all shares of our outstanding convertible preferred stock. Dilution in pro forma as adjusted net tangible book value per share represents the difference between the amount per share paid by purchasers of common stock in this offering and the pro forma as adjusted net tangible book value per share of common stock immediately after the closing of this offering.

       After giving effect to the sale of the shares of common stock at an assumed initial public offering price of $          per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2003 would have been approximately $           million, or $          per share of common stock. This represents an immediate increase in pro forma net tangible book value of $          per share to existing stockholders and an immediate dilution of $          per share to new investors purchasing shares of common stock in this offering at the initial offering price.

       The following table illustrates this dilution on a per share basis:
 	 	 	 	 	 	 	 	 	 	
Assumed initial public offering price per share	 	 	 	 	 	$	 	 	
Historical net tangible book value per share as of September 30, 2003	 	$	(20.94	)	 	 	 	 	
Increase per share due to assumed conversion of all shares of convertible preferred stock	 	 	22.24	 	 	 	 	 	

	 	 	 	 	 	
 	Pro forma net tangible book value per share as of September 30, 2003	 	$	1.30	 	 	 	 	 	
 	Increase per share attributable to new investors	 	 	 	 	 	 	 	 	
Pro forma as adjusted net tangible book value per share after this offering	 	 	 	 	 	 	 	 	
Dilution per share to new investors	 	 	 	 	 	$	 	 	
       The following table summarizes as of September 30, 2003 the number of shares of our common stock purchased from us, the total consideration paid to us, and the average price per share paid to us by existing stockholders and to be paid by new investors purchasing shares of our common stock in this offering. The table assumes an initial public offering price of $          per share, and deducts underwriting discounts and commissions and estimated offering expenses payable by us:

 	 	Shares Purchased	 	Total Consideration	 	Average	

	 	

	 	Price Per	
 	 	Number	 	Percent	 	Amount	 	Percent	 	Share	

	 	

	 	

	 	

	 	

	
Existing stockholders	 	 	 	 	 	 	 	%	 	$	 	 	 	 	 	%	 	$	 	 	
New investors	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total	 	 	 	 	 	 	100	%	 	$	 	 	 	 	100	%	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
       The above discussion and tables are based on 3,990,393 shares of common stock issued and outstanding as of September 30, 2003 and excludes:
 	 	 	
 	• 	4,841,012 shares subject to stock options outstanding as of September 30, 2003;	
 	 	 	
 	• 	1,053,226 shares reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan as of September 30, 2003; and	
 	 	 	
 	• 	367,500 shares of common stock underlying warrants to issue common and preferred stock outstanding as of September 30, 2003.	
25

 

       To the extent the outstanding options or warrants are exercised, you will experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

26

 

SELECTED FINANCIAL DATA

      The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” following this section and our financial statements and related notes included in the back of this prospectus. The selected financial data for the period from August 5, 1997 (inception) to December 31, 1998 and for the year ended December 31, 1999 and as of December 31, 1998, 1999 and 2000 are derived from our audited financial statements not included in this prospectus. The selected financial data for the years ended December 31, 2000, 2001 and 2002 and as of December 31, 2001 and 2002 are derived from our audited financial statements included in this prospectus. The selected financial data for the nine months ended September 30, 2002 and 2003 and as of September 30, 2003 are derived from our unaudited financial statements included in this prospectus. The selected financial data as of September 30, 2002 are derived from our unaudited financial statements not included in this prospectus. The unaudited selected financial statements include, in the opinion of management, all adjustments, consisting only of normal, recurring adjustments, which management considers necessary for a fair statement of the results for those periods. The historical results are not necessarily indicative of results to be expected in any future period and the results for the nine months ended September 30, 2003 should not be considered indicative of results expected for the full fiscal year.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Period from	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	August 5, 1997	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	(date of	 	 	 	 	 	 	 	 	 	 	
 	 	inception)	 	 	 	Nine Months Ended	
 	 	through	 	Year Ended December 31,	 	September 30,	
 	 	December 31,	 	

	 	

	
 	 	1998	 	1999	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	 	

	 	

	
Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development and grant revenues	 	$	—	 	 	$	—	 	 	$	—	 	 	$	7,066	 	 	$	8,596	 	 	$	6,134	 	 	$	5,770	 	
 	License revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,400	 	 	 	2,800	 	 	 	2,100	 	 	 	2,100	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8,466	 	 	 	11,396	 	 	 	8,234	 	 	 	7,870	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	922	 	 	 	6,103	 	 	 	10,403	 	 	 	20,961	 	 	 	28,424	 	 	 	19,661	 	 	 	24,140	 	
 	General and administrative	 	 	1,218	 	 	 	1,515	 	 	 	3,390	 	 	 	5,897	 	 	 	6,953	 	 	 	5,903	 	 	 	7,451	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	2,140	 	 	 	7,618	 	 	 	13,793	 	 	 	26,858	 	 	 	35,377	 	 	 	25,564	 	 	 	31,591	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating loss	 	 	(2,140	)	 	 	(7,618	)	 	 	(13,793	)	 	 	(18,392	)	 	 	(23,981	)	 	 	(17,330	)	 	 	(23,721	)	
Interest and other income	 	 	132	 	 	 	378	 	 	 	902	 	 	 	3,232	 	 	 	2,232	 	 	 	1,838	 	 	 	1,797	 	
Interest and other expense	 	 	(7	)	 	 	(101	)	 	 	(188	)	 	 	(714	)	 	 	(1,331	)	 	 	(1,102	)	 	 	(1,771	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	$	(2,015	)	 	$	(7,341	)	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(16,594	)	 	$	(23,695	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(1.80	)	 	$	(4.72	)	 	$	(6.78	)	 	$	(5.59	)	 	$	(6.62	)	 	$	(4.83	)	 	$	(6.28	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Weighted average shares used in computing net loss per common share, basic and diluted	 	 	1,122	 	 	 	1,556	 	 	 	1,930	 	 	 	2,840	 	 	 	3,484	 	 	 	3,437	 	 	 	3,772	 	
Pro forma net loss per common share, basic and diluted	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(0.78	)	 	 	 	 	 	$	(0.67	)	
Weighted average shares used in computing pro forma net loss per common share, basic and diluted	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	29,668	 	 	 	 	 	 	 	35,336	 	

 	 	As of December 31,	 	As of September 30,	

	 	

	
 	 	1998	 	1999	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	 	

	 	

	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents, short-term and long-term investments	 	$	2,055	 	 	$	14,823	 	 	$	56,787	 	 	$	62,314	 	 	$	30,461	 	 	$	36,529	 	 	$	44,397	 	
Restricted cash	 	 	157	 	 	 	225	 	 	 	225	 	 	 	6,236	 	 	 	13,106	 	 	 	13,376	 	 	 	13,904	 	
Working capital	 	 	1,890	 	 	 	13,113	 	 	 	43,006	 	 	 	50,074	 	 	 	31,693	 	 	 	42,911	 	 	 	43,471	 	
Total assets	 	 	3,638	 	 	 	17,644	 	 	 	61,038	 	 	 	79,019	 	 	 	56,168	 	 	 	61,779	 	 	 	70,199	 	
Long-term portion of equipment financing lines	 	 	—	 	 	 	892	 	 	 	1,079	 	 	 	3,525	 	 	 	7,077	 	 	 	7,146	 	 	 	7,384	 	
Deficit accumulated during the development stage	 	 	(2,016	)	 	 	(9,356	)	 	 	(22,434	)	 	 	(38,309	)	 	 	(61,389	)	 	 	(54,902	)	 	 	(85,084	)	
Total convertible preferred stock	 	 	5,269	 	 	 	24,605	 	 	 	79,462	 	 	 	93,304	 	 	 	93,304	 	 	 	93,304	 	 	 	133,175	 	
Total stockholders’ deficit	 	$	(2,005	)	 	$	(9,121	)	 	$	(21,818	)	 	$	(37,352	)	 	$	(60,572	)	 	$	(54,103	)	 	$	(83,550	)	
27

 

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

       We are a biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs specifically targeting the cytoskeleton. Employing our cell biology driven approach and proprietary technologies we have enhanced the speed, efficiency and yield of our drug discovery and development process. We have two drug candidates for the treatment of cancer and potential drug candidates for the treatment of acute congestive heart failure and are pursuing more than ten research programs addressing a number of therapeutic areas.

       Since our inception in August 1997, we have incurred significant net losses. As of September 30, 2003, we had an accumulated deficit of $85.1 million. We expect to incur substantial and increasing losses for the next several years as:
 	 	 	
 	• 	one or both of SB-715992 and SB-743921 enter later-stage development and commercialization, if we exercise our options to co-fund the development of, and co-promote, these drug candidates under our strategic alliance with GSK;	
 	 	 	
 	• 	we advance a drug candidate for the treatment of acute congestive heart failure and other drug candidates through clinical trials;	
 	 	 	
 	• 	we expand our research programs and further develop our proprietary drug discovery technologies; and	
 	 	 	
 	• 	if we elect to fund development or commercialization of any drug candidate.	
We intend to pursue selective strategic alliances to enable us to maintain financial and operational flexibility.

       To date, we have funded our operations primarily through the sale of equity securities, non-equity payments from GSK, capital lease financings, interest on investments and government grants. We received net proceeds from the sale of equity securities of $39.9 million in the nine-month period ended September 30, 2003, $13.8 million in 2001, $54.9 million in 2000, $19.3 million in 1999 and $5.3 million in 1998. Under our strategic alliance with GSK, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse FTEs performing research in connection with the strategic alliance and to make additional milestone payments and pay royalties based on product sales. As of December 31, 2003, we have received $17.2 million in FTE reimbursement and $3.2 million in milestone payments from GSK. We received $1.4 million, $6.4 million, $3.5 million, $0.6 million and $1.3 million under equipment financing arrangements in the nine-month period ended September 30, 2003, and the years ending December 31, 2002, 2001, 2000, and 1999, respectively. Interest earned on investments in the nine months ended September 30, 2003, and the years ending December 31, 2002, 2001, 2000 and 1999 was $1.7 million, $2.2 million, $3.1 million, $0.8 million and $0.3 million, respectively. Grant revenues were $0.3 million and $0.1 million in 2001 and 2002, respectively.

       GSK has also committed to reimburse FTEs through the end of the five-year research term of the strategic alliance, and to make additional payments upon the achievement of certain precommercialization milestones. GSK has agreed to fund worldwide development and commercialization of drug candidates arising from our strategic alliance. We will earn royalties from sales of any

28

 
resulting drugs. We retain a product-by-product option to co-fund certain later-stage development activities, thereby potentially increasing our royalties and affording co-promotion rights in North America. In the event we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities.

Revenues

       Our current revenue sources are limited, and we do not expect to generate any direct revenue from product sales for several years. We currently recognize revenues from our strategic alliance with GSK for contract research activities, which we record as related expenses are incurred. Charges to GSK are based on negotiated rates which are intended to approximate costs for our FTEs performing research under the strategic alliance and our out-of-pocket expenses. GSK has paid us an upfront licensing fee, which we recognize ratably over the five-year research term of the strategic alliance. We may receive additional payments from GSK upon achieving certain precommercialization milestones. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. We record amounts received in advance of performance as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful. Because a substantial portion of our revenues for the foreseeable future will depend on achieving research, development and other precommercialization milestones, our results of operations may vary substantially from year to year. In the event, we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities.

       We expect that ultimately our future revenues will be derived from royalties on sales from drugs licensed to GSK under our strategic alliance and from those licensed to future partners, as well as from direct sales of our drugs. We retain a product-by-product option under our strategic alliance with GSK to co-fund certain later-stage development activities with GSK under our strategic alliance, thereby potentially increasing our royalties and affording co-promotion rights in North America.

Research and Development

       We incur research and development expenses associated with both partnered and unpartnered research activities, as well as the development and expansion of our drug discovery technologies. Research and development expenses relating to our strategic alliance with GSK consist primarily of costs related to research and screening, lead optimization and other activities relating to the identification of compounds for development as mitotic kinesin inhibitors for the treatment of cancer. These costs are reimbursed by GSK on a FTE basis. GSK funds all costs related to preclinical and clinical development of the compounds that are selected for development. Accordingly, we do not currently incur research and development expenses related to the ongoing development of SB-715992 and SB-743921. Under our strategic alliance, we have an option on a product-by-product basis to co-fund certain later-stage development costs for each of these drug candidates. If we exercise an option, our research and development expenses will increase significantly. Research and development expenses related to any development and commercialization activities we elect to fund would consist primarily of employee compensation, supplies and materials, costs for consultants and contract research, facilities costs, and depreciation of equipment. We expect to incur research and development expenses to conduct clinical trials for a drug candidate for the treatment of acute congestive heart failure and in connection with our more than ten research programs in other diseases, as well as the continued advancement of our PUMA system, Cytometrix technologies and our other existing and future drug discovery technologies.

General and Administrative Expenses

       General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including finance, business development and corporate

29

 
development. Other significant costs include facilities costs and professional fees for accounting and legal services, including legal services associated with obtaining and maintaining patents. After completion of the offering made by this prospectus, we anticipate incurring increases in general and administrative expenses, such as increased costs for insurance and investor relations associated with operating as a publicly traded company. These increases will also likely include the hiring of additional personnel.

Stock Compensation

       In connection with the grant of stock options to employees and non-employees, we recorded deferred stock-based compensation as a component of stockholders’ deficit. Deferred stock compensation for options granted to employees is the difference between the fair value of our common stock on the date such options were granted and their exercise price. Through 2002, for stock options granted to non-employees, we initially recorded on the date of grant the fair value of the options, estimated using the Black-Scholes valuation model. As the non-employee options become exercisable, we revalue the remaining unvested options, with the change in fair value from period to period represented as a change in the deferred compensation charge. Beginning in 2003, we value and recognize the stock-based compensation expense related to options granted to non-employees as the stock options are earned. We amortize this stock-based compensation as charges to operations over the vesting periods of the options, generally four years.

       We recorded $2.8 million of deferred stock-based compensation and $362,000 of amortization of deferred stock-based compensation related to options granted to employees during the nine months ended September 30, 2003. We have recorded $716,000 of deferred stock-based compensation for the period from inception through September 30, 2003 related to options granted to non-employees. We recorded amortization of non-employee deferred compensation of $101,000, $93,000 and $6,000 for the years ended December 31, 2000, 2001 and 2002, respectively. We recorded non-employee stock-based compensation for the nine month periods ended September 30, 2002 and 2003 of ($5,000) and $244,000, respectively. We expect the remaining $2.7 million to be amortized as follows: $266,000 in the fourth quarter of 2003, $840,000 in 2004, $699,000 in 2005, $682,000 in 2006 and $165,000 in 2007, respectively.

       The amount of non-cash stock-based compensation expense we expect in future periods may decrease if unvested options for which deferred compensation expense has been recorded are subsequently cancelled, or may increase if we make future option grants with exercise prices below the estimated fair market value of our common stock on the date of grant.

Interest and Other Income and Expense

       Interest and other income and expense consists primarily of interest income and interest expense. Interest income is generated primarily from investment of our cash reserves. Interest expense relates generally to the borrowings for capital asset financings.

Results of Operations

Nine months ended September 30, 2002 and 2003

Revenues

       Revenues decreased by $0.3 million from $8.2 million in the nine months ended September 30, 2002 to $7.9 million in the nine months ended September 30, 2003. License revenues from our strategic alliance agreement with GSK were $2.1 million for each of the nine-month periods ended September 30, 2002 and 2003 representing ratable recognition of the upfront license fee we received. Research and development and grant revenues of $6.1 million for the nine months ended September 30, 2002 were comprised of $5.0 million of reimbursement for FTEs, $1.0 million of milestone revenues and $0.1 million of other revenues. Research and development and grant

30

 
revenues of $5.8 million for the nine months ended September 30, 2003 were comprised of $5.2 million of reimbursement for FTEs, $0.2 million of milestone revenues and $0.4 million of other revenues. The decrease was due to the recognition of $1.0 million of milestone revenue in the nine months ended September 30, 2002, compared to $0.2 million of milestone revenue in the nine months ended September 30, 2003, partially offset by increased FTE reimbursement rates and increased research funding.

Research and development expenses

       Research and development expenses increased by $4.4 million from $19.7 million in the nine months ended September 30, 2002 to $24.1 million in the nine months ended September 30, 2003. The increase was primarily due to costs of $2.0 million associated with the expansion of our preclinical and clinical development activities. The increase was also due to increases in salary and benefit costs of $2.2 million as a result of an increase in research and development personnel.

       For the nine months ended September 30, 2003, we incurred costs of approximately $4.2 million for research and development activities relating to the discovery of mitotic kinesin inhibitors. During the same period, we incurred costs of approximately $8.4 million, $6.2 million and $5.3 million, respectively, for research and development activities relating to our congestive heart failure program, all other research programs and our PUMA system and Cytometrix technologies.

       Clinical development timelines, likelihood of success and total completion costs vary significantly for each drug candidate and are difficult to estimate. We anticipate that we will make determinations as to which research programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each drug candidate. The lengthy process of seeking regulatory approvals, and the subsequent compliance with applicable regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase and, in turn, have a material adverse effect on our results of operations.

General and administrative expenses

       General and administrative expenses increased by $1.6 million from $5.9 million in the nine months ended September 30, 2002 to $7.5 million in the nine months ended September 30, 2003. The increase was primarily due to rising expenditures for prosecuting and maintaining our intellectual property portfolio of $0.7 million and $0.8 million for outsourced contracted services.

Interest and Other Income and Expenses

       Interest and other income (expense), net was $0.7 million for the nine months ended September 30, 2002 compared with $26,000 for the nine months ended September 30, 2003. The decrease was primarily due to an increase in interest expense from $1.1 million for the nine months ending September 30, 2002 to $1.7 million for the nine months ending September 30, 2003. The increase was due to increased debt as a result of additional draw downs on our equipment financing lines.

Years ended December 31, 2000, 2001 and 2002

Revenues

       We recorded no revenues for the year ended December 31, 2000 compared with $8.5 million and $11.4 million for the years ended December 31, 2001 and 2002, respectively. The increase in license revenues from our strategic alliance with GSK, which we formed in June 2001, from $1.4 million for the year ended December 31, 2001 to $2.8 million for the year ended December 31, 2002 resulted from a full year of revenue recognition in 2002 compared to a partial year of revenue recognition in 2001. Research and development and grant revenues of $7.1 million for the year

31

 
ended December 31, 2001 comprised $3.5 million of reimbursement for FTEs, $2.0 million of milestone revenues, $1.3 million of research funding and $0.3 million of other revenues. Research and development and grant revenues of $8.6 million for the year ended December 31, 2002 comprised $6.7 million of reimbursement for FTEs, $1.0 million of milestone revenues, $0.9 million of various research related revenues. The increase in FTE reimbursement resulted from a full year of FTE activity in 2002 compared to a partial year of FTE activity in 2001.

Research and development expenses

       Research and development expenses were $10.4 million for the year ended December 31, 2000 compared with $21.0 million for the year ended December 31, 2001. The increase in research and development expense was primarily due to increased salary and benefit costs of $2.8 million resulting from the hiring of additional research and development personnel and $4.0 million of outsourced contracted services and laboratory consumables. Research and development expenses were $28.4 million for the year ended December 31, 2002, an increase of $7.4 million from the year before. The increase was primarily due to increased salary and benefit costs resulting from the hiring of additional research and development personnel of $3.8 million and increased spending for contracted services and laboratory consumables of $1.1 million.

       For the years ended December 31, 2000, 2001 and 2002, we incurred costs of approximately $5.2 million, $7.9 million and $8.9 million, respectively, for research and development activities relating to the discovery of mitotic kinesin inhibitors, of which GSK reimbursed none, $4.8 million and $7.5 million, respectively. During the same periods, we incurred costs of approximately $1.3 million, $6.4 million and $8.8 million, respectively, for research and development activities relating to our congestive heart failure program, $1.1 million, $1.8 million and $3.2 million, respectively, for all other research programs and $2.8 million, $4.9 million and $7.5 million, respectively, for our PUMA system and Cytometrix technologies.

       Clinical development timelines, likelihood of success and total completion costs vary significantly for each drug candidate and are difficult to estimate. We anticipate that we will make determinations as to which research programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each drug candidate. The lengthy process of seeking regulatory approvals, and the subsequent compliance with applicable regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase and, in turn, have a material adverse effect on our results of operations.

General and administrative expenses

       General and administrative expenses were $3.4 million for the year ended December 31, 2000 compared with $5.9 million for the year ended December 31, 2001. The increase of $2.5 million was primarily due to increased salary and benefit costs of $1.1 million resulting from the hiring of additional general and administrative personnel and $0.6 million for corporate legal and accounting fees. General and administrative expenses were $7.0 million for the year ended December 31, 2002, an increase of $1.1 million from the year before. The increase was due to increased salary and benefit costs resulting from the hiring of additional general and administrative personnel.

Interest and Other Income and Expense

       Interest and other income (expense), net was $0.7 million for the year ended December 31, 2000 compared with $2.5 million and $0.9 million for the years ended December 31, 2001 and 2002, respectively. The increase in interest and other income (expense), net from the year ended December 31, 2000 as compared with the year ended December 31, 2001 was primarily due to an increase in interest and other income from $0.9 million in 2000 to $3.2 million in 2001. The increase in interest income was due to higher average balances of cash, cash equivalents and investments in

32

 
2001, primarily due to the net proceeds from our private equity financing and strategic alliance agreement with GSK in June 2001. Interest and other expense increased from $0.2 million in 2000 to $0.7 million in 2001. This increase was primarily due to loans entered into for capital asset financings. The decrease in interest and other income (expense), net from the year ended December 31, 2001 as compared with the year ended December 31, 2002, was primarily due to an increase in interest and other expense from $0.7 million in 2001 to $1.3 million in 2002. The increase was due to increased debt as a result of loans entered into for capital lease financings. Interest and other income also decreased from $3.2 million in 2001 to $2.2 million in 2002. The decrease in interest income was due to lower average balances of cash, cash equivalents and investments in 2002.

Liquidity and Capital Resources

       Our cash, cash equivalents and investments totaled $44.4 million, and our restricted cash totaled $13.9 million, at September 30, 2003. From August 5, 1997, date of inception, through September 30, 2003, we funded our operations through the sale of equity securities, non-equity payments from GSK, equipment financings, government grants and interest earned on investments. We received net proceeds of $39.9 million, $13.8 million, $54.9 million, $19.3 million, and $5.3 million from the sale of equity securities in 2003, 2001, 2000, 1999, and 1998, respectively. As of September 30, 2003, we have received $35.0 million in non-equity payments from GSK. We have received $1.4 million, $6.4 million, $3.5 million, $0.6 million, and $1.3 million under equipment financing arrangements in 2003, 2002, 2001, 2000, and 1999, respectively. Grant revenues were $0.3 million and $0.1 million in 2001 and 2002, respectively. Interest earned on investments in the nine months ended September 30, 2003, and the years ending December 31, 2002, 2001, 2000 and 1999 was $1.7 million, $2.2 million, $3.1 million, $0.8 million, and $0.3 million, respectively.

       Net cash used in operating activities amounted to $23.9 million for the nine months ended September 30, 2003, primarily reflecting the net loss occurring for this period of $23.7 million, partially offset by non-cash charges for depreciation and amortization of $2.4 million and deferred stock-based compensation of $0.6 million. Net cash used in investing activities (excluding net proceeds from purchases, sales and maturities of short-term investments) for the nine months ended September 30, 2003 amounted to $2.2 million. Net cash provided by financing activities amounted to $40.0 million for the nine months ended September 30, 2003, primarily reflecting the net proceeds received from the sale of Series E convertible preferred stock and proceeds from additional credit facilities, offset by principal payments on credit facilities.

       Net cash used in operating activities was $11.4 million, $1.8 million and $24.8 million for the years ended December 31, 2000, 2001 and 2002, respectively, and resulted primarily from net losses of $13.1 million, $15.9 million and $23.1 million, respectively, adjusted for non-cash depreciation and amortization and stock-based compensation expenses and changes in accounts receivable, accounts payable and accrued liabilities balances. In 2001, cash used in operating activities was significantly decreased by the receipt of the $14.0 million license fee from GSK, which is being recognized as revenue ratably over the five-year research term of the strategic alliance.

       Net cash used in investing activities of $25.1 million and $23.5 million for the years ended December 31, 2000 and 2001, respectively was primarily used to fund our purchases of investments and to a lesser extent, to fund purchases of property and equipment. Net cash provided by investing activities was $25.1 million for the year ended December 31, 2002 as a result of sales and maturities of investments to meet liquidity needs.

       Net cash provided by financing activities was $55.4 million, $17.0 million and $4.9 million for the years ended December 31, 2000, 2001 and 2002, respectively. The net cash provided by financing activities was primarily attributable to the sale of preferred stock which generated $54.9 million in 2000 and $13.8 million in 2001.

33

 

       As of September 30, 2003, future minimum payments under lease obligations and equipment financing lines are as follows (in thousands):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Within	 	One to three	 	Four to five	 	After five	 	 	
 	 	one year	 	years	 	years	 	years	 	Total	

	 	

	 	

	 	

	 	

	
Operating leases	 	$	1,678	 	 	$	4,830	 	 	$	3,074	 	 	$	6,030	 	 	$	15,612	 	
Equipment financing line	 	 	2,104	 	 	 	6,299	 	 	 	1,085	 	 	 	—	 	 	 	9,488	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Total	 	$	3,782	 	 	$	11,129	 	 	$	4,159	 	 	$	6,030	 	 	$	25,100	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
       Our long-term commitments under operating leases shown above consist of payments relating to our facility lease in South San Francisco, California, which expires in 2013. We have investigated additional office space expansion opportunities to support our administrative, research and development requirements beyond the year 2004 as we expect that by executing our strategy, we will require additional space. As of this date, we have made no formal commitments or plans to access any additional lease space.

       We expect to incur substantial costs as we continue to expand our research programs and related research and development activities. Under the terms of our strategic alliance with GSK, we have options to co-fund certain later-stage development activities for SB-715992 and SB-743921. If we exercise an option, our research and development expenses will increase significantly. Research and development expenses for our unpartnered drug discovery programs consist primarily of employee compensation, supplies and materials, costs for consultants and contract research, facilities costs and depreciation of equipment. We expect to incur significant research and development expenses to complete Phase I and subsequent clinical trials for a drug candidate for the treatment of acute congestive heart failure, to advance our more than ten research programs in multiple therapeutic areas and to develop our PUMA system, Cytometrix technologies and other proprietary drug discovery technologies.

       Our future capital uses and requirements depend on numerous forward-looking factors. These factors include but are not limited to the following:
 	 	 	
 	• 	the initiation, progress, timing and completion of preclinical research, development, and clinical trials for our drug candidates and potential drug candidates;	
 	 	 	
 	• 	the time and costs involved in obtaining regulatory approvals;	
 	 	 	
 	• 	delays that may be caused by evolving requirements of regulatory agencies;	
 	 	 	
 	• 	the number of drug candidates we pursue;	
 	 	 	
 	• 	the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims;	
 	 	 	
 	• 	our options to co-fund the development of one or both of SB-715992 and SB-743921;	
 	 	 	
 	• 	the level of funding that we may provide for future drug candidates, including a drug candidate for the treatment of acute congestive heart failure;	
 	 	 	
 	• 	our plans or ability to establish sales, marketing or manufacturing capabilities and to achieve market acceptance for potential drugs;	
 	 	 	
 	• 	our ability to establish, enforce and maintain selected strategic alliances and activities required for commercialization of our potential drugs;	
 	 	 	
 	• 	the acquisition of technologies, products and other business opportunities that require financial commitments; and	
 	 	 	
 	• 	our revenues, if any, from successful development of our drug candidates and commercialization of potential drugs.	
34

 

       We believe that the net proceeds of this offering, our existing cash resources, future payments from GSK and AstraZeneca, proceeds from equipment financings and interest earned on investments will be sufficient to meet our projected operating requirements for at least the next 24 months. If, at any time, our prospects for internally financing our research programs decline, we may decide to reduce research and development expenses by delaying, discontinuing or reducing our funding of development of one or more drug candidates. Alternatively, we might raise funds through public or private financings, strategic relationships or other arrangements. We cannot assure you that the funding, if needed, will be available on attractive terms, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Similarly, financing obtained through future co-development arrangements may require us to forego certain commercial rights to future drug candidates. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategy.

       As of September 30, 2002 and 2003 and December 31, 2000, 2001 and 2002, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. Therefore, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships. We do not have relationships or transactions with persons or entities that derive benefits from their non-independent relationship with us or our related parties.

Disclosure about Market Risk

       Our exposure to market risk is limited to interest income sensitivity, which is affected by changes in the general level of United States interest rates, particularly because the majority of our investments are in short-term debt securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. To minimize risk, we maintain our portfolio of cash, cash equivalents, short-term and long-term, and restricted investments in a variety of interest-bearing instruments, including United States government and agency securities, high-grade United States corporate bonds, commercial paper and money market funds. The investment portfolio is subject to interest rate risk and will fall in value in the event market interest rates increase. Due to the short duration of our investment portfolio, we believe an immediate 10% change in interest rates would not be material to our financial condition or results of operations. We do not have any foreign currency or derivative financial instruments.

Critical Accounting Policies

       Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. We review our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included in this prospectus, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

35

 

Revenue Recognition

       We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin, or SAB, No. 101, Revenue Recognition in Financial Statements, as amended by SAB Nos. 101A and 101B. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed and determinable; and collectibility is reasonably assured. Determination of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fee charged for research performed and milestones met, and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

       Research and development revenues, which are earned under agreements with third parties for contract research and development activities, are recorded as the related expenses are incurred. Charges to the third parties are based upon negotiated rates for our FTEs and actual out-of-pocket costs. Rates for FTEs are intended to approximate our anticipated costs. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. Any amounts received in advance of performance are recorded as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful.

       Grant revenues are recorded as research is performed. Grant revenues are not refundable.

       License revenues received in connection with strategic alliance agreements are deferred and recognized on a straight-line basis over the term of the agreement.

Stock-Based Compensation

       We account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation” and complies with the disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation and Disclosure an Amendment of FASB Statement No. 123.” Under APB 25, compensation expense is based on the difference, if any, on the date of grant, between the estimated fair value of our common stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity investment.

       We account for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods, or Services.”

Recent Accounting Pronouncements

       In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities to the first reporting period ending after March 15, 2004. We do not expect the adoption of FIN 46 to have a material impact upon our financial position, cash flows or results of operations.

36

 

       In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability or an asset in some circumstances. Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. While the effective date of certain elements of SFAS No. 150 has been deferred, we do not expect the adoption of SFAS No. 150 to have a material impact upon our financial position, cash flows or results of operations.

37

 

BUSINESS

Overview

       We are the leading biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs that specifically target the cytoskeleton. A number of commonly used drugs and a growing body of research validate the role the cytoskeleton plays in a wide array of human diseases. Our focus on the cytoskeleton enables us to develop novel and potentially safer and more effective drugs for the treatment of these diseases. We believe that our cell biology driven approach and proprietary technologies enhance the speed, efficiency and yield of our drug discovery and development process. Our unique approach has produced two cancer drug candidates, potential congestive heart failure drug candidates, and more than ten other research programs addressing a variety of other disease areas including fungal diseases, inflammatory diseases, high blood pressure and asthma. Our most advanced cancer drug candidate, SB-715992, is the subject of a broad Phase II clinical trials program, being conducted by our partner GSK, designed to evaluate effectiveness in multiple tumor types. An IND was filed with the FDA in 2003 for SB-743921, our second cancer drug candidate being developed by GSK, which we expect will enter Phase I clinical trials in early 2004. In addition, we expect to file an IND and initiate Phase I clinical trials for a drug candidate to treat acute congestive heart failure in the second half of 2004.

       Because the cytoskeleton plays a fundamental role in the cell proliferation process, we focused our initial research and development activities on cancer, a disease of unregulated cell proliferation. Our most advanced cancer drug candidate, SB-715992, is a small molecule compound that interferes with cell proliferation and promotes cancer cell death by specifically inhibiting the function of KSP. KSP is a cytoskeletal protein that is essential for cell proliferation, a process which when unregulated, results in tumor growth. Unlike many commonly used cancer drugs, such as Taxol and Taxotere which also impact cytoskeletal proteins, SB-715992 inhibits only cell proliferation and does not interfere with other cell functions. As a result, we believe SB-715992 may exhibit a lower incidence of toxicities. In addition, our preclinical studies indicate that SB-715992 may be effective in treating a wider variety of tumors than existing cancer drugs. SB-715992 is being developed by GSK under our strategic alliance. A Phase II clinical trial for SB-715992 in non-small cell lung cancer began in late 2003. A series of parallel Phase II monotherapy clinical trials and Phase Ib combination therapy clinical trials are scheduled to begin throughout 2004. These additional trials are expected to evaluate SB-715992 in multiple tumor types, including colorectal, breast, ovarian, and other solid and hematologic cancers. In addition, the NCI plans to sponsor additional Phase I and Phase II clinical trials in 2004 to evaluate SB-715992 in other tumor types and other dosing regimens.

       Our other cancer drug candidate, SB-743921, is a structurally distinct small molecule compound that also modulates cell proliferation by specifically inhibiting KSP. Like SB-715992, SB-743921 is being developed by GSK under our strategic alliance. We expect that Phase I clinical trials evaluating the safety and pharmacokinetics of SB-743921 will begin in early 2004. The concurrent development of both drug candidates is key to our strategy of maximizing the potential for the development of a commercially viable cancer drug. We expect other drug candidates targeting other related cytoskeletal proteins essential for cell proliferation will emerge from our strategic alliance with GSK. In addition, we are independently pursuing compounds directed at other cytoskeletal protein pathways, unrelated to cell proliferation, in our other research programs that may also have application for the treatment of cancer.

       Our focus on the cytoskeleton enables us to leverage research and development investments made in our cancer program for our programs in other diseases. For example, we have extended our understanding of the biology of the cytoskeleton to cardiovascular disease. The cytoskeleton plays a pivotal role in cardiac muscle contraction and has been linked to the origins of congestive heart failure, a disease of impaired cardiac function. We believe that by targeting cytoskeletal proteins and multi-protein systems that are responsible for cardiac muscle contraction, we will be able to develop

38

 
effective and safe drugs for the treatment of acute and chronic congestive heart failure. We expect to file an IND and initiate a Phase I clinical trial for a drug candidate for the treatment of acute congestive heart failure in the second half of 2004. Our potential drug candidates specifically target and activate cardiac myosin, a cytoskeletal protein essential for cardiac muscle contraction. In animal models, compounds arising from this program improve cardiac contractility without the potentially life-threatening effects on heart rhythm, heart rate and blood pressure often exhibited by existing congestive heart failure drugs.

       We have more than ten other research programs similarly focused on diseases in which we believe the cytoskeleton plays a significant role. For example, in infectious diseases, we are conducting chemical lead optimization activities for compounds that disrupt a specific cytoskeletal protein essential to fungal cell proliferation. These compounds have demonstrated improved survival in an animal model of fungal infection and, because they are directed against a novel cytoskeletal protein target, we believe they may overcome the increasing clinical resistance seen with existing antifungal drugs. In addition, we are evaluating specific inhibitors of other cytoskeletal proteins implicated in fungal cell proliferation and virulence that may also result in potential drugs for fungal infections. We also have a research program designed to find anti-inflammatory drug candidates by targeting specific cytoskeletal proteins involved in cell movement. We have identified compounds that inhibit the function of a key cytoskeletal protein involved in the migration of inflammatory cells into diseased tissues. Furthermore, we have identified, characterized and are now seeking to chemically optimize other compounds that target another cytoskeletal multi-protein system and that inhibit smooth muscle contractility. Our objective for this research program is to discover potential drug candidates for high blood pressure, asthma and other disease conditions.

       All of our compounds in research and development have been discovered internally using our cell biology driven approach and proprietary automated technologies. This approach, which we have applied specifically to the cytoskeleton, enables increased speed, efficiency and yield not only in our drug discovery process, but also potentially in clinical development. We focus on developing a detailed understanding of validated protein pathways and multi-protein systems to allow our assay systems to more correctly represent the natural environment of a human cell. This approach differs from the conventional practice of concentrating on individual protein targets assayed in a system that may not adequately represent the natural functional environment that is relevant to disease. As a result, we can identify multiple points of biological intervention to modulate a specific protein pathway or multi-protein system. Our discovery activities are thus directed at particular proteins that may be better targets for the development of potentially safer and more effective drugs.

       Our PUMA system and Cytometrix technologies enable early identification and automated prioritization of compounds that are highly selective for their intended protein targets without other cellular effects, and are thereby less likely to give rise to clinical side effects. Our PUMA system identifies compounds within our small molecule library that are likely to target specific cytoskeletal proteins. Our Cytometrix technologies enable us to simultaneously analyze and quantify hundreds of effects of each compound on a cell-by-cell basis. The integrated use of these technologies enables us to efficiently focus our efforts towards those compounds directed at novel cytoskeletal protein targets that are more likely to yield attractive drug candidates. We have advanced our Cytometrix technologies through technical development activities conducted with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc.

       We selectively seek partners and strategic alliances that enable us to maintain financial and operational flexibility while retaining significant economic and commercial rights to our drug candidates. For example, under our strategic alliance, GSK has made a $14.0 million upfront cash payment, an initial $14.0 million equity investment and has committed to reimburse our FTEs performing research in connection with the strategic alliance. As of December 31, 2003, we have received FTE reimbursement of $17.2 million, and in the future we expect to receive additional FTE reimbursement. In addition, we have received, through December 31, 2003, $3.2 million in precommercialization milestone payments from GSK, and in the future we could receive significant

39

 
precommercialization milestone payments and royalties on product sales. GSK is responsible for worldwide development of drug candidates and commercialization of drugs arising from the strategic alliance but we retain a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate and a further option to secure co-promotion rights in North America. In the event we exercise a co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs that we may incur in support of our commercial activities. In addition to our strategic alliance with GSK, our joint technology development activities with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc. have supported the continued development and further validated the proprietary technologies that we use in our research programs. In December 2003, we entered into a strategic alliance with AstraZeneca to fund and participate in the development of a new application of our Cytometrix technologies for use by both parties.

       We plan to build commercial capabilities to address markets characterized by severe illnesses, large patient populations and concentrated customer groups. For example, for SB-715992 and SB-743921, we intend to establish sales and marketing capabilities in collaboration with GSK to support the future commercialization of one or both of those potential drugs in North America. In markets for which customer groups are not concentrated, we intend to seek strategic alliances for the development and commercialization of drug candidates while retaining significant financial interests.

The Cytoskeleton

       The cytoskeleton is a diverse, multi-protein framework that carries out fundamental mechanical activities of cells including mitosis, or the division of genetic material during cell division, intracellular transport, cell movement and contraction and overall cell organization. It provides an ordered but dynamic organizational scaffolding for the cell, and mediates movement, whether of proteins within the cell or of the entire cell itself. The cytoskeleton is comprised of a unique set of filaments and molecular motor proteins. Filaments are long linear structures of proteins that serve as the major scaffolding in cells and conduits for movement of molecular motor proteins transporting other proteins or intracellular material. Microtubule filaments are composed of tubulin, and actin filaments are composed of actin. Molecular motor proteins, such as kinesins and myosins, are proteins that transport materials within cells and are also responsible for cellular movement. Kinesins move along microtubule filaments and myosins move along actin filaments.

       These cytoskeletal proteins organize into ordered protein pathways or multi-protein systems that perform important cellular functions. For example, one such structure called the mitotic spindle organizes and divides genetic material during cell proliferation. The mitotic spindle encompasses many cytoskeletal proteins including tubulin, which forms microtubule filaments, and a sub-group of kinesins known as mitotic kinesins. The highly orchestrated action of the proteins within this structure transports and segregates genetic material during cell proliferation. Our most advanced cancer program, partnered with GSK, is focused on discovering potential drugs that inhibit human mitotic kinesins. One of our founders and scientific advisory board members, Dr. Ron Vale, first discovered kinesins. Another of our founders and scientific advisory board members, Dr. Larry Goldstein, was the first scientist to identify and characterize kinesin genes.

       Another multi-protein cytoskeletal structure, called the cardiac sarcomere, contains a highly ordered array of cardiac myosin interacting with actin filaments. The movement of myosin along actin filaments generates the cell contraction responsible for cardiac muscle function. Our program in congestive heart failure is focused on discovering potential drugs that activate cardiac myosin. Another of our founders and scientific advisory board members, Dr. James Spudich, was one of the first scientists to characterize the functional interrelationships of the cytoskeletal proteins in the sarcomere.

40

 

       Beyond the role these specific cytoskeletal proteins play in cell proliferation and cardiac muscle contraction, other cytoskeletal proteins have been implicated in a variety of other important biological processes and related human diseases. Our drug discovery activities are focused on several of these mechanical cellular processes, including cell proliferation, cardiac and other muscle contraction, cellular organization and cell motility, and are specifically directed at the cytoskeletal proteins that play essential roles in carrying out these functions. For instance, a unique set of cytoskeletal proteins forms the cellular machinery that maintains blood vessel tone. One of our research programs is focused on discovering inhibitors of these proteins as a potential treatment for high blood pressure. In addition, another unique set of cytoskeletal proteins is essential for the movement and function of inflammatory cells. We have a research program focused on the discovery of novel anti-inflammatory drug candidates that inhibit these proteins.

Our Product Development Opportunities

       All of our research programs are focused on diseases in which we believe the cytoskeleton plays a significant role. The following table summarizes our clinical and preclinical programs in 2004 with their current status shown in black and planned activities shown in gray, and excludes those programs that are still in the research stage:

Clinical and Preclinical Programs in 2004

 	 	
(1) 	The Phase I clinical trials of SB-715992 will be used to support Phase II clinical trials for each of the cancer indications set forth below.	
(2) 	To be conducted by GSK.	
(3) 	To be conducted by NCI. Phase I and Phase II clinical trials may include liver, kidney, head and neck, prostate and melanoma tumor types, as well as the potential evaluation of other potential dosing schedules for SB-715992.	
(4) 	To be conducted by Cytokinetics.	
41

 

       In addition to the above preclinical and clinical programs, we also have more than ten other research programs. For example, we are conducting chemical lead optimization activities in our antifungal program with the objective of selecting a drug candidate to enter IND-enabling studies in 2005. Currently, we are also conducting research on several earlier stage research programs that we believe will contribute to our development pipeline over time.

Our Cancer Program

       One of our major development programs is focused on cancer, a disease of unregulated cell proliferation. Each of our cancer drug candidates, SB-715992 and SB-743921, is a structurally distinct small molecule compound that modulates cell proliferation and promotes cancer cell death by specifically inhibiting KSP. KSP is a mitotic kinesin that acts early in the process of mitosis during cell proliferation and is responsible for the formation of a functional mitotic spindle. We initially discovered, characterized and optimized both drug candidates in our research laboratories. These drug candidates are now being developed by GSK through our strategic alliance. SB-715992 is currently the subject of a broad Phase II clinical trials program designed to evaluate efficacy against multiple tumor types. We expect SB-743921 to enter Phase I clinical trials in early 2004. We are also pursuing other potential drug candidates for the treatment of cancer, both within our strategic alliance with GSK and on our own.

      Market Opportunity. Each year over 1.3 million new patients are diagnosed with primary malignant solid tumors or hematological cancers in the United States. The incidence of three of the more common cancer types, colorectal, breast and non-small cell lung cancers, in the United States represents between 35% and 50% of the total incidence of these cancers in the United States, Japan and the major commercial markets in Europe.

       The current market for cancer drugs worldwide is greater than $10.0 billion. Within this market, we estimate that sales of drugs that inhibit mitosis, or anti-mitotic drugs, such as taxanes, most notably Taxol from Bristol-Myers Squibb and Taxotere from Aventis, comprise a large portion of the commercial market for cancer drugs. Worldwide sales from these taxanes alone represented over $2.0 billion in 2002.

       Since their introduction over 30 years ago, anti-mitotic drugs have advanced the treatment of cancer and are commonly used for the treatment of several tumor types. However, these drugs have demonstrated no treatment benefit against certain tumor types, such as colorectal and other tumors. In addition, these drugs target tubulin, a cytoskeletal protein involved not only in mitosis and cell proliferation, but also in other important cellular functions. The inhibition of these other cellular functions produces dose-limiting toxicities such as peripheral neuropathy, an impairment of the peripheral nervous system. Neuropathies result when these drugs interfere with the dynamics of microtubule filaments that are responsible for the long-distance transport of important cellular components within nerve cells.

      Our Solution. Mitotic kinesins form a diverse family of newly characterized cytoskeletal proteins that, like tubulin, facilitate the mechanical processes required for mitosis and cell proliferation. There are 14 human mitotic kinesins required to carry out cell division. We have identified and characterized all of them. Each of these mitotic kinesins functions in a pathway to enable cell division. In our cancer program directed towards inhibitors of mitotic kinesins, we have screened each mitotic kinesin and identified small molecule inhibitors of most of them using our PUMA system, and have begun characterizing these inhibitors using our Cytometrix technologies. We believe that this comprehensive approach to the complete mitotic kinesin pathway will allow us to identify a number of drug candidates that may have diverse clinical utilities. The first mitotic kinesin in this pathway and the one upon which we have focused a majority of our research and development efforts is KSP.

       We believe that drugs inhibiting KSP and other mitotic kinesins represent the next generation of anti-mitotic cancer drugs. Mitotic kinesins are essential to mitosis, and, unlike tubulin, appear to have

42

 
no role in unrelated cellular functions. In addition, they are expressed only in proliferating cells and in higher concentrations in many tumor cells than in non-cancerous proliferating cells. We believe drugs that inhibit KSP and other mitotic kinesins can arrest mitosis and cell proliferation without impacting unrelated, normal cellular functions, avoiding many of the toxicities commonly experienced by patients treated with existing anti-mitotic cancer drugs.

       Our small molecule inhibitors of KSP are highly potent and specific. We have performed detailed biochemical studies to understand the precise molecular mechanism by which our drug candidates inhibit KSP activity. In preclinical research, our drug candidates cause shrinkage of tumor size or reduction in tumor growth rates in more than ten different animal models, including cancers of the colon, lung, breast, ovary, pancreas and prostate, sarcomas and leukemias. These models reveal favorable results for our drug candidates in comparison to existing drugs such as irinotecan, topotecan, gemcitabine, paclitaxel, vinblastine and cyclophosphamide. Based on our preclinical data, we believe that our KSP inhibitor drug candidates may have the potential to expand the range of tumor types susceptible to this novel form of targeted anti-mitotic treatment.

       We have identified, characterized and optimized several distinct structural classes of KSP inhibitors as well as specific inhibitors of other mitotic kinesins. Our KSP inhibitor drug candidates, SB-715992 and SB-743921, are being developed by GSK through our strategic alliance. We and GSK are also characterizing several other mitotic kinesin inhibitors that may have therapeutic potential. We believe that our cancer drug candidates may be safer, more effective and treat a wider variety of tumor types than current anti-mitotic drugs. In addition, preclinical data on SB-715992 indicate that this compound may have an additive effect in certain combination regimens with existing cancer drugs. Potential advantages of our drug candidates include:
 	 	 	
 	• 	Broad therapeutic potential. Our preclinical testing indicates that SB-715992 and SB-743921 cause tumor regression in the form of partial response, complete response or tumor growth inhibition in a variety of tumor types. This is consistent with the important role that KSP plays in cell proliferation in all tumor types, and with the observation that KSP expression levels are higher in some tumor cells than in non-cancerous cells. The graphic below illustrates preclinical effects observed with SB-715992 in a mouse model of colon cancer, a type of cancer that is difficult to treat with existing anti-mitotic drugs.	
43

 

Reduction in Tumor Volume

SB-715992 Compared to Irinotecan in a Mouse Model of Colon Cancer

 	SB-715992 causes colon tumor reduction in a mouse model. This graph shows the size of human colon tumors implanted in a mouse as treated with SB-715992 (shown on the lower curve with stars), irinotecan, a drug that is commonly used in treating colon cancer (middle curve with circles) or no treatment (upper curve with squares). Mice given SB-715992 experienced greater tumor shrinkage over the course of the study than those given irinotecan. Both drugs were administered at the maximum dose tolerated by the animals on days 12, 16 and 20 of the study.	

 	• 	Favorable safety profile.Preclinical testing of SB-715992 and SB-743921 demonstrates that these compounds have fewer toxicities than many existing cancer drugs. These studies indicate that the primary toxicities are temporary, limited to gastrointestinal side effects and a reduction in bone marrow function. We observed no evidence of drug-related toxicities to the nervous system, heart, lung, kidney or liver. We believe that this safety profile could enable higher dosing of SB-715992 and SB-743921 and increase their therapeutic value.	
       Because neuropathy is a common dose-limiting side effect of anti-mitotic cancer drugs, such as Taxol, we analyzed the effects of SB-715992 on the peripheral nervous system in a mouse model.

44

 

Incidence of Neurotoxicity Side Effects

SB-715992 Compared to Taxol in a Mouse Model

 	This graph shows the percentage of mice developing peripheral nervous system dysfunction after being given Taxol (shown on the left with hatched bar), SB-715992 (shown in the middle with black bar) or no treatment (shown on the right with white bar). No evidence of nervous system dysfunction is seen in mice given SB-715992, whereas Taxol causes nerve dysfunction in over 60% of mice tested. Both drugs were given at doses used to treat cancer in mouse models.	
      Current Program Status. SB-715992 is the subject of an ongoing broad Phase II clinical trials program designed to evaluate its efficacy in treating multiple tumor types. The first Phase II clinical trial began in late 2003 to evaluate SB-715992 as a monotherapy in non-small cell lung cancer. Throughout 2004, other monotherapy Phase II clinical trials are planned to evaluate SB-715992 in other prevalent tumor types addressing large commercial markets, including colorectal, breast, ovarian and other solid and hematologic cancers. Also, throughout 2004, the NCI plans to sponsor several additional Phase I and Phase II clinical trials to evaluate other potential dosing regimens and the effectiveness of SB-715992 in other tumor types, which may include liver, kidney, head and neck, prostate and melanoma, respectively. In aggregate, we anticipate that Phase II clinical trials for SB-715992 will enroll more than 500 patients at over 50 clinical trial sites worldwide and evaluate our drug candidate in patients with a wide array of tumor types who have failed multiple prior therapies in both later and earlier-line treatments. Furthermore, we anticipate that SB-715992 may eventually be used in combination therapy regimens with existing cancer drugs. Phase Ib clinical trials are planned throughout 2004 to evaluate SB-715992 in combination with standard cancer drugs such as capecitabine, docetaxel and carboplatin.

       The design of the Phase II clinical trials program draws upon information learned from Phase I clinical trials of SB-715992. GSK commenced the first Phase I clinical trial of SB-715992 in August 2002. This clinical trial, which is nearing completion, is an open-label, non-randomized, dose-finding trial investigating safety, tolerability, pharmacokinetics and pharmacodynamics of SB-715992. This Phase I clinical trial is evaluating various doses of SB-715992 given as a one-hour intravenous infusion repeated once every three weeks. A second similarly designed dose-finding Phase I clinical trial commenced in January 2003. This second study, which is also nearing completion, is evaluating dosing of SB-715992 given once per week for each of three weeks and repeated over a 28-day

45

 
cycle. In both clinical trials, the participants are patients with different types of cancer, all of whom have previously failed multiple regimens of drugs.

       As of December 31, 2003, 44 patients were enrolled in the first clinical trial and 30 patients were enrolled in the second clinical trial. The only dose-limiting toxicity observed in both clinical trials is temporary neutropenia, a decrease in the number of a certain type of white blood cell. This was anticipated given that we believe SB-715992 inhibits KSP in these white blood cells and prevents their proliferation. At the planned Phase II clinical dosing levels, Phase I clinical trial investigators have observed no clinically meaningful evidence of drug-related toxicity to the nervous system, heart, lung, kidney or liver. Both studies demonstrate that the pharmacokinetics of SB-715992 are dose-proportional, indicating that an increased dose is correlated with increased drug exposure. This allows us to more accurately correlate drug dose with drug effectiveness. Although these Phase I clinical trials were not designed to measure efficacy, anti-cancer activity was observed as indicated by stabilization of disease in seven patients with colorectal, liver, head and neck and kidney cancers over three to thirteen courses of treatment. In addition, trial investigators reported tumor shrinkage in three patients with colorectal, kidney and pancreatic cancers.

       In December 2003, under our strategic alliance, GSK filed an IND for SB-743921, a structurally distinct KSP inhibitor. We expect GSK to commence Phase I clinical trials for this drug candidate in early 2004. The Phase I clinical trials program for SB-743921 is designed as an open-label, non-randomized, dose-finding trial investigating safety, tolerability, pharmacokinetics and pharmacodynamics of this drug candidate. Though we are aware of no clinical shortcomings of SB-715992 that are addressed by SB-743921, we believe that having two KSP inhibitors in concurrent clinical development increases the likelihood that a commercial product will result from this program.

      Commercialization. GSK is responsible for the worldwide development and commercialization of SB-715992 and SB-743921 and other drug candidates arising from the strategic alliance. We will receive royalties from the sale of any drugs developed under the strategic alliance. In addition, we retain an option for each of SB-715992 and SB-743921 to co-fund certain later-stage development activities, and thereby increase our potential royalty rate. Furthermore, for those drug candidates that we co-fund certain later-stage development activities, we have a further option to secure co-promotion rights in North America. We expect that the royalties to be paid on future sales of SB-715992 and SB-743921 could potentially increase to an upper-teen percentage rate based on increasing product sales and our anticipated level of co-funding. In the event we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities. We expect to develop sales and marketing capabilities to support the North American commercialization of one or both of SB-715992 and SB-743921 and other drug candidates that may be developed under our strategic alliance with GSK. Because cancer patients are largely treated in institutional and other settings that can be addressed by a specialized sales force, developing our commercial capabilities to address such treatment centers is consistent with our corporate strategy of focusing our commercial efforts on large, concentrated markets.

Our Cardiovascular Disease Program

       We have focused our cardiovascular disease research and development activities on congestive heart failure, a disease characterized by compromised contractile function of the heart that impacts its ability to effectively pump blood throughout the body. We have discovered and optimized small molecule compounds that improve cardiac contractility by specifically targeting and activating cardiac myosin, a cytoskeletal protein essential for cardiac muscle contraction. In animal models, compounds arising from this program improve cardiac contractility without the adverse effects on heart rate, blood pressure and oxygen consumption often exhibited by existing congestive heart failure drugs. We are pursuing compounds that are suitable for intravenous administration in an acute care setting. We expect to file an IND with the FDA and initiate a Phase I clinical trial for a small molecule drug candidate for the treatment of acute congestive heart failure in the second half of 2004. We are

46

 
conducting additional chemical optimization activities for compounds that are intended for the treatment of chronic congestive heart failure through oral administration.

      Market Opportunity. Congestive heart failure is a widespread and rapidly growing disease affecting approximately five million people in the United States alone. The high prevalence of congestive heart failure translates into significant hospitalization rates and associated societal costs. The number of hospital discharges in the United States identified with a primary diagnosis of congestive heart failure rose from 550,000 in 1989 to 900,000 in 1999. Congestive heart failure is the most common primary diagnosis identified in hospital discharges for patients over 65. The annual costs of congestive heart failure in the United States are estimated to be $28.8 billion, including $17.1 billion for inpatient care.

       The market for congestive heart failure drugs was approximately $2.7 billion in 2001 and is expected to grow to approximately $4.0 billion by 2011. Current congestive heart failure drugs may have reached a plateau in terms of efficacy because they typically treat only the symptoms and effects of the disease. We believe that drugs that directly target the underlying cellular mechanisms responsible for congestive heart failure will be more effective.

       Existing drugs that improve cardiac contractility, including milrinone, dobutamine and digoxin, treat congestive heart failure in part by improving the contraction of cardiac cells, thus leading to an improvement in overall cardiac contractility. These drugs work through a complex cascade of cellular proteins, eventually resulting in an increase in intracellular calcium and a subsequent increase in cardiac cell contractility. However, activation of this cascade and the elevation of calcium levels may also impact other cardiac cell functions, producing unintended and potentially life threatening side effects, such as cardiac ischemia from increased oxygen demand and cardiac arrhythmias. Cardiac ischemia is a condition in which oxygen delivery to the heart is limited and is frequently observed in heart failure patients due to constriction or obstruction of blood vessels. Cardiac arrhythmias are irregularities in the force, quality and sequence of the heart beat. In addition, these existing drugs impact tissues apart from cardiac muscle leading to increases in heart rate and decreases in blood pressure, which can complicate their use in this patient population. Therefore, although existing drugs may be effective in treating the symptoms of heart failure, they often increase congestive heart failure patient morbidity and mortality.

      Our Solution. We believe that the direct activation of cardiac myosin is a more specific mechanism by which to improve cardiac cell contractility. Cardiac myosin is the cytoskeletal protein in the cardiac cell that is directly responsible for converting chemical energy into the mechanical force that results in contraction. Cardiac muscle cell contractility is driven by the cardiac sarcomere, a highly ordered cytoskeletal structure composed of cardiac myosin, actin and a set of regulatory proteins. The sarcomere represents one of the most thoroughly characterized protein machines in human biology. Existing drugs that seek to improve cardiac cell contractility increase the concentration of intracellular calcium, which indirectly activates cardiac myosin, but this effect on calcium levels also produces potentially life threatening side effects. Alternatively, our potential drug candidates for the treatment of acute congestive heart failure increase cardiac contractility by specifically targeting and directly activating cardiac myosin in the cardiac sarcomere.

       We believe we are the first to develop potential drug candidates that directly activate cardiac myosin. We accomplished this by leveraging our expertise in the biochemistry, biophysics, chemistry and pharmacology of the cardiac sarcomere. We developed a series of proprietary assays that measure the integrated function of the cardiac sarcomere. We believe that we are the first to reconstitute for use in a high-throughput screen the essential components of the cardiac sarcomere from purified proteins as a fully calcium-regulated system simulating the activity of the multi-protein system  in vivo . The resulting high-throughput assay, incorporated within our PUMA system, is capable of detecting modulators of key aspects of sarcomere function ranging from cardiac myosin interaction with the actin filament to the sensitivity of the regulatory proteins to calcium. We have also developed a suite of complementary assays for the characterization of cardiac myosin activators

47

 
in a manner that predicts their physiological activity. As a result, we can rapidly advance and evaluate highly potent and selective compounds in predictive assays replicating physiologic systems, and determine the precise mechanism of action of promising chemical compounds.

       We have identified multiple chemical series of cardiac myosin activators with attractive properties through repeated characterization in cell and animal models. In rats, guinea pigs and dogs, compounds arising from this program demonstrate increased cardiac contractility and improved cardiac efficiency without accompanying adverse effects.

       Our preclinical testing indicates that our compounds work through a novel mechanism of action that enables the modulation of cardiac cell contraction without increasing intracellular calcium levels or interfering with other unrelated cardiac muscle functions. As a result, we believe that our potential drug candidates may effectively improve cardiac contractility and cardiac output for the treatment of acute congestive heart failure patients without adversely impacting heart rate or blood pressure and minimally affecting cardiac energy consumption.

       We believe that our potential drug candidates could be safer and more effective than existing congestive heart failure drugs. Potential advantages of our potential drug candidates may include:
 	 	 	
 	• 	Cardiac efficiency.Our preclinical testing indicates that compounds arising from this program both enhance cardiac output and improve cardiac efficiency. Cardiac output measures the volume of blood pumped into circulation by the heart per minute. Cardiac work is the product of cardiac output and blood pressure. One measure of cardiac efficiency is the ratio of cardiac work divided by oxygen consumption.	
 	 	 	
 	• 	Favorable safety profile.Our preclinical testing indicates that compounds arising from this program enhance cardiac output without significantly increasing heart rate, decreasing blood pressure or causing cardiac arrhythmias.	
       We expect that these properties of our potential drug candidates could result in their improved safety over existing congestive heart failure drugs and allow for the potential use of our cardiac myosin activators for the treatment of patients for whom current drugs cannot be safely administered.

48

 

       As shown below, in studies in a rat model, our cardiac myosin activator improves cardiac efficiency at a dose producing an equal increase in cardiac output, as compared to milrinone, a drug commonly used to treat acute congestive heart failure.

Increase in Cardiac Efficiency

Our Cardiac Myosin Activator Compared to Milrinone in a Rat Model

 	Our cardiac myosin activator efficiently increases cardiac output. This graph shows the percentage change of cardiac output, heart rate, oxygen consumption and cardiac efficiency in rats as measured against a baseline. The baseline was established by measuring these cardiac functions in the rat model prior to treatment. While both the cardiac myosin activator (gray bars) and milrinone (white bars) both increase cardiac output in isolated hearts, only the cardiac myosin activator achieves the increase in cardiac output with no associated increase in heart rate or significant increase in oxygen consumption.	
       Currently our objective in this program is to complete preclinical testing and select a drug candidate that directly activates cardiac myosin for the treatment of acute congestive heart failure. In addition, some of our compounds have properties that may allow for the development of an orally administered compound suitable for the treatment of chronic congestive heart failure. We believe that cardiac myosin activators arising from our cardiovascular disease drug discovery activities may represent improvements relative to drugs commonly used in the treatment of both acute and chronic congestive heart failure.

      Current Program Status. We are currently performing advanced characterization activities on a series of potential drug candidates. We expect to file an IND and initiate a Phase I clinical trial with a drug candidate for the treatment of acute congestive heart failure in the second half of 2004. We plan to design this Phase I clinical trial to assess in healthy volunteers the drug candidate’s safety, including dosing pharmacokinetics and effects on blood pressure and heart rate. We expect that follow-on studies will evaluate the effects of our drug candidate on cardiac output.

       Compounds identified through our research program have been shown to be effective in animal models of normal cardiac function and of heart failure. These compounds specifically activate cardiac myosin and increase cardiac contractile force  in vitro  and  in vivo,  and have no unintended effects on related targets in skeletal or smooth muscle. Furthermore, these compounds have no unintended effects on cardiac cellular calcium concentration. In animal models, these compounds increase cardiac contractility and have no significant adverse effects on heart rate or blood pressure.

49

 
We are pursuing compounds that are suitable for intravenous administration for use in treating acute congestive heart failure. We are also undertaking chemical optimization activities for compounds that are intended for oral administration for use in treating chronic congestive heart failure.

      Commercialization. While we may seek a strategic alliance to assist in the further funding and expansion of our cardiovascular disease drug discovery and development program, we expect to build capabilities to develop, market and sell our acute congestive heart failure drugs in North America. Because acute congestive heart failure patients are largely treated in teaching and community-based hospitals that can be addressed by a specialized sales force, developing our commercial capabilities to address such treatment centers is consistent with our corporate strategy of focusing our commercial efforts on large, concentrated markets. We expect to rely on one or more strategic alliances to further the discovery, development and commercialization of our potential acute congestive heart failure drugs outside North America and our potential chronic congestive heart failure drugs worldwide.

Other Research Programs

       The cytoskeleton plays a role in a broad array of disease areas beyond cancer and cardiovascular disease. Our drug discovery and development activities focused on other therapeutic areas will build on our investments in and experience gained from our more mature cancer and cardiovascular disease programs. Currently, we are conducting drug discovery activities on several earlier stage research programs that we believe will continue to contribute novel drug candidates to our pipeline over time. In each case, our decision to pursue these programs is based on a therapeutic rationale regarding the role of specific cytoskeletal proteins implicated in the relevant disease and desired treatment.

       We currently have several chemical series of antifungal drug candidates in lead optimization stage. Many critically ill patients, who have received bone marrow transplantations, solid organ transplantations, chemotherapy or treatment in an intensive care unit, suffer from systemic fungal infections as a result of suppressed or weakened immune systems. Depending on the patient, their condition and the underlying disease, these infections can be fatal. It is estimated that more than 120,000 patients will be treated with antifungal drugs in 2008. The largest drug in this market is Diflucan® (fluconazole), which had sales of approximately $1.1 billion in 2002 .  The effectiveness of existing antifungals is limited due to their spectrum of activity, their side effects and the resistance to these drugs that develops over time. The evolving resistance of fungal infections requires drugs that are directed against novel microbial targets with novel mechanisms of action.

       Currently, we are characterizing several series of antifungal compounds. Each of these compounds targets one of several fungal mitotic kinesins. As with human mitotic kinesins, fungal mitotic kinesins play a role in the formation and function of the mitotic spindle in fungal cell proliferation. In a preclinical model, compounds arising from this program increased survival in mice with systemic fungal infections. We are currently conducting chemical lead optimization activities and expect to continue these activities through 2004, with the goal of selecting a drug candidate for development and initiating IND-enabling studies in 2005. In addition, we are evaluating specific inhibitors of other compounds against other cytoskeletal proteins implicated in fungal cell proliferation and virulence that may also result in drug candidates for fungal infections.

       In addition to the programs mentioned above, we have more than ten other research programs in cancer, cardiovascular disease, inflammatory diseases, asthma, high blood pressure and other therapeutic areas. In each of these areas, there is a scientific and therapeutic rationale for modulating a specific cytoskeletal protein pathway or multi-protein system for the treatment of disease that guides our activities. For example, we have a research program designed to find anti-inflammatory drug candidates by targeting specific cytoskeletal proteins involved in cell movement. We have identified compounds that inhibit the function of a key cytoskeletal protein involved in the migration of inflammatory cells into diseased tissues. Furthermore, we have identified, characterized

50

 
and are now seeking to chemically optimize compounds that inhibit smooth muscle contractility. Our objective for this research program is to discover potential drug candidates for high blood pressure, asthma and other diseases.

Our Cell Biology Driven Approach to Drug Discovery and Development

       All of our compounds in discovery and development have been discovered internally using our cell biology driven approach and proprietary automated technologies.

      Cell Biology Driven Approach. We believe that the human cell represents a comprehensive environment in which the full complement of proteins and biological pathways and systems operate, and is therefore the most appropriate context for drug discovery. Unlike the conventional drug discovery approach that typically focuses on a singular molecular target or protein in isolation, we focus on each protein along an entire biological pathway or in multi-protein systems that better represent the natural environment of the cell in which the target proteins function. We then seek to identify the most appropriate protein target or targets, as well as multiple effective ways to chemically modulate each target to elicit the appropriate cellular response without other effects and thereby more likely achieve a desired therapeutic effect. We believe that this approach maximizes the chance of finding the preferred protein target implicated in a particular disease and provides multiple opportunities for success within each target-based drug discovery and development program. Our approach to drug discovery and development may thereby increase the productivity and likelihood of success of our research and development activities compared to the more customary approach practiced by other companies.

      Proprietary Drug Discovery Technologies. Our proprietary automated technologies, most notably our PUMA system and Cytometrix technologies, enable early identification and prioritization of drug candidates.

       Our PUMA system is a high-throughput screening platform comprised of a series of automated proprietary multi-protein biochemical assays designed to comprehensively screen large compound libraries to yield chemical entities that specifically modulate each of several cytoskeletal molecular motor proteins. To date, we have applied the PUMA system to perform more than 20 million assays, against an in-house library of approximately 500,000 small molecule compounds and a diverse group of molecular motor protein targets. Unlike many screening platforms, these technologies allow us to analyze protein pathway activity and complexity in a high-throughput format that we believe is more predictive of the natural cellular environment. We complement this system with a customized suite of secondary and supplemental biochemical assays.

       The PUMA system leverages our focus and expertise in cytoskeletal biology and is a highly sensitive and specific screen for both inhibitors and activators of molecular motor proteins such as mitotic kinesin inhibitors in our cancer program and activators of cardiac myosin in our cardiovascular disease program. We screen small molecule members of our compound library against specific cytoskeletal targets, as well as against related proteins that mediate other cellular functions, to ensure that we identify compounds that modulate our protein targets of interest in a highly potent, specific and understandable manner.

       We have developed our Cytometrix technologies as an automated cell biology platform that is an integral part of our small molecule drug discovery process. Cytometrix technologies are our suite of automated and digital microscopy assays that enable us to screen for potency and specificity against multiple biological targets in cells, facilitating the early identification and rejection of those compounds that may have unintended effects and that may subsequently give rise to toxicities. By eliminating undesirable compounds earlier in the drug discovery process, we can focus our attention and resources on the most promising drug candidates. As a result, we believe we minimize investment on commercially unattractive compounds and we can devote more resources to understanding, qualifying and optimizing the compounds that are more likely to yield safe and effective drug candidates.

51

 

       Cytometrix technologies systematically and comprehensively measure responses of individual human cells to potential drug candidates across multiple experimental conditions. For example, in our cancer program, Cytometrix technologies measure, on a cell-by-cell basis, the number of cells at each stage of cell division and cell death and characterize the type of cell death. This is accomplished by combining the same microscope-based approach that has characterized biological research in the past with modern robotic cell handling, digital imaging, image segmentation and analysis and information handling software technologies.

       Cytometrix technologies enable us to efficiently analyze the effects of individual compounds against all proteins simultaneously on a cell-by-cell basis in contrast to assessing more simple outputs of a compound against a single molecular target as is practiced in most other screening systems. Cytometrix technologies profile both existing drugs and small molecule compounds arising out of our drug discovery activities to create detailed cell-by-cell reports of an individual compound’s biological response. In 2003, Cytometrix technologies measured hundreds of variables across each of over 800 million human cells. The resulting information is quantitative and reproducible, allowing prioritization of potential drug candidates by identifying those compounds with certain unintended cellular effects. We believe Cytometrix technologies provide additional and potentially complementary information to gene and protein expression pattern analyses because they measure, cell-by-cell, the response of a network of integrated proteins within their natural environment, the human cell.

       Attractive small molecule compounds, first identified in primary screening against cytoskeletal protein targets using the PUMA system, are more thoroughly profiled using Cytometrix technologies for secondary screening. These technologies generate quantifiable and reproducible cell-based profiles that fingerprint the cellular responses of diverse molecular mechanisms of drug action. Through the integrated use of our PUMA system and Cytometrix technologies, we are able to efficiently focus our efforts towards those compounds that are directed towards novel cytoskeletal protein targets and that are more likely to yield attractive drug candidates.

      Advanced Small Molecule Chemistries. We have assembled a small molecule compound library containing approximately 500,000 compounds. We designed this library to maximize diversity and drug-like characteristics. We support this library with a fully automated infrastructure for compound handling and housing, thus allowing rapid and accurate robotic integration of this chemistry resource with our PUMA system and Cytometrix technologies. We utilize our chemistry technologies together with our expertise in cell biology, pharmacology, drug metabolism and pharmacokinetics for the rapid identification and advancement of attractive compounds and potential drug candidates.

      Discovery Informatics. We have organized our drug discovery operations based on the principle that aggregating informatics across biology and chemistry leads to predictive approaches to target identification, compound analoging and lead optimization, as well as enhances the speed, efficiency and yield of our drug discovery and development process. In support of this principle, we have also created a powerful discovery informatics infrastructure that efficiently manages large and complex data sets representing valuable cell biology driven and biochemical research insights across state-of-the-art chemoinformatics, bioinformatics and genomics resources.

Our Corporate Strategy

       Our goal is to become a fully-integrated biopharmaceutical company focused on discovering, developing and commercializing novel drugs to treat cancer, cardiovascular disease and other disease areas. We intend to achieve this goal by:

 	Focusing on the cytoskeleton.	

 	       We focus our drug discovery activities on the cytoskeleton because its role in disease has been scientifically and commercially validated. We believe that our unique understanding of the cytoskeleton will enable us to discover drug candidates with novel mechanisms of action and	
52

 
 	 	
 	which may avoid the limitations of current drugs. We believe that there are few, if any, other companies that have focused specifically on the cytoskeleton.	
 	 	
 	       Because the cytoskeleton has been validated in a wide array of human disease, we intend to pursue drug discovery programs across a number of therapeutic areas and we believe we can leverage research and development investments made for a program directed at one therapeutic area to programs directed at other therapeutic areas. This may facilitate our building a diverse pipeline of drug candidates in a cost-effective fashion.	

 	Leveraging our cell biology driven approach and proprietary technologies to increase the speed, efficiency and yield of our drug discovery and development process.	

 	       Our innovative cell biology driven research approach and proprietary technologies, including our PUMA system and Cytometrix technologies, enhance the speed, efficiency and yield of the discovery and, potentially, the development process. We believe we can identify and focus on the most promising compounds earlier in the drug discovery process. We do this by quickly and efficiently eliminating those compounds that exhibit potential toxicities. As a result, we may save time and discovery and development resources and reduce the occurrence of later-stage failures. This early intervention and screening may result in a higher yield of drug candidates with a greater chance of clinical success.	

 	Pursuing multiple drug candidates for each cytoskeletal protein target and broad clinical trials for select drug candidates.	

 	       For each of our programs, we characterize several drug candidates for each of a number of cytoskeletal protein targets that act together in a protein pathway or in a multi-protein system. By leveraging our drug discovery efficiencies, we intend to identify, for each cytoskeletal protein target, multiple potential drug candidates that we may progress into clinical development. We believe that this approach of pursuing a portfolio of potential drug candidates for each cytoskeletal protein target in parallel allows us to increase our potential for commercial success.	
 	 	
 	       Because the cytoskeleton plays a fundamental role in many related diseases, we have an opportunity in those diseases to conduct broad and comprehensive Phase II clinical development trials programs for our drug candidates across multiple related disease areas. We believe that by pursuing this approach we increase the probability of these drug candidates achieving success in clinical trials and maximize the commercial potential related to these programs.	

 	Establishing select strategic alliances to accelerate our drug development programs while preserving significant development and commercial rights.	

 	       We intend to selectively enter into strategic alliances to advance our drug discovery and development programs or technologies, to obtain financial support and to leverage the therapeutic area expertise and development and commercialization resources of our partners to accelerate the development of our drug candidates. Where appropriate, we plan to maintain certain rights in development of potential drug candidates and commercialization of potential drugs arising from our alliances so we can build our internal clinical development and sales and marketing capabilities while also maintaining a significant share of the potential revenues for any products arising from each alliance.	

 	Building development and commercialization capabilities directed at large concentrated markets.	

 	       We focus our drug discovery and development efforts on large commercial market opportunities in concentrated markets, such as cancer and acute congestive heart failure. By	
53

 
 	 	
 	focusing on concentrated markets, we believe that a company at our stage of development can compete effectively within these markets against larger, more established companies with more financial resources. For each opportunity focused on these markets, we intend to build clinical development and sales and marketing capabilities in order to become a fully-integrated biopharmaceutical company that can develop and commercialize drugs that arise from our research programs.	
Our Strategic Alliances

      GlaxoSmithKline. In June 2001, we formed a strategic alliance with GSK to discover, develop and commercialize novel small molecule drugs targeting KSP and certain other cytoskeletal proteins involved in cell proliferation for applications in the treatment of cancer and other diseases. This strategic alliance leverages our expertise in the biology and pharmacology of mitotic kinesins and GSK’s pharmaceutical research, development and commercialization capabilities. Under this strategic alliance, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse our FTEs conducting research in connection with the strategic alliance and to make additional milestone payments and pay royalties based on product sales. As of December 31, 2003, we have received $17.2 million in FTE reimbursement and $3.2 million in precommercialization milestone payments. GSK is responsible for worldwide development of drug candidates and commercialization of drugs arising from the strategic alliance, but we retain a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate and a further option to secure co-promotion rights in North America. In the event we exercise a co-promotion option for a product, we are entitled to receive from GSK reimbursement of certain sales force costs that we may incur in support of our commercial activities. We are eligible to receive precommercialization milestone payments ranging from $30.0 to $50.0 million for each mitotic kinesin target for products directed towards each target. In addition, our royalty rate increases based on our level of participation in funding of certain later-stage development activities and as total worldwide sales escalate for each drug developed and commercialized under the strategic alliance. We expect that the royalties to be paid on future sales of SB-715992 and SB-743921 could potentially increase to an upper-teen percentage rate based on our anticipated level of co-funding of certain later-stage development activities of the drug candidates and increasing product sales.

       At predefined times during the research term of the collaboration, we are entitled to select certain mitotic kinesin targets and related compounds for independent research and development at our expense. If we elect to pursue a compound independently, then at a predetermined time during clinical development, GSK will have an option to return the compound to the joint activities of the collaboration subject to GSK’s payment to us of both an amount based on a premium over our research and development costs and also an enhanced royalty on product sales. In the event that GSK does not exercise its option with respect to a compound, we may independently develop and commercialize that compound, subject to a royalty on product sales payable to GSK.

       Under our strategic alliance, GSK has commenced a comprehensive Phase II clinical trials program designed to evaluate SB-715992 in parallel clinical trials across multiple tumor types in 2003. We expect GSK to commence Phase I clinical trials of SB-743921 to begin in early 2004. Additionally, through the strategic alliance, we are performing target validation, hit identification and lead characterization and optimization on other cytoskeletal targets, to select potential drug candidates that may similarly be advanced to clinical development.

      AstraZeneca. In December 2003, we formed an exclusive strategic alliance with AstraZeneca to develop automated imaging-based cellular phenotyping and analysis technologies for the  in vitro  prediction of hepatotoxicity, or toxicity of the liver, a common reason for failure of drug candidates in clinical development. AstraZeneca has agreed to fund a portion of our technology development activities over a two-year research term and pay annual licensing fees and make a milestone payment to us upon the successful achievement of certain agreed-upon performance criteria.

54

 

      Other Strategic Alliances. We have advanced our Cytometrix technologies through our Cytometrix Technologies Development Partner Program with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc. These partners provided us with research compounds that were profiled using our Cytometrix technologies. We have completed our obligations associated with these relationships.

       We formed a strategic alliance with Exelixis, Inc. in December 2001 to design and generate diverse, small molecule compound libraries. We and Exelixis may use these libraries for screening in our respective drug discovery programs. Exelixis may use its proprietary combinatorial chemistry platform to synthesize compounds designed in collaboration with us. The synthesized compounds will be jointly owned and each company will have the right to use the compounds in its own internal research programs, as well as in its respective collaborative research efforts.

Our Patents and Intellectual Property

       Our policy is to patent the technology, inventions and improvements that we consider important to the development of our business. As of December 31, 2003, we had 72 issued United States patents, notices of allowance on six additional United States patent applications and over 100 additional pending United States and foreign patent applications. In addition, we have an exclusive license to five United States patents and more than 20 pending United States and foreign patent applications from the University of California and Stanford University. We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.

       We seek to protect our proprietary information by requiring our employees, consultants, contractors, outside partners and other advisers to execute nondisclosure and assignment of invention agreements upon commencement of their employment or engagement, through which we seek to protect our intellectual property. Agreements with our employees also prevent them from bringing the proprietary rights of third parties to us. We also require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

       Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technologies and drug candidates as well as successfully defending these patents against third-party challenges. We will only be able to protect our technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

       The patent positions of pharmaceutical, biotechnology and other life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

       The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 	 	 	
 	• 	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;	
 	 	 	
 	• 	we or our licensors might not have been the first to file patent applications for these inventions;	
 	 	 	
 	• 	others may independently develop similar or alternative technologies or duplicate any of our technologies;	
55

 
 	 	 	
 	• 	it is possible that none of our pending patent applications or none of the pending patent applications of our licensors will result in issued patents;	
 	 	 	
 	• 	our issued patents and issued patents of our licensors may not provide a basis for commercially viable drugs or therapies, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties;	
 	 	 	
 	• 	our patent applications or patents may be subject to interference, opposition or similar administrative proceedings;	
 	 	 	
 	• 	we may not develop additional proprietary technologies that are patentable; or	
 	 	 	
 	• 	the patents of others may have an adverse effect on our business.	
       The defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings in the United States are costly, time consuming to pursue, and result in diversion of resources. The outcome of these proceedings is uncertain and could significantly harm our business.

       We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, partners and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

       The pharmaceutical, biotechnology and other life sciences industries are characterized by the existence of a large number of patents and frequent litigation based upon allegations of patent infringement. While our drug candidates are in clinical trials, and prior to commercialization, we believe our current activities fall within the scope of the exemptions provided by 35 U.S.C. Section 271(e) in the United States and Section 55.2(1) of the Canadian Patent Act, each of which covers activities related to developing information for submission to the FDA and its counterpart agency in Canada. As our drug candidates progress toward commercialization, the possibility of an infringement claim against us increases. While we attempt to ensure that our drug candidates and the methods we employ to manufacture them do not infringe other parties’ patents and other proprietary rights, competitors or other parties may assert that we infringe on their proprietary rights.

       In particular, we are aware of an issued United States patent and at least one pending United States patent application assigned to Curis, Inc. relating to certain compounds in the quinazolinone class. SB-715992 falls into this class of compounds. The Curis patent claims a method of use for inhibiting signaling the hedgehog pathway using certain quinazolinones. We are also aware that Curis has pending applications in Europe, Japan, Australia and Canada with claims covering compositions of certain quinazolinone compounds. Curis or a third party may assert that the sale of SB-715992 candidate may infringe one or more of these or other patents.

       We believe that we have valid defenses to an assertion that SB-715992 infringes the Curis patent. However, we cannot guarantee that a court would find such defenses valid. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       In addition, we are aware of a European patent application assigned to Cellomics, Inc. relating to an automated method for analyzing cells. The Cellomics application is proceeding to grant in Europe. We are also aware that Cellomics has pending applications in the United States, Canada, Japan and Australia. Cellomics or a third party may assert that our Cytometrix technologies fall within the scope of the Cellomics European patent application and thus, may infringe one or more of

56

 
these or other patents. We believe that we have valid defenses to such an assertion. Moreover, the grant of the European patent may be opposed by one or more parties. However, we cannot guarantee that a court would find such defenses valid or that such opposition would be successful. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

Government Regulation

       The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture, marketing and distribution of drugs. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our drug candidates and drugs.

       In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FFDCA, and implementing regulations. The process required by the FDA before our drug candidates may be marketed in the United States generally involves the following:
 	 	 	
 	• 	completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies all performed in accordance with the FDA’s good laboratory practice, or GLP, regulations;	
 	 	 	
 	• 	submission to the FDA of an IND application which must become effective before clinical trials may begin;	
 	 	 	
 	• 	performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product candidate for each proposed indication;	
 	 	 	
 	• 	submission of a NDA to the FDA;	
 	 	 	
 	• 	satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance with current GMP, or cGMP, regulations; and	
 	 	 	
 	• 	FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.	
       The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all.

       Preclinical tests include laboratory evaluation of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals. The results of preclinical tests, together with manufacturing information and analytical data, are submitted as part of an IND application to the FDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Our submission of an IND, or those of our collaborators, may not result in FDA authorization to commence a clinical trial. A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development, and the FDA must grant permission before each clinical trial can begin. Further, an independent institutional review board, or IRB, for each medical center proposing to conduct the clinical trial must review and approve the plan for any clinical trial before it commences at that center and it must monitor the study until completed. The FDA, the IRB, or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an

57

 
unacceptable health risk. Clinical testing also must satisfy extensive Good Clinical Practice, or GCP, regulations and regulations for informed consent.

      Clinical Trials. For purposes of NDA submission and approval, clinical trials are typically conducted in the following three sequential phases, which may overlap:
 	 	 	
 	• 	Phase I: Studies are initially conducted in a limited population to test the drug candidate for safety, dose tolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, in patients, such as cancer patients. In some cases, particularly in cancer trials, a sponsor may decide to run what is referred to as a “Phase Ib” evaluation, which is a second safety-focused Phase I clinical trial typically designed to evaluate the impact of the drug candidate in combination with currently approved drugs.	
 	 	 	
 	• 	Phase II: Studies are generally conducted in a limited patient population to identify possible adverse effects and safety risks, to determine the efficacy of the drug candidate for specific targeted indications and to determine dose tolerance and optimal dosage. Multiple Phase II clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase III clinical trials. In some cases, a sponsor may decide to run what is referred to as a “Phase IIb” evaluation, which is a second, confirmatory Phase II clinical trial that could, if positive and accepted by the FDA, serve as a pivotal clinical trial in the approval of a drug candidate.	
 	 	 	
 	• 	Phase III: These are commonly referred to as pivotal studies. When Phase II clinical trials demonstrate that a dose range of the drug candidate is effective and has an acceptable safety profile, Phase III clinical trials are undertaken in large patient populations to further evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites.	
       In some cases, the FDA may condition approval of an NDA for a drug candidate on the sponsor’s agreement to conduct additional clinical trials to further assess the drug’s safety and effectiveness after NDA approval. Such post-approval trials are typically referred to as Phase IV clinical trials.

      New Drug Application. The results of drug candidate development, preclinical testing and clinical trials are submitted to the FDA as part of an NDA. The NDA also must contain extensive manufacturing information. Once the submission has been accepted for filing, by law the FDA has 180 days to review the application and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification. The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The FDA may deny approval of an NDA if the applicable regulatory criteria are not satisfied, or it may require additional clinical data or an additional pivotal Phase III clinical trial. Even if such data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and FDA may interpret data differently than we or our collaborators interpret data. Once issued, the FDA may withdraw drug approval if ongoing regulatory requirements are not met or if safety problems occur after the drug reaches the market. In addition, the FDA may require testing, including Phase IV clinical trials, and surveillance programs to monitor the effect of approved products which have been commercialized, and the FDA has the power to prevent or limit further marketing of a drug based on the results of these post-marketing programs. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved label. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new NDA or NDA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

58

 

      Fast Track Designation.The FDA’s fast track program is intended to facilitate the development and to expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition. Under the fast track program, the sponsor of a new drug candidate may request the FDA to designate the drug candidate for a specific indication as a fast track drug concurrent with or after the filing of the IND for the drug candidate. The FDA must determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

       If fast track designation is obtained, the FDA may initiate review of sections of an NDA before the application is complete. This rolling review is available if the applicant provides and the FDA approves a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the time period specified in the Prescription Drug User Fees Act, which governs the time period goals the FDA has committed to reviewing an application, does not begin until the complete application is submitted. Additionally, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

       In some cases, a fast track designated drug candidate may also qualify for one or more of the following programs:
 	 	 	
 	• 	Priority Review. Under FDA policies, a drug candidate is eligible for priority review, or review within a six-month time frame from the time a complete NDA is accepted for filing, if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track designated drug candidate would ordinarily meet the FDA’s criteria for priority review. We cannot guarantee any of our drug candidates will receive a priority review designation, or if a priority designation is received, that review or approval will be faster than conventional FDA procedures, or that FDA will ultimately grant drug approval.	
 	 	 	
 	• 	Accelerated Approval. Under the FDA’s accelerated approval regulations, the FDA is authorized to approve drug candidates that have been studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit to patients over existing treatments based upon either a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than patient survival. In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to validate the surrogate endpoint or confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to validate a surrogate endpoint or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.	
       When appropriate, we and our collaborators intend to seek fast track designation or accelerated approval for our drug candidates. We cannot predict whether any of our drug candidates will obtain a fast track or accelerated approval designation, or the ultimate impact, if any, of the fast track or the accelerated approval process on the timing or likelihood of FDA approval of any of our drug candidates.

       Satisfaction of FDA regulations and requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease. Typically, if a drug candidate is intended to treat a chronic disease, as is the case with some of the drug

59

 
candidates we are developing, safety and efficacy data must be gathered over an extended period of time. Government regulation may delay or prevent marketing of drug candidates for a considerable period of time and impose costly procedures upon our activities. The FDA or any other regulatory agency may not grant approvals for new indications for our drug candidates on a timely basis, if at all. Even if a drug candidate receives regulatory approval, the approval may be significantly limited to specific disease states, patient populations and dosages. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a drug may result in restrictions on the drug or even complete withdrawal of the drug from the market. Delays in obtaining, or failures to obtain, regulatory approvals for any of our drug candidates would harm our business. In addition, we cannot predict what adverse governmental regulations may arise from future United States or foreign governmental action.

      Other regulatory requirements.Any drugs manufactured or distributed by us or our collaborators pursuant to FDA approvals are subject to continuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences associated with the drug. Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, seizure of product, injunctive action or possible civil penalties. We cannot be certain that we or our present or future third-party manufacturers or suppliers will be able to comply with the cGMP regulations and other ongoing FDA regulatory requirements. If our present or future third-party manufacturers or suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, require us to recall a drug from distribution, or withdraw approval of the NDA for that drug.

       The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet. A company can make only those claims relating to safety and efficacy that are approved by the FDA. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available drugs for uses that are not described in the drug’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.

Competition

       We compete in the segments of the pharmaceutical, biotechnology and other related markets that address cancer, cardiovascular disease and antifungal applications, each of which is highly competitive. We face significant competition from most pharmaceutical companies as well as biotechnology companies that are also researching and selling products designed to address cancer, cardiovascular disease or antifungal applications. Many of our competitors have significantly greater financial, manufacturing, marketing and drug development resources than we do. Large pharmaceutical companies in particular have extensive experience in clinical testing and in obtaining regulatory approvals for drugs. These companies also have significantly greater research capabilities than we do. In addition, many universities and private and public research institutes are active in cancer, cardiovascular disease and antifungal research, some in direct competition with us.

60

 

       We believe that our ability to successfully compete will depend on, among other things:
 	 	 	
 	• 	efficacy, safety and reliability of our drug candidates;	
 	 	 	
 	• 	the speed at which we develop drug candidates;	
 	 	 	
 	• 	completion of clinical development and laboratory testing and obtaining regulatory approvals for drug candidates;	
 	 	 	
 	• 	timing and scope of regulatory approvals;	
 	 	 	
 	• 	our ability to manufacture and sell commercial quantities of a product to the market;	
 	 	 	
 	• 	product acceptance by physicians and other health care providers;	
 	 	 	
 	• 	quality and breadth of our technology;	
 	 	 	
 	• 	skills of our employees and our ability to recruit and retain skilled employees;	
 	 	 	
 	• 	protection of our intellectual property;	
 	 	 	
 	• 	cash flows under existing and potential future arrangements with licensees, partners and other parties; and	
 	 	 	
 	• 	availability of substantial capital resources to fund development and commercialization activities.	
       It is possible that our competitors will develop drug candidates and market drugs that are less expensive and more effective than our future drugs or that will render our drugs obsolete. It is also possible that our competitors will commercialize competing drugs before we or our partners can launch any drugs developed from our drug candidates. Companies that currently sell drugs in our markets of interest include, for example, Bristol-Myers Squibb, Abbott, Aventis, Johnson & Johnson, Merck and Pfizer. Other companies that are early-stage are currently developing alternative treatments and products that could compete with our drugs. These organizations also compete with us to attract qualified personnel and potential parties for acquisitions, joint ventures or other strategic alliances.

Legal Proceedings

       We are not involved in any legal proceedings.

Facilities

       Our facilities consist of approximately 53,408 square feet of research and office space. We lease 50,195 square feet located at 280 East Grand Avenue in South San Francisco, California until 2013 with an option to renew that lease over that timeframe. We also lease 3,213 square feet at 250 East Grand Avenue in South San Francisco, California on a month-to-month basis.

Employees

       As of December 31, 2003, our workforce consisted of 163 full-time employees, 57 of whom hold Ph.D. or M.D. degrees, or both, and 30 of whom hold other advanced degrees. Of our total workforce, 131 are engaged in research and development and 32 are engaged in business development, finance, and administration. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We believe that our relations with our employees are good.

61

 

MANAGEMENT

Executive Officers and Directors

       Our directors and executive officers as of January 15, 2004 are as follows:
 	 	 	 	 	 	 	
Name	 	Age	 	Position	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	45	 	 	President and Chief Executive Officer; Director	
Robert I. Blum	 	 	40	 	 	Executive Vice President, Corporate Development and Finance and Chief Financial Officer	
David J. Morgans, Jr., Ph.D.	 	 	51	 	 	Senior Vice President, Drug Discovery and Development	
Jay K. Trautman, Ph.D.	 	 	45	 	 	Vice President, Technology	
Gail A. Sheridan	 	 	55	 	 	Vice President, Human Resources	
Stephen Dow(1)(3)	 	 	48	 	 	Director	
A. Grant Heidrich, III(1)(2)	 	 	51	 	 	Director	
Charles Homcy, M.D.	 	 	55	 	 	Director	
William J. Rutter, Ph.D.(2)(3)	 	 	76	 	 	Director	
Michael Schmertzler(1)	 	 	51	 	 	Director	
James A. Spudich, Ph.D.(3)	 	 	62	 	 	Director	

 	 	
(1) 	Member of the Audit Committee.	
 	 	
(2) 	Member of the Compensation Committee.	
 	 	
(3) 	Member of the Nominating and Governance Committee.	
      James H. Sabry, M.D., Ph.D. co-founded the company and has served as our President and Chief Executive Officer and as a member of our board of directors since August 1997. Prior to that he held faculty positions at the University of California, San Francisco, from 1989 to 1998, and Harvard Medical School from 1984 to 1987. Dr. Sabry received a M.D. from Queens University and a Ph.D. in Cell Biology from the University of California, San Francisco.

      Robert I. Blum has served as our Executive Vice President, Corporate Development and Finance and Chief Financial Officer since January 2004. From October 2001 to December 2003, he served as our Senior Vice President, Corporate Development and Finance and Chief Financial Officer. From July 1998 to September 2001, Mr. Blum was our Vice President, Business Development. Prior to joining us in July 1998, he was Director, Marketing at COR Therapeutics, Inc., a biopharmaceutical company from 1996. From 1991 to 1996, he was Director, Business Development at COR Therapeutics. Prior to this, Mr. Blum performed roles of increasing responsibility in sales, marketing and other pharmaceutical business functions at Marion Laboratories, Inc. and Syntex Laboratories, Inc. Mr. Blum received B.A. degrees in Human Biology and Economics from Stanford University and a M.B.A. from Harvard Business School.

      David J. Morgans, Jr., Ph.D. has served as our Senior Vice President, Drug Discovery and Development since October 2003. From March 2002 to September 2003, he served as our Senior Vice President, Drug Discovery and, from January 2002 to February 2002, he served as our Vice President, Drug Discovery. From October 2000 to December 2001, he served as our Vice President Chemistry. From July 1998 to October 2000, Dr. Morgans served as Vice President of Research for Iconix Pharmaceuticals, Inc., a biopharmaceutical company. From March 1995 to July 1998, he was Vice President, Inflammatory Diseases at Roche Bioscience, a pharmaceutical company. From 1983 to 1995, he held various positions at Syntex Laboratories, Inc., most recently as Director, Medicinal Chemistry. From 1980 to 1983, Dr. Morgans was Assistant Professor of Chemistry at University of California, Santa Cruz. Dr. Morgans received a B.S. in Chemistry from Saint Joseph’s University in Philadelphia and a Ph.D. in Chemistry from Columbia University.

62

 

      Jay K. Trautman, Ph.D. has served as our Vice President, Technology since May 2003. He served as our Vice President, Cell Technologies from June 2002 to May 2003. From March 2000 to June 2002, he served as the Chief Executive Officer of Praelux Incorporated, a research and development company and wholly owned subsidiary of Amersham Biosciences Corp. From March 1996 to March 2000, Dr. Trautman held a variety of positions at Praelux and its predecessor company, SEQ Ltd., and was responsible for directing research and development activities. Dr. Trautman received a B.S. in Chemistry from the University of Washington and a Ph.D. in Chemistry from Cornell University.

      Gail A. Sheridan has served as our Vice President, Human Resources since January 2004. She joined Cytokinetics as a consultant in March 2003 and became an employee in January 2004. She was sole proprietor of Human Resources Consulting from January 1995 to December 2003. From 1993 to 1995, she was Director, Human Resources at SyStemix Incorporated. From 1990 to 1993, she was Director, Human Resources at Software Publishing Corporation. From 1986 to 1990, Ms. Sheridan was a Principal at Telemarketing Solutions. From 1983 to 1986, she held Vice President positions at Bank of America. Ms. Sheridan holds a B.A. in Political Science from the University of California at Berkeley and an M.A. in American Studies from the University of Southern California.

      Stephen Dow has served as a member of our board of directors since April 1999. Mr. Dow has been a General Partner with Sevin Rosen Funds, a venture capital firm, since 1983. Since 1989, Mr. Dow has served on the board of directors of Citrix Systems, an enterprise software company, and has been Citrix’s Chairman of the Board since May 2002. Mr. Dow received a B.A. in Economics and a M.B.A. from Stanford University.

      A. Grant Heidrich, III has served as a member of our board of directors since April 1999. Mr. Heidrich has been a Managing Director of certain Mayfield funds, each a venture capital firm, since 1983. Mr. Heidrich currently serves as Chairman of the board of directors of Tularik, Inc., a biotechnology company, and as the Lead Outside Director of Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Mr. Heidrich received a B.A. in Human Biology from Stanford University and a M.B.A. from Columbia University.

      Charles Homcy, M.D. has served as a member of our board of directors since February 2003. Since November 2003, Dr. Homcy has served as Chief Executive Officer of Portola Pharmaceuticals, Inc., a biopharmaceutical company. From January 2003 to November 2003, Dr. Homcy served as Senior Research and Development Advisor of Millennium Pharmaceuticals. From February 2002 to December 2002, Dr. Homcy served as the President of Research and Development at Millennium Pharmaceuticals. From 1995 to February 2002, he served as Executive Vice President, Research and Development of COR Therapeutics, Inc., where he served as a member of the board of directors from 1998 to February 2002. From 1994 to March 1995, Dr. Homcy was President of the Medical Research Division of American Cyanamid Company-Lederle Laboratories (now a division of Wyeth-Ayerst Laboratories). From 1990 to 1994, Dr. Homcy was Executive Director of the Cardiovascular and Central Nervous System Research Section at Lederle Laboratories. Dr. Homcy currently serves on the board of directors of Millennium Pharmaceuticals and Kosan Biosciences, Inc., a biopharmaceutical company. Dr. Homcy received a A.B. in Biology and a M.D. from Johns Hopkins University.

      William J. Rutter, Ph.D. has served as a member of our board of directors since May 1999. Since July 2002, Dr. Rutter has been the Chairman, Chief Executive Officer and a principal shareholder of Synergenics LLC, a biotechnology consulting company. From 1981 until May 1999, Dr. Rutter served as Chairman of the Board of Directors of Chiron Corporation, a biopharmaceutical, vaccine and blood testing company that he co-founded. He is currently Chairman Emeritus of Chiron. From August 1983 to April 1989, Dr. Rutter was the Director of the Hormone Research Institute at the University of California, San Francisco. Since January 2000, Dr. Rutter has served on the board of directors of Sangamo Biosciences, Inc., a biotechnology company. Dr. Rutter received a B.A. in

63

 
Biochemistry from Harvard University, a M.S. in Biochemistry from the University of Utah and a Ph.D. in Biochemistry from the University of Illinois.

      Michael Schmertzler has served as a member of our board of directors since April 2003. Since 2001, Mr. Schmertzler has been a Managing Director of Aries Advisors, LLC, a sub-advisor to Credit Suisse First Boston Equity Partners, L.P., a private equity fund, and the Chair of the investment committees. From 1997 to 2001, Mr. Schmertzler was Co-Head of United States and Canadian Private Equity at Credit Suisse First Boston, an investment banking company. Prior to 1997, Mr. Schmertzler held various management positions with Morgan Stanley and its affiliates, including President of Morgan Stanley Leveraged Capital Funds and Managing Director, and was Managing Director and Chief Financial Officer of Lehman Brothers Kuhn Loeb, an investment banking firm. Mr. Schmertzler received a B.A. from Yale College in Molecular Biophysics and Biochemistry, History and City Planning and a M.B.A. from the Harvard Business School.

      James A. Spudich, Ph.D. co-founded the company and has served as a member of our board of directors since August 1997. From September 1998 to September 1999, he served as our Principal Scientist. Dr. Spudich is the Douglass M. Nola Leishman Professor in Cardiovascular Disease and Professor of Biochemistry and Developmental Biology at Stanford University where he has been a member of the faculty since 1977. From 1994 to 1998, Dr. Spudich served as Chairman of Stanford University’s Department of Biochemistry. From 1979 to 1984, he was Chairman of Stanford’s Department of Structural Biology. He was elected a member of the American Academy of Arts and Sciences in 1997 and a member of the National Academy of Sciences in 1991. Dr. Spudich is also a member of our scientific advisory board. Dr. Spudich received a B.S. in Chemistry from the University of Illinois and a Ph.D. in Biochemistry from Stanford University.

Scientific Advisory Board

       The following individuals are members of our scientific advisory board:

      John C. Chabala, Ph.D. is a founder and member of the Management Scientific Advisory Board of Pharmacopeia, Inc., a combinatorial chemistry and chemoinformatics company, where he served as President from 1993 to 1996 and Chief Scientific Officer from 1993 to 1997. Prior to joining Pharmacopeia, Dr. Chabala was Vice President of Discovery Chemistry at Bristol-Myers Squibb from 1991 to 1993. Prior to that, he was with Merck ultimately as Executive Director, Basic Chemistry, supervising a variety of medicinal and other chemistry programs. Dr. Chabala received a B.S. in Chemistry from Bucknell University, and a Ph.D. in Organic Chemistry from Massachusetts Institute of Technology.

      David G. Drubin, Ph.D. is Professor of Genetics in the Department of Molecular and Cell Biology at the University of California, Berkeley, where he has been a member of the faculty since 1988. Dr. Drubin is Associate Editor of Molecular Biology of the Cell, Editor of the Journal of Cell Biology and a member of the editorial board of Trends of Cell Biology. He was elected Co-Chair and Chair of the Gordon Research Conference on the Plant and Fungal Cytoskeleton in 1995 and 1998, respectively, and was Chair of the Program Committee for the 1999 meeting of the American Society of Cell Biology. Dr. Drubin received an A.B. in Biochemistry from the University of California at Berkeley, and a Ph.D. in Biochemistry from the University of California at San Francisco.

      Lawrence S. B. Goldstein, Ph.D. co-founded our company in August 1997. Dr. Goldstein has been a member of the University of California, San Diego faculty since 1995, where he is Professor of Cellular and Molecular Medicine and an Investigator in the Howard Hughes Medical Institute. From 1984 to 1993, he was Professor of Cellular and Developmental Biology at Harvard University. Dr. Goldstein is a member of the editorial boards of Molecular Biology of the Cell and the Journal of Cell Biology. He is also Associate Editor of the Annual Review of Cell and Developmental Biology. Dr. Goldstein received a B.A. in Biology from the University of California, San Diego, and a Ph.D. in Genetics from the University of Washington.

64

 

      Eric M. Gordon, Ph.D. held the position of Senior Vice President of Research at Sunesis Pharmaceuticals, Inc. from October 1998 to July 2002. From 1996 to 1998, Dr. Gordon was President, Scientific Founder and Chief Scientific Officer of Versicor. Prior to this, Dr. Gordon served as Vice President of Research and Director of Chemistry at Affymax Research Institute from 1992 to 1996, and from 1990 to 1992, he was the Director of Medicinal Chemistry at The Squibb Institute in Princeton where he began as a Postdoctoral Fellow in 1974. His professional activities include serving as president of the Princeton American Chemical Society, Adjunct Professor of Medicinal Chemistry at the University of Wisconsin, and he was elected an American Association Advancement of Science (AAAS) Fellow. Dr. Gordon received a B.S. and a Ph.D. in Medicinal Chemistry from the University of Wisconsin.

      Marc W. Kirschner, Ph.D. is the founding chair of the Department of Cell Biology and the Carl W. Walter Professor of Cell Biology at Harvard Medical School, where he joined the faculty in 1993. Dr. Kirschner was a co-founder of Harvard’s Institute of Chemistry and Cell Biology. From 1978 to 1993, Dr. Kirschner was Professor at the University of California, San Francisco. From 1972 to 1978, he was on faculty at Princeton University. Dr. Kirschner is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and was elected a Foreign Member of the Royal Society of London in 1999. Dr. Kirschner received a B.A. in Chemistry from Northwestern University and received a Ph.D. in Cell Biology from the University of California, Berkeley.

      Larry E. Overman, Ph.D. has been a member of the faculty at the University of California, Irvine since 1971, where he is currently a Distinguished Professor of Chemistry. He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences. Dr. Overman is Editor-in-Chief of Organic Reactions and a member of the Board of Consulting Editors of Tetrahedron Publications. He is a member of the board of directors of Organic Syntheses and Organic Reactions and a member of Pharmacopeia’s scientific advisory board. Dr. Overman received a B.A. in Chemistry in 1965 from Earlham College and a Ph.D. in Organic Chemistry in 1969 from the University of Wisconsin.

      Thomas D. Pollard, M.D. is the Higgins Professor of Molecular, Cellular and Developmental Biology at Yale University. From 1996 to 2000, Dr. Pollard served as Professor and President of the Salk Institute for Biological Studies in La Jolla, California. From 1977 to 1996, Dr. Pollard directed the Department of Cell Biology at the Johns Hopkins Medical School. From 1993 to 1998, he chaired the Commission on Life Sciences at the National Research Council. Dr. Pollard served as Council Member and President of both the American Society for Cell Biology and the Biophysical Society. Dr. Pollard received a B.A. in Chemistry and Zoology from Pomona College, and a M.D. from Harvard Medical School.

      Stephen J. Smith, Ph.D. is a Professor of Molecular and Cellular Physiology at the Stanford University School of Medicine. From 1977 to 1979, Dr. Smith was a Miller Fellow at the University of California, Berkeley. Dr. Smith received a B.S. in Psychology from Reed College, and a Ph.D. in Physiology and Biophysics from the University of Washington.

      James A. Spudich, Ph.D. Dr. Spudich’s biographical information is provided above.

      Ronald D. Vale, Ph.D. co-founded our company in August 1997. Since 1986, Dr. Vale has been a member of the University of California, San Francisco faculty. Dr. Vale was appointed to the Howard Hughes Medical Institute in 1995, and was elected to the National Academy of Sciences in 2001. He serves as the Chair of the Department of Cellular and Molecular Pharmacology at the University of California, San Francisco and is the W. K. Hamilton Distinguished Professor of Anesthesia. Dr. Vale received a B.S. in Biology and Chemistry from the University of California, Santa Barbara, and a Ph.D. in Neurosciences from Stanford University.

65

 

Board Composition and Committees

       Our board of directors currently consists of seven members. Prior to the closing of this offering, our board of directors will be divided into three classes, with each director serving a three-year term and one class being elected at each year’s annual meeting of stockholders. Directors A. Grant Heidrich and William J. Rutter will be in the class of directors whose initial term expires at the 2004 annual meeting of stockholders. Directors James Spudich and Charles Homcy will be in the class of directors whose initial term expires at the 2005 annual meeting of the stockholders. Directors Stephen Dow, Michael Schmertzler and James Sabry will be in the class of directors whose initial term expires at the 2006 annual meeting of stockholders.

       Our board of directors currently has an audit committee, a compensation committee and a nominating and governance committee. Directors Stephen Dow, Grant Heidrich and Michael Schmertzler are currently members of the audit committee. The audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent accountants. Directors A. Grant Heidrich and William J. Rutter are currently members of the compensation committee. The compensation committee reviews and recommends to the board of directors the compensation and benefits for all of our officers and establishes and reviews general policies relating to compensation and benefits for our other employees. Directors Stephen Dow, James Spudich and William J. Rutter are currently members of the nominating and governance committee. The nominating and governance committee assists our board of directors in the areas of membership selection, evaluation of overall effectiveness of the board of directors and the review of developments in corporate governance practices.

Director Compensation

       We reimburse our non-employee directors for their expenses incurred in connection with attending board and committee meetings but do not plan to compensate them for their services as board or committee members. We have in the past granted non-employee directors options to purchase our common stock pursuant to the terms of our 1997 Stock Option/ Stock Issuance Plan, and our board continues to have the discretion to grant options to new and continuing non-employee directors. In addition, one director has purchased shares of our common stock pursuant to restricted stock purchase agreements, subject to a repurchase right in our favor. For a discussion of such director’s restricted stock purchase agreement, see “Related Party Transactions.”

       In January 2004, our stockholders approved our 2004 Equity Incentive Plan, which provides for automatic grants of stock options to directors who are not our officers or employees. The 2004 Equity Incentive Plan provides that such directors will automatically receive:
 	 	 	
 	• 	one-time option grants of 20,000 shares vesting annually over three years from the date of joining the board which are to be granted on such date at the fair market value of one share of our common stock on the date of grant; and	
 	 	 	
 	• 	annual option grants of 15,000 shares vested in full on the date of grant which are to be granted on the date of each annual stockholder meeting following the closing of this offering at the fair market value of one share of our common stock on the date of grant, provided that such grant will only be made to non- employee directors that have been members of the board for at least six months at the time of such annual stockholder meeting.	
66

 

Executive Compensation

       The following table sets forth the compensation earned for services rendered to us in all capacities by our Chief Executive Officer and our other executive officers whose total cash compensation exceeded $100,000 — collectively, the “Named Executive Officers” — for the year ended December 31, 2003.

Summary 2003 Compensation Table

 	 	 	 	 	 	 	 	 	 	Long-Term Compensation	

	
 	 	Annual Compensation ($)	 	Securities	 	 	

	 	Underlying	 	All Other	
Name and Principal Positions	 	Year	 	Salary	 	Bonus	 	Other	 	Options (#)	 	Compensation(7)	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.,	 	 	2003	 	 	$	354,167	 	 	$	86,760	 	 	$	10,610	(2)	 	 	150,000	(8)	 	$	1,031	 	
 	President and Chief	 	 	2002	 	 	 	317,917	 	 	 	71,190	 	 	 	10,610	(2)	 	 	600,000	(9)	 	 	660	 	
 	Executive Officer	 	 	2001	 	 	 	277,083	 	 	 	52,500	 	 	 	1,152	(2)	 	 	—	 	 	 	618	 	
Robert I. Blum,	 	 	2003	 	 	 	268,404	 	 	 	210,290	 	 	 	6,248	(3)	 	 	358,850	(10)	 	 	604	 	
 	Executive Vice President,	 	 	2002	 	 	 	268,484	 	 	 	42,525	 	 	 	8,987	(3)	 	 	300,000	(11)	 	 	468	 	
 	Corporate Development and Finance	 	 	2001	 	 	 	234,375	 	 	 	31,500	 	 	 	9,256	(3)	 	 	—	 	 	 	456	 	
 	and Chief Financial Officer	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
David J. Morgans, Jr., Ph.D.,	 	 	2003	 	 	 	243,078	 	 	 	54,660	 	 	 	11,123	(4)	 	 	109,000	(12)	 	 	1,239	 	
 	Senior Vice President,	 	 	2002	 	 	 	226,208	 	 	 	34,965	 	 	 	8,935	(5)	 	 	100,000	(13)	 	 	1,146	 	
 	Drug Discovery and Development	 	 	2001	 	 	 	192,708	 	 	 	—	 	 	 	8,935	(5)	 	 	30,000	(14)	 	 	609	 	
Jay K. Trautman, Ph.D.,	 	 	2003	 	 	 	223,333	 	 	 	39,800	 	 	 	—	 	 	 	55,000	(15)	 	 	736	 	
 	Vice President, Technology(1)	 	 	2002	 	 	 	126,992	 	 	 	60,000	 	 	 	11,506	(6)	 	 	125,000	(16)	 	 	228	 	

 	 	 	
 	(1) 	Dr. Trautman’s employment with us began on June 3, 2002.	
 	 	 	
 	(2) 	Represents loan to be forgiven over eight years beginning November 12, 2001.	
 	 	 	
 	(3) 	Represents interest payments on a loan co-signed by us on behalf of Mr. Blum.	
 	 	 	
 	(4) 	Represents loans to be forgiven over eight years beginning on October 18, 2000 and May 20, 2002.	
 	 	 	
 	(5) 	Represents loan to be forgiven over eight years beginning October 18, 2000.	
 	 	 	
 	(6) 	Represents non-deductible moving expenses.	
 	 	 	
 	(7) 	Represents group term life Insurance	
 	 	 	
 	(8) 	Represents a stock option granted to Dr. Sabry in May, 2003. Such option vests monthly over a four-year period beginning March 1, 2003.	
 	 	 	
 	(9) 	Represents a stock option granted to Dr. Sabry in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	

(10) 	Represents a stock option granted to Mr. Blum in May, 2003, which vests monthly over a four-year period beginning March 1, 2003, and a stock option granted in December, 2003, which vests monthly over a five-year period beginning December 18, 2003.	
 	 	
(11) 	Represents a stock option granted to Mr. Blum in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	
 	 	
(12) 	Represents a stock option granted to Dr. Morgans in May, 2003. Such option vests monthly over a four-year period beginning March 1, 2003.	
 	 	
(13) 	Represents a stock option granted to Dr. Morgans in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	
 	 	
(14) 	Represents a stock option granted to Dr. Morgans in March, 2001. Such option vested as to 25% of the shares subject to the option on March 14, 2002, and as to 1/48th of the shares subject to such option each month thereafter.	
 	 	
(15) 	Represents a stock option granted to Dr. Trautman in May, 2003. Such option vests monthly over a four-year period from March 1, 2003.	
 	 	
(16) 	Represents a stock option granted to Dr. Trautman in July, 2002. Such option vested as to 25% of the shares subject to the option on June 3, 2003, and as to 1/48th of the shares subject to such option each month thereafter.	
67

 

Option Grants in 2003

       The following table sets forth information concerning grants of stock options to each of the executive officers named in the table above during 2003. All options granted to these executive officers in 2003 were granted under the 1997 Stock Option/ Stock Issuance Plan, as amended. Except as otherwise noted, one forty-eighth of the shares subject to each option vests and becomes exercisable on the first month after the vesting commencement date, and an additional one-forty-eighth of the shares subject to each option vests each month thereafter. The percent of the total options set forth below is based on an aggregate of 1,227,539 options granted to employees during 2003. All options were granted at fair market value as determined by our board of directors on the date of grant.

       Potential realizable value represents hypothetical gains that could be achieved for the options if exercised at the end of the option term assuming that the initial public offering price of our common stock appreciates at 5% and 10% over the option term. The assumed 5% and 10% rates of stock price appreciation are provided in accordance with rules of the Securities and Exchange Commission and do not represent our estimate or projection of our future common stock price.

 	 	Individual Grants	 	 	

	 	Potential	
 	 	 	 	Percent of	 	 	 	Realizable Value at	
 	 	 	 	Total	 	 	 	Assumed Annual	
 	 	Number of	 	Options	 	 	 	Rates of Stock	
 	 	Securities	 	Granted to	 	 	 	Appreciation for	
 	 	Underlying	 	Employees	 	Exercise	 	 	 	Option Term ($)	
 	 	Options	 	During	 	Price Per	 	Expiration	 	

	
Name	 	Granted	 	Period (%)	 	Share ($)	 	Date	 	5%	 	10%	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	150,000	 	 	 	12.2	%	 	$	0.60	 	 	 	5/21/13	 	 	$	 	 	 	$	 	 	
Robert I. Blum	 	 	75,000	 	 	 	6.1	 	 	 	0.60	 	 	 	5/21/13	 	 	 	 	 	 	 	 	 	
 	 	 	283,850	 	 	 	23.1	 	 	 	1.00	 	 	 	12/18/13	 	 	 	 	 	 	 	 	 	
David J. Morgans, Jr., Ph.D.	 	 	109,000	 	 	 	8.9	 	 	 	0.60	 	 	 	5/21/13	 	 	 	 	 	 	 	 	 	
Jay K. Trautman, Ph.D.	 	 	55,000	 	 	 	4.5	 	 	 	0.60	 	 	 	5/21/13	 	 	 	 	 	 	 	 	 	
Aggregate Option Exercises in 2003 and Values at December 31, 2003

       The following table sets forth information concerning exercisable and unexercisable stock options held by the executive officers named in the summary compensation table at December 31, 2003. The value of unexercised in-the-money options is based on an assumed initial offering price of $          per share minus the actual exercise prices. All options were granted under our 1997 Stock Option/ Stock Issuance Plan, as amended. Except as otherwise noted, these options vest over four years and otherwise generally conform to the terms of our 1997 Stock Option/ Stock Issuance Plan, as amended.

 	 	 	 	 	 	Number of Securities	 	 	
 	 	 	 	 	 	Underlying Unexercised	 	Value of Unexercised	
 	 	 	 	 	 	Options at	 	In-the-Money Options at	
 	 	Shares	 	 	 	December 31, 2003 (#)	 	December 31, 2003 ($)(2)	
 	 	Acquired	 	Value	 	

	 	

	
Name	 	On Exercise	 	Realized ($) (1)	 	Exercisable	 	Unexercisable	 	Exercisable	 	Unexercisable	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	—	 	 	 	—	 	 	 	1,375,000(3	)	 	 	—	 	 	 	 	 	 	 	 	 	
Robert I. Blum	 	 	—	 	 	 	—	 	 	 	883,850(4	)	 	 	—	 	 	 	 	 	 	 	 	 	
David J. Morgans, Jr., Ph.D.	 	 	35,000	 	 	 	 	 	 	 	364,000(5	)	 	 	—	 	 	 	 	 	 	 	 	 	
Jay K. Trautman, Ph.D.	 	 	60,000	 	 	 	 	 	 	 	120,000(6	)	 	 	—	 	 	 	 	 	 	 	 	 	

 	 	
(1) 	Based upon the assumed initial public offering price of $        per share less the exercise price per share.	
 	 	
(2) 	Value is determined by subtracting the exercise price of an option from an assumed $        per share fair market value of our common stock.	
 	 	
(3) 	If Dr. Sabry’s employment with us terminated, 703,543 of the shares issuable upon the exercise of Dr. Sabry’s options would currently be subject to repurchase by us at the original purchase price.	
68

 
 	 	
(4) 	If Mr. Blum’s employment with us terminated, 606,873 of the shares issuable upon the exercise of Mr. Blum’s options would currently be subject to repurchase by us at the original purchase price.	
 	 	
(5) 	If Dr. Morgan’s employment with us terminated, 196,272 of the shares issuable upon the exercise of Dr. Morgan’s options would currently be subject to repurchase by us at the original purchase price.	
 	 	
(6) 	If Dr. Trautman’s employment with us terminated, 122,813 of the shares issuable upon the exercise of Dr. Trautman’s options would currently be subject to repurchase by us at the original purchase price.	
Stock Plans

1997 Stock Option/ Stock Issuance Plan

       Our board of directors adopted and our stockholders approved the 1997 Stock Option/ Stock Issuance Plan in December 1997 and January 1998, respectively. Our board of directors will not grant any additional options under the plan following the effective date of this offering. However, the plan will continue to govern the terms and conditions of the outstanding options previously granted under the plan.

       A total of 8,832,345 shares of our common stock are authorized for issuance under the 1997 Stock Option/ Stock Issuance Plan. As of December 31, 2003, options to acquire a total of 4,488,773 shares of our common stock were issued and outstanding, and a total of 3,562,264 shares of our common stock had been issued upon the exercise of options granted under the plan.

       The plan provides for the grant of nonstatutory stock options to our employees and consultants, and for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to our employees. Our board of directors administers the 1997 Stock Option/ Stock Issuance Plan. The administrator has the authority to determine the terms and conditions of the options granted under the plan.

       Generally, in the event of a “change of control,” the successor corporation will assume each outstanding option or replace such options with a cash incentive program that preserves the spread between the strike price and fair market value associated with such option. If the outstanding options are not assumed, or if the successor corporation does not replace such options with a cash incentive program, the outstanding options will become fully exercisable immediately prior to such change of control and will terminate upon the consummation of the change of control. Generally, if options are assumed in connection with the change of control and an optionee’s employment is terminated as the result of an “involuntary termination” within 24 months of the change of control, the options held by such optionee will immediately vest in full.

2004 Equity Incentive Plan

       Our board of directors adopted our 2004 Equity Incentive Plan in January 2004 and our stockholders approved it in January 2004. Our 2004 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, stock purchase rights, restricted stock, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.

       We have reserved a total of 3,200,000 shares of our common stock for issuance pursuant to the 2004 Equity Incentive Plan, of which no options have been issued. The 2004 Equity Incentive Plan will become effective on the day prior to the completion of this offering. In addition, the shares reserved for issuance under our 2004 Equity Incentive Plan include (a) shares reserved but unissued under the 1997 Stock Option/ Stock Issuance Plan as of the effective date of this offering, (b) shares returned to the 1997 Stock Option/ Stock Issuance Plan as the result of termination of options or the repurchase of shares issued under such plan, and (c) annual increases in the number of shares

69

 
available for issuance on the first day of each fiscal year beginning with our fiscal year beginning in 2005, equal to the lesser of:
 	 	 	
 	• 	3.5% of the outstanding shares of common stock on the first day of our fiscal year,	
 	 	 	
 	• 	3,000,000 shares, or	
 	 	 	
 	• 	an amount our board may determine.	
       Our board of directors or a committee of our board administers our 2004 Equity Incentive Plan. In the case of options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more “outside directors” within the meaning of Section 162(m) of the Code. The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a lower exercise price.

       The administrator determines the exercise price of options granted under our 2004 Equity Incentive Plan, but with respect to nonstatutory stock options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code and all incentive stock options, the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator determines the term of all other options.

       No optionee may be granted an option to purchase more than 1,500,000 shares in any fiscal year. However, in connection with his or her initial service, an optionee may be granted an additional option to purchase up to 1,500,000 shares.

       After termination of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in the option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months. However, an option generally may not be exercised later than the expiration of its term.

       Stock purchase rights, which represent the right to purchase our common stock, may be issued under our 2004 Equity Incentive Plan. The administrator determines the purchase price of stock purchase rights. Unless the administrator determines otherwise, we will retain a repurchase option on issued shares that we may exercise upon the termination of the purchaser’s service with us for any reason. The administrator determines the rate at which our repurchase option will lapse.

       Stock appreciation rights may be granted under our 2004 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. The administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay the increased appreciation in cash or with shares of our common stock, or a combination thereof.

       Restricted stock may be granted under our 2004 Equity Incentive Plan. Restricted stock awards are shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee. The administrator may impose whatever conditions to vesting it determines to be appropriate. For example, the administrator may set restrictions based on the achievement of specific performance goals. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

70

 

       Performance units and performance shares may be granted under our 2004 Equity Incentive Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to which they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. Performance units shall have an initial dollar value established by the administrator prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date.

       Our 2004 Equity Incentive Plan also provides for the automatic grant of options to our non-employee directors. Each non-employee director appointed or elected to the board after the completion of this offering will receive an initial option to purchase 20,000 shares upon such appointment or election, except for those directors who become non-employee directors by ceasing to be employee directors. In addition, beginning in 2005, non-employee directors who have been directors for at least six months will receive a subsequent option to purchase 15,000 shares following each annual meeting of our stockholders. All options granted under the automatic grant provisions have a term of ten years and an exercise price equal to fair market value on the date of grant. Each initial option becomes exercisable as to one-third of the shares subject to such option on each anniversary of the date of grant, provided the non-employee director remains a service provider on such dates. Each subsequent option shall be exercisable in full on the date of grant.

       Our 2004 Equity Incentive Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

       Our 2004 Equity Incentive Plan provides that in the event of a “change of control,” the successor corporation will assume or substitute an equivalent award for each outstanding option, stock appreciation right and stock purchase right. If there is no assumption or substitution of outstanding options, stock appreciation rights and stock purchase rights, the administrator will provide notice to the recipient that he or she has the right to exercise the option, stock appreciation right or stock purchase right as to all of the shares subject to the award, including shares which would not otherwise be exercisable, for a period of time as the administrator may determine from the date of the notice. The award will terminate upon the expiration of such period. In the event an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation, his or her options will fully vest and become immediately exercisable.

       Our 2004 Equity Incentive Plan will automatically terminate in 2009, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate the 2004 Equity Incentive Plan provided such action does not impair the rights of any participant.

2004 Employee Stock Purchase Plan

       Concurrently with this offering, we intend to establish our 2004 Employee Stock Purchase Plan, and a total of 1,000,000 shares of our common stock will be made available for sale.

       Our board of directors or a committee of our board administers our 2004 Employee Stock Purchase Plan. Our board of directors or its committee has full and exclusive authority to interpret the terms of our 2004 Employee Stock Purchase Plan and determine eligibility.

       All of our employees are eligible to participate if they are customarily employed by us or any participating subsidiary for at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock if such employee:
 	 	 	
 	• 	immediately after the grant owns stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock, or	
 	 	 	
 	• 	has rights to purchase stock under our employee stock purchase plans that accrues at a rate that exceeds $25,000 worth of stock for each calendar year.	
71

 

       Our 2004 Employee Stock Purchase Plan is intended to qualify under Section 423 of the Internal Revenue Code and provides for consecutive, overlapping 24-month offering periods. Each offering period includes four six-month purchase periods. The offering periods generally start on the first trading day on or after May 1 and November 1 of each year, except for the first such offering period which will commence on the first trading day on or after the effective date of this offering and will end on the first trading day on or after the earlier of (a) May 1, 2006 or (b) 27 months from the beginning of the first offering period.

       Our 2004 Employee Stock Purchase Plan permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation which includes a participant’s base salary, wages, overtime pay, shift premium and recurring commissions, but does not include payments for incentive compensation or bonuses. A participant may purchase a maximum of 2,500 shares during a six-month purchase period.

       Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of each six-month purchase period. The price is 85% of the lower of the fair market value of our common stock at the beginning of an offering period or after a purchase period end. If the fair market value at the end of a purchase period is less than the fair market value at the beginning of the offering period, participants will be withdrawn from the current offering period following their purchase of shares on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offering period, and will be paid their payroll deductions to date. Participation ends automatically upon termination of employment with us.

       A participant may not transfer rights granted under the 2004 Employee Stock Purchase Plan other than by will, the laws of descent and distribution or as otherwise provided under the 2004 Employee Stock Purchase Plan.

       In the event of a “change of control,” a successor corporation may assume or substitute each outstanding option. If the successor corporation refuses to assume or substitute for the outstanding options, the offering period then in progress will be shortened, and a new exercise date will be set.

       Our board of directors has the authority to amend or terminate our 2004 Employee Stock Purchase Plan, except that, subject to certain exceptions described in the 2004 Employee Stock Purchase Plan, no such action may adversely affect any outstanding rights to purchase stock under our 2004 Employee Stock Purchase Plan.

401(k) Plan

       In July 1998, we adopted a Retirement Savings and Investment Plan, the 401(k) Plan, covering our full-time employees located in the United States. The 401(k) Plan is intended to qualify under Section 401(k) of the Internal Revenues Code, so that contributions to the 401(k) Plan by employees or by us, and the investment earnings thereon, are not taxable to the employees until withdrawn. If our 401(k) Plan qualifies under Section 401(k) of the Internal Revenues Code, our contributions will be deductible by us when made. Our employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit of $13,000 if under 50 years old and $16,000 if over 50 years old in 2004 and to have those funds contributed to the 401(k) Plan. The 401(k) Plan permits us, but does not require us, to make additional matching contributions on behalf of all participants. To date, we have not made any contributions to the 401(k) Plan.

Compensation Committee Interlocks and Insider Participation

       None of the members of our compensation committee has at any time been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

72

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Stock Issuances to our Directors, Officers and Principal Stockholders

       In April 1998, we sold 5,300,000 shares of our Series A preferred stock at $1.00 per share. In August 1999, we sold 6,896,545 shares of our Series B preferred stock at $2.90 per share. In November 2000, we sold 11,578,980 shares of our Series C preferred stock at $4.75 per share. In July 2001, we sold 2,333,334 shares of our Series D preferred stock at $6.00 per share. In March and April 2003, we sold 8,015,449 shares of our Series E preferred stock at $5.00 per share. Our Series A, Series B, Series C and Series E preferred stock is convertible into shares of our common stock on a 1-for-1 basis. Our Series D preferred stock is convertible into shares of our common stock on a 1-for-1.0321278 basis.

       Upon the closing of this offering, all shares of our outstanding preferred stock will be automatically converted into shares of common stock. We have entered into an agreement pursuant to which our preferred stockholders will have registration rights with respect to their shares of common stock following this offering. For a description of these registration rights, see “Description of Capital Stock.”

       Since our inception, we have from time to time sold shares of our common stock pursuant to option exercises and restricted stock purchases, at per share prices ranging from $0.0075 per share to $1.00, to our directors, officers, founders and consultants, subject to repurchase rights in our favor that lapse over specified periods, typically four years. The repurchase right entitles us to repurchase the unvested shares at the original purchase price paid by the purchaser upon the termination of a purchaser’s services with us.

       Listed below are those persons who participated in the transactions described above who are our executive officers or directors or who beneficially own five percent or more of our securities.

 	 	Common Stock	 	Convertible Preferred Stock	

	 	

	
 	 	 	 	Aggregate	 	 	 	Aggregate	
Name of Purchaser	 	Shares (#)	 	Consideration ($)	 	Series A (#)	 	Series B (#)	 	Series C (#)	 	Series D (#)	 	Series E (#)	 	Consideration ($)	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	
5% Stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Entities affiliated with Sevin Rosen Funds(1)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,032,757	 	 	 	1,052,631	 	 	 	—	 	 	 	2,000,000	 	 	$	20,244,993	 	
Entities affiliated with Credit Suisse First Boston(2)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,210,527	 	 	 	—	 	 	 	2,000,000	 	 	 	30,000,003	 	
Vulcan Ventures, Inc.	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,724,137	 	 	 	2,105,264	 	 	 	—	 	 	 	800,000	 	 	 	19,000,001	 	
Entities affiliated with Mayfield(3)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,034,482	 	 	 	578,947	 	 	 	—	 	 	 	400,000	 	 	 	9,999,996	 	
Glaxo Group Limited	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,333,334	 	 	 	600,000	 	 	 	17,000,004	 	
Biomedicine, L.P.	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,724,137	 	 	 	210,526	 	 	 	—	 	 	 	200,000	 	 	 	6,999,996	 	
Entities affiliated with Alta Biopharma Group(4)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,263,158	 	 	 	—	 	 	 	800,000	 	 	 	10,000,001	 	
Executive Officers and Directors	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
James H. Sabry, M.D., Ph.D.(5)	 	 	500,000	 	 	$	3,750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Robert I. Blum	 	 	225,000	 	 	 	22,500	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Jay K. Trautman, Ph.D.	 	 	60,000	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
David J. Morgans, Jr., Ph.D.	 	 	35,000	 	 	 	10,150	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
James A. Spudich, Ph.D.(6)	 	 	550,000	 	 	 	8,750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Stephen Dow(7)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,032,757	 	 	 	1,052,631	 	 	 	—	 	 	 	2,000,000	 	 	 	20,244,993	 	
Grant Heidrich, III(8)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,034,482	 	 	 	631,579	 	 	 	—	 	 	 	405,449	 	 	 	10,277,243	 	
Michael Schmertzler(9)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,210,527	 	 	 	—	 	 	 	2,000,000	 	 	 	30,000,003	 	
William J. Rutter, Ph.D.(10)	 	 	7,000	 	 	 	700	 	 	 	—	 	 	 	344,827	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	999,998	 	

 	 	
(1) 	Represents: (a) 6,000 shares of Series A preferred stock and 1,380 shares of Series B preferred stock held by Sevin Rosen Bayless Management Company; (b) 2,080,188 shares of Series A preferred stock, 956,086 shares of Series B preferred stock and 195,158 shares of Series C preferred stock held by Sevin Rosen Fund VI L.P.; (c) 163,812 shares of Series A preferred stock, 75,291 shares of Series B preferred stock and 15,368 shares of Series C preferred stock held by Sevin Rosen VI Affiliates Fund L.P.; (d) 825,263 shares of Series C preferred stock and 686,000 shares of Series E preferred stock held by Sevin Rosen Fund VIII L.P.; (e) 16,842 shares of Series C preferred stock and 14,000 shares of Series E preferred stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 1,251,900 shares of Series E preferred stock held by Sevin Rosen Fund VII L.P.; and (g) 48,100 shares of Series E preferred stock held by Sevin Rosen VII Affiliates Fund L.P.	
73

 
 	 	
(2) 	Represents: (a) 2,893,799 shares of Series C preferred stock and 1,561,993 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 808,891 shares of Series C preferred stock and 436,617 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 288,000 shares of Series C preferred stock held by EMA Private Equity Fund 2000, L.P.; (d) 217,263 shares of Series C preferred stock held EMA Partners Fund 2000, L.P.; and (e) 2,574 shares of Series C preferred stock and 1,390 shares of Series E preferred stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly-owned subsidiary, is either the general partner, managing general partner or investment manager of each of these entities. Credit Suisse Group and Credit Suisse First Boston LLC each disclaims beneficial ownership of the shares owned by such investment partnerships to the extent attributable to partnership interests therein held by persons other than Credit Suisse Group and its affiliates.	
 	 	
(3) 	Represents: (a) 2,137,500 shares of Series A preferred stock, 982,758 shares of Series B preferred stock, 278,499 shares of Series C preferred stock and 353,961 shares of Series E preferred stock held by Mayfield IX; (b) 112,500 shares of Series A preferred stock, 51,724 shares of Series B preferred stock, 14,658 shares of Series C preferred stock and 18,629 shares of Series E preferred stock held by Mayfield Associates Fund IV; (c) 285,790 shares of Series C preferred stock held by Cell Trust; and (d) 27,410 shares of Series E preferred stock by Cell Trust II.	
 	 	
(4) 	Represents: (a) 1,194,169 shares of Series C preferred stock and 771,614 shares of Series E preferred stock held by Alta BioPharma Partners II, L.P.; and (b) 68,989 shares of Series C preferred stock and 28,386 shares of Series E preferred stock held by Alta Embarcadero BioPharma II, LLC.	
 	 	
(5) 	Dr. Sabry purchased his shares of common stock in January 1998, at $0.0075 per share. Our right to repurchase those shares lapsed as to all of the shares as of January 2002.	
 	 	
(6) 	Dr. Spudich purchased 500,000 of his shares of common stock in January 1998, at $0.0075 per share, and 50,000 of his shares in June 1999, at $0.10 per share. Our right to repurchase those shares lapsed as to all of the shares as of January 2002 and September of 2002, respectively. Dr. Spudich subsequently transferred an aggregate of 70,000 shares of common stock.	
 	 	
(7) 	Represents: (a) 6,000 shares of Series A preferred stock and 1,380 shares of Series B preferred stock held by Sevin Rosen Bayless Management Company; (b) 2,080,188 shares of Series A preferred stock, 956,086 shares of Series B preferred stock and 195,158 shares of Series C preferred stock held by Sevin Rosen Fund VI L.P.; (c) 163,812 shares of Series A preferred stock, 75,291 shares of Series B preferred stock and 15,368 shares of Series C preferred stock held by Sevin Rosen VI Affiliates Fund L.P.; (d) 825,263 shares of Series C preferred stock and 686,000 shares of Series E preferred stock held by Sevin Rosen Fund VIII L.P.; (e) 16,842 shares of Series C preferred stock and 14,000 shares of Series E preferred stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 1,251,900 shares of Series E preferred stock held by Sevin Rosen Fund VII L.P.; and (g) 48,100 shares of Series E preferred stock held by Sevin Rosen  VII Affiliates Fund L.P. Stephen Dow is a general partner of the general partner of each of these entities except for Sevin Rosen Bayless Management Company, of which he is a Vice President. Mr. Dow disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest in these shares.	
 	 	
(8) 	Represents: (a) 2,137,500 shares of Series A preferred stock and 982,758 shares of Series B preferred stock held by Mayfield IX; (b) 285,790 shares of Series C preferred stock held by Cell Trust; (c) 14,658 shares of Series C preferred stock and 18,629 shares of Series E preferred stock held by Mayfield Associates Fund IV, L.P.; (f) 27,410 shares of Series E preferred stock held by Cell Trust II; (g) 112,500 shares of Series A preferred stock and 51,724 shares of Series B preferred stock held by Mayfield Associates Fund IV, A California Limited Partnership; (h) 278,499 shares of Series C preferred stock and 353,961 shares of Series E preferred stock held by Mayfield IX, L.P.; and (i) 52,632 shares of Series C preferred stock and 5,449 shares of Series E preferred stock held by The A. Grant III & Jeanette Yvonne Heidrich Community Property Trust. Grant Heidrich is a general partner of this entity or is a member of a limited liability company that serves as a general partner. Mr. Heidrich disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in these shares.	
 	 	
(9) 	Represents: (a) 2,893,799 shares of Series C preferred stock and 1,561,993 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 808,891 shares of Series C preferred stock and 436,617 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 288,000 shares of Series C preferred stock held by EMA Private Equity Fund 2000, L.P.; (d) 217,263 shares of Series C preferred stock held EMA Partners Fund 2000, L.P.; and (e) 2,574 shares of Series C preferred stock and 1,390 shares of Series E preferred stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. Michael Schmertzler is a general partner of this entity or is a member of a limited liability company that serves as a general partner. Mr. Schmertzler disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in these shares.	

(10) 	Represents: 344,827 shares of Series B preferred stock and 7,000 shares of common stock. Dr. Rutter purchased 7,000 shares of common stock in December 2003 at $0.10 per share. Dr. Rutter subsequently transferred an aggregate of 7,000 shares of common stock. Our right to repurchase those shares lapsed as to all of the shares as of May 2003.	
Strategic Alliance Agreement with GlaxoSmithKline

       In June 2001, we entered into a strategic alliance agreement with Glaxo Group Limited, a wholly-owned subsidiary of GSK. In the agreement, GSK agreed to pay the Company an upfront cash payment of $14.0 million. GSK has also committed to reimburse our FTEs conducting research in connection with the strategic alliance and to make additional precommercialization milestone payments and pay royalties based on product sales. As part of such transaction, Glaxo Wellcome International B.V., another wholly-owned subsidiary of GSK, purchased 2,333,334 shares of our Series D preferred stock at price per share of $6.00 and an aggregate price of $14,000,004. Pursuant to the terms of the stock purchase agreement, GSK has certain restrictions on its ability to buy and sell our securities for up to three years following this offering. As of September 30, 2003, we have recognized a total of $6.3 million, $3.2 million and $17.8 million in licensing fees, milestone payments, and FTE and project reimbursements respectively, from GSK under this strategic alliance. In the future, we may also receive significant precommercialization milestone payments, as well as royalties on product sales.

Investment of GlaxoSmithKline in Series E Preferred Stock Financing

       In connection with our March and April 2003 Series E preferred stock financing, Glaxo Group Limited purchased 600,000 shares of Series E preferred stock at $5.00 per share for an aggregate purchase price of $3,000,000.

74

 

Investment of Credit Suisse Group Series C and Series E Preferred Stock Financing

       In connection with our November 2000 Series C and March and April 2003 Series E preferred stock financings, affiliates of Credit Suisse Group purchased an aggregate of 4,210,527 shares of Series C preferred stock at $4.75 per share and 2,000,000 shares of Series E preferred stock at $5.00 per share for an aggregate purchase price of $20,000,003 and $10,000,000, respectively. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly owned subsidiary, one of the underwriters in the offering made by this prospectus, is either the general manager, managing general partner or investment manager of each of these entities.

Licensing Arrangement

       Dr. James Spudich, one of our directors, is a Professor of Biochemistry and Developmental Biology at Stanford University. As such, he may receive compensation from the university in respect of inventions and intellectual property he has assigned to it, including certain patent rights which we licensed from the university in April 1998. We have paid technology licensing fees under this agreement, for which Dr. Spudich received no compensation. In the future, we may make additional payments upon achievement of milestones or sales of products we develop using the licensed patents.

Cash Bonus Agreements with Management

       We have entered into Cash Bonus Agreements with certain of our executive officers. Robert I. Blum has an agreement dated September 1, 2002, amended and restated on December 1, 2003 whereby we agree to pay Mr. Blum cash bonuses in the amount of $9,000, $9,000, $40,100, $38,300, $36,500 and $3,600 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Mr. Blum remains an employee in good standing.

       We have entered into a Cash Bonus Agreement with David J. Morgans dated September 1, 2002, amended and restated on December 1, 2003, whereby we agree to pay Dr. Morgans cash bonuses in the amount of $7,400, $7,400, $33,100, $31,600, $30,200 and $3,000 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Dr. Morgans remains an employee in good standing.

       We have entered into a Cash Bonus Agreement with Jay K. Trautman dated September 1, 2002, amended and restated on December 1, 2003, whereby we agree to pay Dr. Trautman cash bonuses in the amount of $19,300, $19,300, $86,200, $82,300, $78,500 and $7,700 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Dr. Trautman remains an employee in good standing.

Loans to Management

       In connection with the employment of Robert I. Blum, we provided a letter of credit dated October 6, 1998, in the amount of $150,000 and with an interest rate of 6.65% per annum, secured by a certificate of deposit, as security for a personal loan obligation of Mr. Blum. We agreed to make all interest payments on the loan. As of September 30, 2003, the amount of the loan is $150,000, and we made interest payments totaling $9,256, $8,987 and $5,245 in 2001, 2002 and for the nine month period ended September 30, 2003, respectively.

       On July 12, 2002, we provided Mr. Blum with a loan, secured by shares of our common stock held by Mr. Blum, per a promissory note dated July 12, 2002, in the amount of $100,000 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

75

 

       In connection with the employment of David J. Morgans, Ph.D., we provided Dr. Morgans and Sandra Morgans with unsecured loans per promissory notes, dated May 20, 2002 and October 18, 2000, in the amounts of $37,400 and $150,000 and interest rates of 4.88% per annum, and 5.8% per annum, respectively. The total loan amounts, in conjunction with accrued interest, are forgivable over the course of Dr. Morgans’ employment with us.

       On July 12, 2002, we provided Dr. Morgans with a loan, secured by shares of our common stock held by Dr. Morgans, per a promissory note, dated July 12, 2002, in the amount of $82,600 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

       In connection with the employment of Jay K. Trautman, Ph.D., we provided Dr. Trautman with a loan secured by shares of our common stock held by Dr. Trautman, per a promissory note, dated July 12, 2002, in the amount of $215,000 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

       In connection with the employment of James H. Sabry, M.D., Ph.D., we provided Dr. Sabry and Sandra J. Spence with an unsecured loan per a promissory note, dated November 12, 2001, in the amount of $200,000 and an interest rate of 5.18% per annum. The total loan amount, in conjunction with accrued interest, is forgivable over the course of Dr. Sabry’s employment with us.

Other Transactions

       We have a verbal understanding with Dr. William J. Rutter, whereby Dr. Rutter agreed to spend an average of one day per week at the Company providing general business consulting and become a member of the board effective May 1999. In exchange for these services, we granted Dr. Rutter an option to purchase 125,000 shares of Common Stock at an exercise price of $0.10. The option was granted and approved at the July 27, 1999 board meeting.

       On February 13, 2003, Dr. Charles Homcy became a member of the board of directors. In exchange for these services, we granted Dr. Homcy an option to purchase 60,000 shares of Common Stock at an exercise price of $0.60. The option was granted and approved at the March 19, 2003 board meeting.

       On March 3, 2003, we entered into a consulting agreement with Dr. Charles Homcy, whereby Dr. Homcy agreed to provide the Company consulting in the specialized field of drug discovery and development. In exchange for these services, we granted Dr. Homcy an option to purchase 25,000 shares of Common Stock at an exercise price of $0.60. The option was granted and approved at the May 21, 2003 board meeting.

       On July 10, 2002, we granted to Dr. James A. Spudich an option to purchase 20,000 shares of our common stock at an exercise price of $0.60 per share in connection with his services on our scientific advisory board. Such options vest monthly over a two-year period.

76

 

PRINCIPAL STOCKHOLDERS

       The following table sets forth information known to us with respect to the beneficial ownership of our common stock as of January 15, 2004 and as adjusted to reflect the sale of common stock offered hereby by:
 	 	 	
 	• 	each stockholder known by us to own beneficially more than five percent of our common stock;	
 	 	 	
 	• 	each of the named executive officers listed in the Summary Compensation Table;	
 	 	 	
 	• 	each of our directors; and	
 	 	 	
 	• 	all of our directors and the named executive officers as a group.	
       Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to stock options and warrants currently exercisable or exercisable within 60 days are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Some of the shares of common stock held by our directors, officers and consultants are subject to repurchase rights in our favor. For a discussion of these repurchase rights, see “Related Party Transactions.”

 	 	 	 	Percent of Shares	
 	 	Number of Shares	 	Beneficially Owned	
 	 	Beneficially	 	

	
 	 	Owned Prior to	 	Before	 	After	
Name and Address of Beneficial Owner	 	The Offering	 	Offering(1)	 	Offering	

	 	

	 	

	 	

	
5% Stockholders	 	 	 	 	 	 	 	 	 	 	 	 	
Entities affiliated with Sevin Rosen Funds(2)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Two Galleria Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	13455 Noel Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Dallas, TX 75240	 	 	6,335,388	 	 	 	16.2	%	 	 	 	 	
Entities affiliated with Credit Suisse First Boston(3)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Eleven Madison Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	New York, NY 10010	 	 	6,210,527	 	 	 	15.9	%	 	 	 	 	
Vulcan Ventures, Inc.	 	 	 	 	 	 	 	 	 	 	 	 	
 	505 Union Station,	 	 	 	 	 	 	 	 	 	 	 	 	
 	505 Fifth Ave. South, Suite 900	 	 	 	 	 	 	 	 	 	 	 	 	
 	Seattle, WA 98104	 	 	4,629,401	 	 	 	11.9	%	 	 	 	 	
Entities affiliated with Mayfield(4)	 	 	 	 	 	 	 	 	 	 	 	 	
 	2800 Sand Hill Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 250	 	 	 	 	 	 	 	 	 	 	 	 	
 	Menlo Park, CA 94025	 	 	4,263,429	 	 	 	10.9	%	 	 	 	 	
Glaxo Group Limited	 	 	 	 	 	 	 	 	 	 	 	 	
 	Glaxo Wellcome House	 	 	 	 	 	 	 	 	 	 	 	 	
 	Berkeley Avenue	 	 	 	 	 	 	 	 	 	 	 	 	
 	Greenford	 	 	 	 	 	 	 	 	 	 	 	 	
 	Middlesex	 	 	 	 	 	 	 	 	 	 	 	 	
 	England	 	 	 	 	 	 	 	 	 	 	 	 	
 	UB6 ONN	 	 	3,008,298	 	 	 	7.7	%	 	 	 	 	
77

 

 	 	 	 	Percent of Shares	
 	 	Number of Shares	 	Beneficially Owned	
 	 	Beneficially	 	

	
 	 	Owned Prior to	 	Before	 	After	
Name and Address of Beneficial Owner	 	The Offering	 	Offering(1)	 	Offering	

	 	

	 	

	 	

	
Biomedicine, L.P.	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cayman National Bldg., 4th Floor	 	 	 	 	 	 	 	 	 	 	 	 	
 	Elgin Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	P.O. Box 1790	 	 	 	 	 	 	 	 	 	 	 	 	
 	George Town	 	 	 	 	 	 	 	 	 	 	 	 	
 	Grand Cayman	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cayman Islands	 	 	2,134,663	 	 	 	5.5	%	 	 	 	 	
Entities affiliated with Alta Biopharma Group(5)	 	 	 	 	 	 	 	 	 	 	 	 	
 	One Embarcadero Center	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 4050	 	 	 	 	 	 	 	 	 	 	 	 	
 	San Francisco, CA 94111	 	 	2,063,158	 	 	 	5.3	%	 	 	 	 	
Executive Officers and Directors	 	 	 	 	 	 	 	 	 	 	 	 	
James H. Sabry, M.D., Ph.D(6)	 	 	1,875,000	 	 	 	4.6	%	 	 	 	 	
Robert I. Blum(7)	 	 	1,108,850	 	 	 	2.8	%	 	 	 	 	
David J. Morgans, Jr., Ph.D(8)	 	 	399,000	 	 	 	1.0	%	 	 	 	 	
Jay K. Trautman, Ph.D(9)	 	 	180,000	 	 	 	*	 	 	 	 	 	
Stephen Dow(10)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Two Galleria Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	13455 Noel Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Dallas, TX 75240	 	 	6,335,388	 	 	 	16.2	%	 	 	 	 	
A. Grant Heidrich, III(11)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Mayfield Fund	 	 	 	 	 	 	 	 	 	 	 	 	
 	2800 Sand Hill Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 250	 	 	 	 	 	 	 	 	 	 	 	 	
 	Menlo Park, CA 94025	 	 	4,321,510	 	 	 	11.1	%	 	 	 	 	
William J. Rutter, Ph.D.(12)	 	 	 	 	 	 	 	 	 	 	 	 	
 	One Market	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 1475	 	 	 	 	 	 	 	 	 	 	 	 	
 	Steuart Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	San Francisco, CA 94105	 	 	462,827	 	 	 	1.2	%	 	 	 	 	
Michael Schmertzler(13)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Eleven Madison Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	New York, NY 10010	 	 	6,210,527	 	 	 	15.9	%	 	 	 	 	
James A. Spudich, Ph.D.(14)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Stanford School of Medicine	 	 	 	 	 	 	 	 	 	 	 	 	
 	Beckman Center	 	 	 	 	 	 	 	 	 	 	 	 	
 	Room B405	 	 	 	 	 	 	 	 	 	 	 	 	
 	Stanford, CA 94305-5307	 	 	500,000	 	 	 	1.3	%	 	 	 	 	
Charles Homcy, M.D.(15)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Portola Pharmaceuticals	 	 	 	 	 	 	 	 	 	 	 	 	
 	270 East Grand Avenue	 	 	 	 	 	 	 	 	 	 	 	 	
 	South San Francisco, CA 94080	 	 	85,000	 	 	 	*	 	 	 	 	 	
All directors and named executive officers as a group (10 persons)	 	 	21,478,102	 	 	 	51.2	%	 	 	 	 	

 	 	 	
 	*	Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock.	
78

 
 	 	 	
 	(1) 	Percentage ownership before the offering is based on the 39,057,730 shares of common stock outstanding on January 15, 2004, after giving effect to the conversion of all of our preferred stock into shares of our common stock.	
 	 	 	
 	(2) 	Represents: (a) 7,380 shares of common stock held by Sevin Rosen Bayless Management Company; (b) 3,231,432 shares of common stock held by Sevin Rosen VI L.P.; (c) 254,471 shares of common stock held by Sevin Rosen Fund VI Affiliates Fund L.P.; (d) 1,511,263 shares of common stock held by Sevin Rosen Fund VIII L.P.; (e) 30,842 shares of common stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 1,251,900 shares of common stock held by Sevin Rosen Fund VII L.P.; and (g) 48,100 shares of common stock held by Sevin Rosen VII Affiliates Fund L.P.	
 	 	 	
 	(3) 	Represents: (a) 4,455,792 shares of common stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 1,245,508 shares of common stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 288,000 shares of common stock held by EMA Private Equity Fund 2000, L.P.; (d) 217,263 shares of common stock held EMA Partners Fund 2000, L.P.; and (e) 3,964 shares of common stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly-owned subsidiary, is either the general partner, managing general partner or investment manager of each of those entities. Credit Suisse Group and Credit Suisse First Boston LLC each disclaims beneficial ownership of the shares owned by such investment partnerships to the extent attributable to partnership interests therein held by persons other than Credit Suisse Group and its affiliates.	
 	 	 	
 	(4) 	Represents: (a) 3,752,718 shares of common stock held by Mayfield IX; (b) 197,511 shares of common stock held by Mayfield Associates Fund IV, L.P.; (c) 285,790 shares of common stock held by Cell Trust; and (d) 27,410 shares of common stock held by Cell Trust II.	
 	 	 	
 	(5) 	Represents: (a) 1,965,783 shares of common stock held by Alta BioPharma Partners II, L.P.; and (b) 97,375 shares of common stock held by Alta Embarcadero BioPharma II, LLC.	
 	 	 	
 	(6) 	Represents: (a) 500,000 shares of common stock held by Dr. Sabry; and (b) options granted to Dr. Sabry to purchase 1,375,000 shares of common stock that are immediately exercisable. 682,085 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Sabry’s employment.	
 	 	 	
 	(7) 	Represents: (a) 185,000 shares of common stock held by Mr. Blum; (b) 20,000 shares of common stock held by The Brittany Blum 2003 Irrevocable Trust; (c) 20,000 shares of common stock held by The Bridget Blum 2003 Irrevocable Trust; and (d) options granted to Mr. Blum to purchase 883,850 shares of common stock that are immediately exercisable. 597,393 shares underlying the option would remain subject to our repurchase right upon termination of Mr. Blum’s employment.	
 	 	 	
 	(8) 	Represents (a) 35,000 shares of common stock held by Dr. Morgans and (b) options granted to Dr. Morgans to purchase 364,000 shares of common stock that underlying the option immediately exercisable. 191,710 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Morgans’ employment.	
 	 	 	
 	(9) 	Represents: (a) 120,000 shares of common stock held by Dr. Trautman, 59,063 shares of which are subject to our right of repurchase; and (b) options granted to Dr. Trautman to purchase 60,000 shares of common stock that are immediately exercisable. 60,000 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Trautman’s employment.	

(10) 	Represents: (a) 7,380 shares of common stock held by Sevin Rosen Bayless Management Company; (b) 3,231,432 shares of common stock held by Sevin Rosen VI L.P.; (c) 254,471 shares of common stock held by Sevin Rosen Fund VI Affiliates Fund L.P.; (d) 1,511,263 shares of common stock held by Sevin Rosen Fund VIII L.P.; (e) 30,842 shares of common stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 1,251,900 shares of common stock held	
79

 
 	 	
 	by Sevin Rosen Fund VII L.P.; and (g) 48,100 shares of common stock held by Sevin Rosen VII Affiliates Fund L.P. Stephen Dow is a general partner of the general partner of each of these entities except for Sevin Rosen Bayless Management Company, of which he is a Vice President. Mr. Dow disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest in these shares.	
 	 	
(11) 	Represents: (a) 3,752,718 shares of common stock held by Mayfield IX; (b) 197,511 shares of common stock held by Mayfield Associates Fund IV; (c) 285,790 shares of common stock held by Cell Trust; (d) 27,410 shares of common stock held by Cell Trust II; and (d) 58,081 shares of common stock held by The A. Grant III & Jeanette Yvonne Heidrich Community Property Trust. Grant Heidrich is a Managing Director of Mayfield IX Management, L.L.C., the General Partner of Mayfield IX and Mayfield Associates Fund IV. Mr. Heidrich disclaims beneficial ownership of the shares held by affiliates of Mayfield, except to the extent of his proportionate partnership interest therein.	
 	 	
(12) 	Represents: (a) 230,533 shares of common stock owned by the William J. Rutter Revocable Trust; (b) 114,294 shares of common stock held by Rutter Investments, L.P.; and (c) options granted to Dr. Rutter to purchase 118,000 shares of common stock that are immediately exercisable.	
 	 	
(13) 	Represents: (a) 4,455,792 shares of common stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 1,245,508 shares of common stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 288,000 shares of common stock held by EMA Private Equity Fund 2000, L.P.; (d) 217,263 shares of common stock held EMA Partners Fund 2000, L.P.; and (e) 3,964 shares of common stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. Michael Schmertzler is a Managing Director of Aries Advisors, LLC, a sub-advisor to Credit Suisse First Boston Equity Partners, L.P. Mr. Schmertzler disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in shares.	
 	 	
(14) 	Represents: (a) 480,000 shares of common stock held by held by Dr. Spudich; and (b) options granted to Dr. Spudich to purchase 20,000 shares of common stock that are immediately exercisable. 3,334 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Spudich’s employment.	
 	 	
(15) 	Represents options granted to Dr. Homcy to purchase 85,000 shares of common stock that are immediately exercisable. 56,251 shares underlying the option would remain subject to repurchase right upon termination of Dr. Homcy’s employment.	
       Except as otherwise noted above, the address of each person listed on the table is c/o Cytokinetics, Incorporated, 280 East Grand Avenue, South San Francisco, CA 94080.

80

 

DESCRIPTION OF CAPITAL STOCK

General

       We are authorized to issue 120,000,000 shares of common stock, $0.001 par value, and 10,000,000 shares of undesignated preferred stock, $0.001 par value.

Common Stock

       Assuming the conversion of all of our preferred stock into 34,199,272 shares of common stock, as of January 15, 2004, we had 39,057,730 shares of common stock outstanding that were held of record by approximately 139 stockholders.

       The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon the closing of this offering will be fully paid and nonassessable.

Preferred Stock

       Upon the closing of this offering, our board of directors will have the authority, without action by our stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series. The board of directors may also designate the rights, preferences and privileges of each series of preferred stock; any or all of which may be greater than the rights of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
 	 	 	
 	• 	restricting dividends on the common stock;	
 	 	 	
 	• 	diluting the voting power of the common stock;	
 	 	 	
 	• 	impairing the liquidation rights of the common stock; and	
 	 	 	
 	• 	delaying or preventing a change in control of our company without further action by the stockholders.	
       We have no present plans to issue any shares of preferred stock.

Warrants

       As of January 15, 2004, we had the following warrants outstanding to purchase a total of 367,500 shares of our capital stock:
 	 	 	
 	• 	200,000 shares of our common stock at an exercise price of $0.29 per share, terminating five years after the date of our initial public offering;	
 	 	 	
 	• 	67,500 shares of our Series A preferred stock, which are convertible into 67,500 shares of our common stock, at an exercise price of $1.00 per share, terminating 2005;	
 	 	 	
 	• 	Up to 100,000 shares of our Series B preferred stock, which are convertible into 100,000 shares of our common stock, at an exercise price of $2.90 per share, terminating 2006; and	
81

 
 	 	 	
 	• 	100,000 shares of our Series B preferred stock, which are convertible into 100,000 shares of our common stock, at an exercise price of $2.90 per share, terminating 2006.	
Holders of Registration Rights Can Require Us to Register Shares of Our Stock for Resale

       The holders of 34,199,272 shares of common stock issuable upon conversion of preferred stock and 367,500 shares of common stock issuable upon the exercise of warrants or conversion of preferred stock underlying warrants or their permitted transferees are entitled to rights with respect to registration of these shares under the Securities Act of 1933, as amended. These rights are provided under the terms of our agreement with the holders of registrable securities. Under these registration rights, holders of the then outstanding registrable securities may require on two occasions that we register their shares for public resale. The first such registration requires the election of the holders of registrable securities holding at least 51% of such registrable securities, and the second such registration requires the election of the holders of registrable securities holding at least twenty-five percent of such registrable securities. We are obligated to register these shares only if the requesting holders request the registration of at least 20% of the registrable securities held by such requesting holders. In addition, 12 months after the effective date of the first registration of our securities, holders of at least thirty percent of the registrable securities resulting from the conversion of shares of our Series C preferred stock may require on two occasions that we register their shares for public resale. We are obligated to register these shares resulting from the conversion of our Series C preferred stock only if the requesting holders request the registration of at least thirty percent of the registrable securities held by such requesting holders that resulted from the conversion of our Series C preferred stock. In addition, holders of registrable securities may require that we register their shares for public resale on Form S-3 or similar short-form registration, if we are eligible to use Form S-3 or similar short-form registration, and the value of the securities to be registered is at least $500,000. If we elect to register any of our shares of common stock for any public offering, the holders of registrable securities are entitled to include shares of common stock in the registration. However we may reduce the number of shares proposed to be registered in view of market conditions. We will pay all expenses in connection with any registration, other than underwriting discounts and commissions.

Anti-Takeover Effects of Some Provisions of Delaware Law

       Provisions of Delaware law and our amended and restated certificate of incorporation and amended bylaws to be in effect upon the closing of this offering could make the acquisition of our company through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors more difficult. We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.

       We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless:
 	 	 	
 	• 	prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;	
 	 	 	
 	• 	the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers, and	
82

 
 	 	 	
 	 	(b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or	
 	 	 	
 	• 	on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66% of the outstanding voting stock which is not owned by the interested stockholder.	
       Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Anti-Takeover Effects of Provisions of Our Charter Documents

       Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for our board of directors to be divided into three classes serving staggered terms. Approximately one-third of the board of directors will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board of directors until the second annual stockholders meeting following the date the acquirer obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors will retain their positions. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides that directors may be removed with cause by the affirmative vote of the holders of the outstanding shares of common stock.

       Our amended bylaws to be in effect upon the closing of this offering establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Stockholders may also consider a proposal or nomination by a person who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our Secretary timely written notice, in proper form, of his or her intention to bring that business before the meeting. The amended bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

       Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the amended and restated certificate of incorporation or the amended bylaws. Our amended bylaws authorize a majority of our board of directors, the chairman of the board or the chief executive officer to call a special meeting of stockholders. Because our stockholders do not have the right to call a special meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of the board of directors by calling a special meeting of stockholders prior to such time as a majority of the board of directors believed

83

 
or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the board also could be delayed until the next annual meeting.

       Delaware law provides that stockholders may execute an action by written consent in lieu of a stockholder meeting. However, Delaware law also allows us to eliminate stockholder actions by written consent. Elimination of written consents of stockholders may lengthen the amount of time required to take stockholder actions since actions by written consent are not subject to the minimum notice requirement of a stockholder’s meeting. However, we believe that the elimination of stockholders’ written consents may deter hostile takeover attempts. Without the availability of stockholder’s actions by written consent, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders’ meeting. The holder would have to obtain the consent of a majority of the board of directors, the chairman of the board or the chief executive officer to call a stockholders’ meeting and satisfy the notice periods determined by the board of directors. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for the elimination of actions by written consent of stockholders upon the closing of this offering.

Transfer Agent and Registrar

       The transfer agent and registrar for our common stock is                    .

Nasdaq Stock Market Listing

       We have applied to have our common stock listed on the Nasdaq National Market for quotation under the symbol “CYTK”.

84

 

SHARES ELIGIBLE FOR FUTURE SALE

       Prior to this offering, there has been no public market for our stock. Future sales of substantial amounts of our common stock in the public market following this offering or the possibility of these sales occurring could adversely affect prevailing market prices for our common stock or could impair our ability to raise capital through an offering of equity securities.

       After this offering, we will have outstanding                     shares of common stock, based upon shares outstanding as of January 15, 2004. All of the shares sold in this offering will be freely tradable without restriction under the Securities Act except for any shares purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. The remaining 39,057,730 shares of common stock held by existing stockholders are “restricted” shares as that term is defined in Rule 144 under the Securities Act. We issued and sold the restricted shares in private transactions in reliance upon exemptions from registration under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as Rule 144 or 701 under the Securities Act, which are summarized below.

       Our officers, directors and some of our stockholders, including business partners, who collectively hold an aggregate of                     shares, and the underwriters have entered into lock-up agreements in connection with this offering. These lock-up agreements provide that, with limited exceptions, our officers, directors and other stockholders have agreed not to offer, sell, contract to sell, grant any option to purchase or otherwise dispose of any of our shares for a period of 180 days after the effective date of this offering. Goldman, Sachs & Co. may, in its sole discretion and at any time without prior notice, release all or any portion of the shares subject to these lock-up agreements.

       Taking into account the lock-up agreements, the number of shares, other than shares sold in the offering, that will be available for sale in the public market under the provisions of Rules 144 and 701, will be as follows:
 	 	 	
 	• 	                    shares that become eligible for sale at various times between the date of this offering and the date 90 days after the effective date of this offering;	
 	 	 	
 	• 	an additional                    shares that become eligible for sale beginning 180 days after the effective date of this offering;	
 	 	 	
 	• 	an additional                    shares that become eligible for sale upon exercise of vested options 90 days after the date of this prospectus and an additional                    shares that become eligible for sale upon the exercise of vested options 180 days after the date of this prospectus; and	
 	 	 	
 	• 	an additional                    shares that become eligible for sale at various times thereafter upon the expiration of applicable holding periods.	
       Following the expiration of the lock-up period, shares issued upon exercise of options granted by us prior to the completion of this offering will also be available for sale in the public market pursuant to Rule 701 under the Securities Act unless those shares are held by one of our affiliates, directors or officers.

       Rule 701 permits resale of shares in reliance upon Rule 144 but without compliance with restrictions of Rule 144, including the holding period requirement. In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an

85

 
affiliate, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
 	 	 	
 	• 	one percent of the number of shares of common stock then outstanding, which will equal approximately                     shares immediately after the offering, or	
 	 	 	
 	• 	the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale.	
       Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of our company at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years including the holding period of any prior owner except an affiliate, is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

       Rule 701, as currently in effect, permits our employees, officers, directors or consultants who purchased shares under a written compensatory plan or contract to resell these shares in reliance upon Rule 144 but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell these shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144.

       We intend to file, shortly after the effectiveness of this offering, a registration statement on Form S-8 under the Securities Act covering all shares of common stock reserved for issuance under the stock plans and subject to outstanding options under our 1997 Stock Option/ Stock Issuance Plan. See “Management — Stock Plans”. Shares of common stock issued upon exercise of options under the Form S-8 will be available for sale in the public market, subject to Rule 144 volume limitations applicable to affiliates and subject to the contractual restrictions described above. As of January 15, 2004, options to purchase 4,373,465 shares of common stock were outstanding. Beginning 90 and 180 days after the effective date of this offering, approximately                     shares and                     shares, respectively, issuable upon the exercise of vested stock options will become eligible for sale in the public market, if the options are exercised.

       Following this offering, the holders of an aggregate of 34,199,272 shares of outstanding common stock and 367,500 shares of common stock issuable upon the exercise of warrants or conversion of preferred stock underlying warrants have the right to require us to register their shares for sale upon meeting specific requirements. See “Description of Capital Stock — Registration Rights” for additional information regarding registration rights.

86

 

MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

       This section summarizes certain material United States federal income and estate tax considerations relating to the ownership and disposition of common stock. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on existing authorities. These authorities may change, possibly retroactively, or the IRS might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of common stock could differ from those described below. For purposes of this summary, a “non-U.S. holder” is any holder other than a citizen or resident of the United States, a corporation created or organized under the laws of the United States or any political subdivision thereof, a trust that is (i) subject to the primary supervision of a United States court and the control of one of more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person or an estate whose income is subject to U.S. income tax regardless of source. If a partnership is a beneficial owner of common stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. The summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances (such as U.S. expatriates, insurance companies, tax-exempt organizations, dealers in securities, banks or other financial institutions, “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid United States federal income tax and investors that hold our common stock as part of a hedge, straddle or conversion transaction), or because they are subject to special rules. Finally, the summary does not describe the effects of any applicable foreign, state, or local laws.

       INVESTORS CONSIDERING THE PURCHASE OF COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.

Dividends

       Payments on the common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted basis in the common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of the common stock.

       Amounts treated as dividends paid to a non-U.S. holder on our common stock will generally be subject to U.S. withholding tax at a 30 percent rate. The withholding tax might not apply, however, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. A non-U.S. holder must demonstrate its entitlement to treaty benefits by certifying its, among other facts, nonresident status. A non-U.S. holder can meet this certification requirement by providing a Form W-8BEN or appropriate substitute form to us or our paying agent. If the holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a foreign partnership or other foreign flowthrough entity, the certification requirements generally apply to the partners or other owners, and the foreign partnership or foreign intermediary will also be required to comply with additional certification requirements. Special rules, described below, apply if a dividend is effectively connected with a U.S. trade or business conducted by the non-U.S. holder.

87

 

Sale of Common Stock

       Non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange, or other disposition of common stock. This general rule, however, is subject to several exceptions. For example, the gain would be subject to U.S. federal income tax if:
 	 	 	
 	• 	the gain is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business (in which case the special rules described below apply);	
 	 	 	
 	• 	the non-U.S. holder was a citizen or resident of the United States and thus is subject to special rules that apply to expatriates;	
 	 	 	
 	• 	the non-U.S. holder is an individual who holds his or her common stock as a capital asset (generally, an asset held for investment purposes) and who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and other conditions are met; or	
 	 	 	
 	• 	the rules of the Foreign Investment in Real Property Tax Act (or FIRPTA) (described below) treat the gain as effectively connected with a U.S. trade or business.	
       The FIRPTA rules may apply to a sale, exchange or other disposition of common stock if we are, or were within the shorter of five years before the transaction or the non-U.S. holder’s holding period for the common stock, a “U.S. real property holding corporation” (or USRPHC). In general, we would be a USRPHC if interests in U.S. real estate comprised most of our assets. We do not believe that we are a USRPHC or that we will become one in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, however, such common stock will be subject to U.S. federal income tax under the FIRPTA rules only if the non-U.S. holder actually or constructively held more than 5 percent of such regularly traded common stock.

Dividends or Gain Effectively Connected With a U.S. Trade or Business

       If any dividend on common stock, or gain from the sale, exchange or other disposition of common stock, is effectively connected with a U.S. trade or business conducted by the non-U.S. holder, then the dividend or gain will be subject to U.S. federal income tax at the regular graduated rates. If the non-U.S. holder is eligible for the benefits of a tax treaty between the United States and the holder’s country of residence, any “effectively connected” dividend or gain would generally be subject to U.S. federal income tax only if it is also attributable to a permanent establishment or fixed base maintained by the holder in the United States. Payments of dividends that are effectively connected with a U.S. trade or business, and therefore included in the gross income of a non-U.S. holder, will not be subject to the 30 percent withholding tax. To claim exemption from withholding, the holder must certify its qualification, which can be done by filing a Form W-8ECI. If the non-U.S. holder is a corporation, that portion of its earnings and profits that is effectively connected with its U.S. trade or business would generally be subject to a “branch profits tax.” The branch profits tax rate is generally 30 percent, although an applicable income tax treaty might provide for a lower rate.

U.S. Federal Estate Tax

       The estates of nonresident alien individuals are generally subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent. The U.S. federal estate tax liability of the estate of a nonresident alien may be affected by a tax treaty between the United States and the decedent’s country of residence.

88

 

Backup Withholding and Information Reporting

       The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or repeatedly failing to report interest or dividends on his returns. The withholding tax rate is currently 28 percent. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign.

       Payments to non-U.S. holders of dividends on common stock will generally not be subject to backup withholding, and payments of proceeds made to non-U.S. holders by a broker upon a sale of common stock will not be subject to information reporting or backup withholding, in each case so long as the non-U.S. holder certifies its nonresident status. Some of the common means of certifying nonresident status are described under “— Dividends.” We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to such dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.

       Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder.

       THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

89

 

UNDERWRITING

       Cytokinetics and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Credit Suisse First Boston LLC, Pacific Growth Equities, LLC and Lazard Frères & Co. LLC are the representatives of the underwriters.
 	 	 	 	 	 	
Underwriters	 	Number of Shares	

	 	

	
Goldman, Sachs & Co. 	 	 	 	 	
Credit Suisse First Boston LLC	 	 	 	 	
Pacific Growth Equities, LLC	 	 	 	 	
Lazard Frères & Co. LLC	 	 	 	 	

	 	
 	Total	 	 	 	 	

	 	
       The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

       If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional                     shares from Cytokinetics to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

       The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by Cytokinetics. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase                     additional shares.

Paid by Cytokinetics	

	
 	 	No Exercise	 	Full Exercise	

	 	

	
Per Share	 	$	 	 	 	$	 	 	

	 	 	 	

	 	
 	Total	 	$	 	 	 	$	 	 	

	 	 	 	

	 	
       Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $          per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $          per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

       Subject to limited exceptions, Cytokinetics, its directors, officers and stockholders have agreed with the underwriters not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to Cytokinetics with respect to options or shares of its common stock issued pursuant to any existing employee benefit plans or to new shares of Cytokinetics’ common stock issued or sold in connection with any corporate strategic development transaction or any merger or acquisition transaction up to an aggregate amount of ten percent (10%) of the outstanding shares of Cytokinetics’ common stock following completion of the offering of shares offered by this prospectus. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

90

 

       Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among Cytokinetics and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be Cytokinetics’ historical performance, estimates of the business potential and earnings prospects of Cytokinetics, an assessment of Cytokinetics’ management and the consideration of the above factors in relation to market valuation of companies in related businesses.

       An application has been made to quote the common stock on the Nasdaq National Market under the symbol “CYTK”.

       In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from Cytokinetics in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

       The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

       Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of Cytokinetics’ stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise.

       Each underwriter has represented, warranted and agreed that (i) it has not offered or sold and, prior to the expiry of a period of six months from the Closing date, will not offer or sell any shares to persons in the United Kingdom except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of any shares in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

91

 

       The shares may not be offered or sold, transferred or delivered, as part of their initial distribution or at any time thereafter, directly or indirectly, to any individual or legal entity in the Netherlands other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade, which includes banks, securities intermediaries, insurance companies, pension funds, other institutional investors and commercial enterprises which, as an ancillary activity, regularly trade or invest in securities.

       The shares being offered may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares being offered may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares being offered which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

       This prospectus has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each syndicate member acknowledges that the shares may not be offered or sold, or be made the subject of an invitation for subscription or purchase, nor may this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares being offered be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”) (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

       Each underwriter has acknowledged and agreed that the shares being offered have not been registered under the Securities and Exchange Law of Japan and are not being offered or sold and may not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (1) pursuant to an exemption from the registration requirements of the Securities and Exchange Law of Japan and (ii) in compliance with any other applicable requirements of Japanese law. As part of this offering, the underwriters may offer securities in Japan to a list of 49 offerees in accordance with the above provisions.

       The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

       Cytokinetics estimates that its share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $                    .

       Cytokinetics has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

       After this offering, certain affiliates of Credit Suisse First Boston LLC will own approximately           % of Cytokinetics’ outstanding common stock.

       A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

92

 

VALIDITY OF SECURITIES

       The validity of the common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California, and for the underwriters by Latham & Watkins LLP, Menlo Park, California. A member of Wilson Sonsini Goodrich & Rosati and an investment partnership comprised of current and former members of Wilson Sonsini Goodrich & Rosati beneficially own an aggregate of 8,620 shares of our common stock.

EXPERTS

       The financial statements as of December 31, 2001 and 2002 and for each of the three years in the period ended December 31, 2002 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

       We have filed with the Securities and Exchange Commission, a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to Cytokinetics and the common stock offered hereby, you should refer to the registration statement and to the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules therewith may be inspected without charge at the public reference room maintained by the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of all or any portion of the registration statement may be obtained from such offices upon payment of prescribed fees. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.

93

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Index to Financial Statements
 	 	 	 	 	
 	 	Page	

	
Report of Independent Auditors	 	 	F-2	 	
Balance Sheets	 	 	F-3	 	
Statements of Operations	 	 	F-4	 	
Statements of Stockholders’ Deficit	 	 	F-5	 	
Statements of Cash Flows	 	 	F-7	 	
Notes to Financial Statements	 	 	F-8	 	
F-1

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Cytokinetics, Incorporated
(a development stage enterprise):

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Cytokinetics, Incorporated (a development stage enterprise) at December 31, 2001 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 	 	
 	/s/ PRICEWATERHOUSECOOPERS LLP	
San Jose, California
March 21, 2003, except for note 13,
as to which the date is January 21, 2004

F-2

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Balance Sheets
(in thousands, except share and per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Pro forma	
 	 	 	 	 	 	 	 	Stockholders’	
 	 	 	 	 	 	Equity at	
 	 	December 31,	 	September 30,	 	September 30,	

	 	

	 	

	
 	 	2001	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	
 	 	 	 	 	 	(unaudited)	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	11,244	 	 	$	16,388	 	 	$	9,259	 	 	 	 	 	
 	Short-term investments	 	 	40,686	 	 	 	10,425	 	 	 	27,176	 	 	 	 	 	
 	Accounts receivable, net of allowance of $386, none and none in 2001, 2002 and at September 30, 2003 (unaudited), respectively	 	 	875	 	 	 	16	 	 	 	76	 	 	 	 	 	
 	Restricted cash	 	 	6,236	 	 	 	13,106	 	 	 	13,904	 	 	 	 	 	
 	Prepaids and other current assets	 	 	775	 	 	 	1,117	 	 	 	1,346	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total current assets	 	 	59,816	 	 	 	41,052	 	 	 	51,761	 	 	 	 	 	
Long-term investments	 	 	10,384	 	 	 	3,648	 	 	 	7,962	 	 	 	 	 	
Property and equipment, net	 	 	8,018	 	 	 	9,742	 	 	 	8,614	 	 	 	 	 	
Related party notes receivable	 	 	396	 	 	 	1,146	 	 	 	1,146	 	 	 	 	 	
Other assets	 	 	405	 	 	 	580	 	 	 	716	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total assets	 	$	79,019	 	 	$	56,168	 	 	$	70,199	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Accounts payable	 	$	4,766	 	 	$	1,609	 	 	$	2,375	 	 	 	 	 	
 	Accrued liabilities	 	 	1,069	 	 	 	2,225	 	 	 	1,011	 	 	 	 	 	
 	Short-term portion of equipment financing lines	 	 	1,107	 	 	 	2,415	 	 	 	2,104	 	 	 	 	 	
 	Short-term portion of deferred revenue	 	 	2,800	 	 	 	3,110	 	 	 	2,800	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total current liabilities	 	 	9,742	 	 	 	9,359	 	 	 	8,290	 	 	 	 	 	
Long-term portion of equipment financing lines	 	 	3,525	 	 	 	7,077	 	 	 	7,384	 	 	 	 	 	
Long-term portion of deferred revenue	 	 	9,800	 	 	 	7,000	 	 	 	4,900	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total liabilities	 	 	23,067	 	 	 	23,436	 	 	 	20,574	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Commitments (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Convertible preferred stock, $0001 par value:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Authorized: 37,300,000 shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issued and outstanding: 26,108,859 shares in 2001 and 2002, 34,124,308 shares in 2003 (unaudited) and none pro forma (unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	(Liquidation preference: $94,300 in 2001 and 2002 and $134,377 in 2003 (unaudited))	 	 	93,304	 	 	 	93,304	 	 	 	133,175	 	 	$	—	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	93,304	 	 	 	93,304	 	 	 	133,175	 	 	 	—	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Stockholders’ equity (deficit):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Common stock, $0.001 par value:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Authorized: 45,000,000 shares at December 31, 2001 and 2002 and 61,500,000 at September 30, 2003	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issued and outstanding: 3,597,982 and 3,853,206 shares at December 31, 2001 and 2002, respectively and 3,990,393 at September 30, 2003; 38,189,665 shares pro forma	 	 	4	 	 	 	4	 	 	 	4	 	 	 	38	 	
 	Additional paid-in capital	 	 	743	 	 	 	823	 	 	 	4,106	 	 	 	137,247	 	
 	Deferred stock-based compensation	 	 	(58	)	 	 	(50	)	 	 	(2,652	)	 	 	(2,652	)	
 	Accumulated other comprehensive income	 	 	268	 	 	 	40	 	 	 	76	 	 	 	76	 	
 	Deficit accumulated during the development stage	 	 	(38,309	)	 	 	(61,389	)	 	 	(85,084	)	 	 	(85,084	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total stockholders’ equity (deficit)	 	 	(37,352	)	 	 	(60,572	)	 	 	(83,550	)	 	$	49,625	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	 	$	79,019	 	 	$	56,168	 	 	$	70,199	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
The accompanying notes are an integral part of these financial statements.

F-3

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Operations
(in thousands, except per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	Period from	
 	 	 	 	 	 	 	 	 	 	August 5, 1997	
 	 	 	 	 	 	 	 	Nine Months	 	(date of	
 	 	 	 	Ended	 	inception) to	
 	 	Years Ended December 31,	 	September 30,	 	September 30,	

	 	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	 	(unaudited)	
 	 	 	 	 	 	 	 	(unaudited)	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development and grant revenues	 	$	—	 	 	$	7,066	 	 	$	8,596	 	 	$	6,134	 	 	$	5,770	 	 	$	21,432	 	
 	License revenues	 	 	—	 	 	 	1,400	 	 	 	2,800	 	 	 	2,100	 	 	 	2,100	 	 	 	6,300	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total revenues	 	 	—	 	 	 	8,466	 	 	 	11,396	 	 	 	8,234	 	 	 	7,870	 	 	 	27,732	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development(1)	 	 	10,403	 	 	 	20,961	 	 	 	28,424	 	 	 	19,661	 	 	 	24,140	 	 	 	90,953	 	
 	General and administrative(1)	 	 	3,390	 	 	 	5,897	 	 	 	6,953	 	 	 	5,903	 	 	 	7,451	 	 	 	26,424	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	13,793	 	 	 	26,858	 	 	 	35,377	 	 	 	25,564	 	 	 	31,591	 	 	 	117,377	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating loss	 	 	(13,793	)	 	 	(18,392	)	 	 	(23,981	)	 	 	(17,330	)	 	 	(23,721	)	 	 	(89,645	)	
Interest and other income	 	 	902	 	 	 	3,232	 	 	 	2,232	 	 	 	1,838	 	 	 	1,797	 	 	 	8,673	 	
Interest and other expense	 	 	(188	)	 	 	(714	)	 	 	(1,331	)	 	 	(1,102	)	 	 	(1,771	)	 	 	(4,112	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	 	(13,079	)	 	 	(15,874	)	 	 	(23,080	)	 	 	(16,594	)	 	 	(23,695	)	 	 	(85,084	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(6.78	)	 	$	(5.59	)	 	$	(6.62	)	 	$	(4.83	)	 	$	(6.28	)	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Weighted-average number of shares used in per share calculations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	 	1,930	 	 	 	2,840	 	 	 	3,484	 	 	 	3,437	 	 	 	3,772	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Pro forma net loss per share (unaudited):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	 	 	 	 	 	 	 	 	$	(0.78	)	 	 	 	 	 	$	(0.67	)	 	 	 	 	
Weighted-average number of shares used in pro forma per share calculations (unaudited):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	 	 	 	 	 	 	 	 	 	29,668	 	 	 	 	 	 	 	35,336	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1) Includes the following stock-based compensation charges:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	$	101	 	 	$	86	 	 	$	4	 	 	$	(4	)	 	$	376	 	 	$	690	 	
 	General and administrative	 	 	—	 	 	 	27	 	 	 	2	 	 	 	(1	)	 	 	230	 	 	 	259	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	$	101	 	 	$	113	 	 	$	6	 	 	$	(5	)	 	$	606	 	 	$	949	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-4

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Stockholder’s Deficit
(in thousands, except share and per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	Deficit	 	 	
 	 	 	 	 	 	 	 	Other	 	Accumulated	 	 	
 	 	Common Stock	 	Additional	 	Deferred	 	Comprehensive	 	During the	 	Total	

	 	Paid-In	 	Stock-Based	 	Income	 	Development	 	Stockholders’	
 	 	Shares	 	Amount	 	Capital	 	Compensation	 	(Loss)	 	Stage	 	Deficit	

	 	

	 	

	 	

	 	

	 	

	 	

	
Issuance of common stock upon exercise of stock options for cash at $0.0075 per share	 	 	295,250	 	 	$	—	 	 	$	2	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	2	 	
Issuance of common stock to founders at $0.0075 per share in exchange for cash in January 1998.	 	 	1,126,110	 	 	 	1	 	 	 	7	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8	 	
Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,015	)	 	 	(2,015	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 1998.	 	 	1,421,360	 	 	 	1	 	 	 	9	 	 	 	—	 	 	 	—	 	 	 	(2,015	)	 	 	(2,005	)	
Issuance of common stock upon exercise of stock options for cash at $0.0075-$0.29 per share	 	 	575,000	 	 	 	1	 	 	 	68	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	69	 	
Issuance of warrants, valued using Black- Scholes model	 	 	—	 	 	 	—	 	 	 	41	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	41	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	237	 	 	 	(237	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	123	 	 	 	—	 	 	 	—	 	 	 	123	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Unrealized loss on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(8	)	 	 	—	 	 	 	(8	)	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(7,341	)	 	 	(7,341	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(7,349	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 1999	 	 	1,996,360	 	 	 	2	 	 	 	355	 	 	 	(114	)	 	 	(8	)	 	 	(9,356	)	 	 	(9,121	)	
Issuance of common stock upon exercise of stock options for cash at $0.0075-$0.29 per share	 	 	1,463,327	 	 	 	2	 	 	 	193	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	195	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	93	 	 	 	(93	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	101	 	 	 	—	 	 	 	—	 	 	 	101	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized loss on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	86	 	 	 	—	 	 	 	86	 	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(13,079	)	 	 	(13,079	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(12,993	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 2000	 	 	3,459,687	 	 	 	4	 	 	 	641	 	 	 	(106	)	 	 	78	 	 	 	(22,435	)	 	 	(21,818	)	
Issuance of common stock upon exercise of stock options for cash at $0.0075-$0.60 per share	 	 	204,962	 	 	 	—	 	 	 	56	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	56	 	
Repurchase of common stock	 	 	(66,667	)	 	 	—	 	 	 	(19	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(19	)	
Compensation expense for acceleration of options	 	 	—	 	 	 	—	 	 	 	20	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	20	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	45	 	 	 	(45	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	93	 	 	 	—	 	 	 	—	 	 	 	93	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	190	 	 	 	—	 	 	 	190	 	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(15,874	)	 	 	(15,874	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(15,684	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-5

 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	Deficit	 	 	
 	 	 	 	 	 	 	 	Other	 	Accumulated	 	 	
 	 	Common Stock	 	Additional	 	Deferred	 	Comprehensive	 	During the	 	Total	

	 	Paid-In	 	Stock-Based	 	Income	 	Development	 	Stockholders’	
 	 	Shares	 	Amount	 	Capital	 	Compensation	 	(Loss)	 	Stage	 	Deficit	

	 	

	 	

	 	

	 	

	 	

	 	

	
Balances, December 31, 2001	 	 	3,597,982	 	 	 	4	 	 	 	743	 	 	 	(58	)	 	 	268	 	 	 	(38,309	)	 	 	(37,352	)	
Issuance of common stock upon exercise of stock options for cash at $0.0075-$0.60 per share	 	 	262,381	 	 	 	—	 	 	 	84	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	84	 	
Repurchase of common stock	 	 	(7,157	)	 	 	—	 	 	 	(2	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2	)	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	(2	)	 	 	2	 	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	—	 	 	 	6	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(228	)	 	 	—	 	 	 	(228	)	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,080	)	 	 	(23,080	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,308	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 2002	 	 	3,853,206	 	 	 	4	 	 	 	823	 	 	 	(50	)	 	 	40	 	 	 	(61,389	)	 	 	(60,572	)	
Issuance of common stock upon exercise of stock options for cash at $0.0075-$0.60 per share (unaudited)	 	 	137,187	 	 	 	—	 	 	 	75	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	75	 	
Stock-based compensation (unaudited)	 	 	—	 	 	 	—	 	 	 	83	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	83	 	
Deferred stock-based compensation (unaudited)	 	 	—	 	 	 	—	 	 	 	3,125	 	 	 	(3,125	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation (unaudited)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	523	 	 	 	—	 	 	 	—	 	 	 	523	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments (unaudited)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	36	 	 	 	—	 	 	 	36	 	
 	Net loss (unaudited)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,695	)	 	 	(23,695	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,659	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, September 30, 2003 (unaudited)	 	 	3,990,393	 	 	$	4	 	 	$	4,106	 	 	$	(2,652	)	 	$	76	 	 	$	(85,084	)	 	$	(83,550	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-6

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Cash Flows
(in thousands)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Period from	
 	 	 	 	 	 	 	 	Nine Months	 	August 5,	
 	 	 	 	Ended	 	1997 (date of	
 	 	Years Ended December 31,	 	September 30,	 	inception) to	

	 	

	 	September 30,	
 	 	2000	 	2001	 	2002	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	 	(unaudited)	
 	 	 	 	 	 	 	 	(unaudited)	 	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(16,594	)	 	$	(23,695	)	 	$	(85,084	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Depreciation and amortization	 	 	860	 	 	 	1,614	 	 	 	2,849	 	 	 	2,088	 	 	 	2,399	 	 	 	8,113	 	
 	Loss on disposal of equipment	 	 	—	 	 	 	156	 	 	 	14	 	 	 	—	 	 	 	82	 	 	 	252	 	
 	Gain on sale of investments	 	 	—	 	 	 	(84	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(84	)	
 	Allowance for doubtful accounts	 	 	—	 	 	 	386	 	 	 	(195	)	 	 	(195	)	 	 	—	 	 	 	191	 	
 	Non-cash expense related to warrants issued for equipment financing lines and facility lease	 	 	11	 	 	 	15	 	 	 	7	 	 	 	6	 	 	 	—	 	 	 	41	 	
 	Non-cash compensation expense for acceleration of options	 	 	—	 	 	 	20	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	20	 	
 	Stock-based compensation	 	 	101	 	 	 	93	 	 	 	6	 	 	 	(6	)	 	 	606	 	 	 	929	 	
 	Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Accounts receivable	 	 	—	 	 	 	(1,261	)	 	 	1,054	 	 	 	1,061	 	 	 	(60	)	 	 	(267	)	
 	 	Prepaids and other assets	 	 	(101	)	 	 	(515	)	 	 	(342	)	 	 	75	 	 	 	(229	)	 	 	(1,424	)	
 	 	Accounts payable	 	 	148	 	 	 	1,280	 	 	 	(3,675	)	 	 	(3,115	)	 	 	766	 	 	 	(646	)	
 	 	Accrued liabilities	 	 	693	 	 	 	132	 	 	 	1,206	 	 	 	(253	)	 	 	(1,214	)	 	 	1,011	 	
 	 	Other assets	 	 	—	 	 	 	(343	)	 	 	(175	)	 	 	(125	)	 	 	(136	)	 	 	(638	)	
 	 	Deferred revenue	 	 	—	 	 	 	12,600	 	 	 	(2,490	)	 	 	(2,100	)	 	 	(2,410	)	 	 	7,700	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	Net cash used in operating activities	 	 	(11,367	)	 	 	(1,781	)	 	 	(24,821	)	 	 	(19,158	)	 	 	(23,891	)	 	 	(69,886	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Increase in restricted cash	 	 	—	 	 	 	(6,011	)	 	 	(6,870	)	 	 	(7,140	)	 	 	(798	)	 	 	(13,905	)	
Purchases of property and equipment	 	 	(2,194	)	 	 	(3,808	)	 	 	(4,068	)	 	 	(3,723	)	 	 	(1,353	)	 	 	(13,981	)	
Proceeds from sale of equipment	 	 	—	 	 	 	24	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	24	 	
Issuance of notes receivable	 	 	—	 	 	 	(200	)	 	 	(750	)	 	 	—	 	 	 	—	 	 	 	(1,146	)	
Purchases of investments	 	 	(36,083	)	 	 	(65,422	)	 	 	—	 	 	 	(585	)	 	 	—	 	 	 	(116,260	)	
Proceeds from sales and maturities of investments	 	 	13,153	 	 	 	51,889	 	 	 	36,768	 	 	 	43,479	 	 	 	(21,029	)	 	 	81,281	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	Net cash provided by (used in) investing activities	 	 	(25,124	)	 	 	(23,528	)	 	 	25,080	 	 	 	32,031	 	 	 	(23,180	)	 	 	(63,987	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from issuance of preferred stock, net of issuance costs	 	 	54,907	 	 	 	13,842	 	 	 	(50	)	 	 	—	 	 	 	39,871	 	 	 	133,175	 	
Proceeds from issuance of common stock	 	 	195	 	 	 	56	 	 	 	84	 	 	 	70	 	 	 	75	 	 	 	489	 	
Repurchase of common stock	 	 	—	 	 	 	(19	)	 	 	(2	)	 	 	(2	)	 	 	—	 	 	 	(21	)	
Proceeds from equipment financing lines	 	 	628	 	 	 	3,545	 	 	 	6,373	 	 	 	5,837	 	 	 	1,357	 	 	 	13,189	 	
Repayment of equipment financing lines	 	 	(293	)	 	 	(396	)	 	 	(1,520	)	 	 	(893	)	 	 	(1,361	)	 	 	(3,700	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net cash provided by financing activities	 	 	55,437	 	 	 	17,028	 	 	 	4,885	 	 	 	5,012	 	 	 	39,942	 	 	 	143,132	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net increase (decrease) in cash and cash equivalents	 	 	18,946	 	 	 	(8,281	)	 	 	5,144	 	 	 	17,885	 	 	 	(7,129	)	 	 	9,259	 	
Cash and cash equivalents, beginning of period	 	 	577	 	 	 	19,525	 	 	 	11,244	 	 	 	11,244	 	 	 	16,388	 	 	 	—	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash and cash equivalents, end of period	 	$	19,523	 	 	$	11,244	 	 	$	16,388	 	 	$	29,129	 	 	$	9,259	 	 	$	9,259	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash paid for interest	 	$	165	 	 	$	180	 	 	$	697	 	 	$	478	 	 	$	638	 	 	$	1,514	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	Cash paid for taxes	 	$	11	 	 	$	6	 	 	$	63	 	 	$	62	 	 	$	9	 	 	$	79	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Supplemental disclosure of significant non-cash investing and financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Deferred stock-based compensation	 	$	93	 	 	$	45	 	 	$	(2	)	 	$	(2	)	 	$	3,125	 	 	$	3,498	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-7

 

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements

Note 1 — Formation and Business of the Company:

       Cytokinetics, Incorporated, (the “Company”) was incorporated in Delaware on August 5, 1997 to discover, develop and commercialize novel small molecule drugs specifically targeting the cytoskeleton. Through September 30, 2003, the Company has been primarily engaged in conducting research, developing drug candidates and product technologies, recruiting personnel and raising capital. The activity from August 5, 1997 to December 31, 1997 was insignificant.

Note 2 — Summary of Significant Accounting Policies:

Unaudited Interim Financial Data

       The accompanying balance sheet as of September 30, 2003, the statements of operations and of cash flows for the nine months ended September 30, 2002 and 2003, and the statement of stockholders’ equity (deficit) for the nine months ended September 30, 2003 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations and cash flows for the nine months ended September 30, 2002 and 2003. The financial data and other information disclosed in these notes to financial statements related to the nine month periods are unaudited. The results for the nine months ended September 30, 2003 are not necessarily indicative of the results to be expected for the year ending December 31, 2003 or for any other interim period or for any future year.

Use of Estimates

       The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk and Other Risks and Uncertainties

       Financial instruments which potentially subject the Company to concentrations of risk consist principally of cash and cash equivalents, investments and accounts receivable. The Company’s cash and cash equivalents are invested in deposits with two major banks in the United States. Deposits in these banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash, cash equivalents, and investments.

       The Company performs an ongoing credit evaluation of its’ customers’ financial conditions and generally does not require collateral to secure accounts receivable. The Company’s exposure to credit risk associated with non-payment is affected principally by conditions or occurrences within GlaxoSmithKline (“GSK”). The Company historically has not experienced significant losses relating to accounts receivable from its primary customer. 96% and 99% of the Company’s revenues for the years ended December 31, 2001 and 2002 respectively were derived from GSK.

       Drug candidates developed by the Company may require approvals or clearances from the Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercialized sales. There can be no assurance that the Company’s drug candidates will receive any of the required approvals or clearances. If the Company was denied approval or clearance or such approval was delayed, it may have a material adverse impact on the Company.

F-8

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Cash and Cash Equivalents

       Cash equivalents are stated at cost, which approximates market value. The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents.

Investments

       Investments consist of US Corporate Bonds and commercial paper with maturities ranging from three months to two years. The Company has classified all investments as available-for-sale and, as a result, carries such amounts at fair value. Unrealized gains and losses are included in accumulated other comprehensive income (loss) in stockholders’ equity until realized. Realized gains and losses on sales of all such securities are reported in earnings and computed using the specific identification cost method. Realized gains or losses and charges for other-than-temporary declines in value, if any, on available-for-sale securities are reported in other income or expense as incurred. The Company periodically evaluates these investments for other-than-temporary impairment.

Fair Value of Financial Instruments

       For financial instruments consisting of cash and cash equivalents, accounts payable and accrued liabilities included in the Company’s financial statements, the carrying amounts are reasonable estimates of fair value due to their short maturities. Estimated fair values for marketable securities, which are separately disclosed elsewhere, are based on quoted market prices for the same or similar instruments. Based on borrowing rates currently available to the Company, the carrying value of the equipment financing lines approximate fair value.

Property and Equipment

       Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, which is generally three to five years. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related assets, typically five years. Upon sale or retirement of assets, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Impairment of long-lived assets

       In accordance with the provisions of Statement of Financial Accounting Standards Board (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” the Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Under SFAS No. 144, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Through December 31, 2002, there have been no such impairments.

F-9

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Revenue Recognition

       The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin, or SAB, No. 101, Revenue Recognition in Financial Statements, as amended by SAB Nos. 101A and 101B. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed and determinable; and collectibility is reasonably assured. Determination of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fee charged for research performed and milestones met, and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

       Research and development revenues, which are earned under agreements with third parties for contract research and development activities, are recorded as the related expenses are incurred. Charges to the third parties are based upon negotiated rates for full time equivalent employees of the Company and actual out-of-pocket costs. Rates for full time equivalent employees are intended to approximate the Company’s anticipated costs. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. Any amounts received in advance of performance are recorded as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful.

       Grant revenues are recorded as research is performed. Grant revenues are not refundable.

       License revenues received in connection with strategic alliance agreements are deferred and recognized on a straight-line basis over the term of the agreement.

Research and Development Expenditures

       Research and development costs are charged to operations as incurred.

Income Taxes

       The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Net Loss Per Common Share

       Basic net loss per share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive common shares, including options, common stock subject to repurchase, warrants and convertible preferred stock. A reconciliation of

F-10

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

the numerator and denominator used in the calculation of basic and diluted net loss per share follows (in thousands):

 	 	 	 	 	 	 	 	Nine Months	
 	 	 	 	Ended	
 	 	Years Ended December 31,	 	September 30,	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(unaudited)	
Numerator:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(16,594	)	 	$	(23,695	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Denominator:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted-average number of common shares outstanding	 	 	2,494	 	 	 	3,531	 	 	 	3,754	 	 	 	3,732	 	 	 	3,902	 	
 	Less: Weighted-average shares subject to repurchase	 	 	(564	)	 	 	(691	)	 	 	(270	)	 	 	(295	)	 	 	(130	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per share	 	 	1,930	 	 	 	2,840	 	 	 	3,484	 	 	 	3,437	 	 	 	3,772	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Anti-dilutive Securities

       The following outstanding options, common stock subject to repurchase, convertible preferred stock and warrants were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an antidilutive effect (in thousands):

 	 	 	 	Nine Months	
 	 	Years Ended	 	Ended	
 	 	December 31,	 	September 30,	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(unaudited)	
Convertible preferred stock (as if converted)	 	 	23,776	 	 	 	26,109	 	 	 	26,109	 	 	 	26,109	 	 	 	34,124	 	
Options to purchase common stock	 	 	2,194	 	 	 	2,823	 	 	 	4,121	 	 	 	4,124	 	 	 	4,841	 	
Common stock subject to repurchase	 	 	999	 	 	 	433	 	 	 	178	 	 	 	208	 	 	 	91	 	
Warrants to purchase common stock	 	 	200	 	 	 	200	 	 	 	200	 	 	 	200	 	 	 	200	 	
Warrants to purchase convertible preferred stock	 	 	68	 	 	 	168	 	 	 	168	 	 	 	168	 	 	 	168	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	27,237	 	 	 	29,733	 	 	 	30,776	 	 	 	30,809	 	 	 	39,424	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Stock-based Compensation

       The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation” and complies with the disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation and Disclosure an Amendment of FASB Statement No. 123.” Under APB 25,

F-11

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

compensation expense is based on the difference, if any, on the date of grant, between the estimated fair value of the Company’s common stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity investment.

       The Company accounts for equity instruments issued to nonemployees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods, or Services.”

       As the determination of fair value of all options granted to employees after such time the Company becomes a public company will include an expected volatility factor in addition to the factors described in the following table, the following results may not be representative of future periods.

       The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation arrangements (in thousands):

 	 	 	 	Nine Months Ended	
 	 	Years Ended December 31,	 	September 30,	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(unaudited)	
Net loss, as reported	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(16,594	)	 	$	(23,695	)	
Add: Stock-based employee compensation expense included in reported net loss	 	 	—	 	 	 	20	 	 	 	—	 	 	 	—	 	 	 	362	 	
Deduct: Total stock-based employee compensation determined under fair value based method for all awards	 	 	(33	)	 	 	(88	)	 	 	(79	)	 	 	(57	)	 	 	(440	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Adjusted net loss	 	$	(13,112	)	 	$	(15,942	)	 	$	(23,159	)	 	$	(16,651	)	 	$	(23,773	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per common share, basic and diluted:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	As reported	 	$	(6.78	)	 	$	(5.59	)	 	$	(6.62	)	 	$	(4.83	)	 	$	(6.28	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	Adjusted	 	$	(6.79	)	 	$	(5.61	)	 	$	(6.65	)	 	$	(4.84	)	 	$	(6.30	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
F-12

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       The value of each option granted is estimated on the date of grant using the minimum value method with the following weighted average assumptions:

 	 	 	 	 	 	 	 	Nine Months	
 	 	 	 	Ended	
 	 	Years Ended December 31,	 	September 30,	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(unaudited)	
Risk-free interest rate	 	 	6.33	%	 	 	6.33	%	 	 	2.78	%	 	 	2.78	%	 	 	4.31	%	
Expected life (in years)	 	 	5	 	 	 	5	 	 	 	5	 	 	 	5	 	 	 	5	 	
Dividend yield	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	
       Based on the above assumptions, the weighted average estimated minimum values of options granted were $0.07, $0.11 and $0.26 per share for the years ended December 31, 2000, 2001 and 2002, respectively, and $0.20 and $3.18 for the nine months ended September 30, 2002 (unaudited) and 2003 (unaudited), respectively.

Recent Accounting Pronouncements

       In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. During December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities, to the first reporting period ending after March 15, 2004. We do not expect the adoption of FIN 46 to have a material impact upon our financial position, cash flows or results of operations.

       In May, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability or an asset in some circumstances. Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. While the effective date of certain elements of SFAS No. 150 has been deferred, we do not expect the adoption of SFAS No. 150 to have a material impact upon our financial position, cash flows or results of operations.

F-13

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Note 3 — Investments:

       The amortized cost and fair value of short-term and long-term investments at December 31, 2001 and 2002 are as follows (in thousands):

 	 	December 31, 2001	

	
 	 	Amortized	 	Unrealized	 	Unrealized	 	 	
 	 	Cost	 	Gains	 	Losses	 	Fair Value	 	Maturity Dates	

	 	

	 	

	 	

	 	

	
US Corporate Bonds	 	$	33,408	 	 	$	139	 	 	$	(2	)	 	$	33,545	 	 	 	01/02 - 11/02	 	
US Government Bonds	 	 	6,620	 	 	 	13	 	 	 	—	 	 	 	6,633	 	 	 	08/02 - 10/02	 	
Foreign Corporate Bonds	 	 	503	 	 	 	5	 	 	 	—	 	 	 	508	 	 	 	5/02	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total short-term investments	 	$	40,531	 	 	$	157	 	 	$	(2	)	 	$	40,686	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
US Corporate Bonds	 	$	8,999	 	 	$	103	 	 	$	—	 	 	$	9,102	 	 	 	01/03 - 04/03	 	
Foreign Corporate Bonds	 	 	1,272	 	 	 	10	 	 	 	—	 	 	 	1,282	 	 	 	02/03	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total long-term investments	 	$	10,271	 	 	$	113	 	 	$	—	 	 	$	10,384	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	

 	 	December 31, 2002	

	
 	 	Amortized	 	Unrealized	 	Unrealized	 	 	
 	 	Cost	 	Gains	 	Losses	 	Fair Value	 	Maturity Dates	

	 	

	 	

	 	

	 	

	
US Corporate Bonds	 	$	9,147	 	 	$	32	 	 	$	(10	)	 	$	9,169	 	 	 	01/03 - 11/03	 	
Foreign Corporate Bonds	 	 	1,253	 	 	 	3	 	 	 	—	 	 	 	1,256	 	 	 	02/03	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total short-term investments	 	$	10,400	 	 	$	35	 	 	$	(10	)	 	$	10,425	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
US Corporate Bonds	 	$	3,633	 	 	$	15	 	 	$	—	 	 	$	3,648	 	 	 	02/04	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total long-term investments	 	$	3,633	 	 	$	15	 	 	$	—	 	 	$	3,648	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
       There was a realized gain of $84,000 for the year ended December 31, 2001. There were no realized gains or losses in 2000 or 2002.

Note 4 — Balance Sheet Components (in thousands):

 	 	December 31,	

	
 	 	2001	 	2002	

	 	

	
Property and equipment, net:	 	 	 	 	 	 	 	 	
 	Computer and laboratory equipment	 	$	9,368	 	 	$	13,830	 	
 	Furniture and fixtures	 	 	381	 	 	 	387	 	
 	Leasehold improvements	 	 	889	 	 	 	982	 	

	 	 	 	

	 	
 	 	 	10,638	 	 	 	15,199	 	
 	Less: Accumulated depreciation and amortization	 	 	(2,620	)	 	 	(5,457	)	

	 	 	 	

	 	
 	 	$	8,018	 	 	$	9,742	 	

	 	 	 	

	 	
F-14

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

 	 	December 31,	

	
 	 	2001	 	2002	

	 	

	
Accrued liabilities:	 	 	 	 	 	 	 	 	
 	Payroll related	 	$	488	 	 	$	928	 	
 	Consulting and professional fees	 	 	477	 	 	 	452	 	
 	Deposits from sublessor	 	 	104	 	 	 	—	 	
 	Other accrued expenses	 	 	—	 	 	 	845	 	

	 	 	 	

	 	
 	 	$	1,069	 	 	$	2,225	 	

	 	 	 	

	 	
Note 5 — Related Party Transactions:

       In 1998, the Company entered into a licensing agreement with certain universities where the Company’s founding scientists are also affiliates of the universities. The Company agreed to pay technology license fees, as well as milestone payments for technology developed under the licensing agreement. The Company is also obligated to make minimum royalty payments, as specified in the agreement commencing the year of product market introduction or upon an agreed upon anniversary of the licensing agreement. In 2000, 2001 and 2002, $44,000, $125,000 and $56,000 was paid to the universities under this agreement, respectively.

       In 2001, the Company entered into a strategic alliance agreement with the holders of Series D Convertible Preferred Stock. In the agreement, the stockholders agreed to pay the Company an upfront licensing fee of $14,000,000 for rights to certain technologies. In addition, the stockholders agreed to pay the Company milestone payments regarding performance and developments within agreed upon projects. In conjunction with these projects, the stockholders agreed to reimburse the Company’s costs associated with the strategic alliance. In 2001, the Company received $14,000,000 for the licensing fee, which is being recognized ratably over the term of the agreement. For the years ended December 31, 2001 and 2002, $1,400,000 and $2,800,000 respectively, has been recognized as license revenue under this agreement. At December 31, 2001 and 2002, license revenue of $12,600,000 and $9,800,000, respectively, was deferred. The Company also received and recognized as revenue $2,000,000 and $1,000,000 in performance milestone payments and $4,764,000 and $7,470,000 in project reimbursements for the years ended December 31, 2001 and 2002 respectively, as no ongoing performance obligations exist. At December 31, 2002, deferred revenue related to research and development was $310,000.

       In 2001 and 2002, the Company extended loans for $200,000 and $100,000, respectively, to officers of the Company. The loans accrue interest at 5.18% and 5.75% and mature on November 12, 2010 and July 12, 2008, respectively. In 2000, 2001 and 2002, the Company extended loans totaling $150,000, none and $650,000, respectively, to various executives and employees of the Company. The loans accrue interest at rates ranging from 4.88% to 5.80% and will mature at various dates between 2005 and 2011. Certain of the loans will be forgiven if the officers or executives remain with the Company through the maturation of their respective loans. At December 31, 2002, $1.1 million is included in related party notes receivable.

       The Company co-signed a loan with a major bank in the United States on the behalf of an executive of the Company. The Company has a restricted cash investment in the amount of $150,000 to collateralize the note in case of officer default (included in restricted cash), and agreed to make all interest payments on the loan. As of December 31, 2002, the amount of the loan is

F-15

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

$150,000, and the Company made interest payments totaling $9,000, $8,000 and $9,000 in 2000, 2001 and 2002 respectively.

Note 6 — Equipment Financing Line:

       In September of 1998, the Company obtained an equipment line of credit. The Company could borrow an amount not to exceed $1,500,000, available in minimum installments of $250,000 until September 1999, upon which the line expired. In 1999, the Company made three draws on this line of credit for $663,000, $253,000 and $370,000 with effective interest rates of 13.24%, 13.3% and 13.09%, respectively. All of these loans are payable in 48 monthly installments with an additional 15% ending balloon payment. In addition, in connection with this line, the Company issued warrants (see Note 8).

       In December 1999, the Company obtained an additional equipment line of credit. The Company could borrow an amount not to exceed $5,000,000, available until December 2000, upon which the line expired. In 2000, the Company made two draws on this line of credit for $549,000 and $78,000 with effective interest rates of 13.17% and 15.18%, respectively. These loans are payable in 48 and 36 monthly installments, respectively, with an additional 15% ending balloon payment.

       In January 2001, the Company entered into a new financing agreement under which the Company may borrow up to $6,000,000 through a financing line of credit. In 2001, the Company made four draws on this line of credit for $1,702,000, $140,000, $997,000, and $706,000 with effective interest rates of 10.34%, 10.4%, 10.34%, and 10.4%, respectively, and with financing terms of 60 months, 36 months, 60 months, and 36 months, respectively. In 2002, the Company made one additional draw on this line of credit for $2,448,000 with an effective interest rate of 10.34% and with financing terms of 60 months. In connection with this line, the Company is obligated to maintain a $5,550,000 letter of credit as collateral against the line of credit (see Note 7).

       On July 1, 2002, the Company entered into a new financing agreement under which the Company may borrow up to $7,500,000 through a financing line of credit. In 2002, the Company made three draws on this line of credit for $1,568,000, $1,821,000, and $535,000 with effective interest rates of 8.77%, 7.61%, and 7.64%, respectively, and with financing terms of 60 months for all draws. In connection with this line, the Company is obligated to maintain a $7,500,000 letter of credit as collateral against the line of credit (see Note 7).

       Minimum equipment lease line principal payments are as follows (in thousands):
 	 	 	 	 	
2003	 	$	2,415	 	
2004	 	 	2,283	 	
2005	 	 	2,000	 	
2006	 	 	2,081	 	
2007	 	 	708	 	
2008	 	 	5	 	

	 	
Total minimum principal payments	 	$	9,492	 	

	 	
F-16

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Note 7 — Commitments:

Leases

       The Company leases office space and equipment under noncancelable operating leases with various expiration dates through 2013. Rent expense was $845,000, $2,250,000 and $2,220,000 for the years ended December 31, 2000, 2001 and 2002 respectively. The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has deferred the rent expense paid but not incurred.

       During 2001, the Company subleased a portion of their building. Sublease income for the year ended December 31, 2001 was $313,000 which has been offset against rent expense.

       Future minimum lease payments under noncancelable operating leases are as follows (in thousands):
 	 	 	 	 	
Year Ending December 31,	 	Operating Leases	

	 	

	
2003	 	$	1,793	 	
2004	 	 	1,689	 	
2005	 	 	1,656	 	
2006	 	 	1,552	 	
2007	 	 	1,598	 	
2008 through end of lease	 	 	8,698	 	

	 	
 	 	$	16,986	 	

	 	
Restricted Cash

       During 1999, $75,000 of cash was pledged as collateral for the corporate employee credit cards issued to employees for travel and other expenses and is classified as restricted cash on the balance sheet. During 2001, this amount was increased by $10,500 due to the increase in headcount. As of December 31, 2002, the total amount of cash pledged as collateral was $85,500.

       The Company also had a restricted certificate of deposit in the amount of $150,000 during 2002 and 2001 (see Note 5) pledged as collateral on a loan.

       In 2001, the Company purchased a $6,000,000 certificate of deposit to secure a letter of credit in conjunction with an equipment financing line (see Note 6). This amount was classified as restricted cash at December 31, 2001. In October 2002, the Company renegotiated the terms of the letter of credit and pledged $5,550,000 of its investment account to secure the renegotiated letter of credit. The balance pledged shall automatically be reduced by $90,000 each month until October 31, 2003. At December 31, 2002 $5,370,000 is included in restricted cash.

       The Company further pledged $7,500,000 of its investment account in July 2002 to secure a new letter of credit in conjunction with the new financing line obtained on July 1, 2002 (Note 6). The balance pledged shall automatically be reduced by $125,000 each month until December 31, 2003. At December 31, 2002 $7,500,000 is included in restricted cash.

Note 8 — Convertible Preferred Stock:

       Under the Company’s Certificate of Incorporation, the Company’s Convertible Preferred Stock is issuable in series.

F-17

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       In April 1998, the Company sold 5,300,000 shares of Series A Convertible Preferred Stock at $1.00 per share to new investors for net cash proceeds of $5,269,000.

       In August 1999, the Company sold 6,896,545 shares of Series B Convertible Preferred Stock at $2.90 per share to new and existing investors for net cash proceeds of $19,336,000.

       In November 2000, the Company sold 11,578,980 shares of Series C Convertible Preferred Stock at $4.75 per share to new and existing investors for net cash proceeds of $54,857,000.

       In July 2001, the Company sold 2,333,334 shares of Series D Convertible Preferred Stock at $6.00 per share to new investors for net cash proceeds of $13,842,000.

       In March and April 2003, the Company sold 8,015,449 shares of Series E Convertible Preferred Stock at $5.00 per share to new and existing investors for net cash proceeds of $39,871,000.

       As of December 31, 2000, the Convertible Preferred Stock comprised:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of	 	Number of Shares	 	 	 	Liquidation	 	 	
 	 	Shares	 	Issued and	 	Proceeds, Net of	 	Preference per	 	Annual Dividends	
 	 	Authorized	 	Outstanding	 	Issuance Cost	 	Share	 	per Share	

	 	

	 	

	 	

	 	

	
Series A	 	 	5,550,000	 	 	 	5,300,000	 	 	$	5,269	 	 	$	1.00	 	 	$	0.10	 	
Series B	 	 	7,000,000	 	 	 	6,896,545	 	 	 	19,336	 	 	$	2.90	 	 	$	0.29	 	
Series C	 	 	12,250,000	 	 	 	11,578,980	 	 	 	54,857	 	 	$	4.75	 	 	$	0.475	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
 	 	 	24,800,000	 	 	 	23,775,525	 	 	$	79,462	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
       As of December 31, 2001 and 2002, the Convertible Preferred Stock comprised (in thousands, except share and per share data):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of	 	Number of Shares	 	 	 	Liquidation	 	 	
 	 	Shares	 	Issued and	 	Proceeds, Net of	 	Preference per	 	Annual Dividends	
 	 	Authorized	 	Outstanding	 	Issuance Cost	 	Share	 	per Share	

	 	

	 	

	 	

	 	

	
Series A	 	 	5,550,000	 	 	 	5,300,000	 	 	$	5,269	 	 	$	1.00	 	 	$	0.10	 	
Series B	 	 	7,000,000	 	 	 	6,896,545	 	 	 	19,336	 	 	$	2.90	 	 	$	0.29	 	
Series C	 	 	12,250,000	 	 	 	11,578,980	 	 	 	54,857	 	 	$	4.75	 	 	$	0.475	 	
Series D	 	 	2,500,000	 	 	 	2,333,334	 	 	 	13,842	 	 	$	6.00	 	 	$	0.60	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
 	 	 	27,300,000	 	 	 	26,108,859	 	 	$	93,304	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
       As of September 30, 2003, the Convertible Preferred Stock comprised (in thousands, except share and per share data, unaudited):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of	 	Number of Shares	 	 	 	Liquidation	 	 	
 	 	Shares	 	Issued and	 	Proceeds, Net of	 	Preference per	 	Annual Dividends	
 	 	Authorized	 	Outstanding	 	Issuance Cost	 	Share	 	per Share	

	 	

	 	

	 	

	 	

	
Series A	 	 	5,550,000	 	 	 	5,300,000	 	 	$	5,269	 	 	$	1.00	 	 	$	0.10	 	
Series B	 	 	7,000,000	 	 	 	6,896,545	 	 	 	19,336	 	 	$	2.90	 	 	$	0.29	 	
Series C	 	 	12,250,000	 	 	 	11,578,980	 	 	 	54,857	 	 	$	4.75	 	 	$	0.475	 	
Series D	 	 	2,500,000	 	 	 	2,333,334	 	 	 	13,842	 	 	$	6.00	 	 	$	0.60	 	
Series E	 	 	10,000,000	 	 	 	8,015,449	 	 	 	39,871	 	 	$	5.00	 	 	$	0.50	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
 	 	 	37,300,000	 	 	 	34,124,308	 	 	$	133,175	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
F-18

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       The holders of Convertible Preferred Stock have various rights and preferences as follows:

Voting

       Each share of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock has voting rights equal to an equivalent number of shares of Common Stock into which it is convertible and votes together as one class with the Common Stock.

Dividends

       Holders of Convertible Preferred Stock are entitled to receive noncumulative dividends at the rates specified above when and if declared by the Board of Directors. The holders of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock will also be entitled to participate in dividends on Common Stock, when and if declared by the Board of Directors, based on the number of shares of Common Stock held on an as-if converted basis. Such dividends shall not be cumulative. No dividends on Convertible Preferred Stock or Common Stock have been declared by the Board from inception through December 31, 2002.

Liquidation

       In the event of any liquidation, dissolution or winding up of the Company, including a merger, acquisition or sale of assets where the beneficial owners of the Company’s Common Stock and Convertible Preferred Stock own less than 50% of the resulting voting power of the surviving entity, the holders of Series A Convertible Preferred Stock are entitled to receive an amount equal to the liquidation preference specified above plus any declared but unpaid dividends prior to and in preference to any distribution to the holders of Common Stock. If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Convertible Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Convertible Preferred Stock in proportion to the per share preferential amount each such holder is otherwise entitled to receive.

Redemption

       The Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock are not mandatorily redeemable.

Conversion

       Each share of Convertible Preferred Stock, at the option of the holder, is convertible into the number of fully paid and nonassessable shares of Common Stock which results from dividing the conversion price per share in effect for the shares of such series of Convertible Preferred Stock at the time of conversion into the original issue price per share of such series of Convertible Preferred Stock. The initial conversion price per share of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock shall be the original issue price. The initial conversion price of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock is subject to adjustment from time to time, as described in the Company’s Restated Certificate of Incorporation.

       Conversion is automatic for the holders of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock at the then effective conversion rate immediately upon the closing of a firm commitment underwritten initial public offering pursuant to an effective registration statement

F-19

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

under the Securities Act of 1933 covering the offer and sale of common stock in which the aggregate proceeds raised equals or exceeds $40,000,000. If the aggregate proceeds are less than $40,000,000 conversion is automatic upon the approval of at least 51% of the then outstanding shares of Preferred Stock, with all series voting together as a single class. The Company has reserved 34,199,272 shares of Common Stock for issuance upon conversion of Convertible Preferred Stock.

       The Company’s Convertible Preferred Stock is subject to an antidilution conversion price adjustment feature which was triggered for Series D when the Company issued Series E for a consideration per share less than the initial conversion price for Series D. The conversion price for Series D shall be adjusted downward from its initial conversion price of $6.00 per share. As of September 30, 2003 the Company has issued 8,015,449 shares of Series E Convertible Preferred Stock for consideration of $5.00 per share. As a result, the Series D stockholders would receive an additional 74,964 shares of Common Stock upon conversion of the Convertible Preferred Stock.

       As of September 30, 2003 each share of Series A, Series B, Series C and Series E Convertible Preferred stock is convertible into one share of common stock on a 1-for-1 basis and each share of Series D Convertible Preferred Stock is convertible into common stock on a 1-for-1.0321278 basis.

Warrants for Convertible Preferred Stock

       In connection with an equipment line of credit, the Company issued warrants to purchase 67,500 shares of Series A Convertible Preferred Stock for $1.00 per share in September 1999. The Company valued the warrants by using the Black-Scholes pricing model in fiscal 1999 when the line was drawn upon using the full term of seven years, a risk-free interest rate of 6.33%, a dividend yield of 0%, and volatility of 60%. The fair value was netted against the equipment line and charged to interest expense over the life of the equipment line. The amount charged to interest expense was $8,000, $7,000 and $7,000 for the years ended December 31, 2000, 2001 and 2002, respectively. Upon the effective date of the registration statement for the Company’s initial public offering of its equity securities, the shares purchaseable under these warrants will be shares of the Company’s common stock, in the same number that the holder otherwise would have been entitled to purchase had these warrants remained exercisable for shares of convertible preferred stock.

       In connection with obtaining Series B Convertible Preferred Stock financing in August 1999, the Company agreed to issue warrants to purchase an amount of Series B Convertible Preferred Stock at $2.90 per share. The Company determined in July 2001 that the amount issued was 100,000 warrants. The warrants were valued at $467,000 using the Black-Scholes pricing model using the contractual term of seven years, a risk-free interest rate of 5.37%, a dividend yield of 0%, and volatility of 60%. As the warrants relate to preferred stock issuance costs, the valuation was recorded as an issuance cost as an offset to Convertible Preferred Stock.

Note 9 — Stockholders’ Deficit:

Common Stock

       The Company’s Articles of Incorporation, as amended, authorize the Company to issue 61,500,000 shares of $0.001 par value Common Stock. A portion of the shares sold are subject to a right of repurchase by the Company subject to vesting, which is generally over a four year period from the earlier of the grant date or employee hire date, as applicable, until vesting is complete. As

F-20

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

of December 31, 2002, 177,659 shares had been exercised under the employee stock option plan and are subject to repurchase.

       In connection with the building lease, the Company issued warrants to purchase 200,000 shares of Common Stock for $0.29 per share in July 1999. The Company valued the warrants by using the Black-Scholes pricing model in 1999 using the contractual term of five years, a risk-free interest rate of 6.33%, a dividend yield of 0%, and volatility of 60%. The fair value was capitalized in other assets and amortized over the life of the building lease, which expired in August 2000. The amount charged to rent expense was $4,000, $0 and $0 for the years ended December 31, 2000, 2001 and 2002, respectively.

Stock Option Plans

       In 1997, the Company adopted the 1997 Stock Option/ Stock Issuance Plan (the “Plan”). The Plan provides for the granting of stock options to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options (“NSO”) may be granted to Company employees and consultants. The Company has reserved 8,832,345 shares of Common Stock for issuance under the Plan.

       Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, and (ii) with respect to any 10% shareholder, the exercise price of an ISO or NSO shall not be less than 110% of the estimated fair market value of the shares on the date of grant and the term of the grant shall not exceed five years. Options may be exercisable immediately and are subject to repurchase options held by the Company which lapse over a maximum period of ten years at such times and under such conditions as determined by the Board of Directors. To date, options granted generally vest over four or five years (generally 25% after one year and monthly thereafter). Activity under the Plan is as follows:
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Options	 	Options	 	Weighted	
 	 	Available for	 	Outstanding and	 	Average Exercise	
 	 	Grant	 	Exercisable	 	Price per Share	

	 	

	 	

	
Options authorized	 	 	2,923,890	 	 	 	—	 	 	$	—	 	
Options granted	 	 	(1,666,390	)	 	 	1,666,390	 	 	 	0.05	 	
Options exercised	 	 	—	 	 	 	(295,250	)	 	 	0.0075	 	
Options canceled	 	 	—	 	 	 	—	 	 	 	—	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 1998	 	 	1,257,500	 	 	 	1,371,140	 	 	 	0.06	 	
Options granted	 	 	(1,090,500	)	 	 	1,090,500	 	 	 	0.11	 	
Options exercised	 	 	—	 	 	 	(575,000	)	 	 	0.12	 	
Options canceled	 	 	26,250	 	 	 	(26,250	)	 	 	0.10	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 1999	 	 	193,250	 	 	 	1,860,390	 	 	 	0.12	 	
Increase in authorized shares	 	 	3,408,455	 	 	 	—	 	 	 	—	 	
Options granted	 	 	(1,935,000	)	 	 	1,935,000	 	 	 	0.29	 	
Options exercised	 	 	—	 	 	 	(1,463,327	)	 	 	0.13	 	
Options canceled	 	 	137,688	 	 	 	(137,688	)	 	 	0.14	 	

	 	 	 	

	 	 	 	 	 	
F-21

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Options	 	Options	 	Weighted	
 	 	Available for	 	Outstanding and	 	Average Exercise	
 	 	Grant	 	Exercisable	 	Price per Share	

	 	

	 	

	
Balances at December 31, 2000	 	 	1,804,393	 	 	 	2,194,375	 	 	 	0.26	 	
Options granted	 	 	(1,051,915	)	 	 	1,051,915	 	 	 	0.56	 	
Options exercised	 	 	—	 	 	 	(204,962	)	 	 	0.27	 	
Options canceled	 	 	218,312	 	 	 	(218,312	)	 	 	0.23	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2001	 	 	970,790	 	 	 	2,823,016	 	 	 	0.37	 	
Increase in authorized shares	 	 	2,500,000	 	 	 	—	 	 	 	 	 	
Options granted	 	 	(1,865,234	)	 	 	1,865,234	 	 	 	0.60	 	
Options exercised	 	 	—	 	 	 	(262,381	)	 	 	0.32	 	
Options canceled	 	 	304,651	 	 	 	(304,651	)	 	 	0.39	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2002	 	 	1,910,207	 	 	 	4,121,218	 	 	 	0.47	 	
Options granted (unaudited)	 	 	(933,689	)	 	 	933,689	 	 	 	0.60	 	
Options exercised (unaudited)	 	 	—	 	 	 	(137,187	)	 	 	0.54	 	
Options canceled (unaudited)	 	 	76,708	 	 	 	(76,708	)	 	 	0.40	 	

	 	 	 	

	 	 	 	 	 	
Balances at September 30, 2003 (unaudited)	 	 	1,053,226	 	 	 	4,841,012	 	 	$	0.54	 	

	 	 	 	

	 	 	 	 	 	
       The options outstanding and currently exercisable by exercise price at December 31, 2002 are as follows:

 	 	Options Outstanding at December 31, 2002	

	
 	 	 	 	Weighted Average	 	 	
 	 	 	 	Remaining Contractual	 	 	
Exercise Price	 	Number Outstanding	 	Life (Years)	 	Number Vested	

	 	

	 	

	 	

	
$0.10	 	 	206,500	 	 	 	6.41	 	 	 	189,228	 	
$0.29	 	 	1,272,916	 	 	 	7.63	 	 	 	718,345	 	
$0.50	 	 	228,608	 	 	 	8.10	 	 	 	99,271	 	
$0.60	 	 	2,413,194	 	 	 	9.33	 	 	 	402,721	 	

	 	 	 	 	 	 	 	

	 	
 	 	 	4,121,218	 	 	 	 	 	 	 	1,409,565	 	

	 	 	 	 	 	 	 	

	 	
       The options outstanding and currently exercisable by exercise price at September 30, 2003 are as follows:

 	 	Options Outstanding at September 30, 2003	

	
 	 	 	 	Weighted Average	 	 	
 	 	 	 	Remaining Contractual Life	 	 	
Exercise Price	 	Number Outstanding	 	(Years)	 	Number Vested	

	 	

	 	

	 	

	
$0.10	 	 	186,500	 	 	 	5.85	 	 	 	186,500	 	
$0.29	 	 	1,233,625	 	 	 	6.89	 	 	 	871,046	 	
$0.50	 	 	215,866	 	 	 	7.36	 	 	 	137,673	 	
$0.60	 	 	3,205,021	 	 	 	8.86	 	 	 	896,446	 	

	 	 	 	 	 	 	 	

	 	
 	 	 	4,841,012	 	 	 	 	 	 	 	2,091,665	 	

	 	 	 	 	 	 	 	

	 	
F-22

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Stock-based Compensation

       In anticipation of the Company’s initial public offering, the Company has determined that, for financial reporting purposes, the estimated value of its common stock was in excess of the exercise prices. Accordingly, for stock options issued to employees, the Company has recorded deferred stock-based compensation, and is amortizing the related expense on a straight line basis over the service period, which is generally four years. During the nine months ended September 30, 2003 (unaudited), the Company recorded deferred stock compensation in the amount of $2.8 million. During the nine months ended September 30, 2003 (unaudited), the Company recorded amortization of stock-based compensation of $362,000 in connection with options granted to employees.

       In 2001, the Company accelerated the vesting of options to two employees in connection with related severance packages. The acceleration was accounted for in accordance with FIN No. 44 “Accounting for Certain Transactions Involving Stock Compensation” as a one-time charge to the statement of operations. The charge for the year ended December 31, 2001 was $20,000. The charge was equal to the intrinsic value difference between the exercise price of the accelerated options and the fair value of the common stock on the date of acceleration.

       Stock-based compensation expense related to stock options granted to non-employees is recognized, on a straight-line basis, as the stock options are earned. The Company believes that the fair value of the stock options is more reliably measurable than the fair value of the services received. The fair value of the stock options granted is calculated at each reporting date using the Black-Scholes option-pricing model as prescribed by SFAS No. 123 using the following assumptions:

 	 	 	 	Nine Months	
 	 	Year Ended	 	Ended	
 	 	December 31,	 	September 30,	

	 	

	
 	 	2000	 	2001	 	2002	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(unaudited)	
Risk-free interest rate	 	 	6.33	%	 	 	5.07	%	 	 	4.48	%	 	 	4.48	%	 	 	4.31	%	
Expected life (in years)	 	 	10	 	 	 	10	 	 	 	10	 	 	 	10	 	 	 	10	 	
Dividend yield	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	
Volatility	 	 	60	%	 	 	60	%	 	 	70	%	 	 	70	%	 	 	70	%	
       Based on the above assumptions, the weighted average fair values of options granted were $0.17, and $2.07 per share for the years ended December 31, 2000 and 2002, respectively. There were no options granted to non-employees in 2001. The weighted average fair values of options granted were $2.07 and $3.04 for the nine months ended September 30, 2002 (unaudited) and 2003 (unaudited), respectively.

       The stock-based compensation expense will fluctuate as the fair market value of the common stock fluctuates. From August 5, 1997 (date of inception) to September 30, 2003, the Company has recorded $716,000 of deferred stock-based compensation related to options granted to non-employees. In connection with the grant of stock options to non-employees through 2002, the Company has amortized $101,000, $93,000 and $6,000 of stock-based compensation to expense in 2000, 2001 and 2002 respectively, $(5,000) and $161,000 for the nine months ended September 30, 2002 (unaudited) and 2003 (unaudited), respectively, and $484,000 for the period from August 5, 1997 (date of inception) through September 30, 2003. The Company recorded $83,000 of stock-

F-23

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

based compensation expense for the nine months ended September 30, 2003 for options granted to non-employees in 2003.

Note 10 — Pro Forma Common Shares Outstanding and Pro Forma Net Loss Per Share (Unaudited)

       The pro forma common shares outstanding at September 30, 2003, the pro forma weighted-average common shares outstanding during the year ended December 31, 2002 and the pro forma weighted-average common shares outstanding during the nine months ended September 30, 2003 reflect the automatic conversion of all shares of convertible preferred stock outstanding into 34,199,272 shares of common stock as if such conversion had occurred on January 1, 2002 or the date of issuance, if later.

       A reconciliation of the numerator and denominator used in the calculation of pro forma net loss per share follows (in thousands):
 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Nine Months Ended	
 	 	December 31,	 	September 30,	
 	 	2002	 	2003	

	 	

	
 	 	 	
 	 	(unaudited)	
Numerator:	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(23,080	)	 	$	(23,695	)	

	 	 	 	

	 	
Denominator:	 	 	 	 	 	 	 	 	
 	Weighted-average number of shares outstanding used in computing basic net loss per share	 	 	3,484	 	 	 	3,772	 	
 	Adjustments to reflect the effect of the assumed conversion of the preferred stock from the date of issuance	 	 	26,184	 	 	 	31,564	 	

	 	 	 	

	 	
 	Weighted-average number of shares used in computing basic and diluted pro forma net income per share	 	 	29,668	 	 	 	35,336	 	

	 	 	 	

	 	
Note 11 — Employee Benefit Plans:

       The Company sponsors a 401(k) defined contribution plan covering all employees. There were no employer contributions in 2000, 2001 or 2002.

Note 12 — Taxes:

       The Company did not record an income tax provision in the years ended December 31, 2000, 2001 and 2002 since the Company had a net taxable loss in each of those periods.

F-24

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       Deferred tax assets and liabilities consist of the following (in thousands):

 	 	December 31,	

	
 	 	2001	 	2002	

	 	

	
Deferred tax assets:	 	 	 	 	 	 	 	 	
Net operating loss carryforwards	 	$	8,552	 	 	$	16,119	 	
Deferred revenue	 	 	5,040	 	 	 	4,027	 	
Research and development credit	 	 	2,262	 	 	 	3,658	 	
Capitalized start-up costs	 	 	2,042	 	 	 	4,114	 	
Other	 	 	212	 	 	 	6	 	

	 	 	 	

	 	
 	 	 	18,108	 	 	 	27,924	 	
Less: Valuation allowance	 	 	(18,108	)	 	 	(27,924	)	

	 	 	 	

	 	
 	 	$	—	 	 	$	—	 	

	 	 	 	

	 	
       Management believes that, based on a number of factors, it is more likely than not that the deferred tax assets will not be realized, such that a full valuation allowance has been recorded.

       The Company has federal and state net operating loss carryforwards and tax credit carryforwards of approximately $44,621,000 and $16,249,000 at December 31, 2002. The federal and state operating loss carryforwards expire in 2022 and 2012, respectively, if not utilized.

       The Tax Reform Act of 1986 limits the use of operating loss tax credit carryforwards in certain situations where charges occur in stock ownership of a company. In the event the Company has a change in ownership; utilization of the carryforwards could be restricted.

Note 13 — Subsequent Events:

Authorized number of shares

       In March 2003, the Company amended its Certificate of Incorporation to increase the authorized shares of common stock to 61,500,000 and to increase the authorized shares of convertible preferred stock to 37,300,000 of which 5,550,000, 7,000,000, 12,250,000, 2,500,000 and 10,000,000 are designated Series A, Series B, Series C, Series D and Series E, respectively.

Equipment Financing Line of Credit

       In March 2003, the Company executed an additional draw of approximately $1,110,000 on the July 2002 line of credit with an effective interest rate of 7.59% and a term of 60 months. In May 2003, the Company refinanced the outstanding balance of approximately $4,800,000 under the January 2001 line of credit and drew an additional $248,000, with an interest rate of 7.56% and a term of 60 months. In October 2003, the Company refinanced the outstanding balance of approximately $9,300,000 under the January 2001 line of credit (as previously refinanced) and the July 2002 line of credit, with an interest rate of 4.25% and a term of 60 months. In November 2003, the Company executed an additional draw on the $7,500,000 line of credit totaling $614,165 with an effective interest rate of 4.25% and a term of 60 months.

F-25

 
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Initial Public Offering

       On January 21, 2004, the Board of Directors authorized management of the Company to file a registration statement with the Securities and Exchange Commission permitting the Company to sell shares of its common stock to the public. If the initial public offering is closed under the terms presently anticipated, all of the convertible preferred stock outstanding will automatically convert into shares of common stock. Unaudited pro forma stockholders’ equity, as adjusted for the assumed conversion of the preferred stock, is set forth on the balance sheet.

Authorized number of shares

       On January 21, 2004, the Board of Directors approved an amendment to the Company’s amended and restated certificate of incorporation increasing the authorized number of shares to 130,000,000, of which 120,000,000 are designated as common stock and 10,000,000 are designated as preferred stock. The amendment is subject to stockholder approval and the closing of the Company’s initial public offering.

2004 Equity Incentive Plan

       On January 21, 2004, the Board of Directors adopted the 2004 Equity Incentive Plan (“the 2004 Plan”), subject to stockholder approval. The 2004 Plan provides for the granting of incentive stock options, nonstatutory stock options and restricted stock purchase rights and stock bonuses to employees, and consultants.

       A total of 3,200,000 shares of common stock have been authorized for issuance pursuant to the 2004 Plan. On January 1, 2005, and annually thereafter, the authorized shares will automatically be increased by a number of shares equal to the lesser of:
 	 	 	
 	• 	3,000,000 shares;	
 	 	 	
 	• 	3.5% of the outstanding shares on such date; or	
 	 	 	
 	• 	an amount determined by the Board of Directors.	
Employee Stock Purchase Plan

       On January 21, 2004, the Board of Directors adopted the 2004 Employee Stock Purchase Plan (the “Purchase Plan”), subject to shareholder approval. 1,000,000 shares of common stock were reserved for issuance pursuant to the Purchase Plan.

F-26

 

      No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	

	
Prospectus Summary	 	 	1	 	
Risk Factors	 	 	6	 	
Special Note Regarding Forward-Looking Statements	 	 	22	 	
Use of Proceeds	 	 	23	 	
Dividend Policy	 	 	23	 	
Capitalization	 	 	24	 	
Dilution	 	 	25	 	
Selected Financial Data	 	 	27	 	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	28	 	
Business	 	 	38	 	
Management	 	 	62	 	
Certain Relationships and Related Party Transactions	 	 	73	 	
Principal Stockholders	 	 	77	 	
Description of Capital Stock	 	 	81	 	
Shares Eligible for Future Sale	 	 	85	 	
United States Federal Income Tax Consequences to Non-United States Holders	 	 	87	 	
Underwriting	 	 	90	 	
Validity of Securities	 	 	93	 	
Experts	 	 	93	 	
Where You Can Find Additional Information	 	 	93	 	
Index to Financial Statements	 	 	F-1	 	
          Through and including                     , 2004 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

                            Shares
Cytokinetics,
Incorporated
Common Stock

Goldman, Sachs & Co.
Credit Suisse First Boston
Pacific Growth Equities, LLC
Lazard

 

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.     	Other Expenses of Issuance and Distribution.	
       The following table sets forth the costs and expenses, other than the underwriting discounts, payable by the Registrant in connection with the sale of the securities being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq/NMS listing fee.
 	 	 	 	 	 	
SEC Registration Fee	 	$	6,977.63	 	
NASD Filing Fee	 	 	*	 	
Nasdaq National Market Listing Fee	 	 	*	 	
Printing Costs	 	 	*	 	
Legal Fees and Expenses	 	 	*	 	
Accounting Fees and Expenses	 	 	*	 	
Blue Sky Fees and Expenses	 	 	*	 	
Transfer Agent and Registrar Fees	 	 	*	 	
Miscellaneous	 	 	*	 	

	 	
 	Total	 	$	*	 	

	 	

* 	to be completed by amendment	

Item 14.     	Indemnification of Directors and Officers.	
       Section 145 of the Delaware General Corporation Law (“Section 145”) permits indemnification of officers and directors of the Company under certain conditions and subject to certain limitations. Section 145 also provides that a corporation has the power to maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145.

       Article IX of the Registrant’s Bylaws provides for mandatory indemnification of its directors and officers and permissible indemnification of employees and other agents to the maximum extent not prohibited by the Delaware General Corporation Law. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent. In addition, expenses incurred by a director or executive officer in defending any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Registrant (or was serving at the Registrant’s request as a director or officer of another corporation) shall be paid by the Registrant in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Registrant as authorized by the relevant section of the Delaware General Corporation Law.

       As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the Registrant’s Certificate of Incorporation provides that, pursuant to Delaware law, its directors shall not be personally liable for monetary damages for breach of the directors’ fiduciary duty as directors to the Registrant and its stockholders. This provision in the Certificate of Incorporation does not eliminate the directors’ fiduciary duty, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to the Registrant for acts or omission not in good faith or involving international misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of

II-1

 
dividends or approval of Stock repurchases or redemptions that are unlawful under Section 174 of the Delaware General Corporation Law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

       The Registrant has entered into indemnification agreements with each of its directors and executive officers. Generally, the indemnification agreements attempt to provide the maximum protection permitted by Delaware law as it may be amended from time to time. Moreover, the indemnification agreements provide for certain additional indemnification. Under such additional indemnification provisions, however, an individual will not receive indemnification for judgments, settlements or expenses if he or she is found liable to the Registrant (except to the extent the court determines he or she is fairly and reasonably entitled to indemnity for expenses), for settlements not approved by the Registrant or for settlements and expenses if the settlement is not approved by the court. The indemnification agreements provide for the Registrant to advance to the individual any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding. In order to receive an advance of expenses, the individual must submit to the Registrant copies of invoices presented to him or her for such expenses. Also, the individual must repay such advances upon a final judicial decision that he or she is not entitled to indemnification.

       The Registrant intends to enter into additional indemnification agreements with each of its directors and executive officers to effectuate these indemnity provisions and to purchase directors’ and officers’ liability insurance.

       In addition to the foregoing, the Underwriting Agreement contains certain provisions by which the Underwriters have agreed to indemnify the Registrant, each person, if any, who controls the Registrant within the meaning of Section 15 of the Securities Act, each director of the Registrant, each officer of the Registrant who signs the Registration Statement, with respect to information furnished in writing by or on behalf of the Underwriters for use in the Registration Statement.

       At present, there is no pending litigation or proceeding involving a director, officer, employee or other agent of the Registrant in which indemnification is being sought, nor is the Registrant aware of any threatened litigation that may result in a claim for indemnification by any director, officer, employee or other agent of the Registrant.

Item 15.     	Recent Sales of Unregistered Securities.	
       Since December 31, 2000, we have sold and issued the following securities:

Preferred Stock
 	 	
 	       (1) In July 2001, we sold an aggregate of 2,333,334 shares of our Series D preferred stock to an investor at a price of $6.00 per share for an aggregate purchase price of $14,000,004.	
 	 	
 	       (2) In March and April 2003, we sold an aggregate of 8,015,449 shares of our Series E preferred stock to investors at a price of $5.00 per share for an aggregate purchase price of $40,077,245.	
       The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering. All recipients were either accredited or sophisticated investors, as those terms are defined in the Securities Act and the regulations promulgated thereunder. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

II-2

 

Stock Options and Stock Purchase Rights
 	 	
 	       (1) From December 31, 2000 through January 15, 2004, we granted stock options and stock purchase rights to acquire an aggregate of 4,273,288 shares of our common stock at prices ranging from $0.50 to $1.00 per share to employees, consultants and directors pursuant to our 1997 Stock Option/ Stock Issuance Plan.	
 	 	
 	       (2) From December 31, 2000 through January 15, 2004, we issued an aggregate of 1,472,595 shares of our common stock to employees, consultants and directors pursuant to the exercise of stock options and stock purchase rights under our 1997 Stock Option/ Stock Issuance Plan, for aggregate consideration of $671,461.	
       The sales of the above securities were deemed to be exempt from registration in reliance on Rule 701 promulgated under Section 3(b) under the Securities Act as transactions pursuant to a compensatory benefit plan or a written contract relating to compensation.

Item 16.     	Exhibits and Financial Statement Schedules	
      (a) Exhibits
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	1.1*	 	 	Form of Underwriting Agreement.	 	 	 	 	
 	3.1	 	 	Form of Certificate of Incorporation of the Registrant to be filed after the closing of the offering made under this Registration Statement.	 	 	 	 	
 	3.2	 	 	Form of Bylaws of the Registrant to be in effect after the closing of the offering made under this Registration Statement.	 	 	 	 	
 	4.1*	 	 	Specimen Common Stock Certificate.	 	 	 	 	
 	4.2	 	 	Fourth Amended and Restated Investors Rights Agreement, dated March 21, 2003, by and among the Registrant and certain stockholders of the Registrant.	 	 	 	 	
 	4.3	 	 	Master Security Agreement, dated September 25, 1998, by and between the Registrant and Comdisco.	 	 	 	 	
 	4.4	 	 	Warrant for the purchase of shares of Series A preferred stock, dated September 25, 1998, issued by the Registrant to Comdisco.	 	 	 	 	
 	4.5	 	 	Master Security Agreement, dated December 16, 1999, by and between the Registrant and Comdisco	 	 	 	 	
 	4.6	 	 	Warrant for the purchase of shares of Series B preferred stock, dated December 16, 1999, issued by the Registrant to Comdisco.	 	 	 	 	
 	4.7	 	 	Master Security Agreement, dated February 2, 2001, by and between the Registrant and General Electric Capital Corporation.	 	 	 	 	
 	4.8	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Bristow Investments, L.P.	 	 	 	 	
 	4.9	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to the Laurence and Magdalena Shushan Family Trust.	 	 	 	 	
 	4.10	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Slough Estates USA Inc.	 	 	 	 	
 	4.11	 	 	Warrant for the purchase of shares of Series B preferred stock, dated August 30, 1999, issued by the Registrant to The Magnum Trust.	 	 	 	 	
 	5.1*	 	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	 	 	 	 	
 	10.1*	 	 	Form of Indemnification Agreement between the Registrant and each of its directors and officers.	 	 	 	 	
II-3

 
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	10.2	 	 	1997 Stock Option/ Stock Issuance Plan.	 	 	 	 	
 	10.3	 	 	2004 Equity Incentive Plan.	 	 	 	 	
 	10.4	 	 	2004 Employee Stock Purchase Plan.	 	 	 	 	
 	10.5	 	 	Build-to-Suit Lease, dated May 27, 1997, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	 	 	 	 	
 	10.6	 	 	First Amendment to Lease, dated April 13, 1998, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	 	 	 	 	
 	10.7	 	 	Sublease Agreement, dated May 1, 1998, by and between the Registrant and Metaxen LLC.	 	 	 	 	
 	10.8	 	 	Sublease Agreement, dated March 1, 1999, by and between Metaxen, LLC and Exelixis Pharmaceuticals, Inc.	 	 	 	 	
 	10.9	 	 	Assignment and Assumption Agreement and Consent, dated July 11, 1999, by and among Exelixis Pharmaceuticals, Metaxen, LLC, Xenova Group PLC and Britannia Pointe Grande Limited Partnership.	 	 	 	 	
 	10.10	 	 	Second Amendment to Lease, dated July 11, 1999, by and between Britannia Pointe Grand Limited Partnership and Exelixis Pharmaceuticals, Inc.	 	 	 	 	
 	10.11	 	 	First Amendment to Sublease Agreement, dated July 20, 1999, by and between the Registrant and Metaxen.	 	 	 	 	
 	10.12	 	 	Agreement and Consent, dated July 20, 1999, by and among Exelixis Pharmaceuticals, Inc., the Registrant and Britannia Pointe Grand Limited Partnership.	 	 	 	 	
 	10.13	 	 	Amendment to Agreement and Consent, dated July 31, 2000, by and between the Registrant, Exelixis, Inc., and Britannia Pointe Grande Limited Partnership.	 	 	 	 	
 	10.14	 	 	Assignment and Assumption of Lease, dated September 28, 2000, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.15	 	 	Sublease Agreement, dated September 28, 2000, by and between the Registrant and Exelixis, Inc.	 	 	 	 	
 	10.16	 	 	Sublease Agreement, dated December 29, 1999, by and between the Registrant and COR Therapeutics, Inc.	 	 	 	 	
 	10.17(1)	 	 	Collaboration and License Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.18(1)	 	 	Memorandum, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.19(1)	 	 	Letter Amendment to Collaboration Agreement, dated October 28, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.20(1)	 	 	Letter Amendment to Collaboration Agreement, dated November 5, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.21(1)	 	 	Letter Amendment to Collaboration Agreement, dated December 13, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.22(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 11, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.23(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.24(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.25(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
II-4

 
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	10.26	 	 	Series D Preferred Stock Purchase Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Wellcome International B.V.	 	 	 	 	
 	10.27	 	 	Amendment No. 1 to Series D Preferred Stock Purchase Agreement, dated April 2, 2003, by and among the Registrant, Glaxo Wellcome International B.V. and Glaxo Group Limited.	 	 	 	 	
 	10.28(1)	 	 	Exclusive License Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated April 21, 1998.	 	 	 	 	
 	10.29	 	 	Modification Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated September 1, 2000.	 	 	 	 	
 	10.30(1)	 	 	Collaboration and License Agreement, dated December 15, 2003, by and between AstraZeneca AB and the Registrant.	 	 	 	 	
 	10.31(1)	 	 	Collaboration Agreement, dated December 28, 2001, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.32(1)	 	 	First Letter Amendment of Collaboration Agreement, dated April 10, 2003, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.33	 	 	Robert I. Blum Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.34	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated May 20, 2002.	 	 	 	 	
 	10.35	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated October 18, 2000.	 	 	 	 	
 	10.36	 	 	David J. Morgans Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.37	 	 	Jay K. Trautman Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.38	 	 	James H. Sabry and Sandra J. Spence Promissory Note, dated November 12, 2001.	 	 	 	 	
 	10.39	 	 	Robert I. Blum Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.40	 	 	Robert I. Blum Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	
 	10.41	 	 	David J. Morgans Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.42	 	 	David J. Morgans Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	
 	10.43	 	 	Jay K. Trautman Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.44	 	 	Jay K. Trautman Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	
 	23.1	 	 	Consent of PricewaterhouseCoopers LLP, Independent Accountants.	 	 	 	 	
 	23.2*	 	 	Consent of Counsel (included in Exhibit 5.1).	 	 	 	 	
 	24.1	 	 	Power of Attorney (see Page II-7 of the original filing).	 	 	 	 	

 	 	 	
 	*	To be filed by amendment.	

 	†	Previously filed.	

(1) 	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.	
       (b) Financial statement schedules

II-5

 

REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of Cytokinetics, Incorporated:

       Our audits of the financial statements referred to in our report dated March 21, 2003 except for Note 13 as to which the date is January 21, 2004, appearing in the Registration Statement on Form S-1 of Cytokinetics, Incorporated also included an audit of the financial statement schedule listed in Item 16(b) on Page II-5 of this Form S-1. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California
March 21, 2003

II-6

 

Schedule II

CYTOKINETICS, INCORPORATED

VALUATION AND QUALIFYING ACCOUNTS
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Additions	 	 	 	 	
 	 	 	 	(reductions)	 	 	 	 	
 	 	Balance at	 	to Costs	 	 	 	Balance at	
 	 	Beginning	 	and	 	 	 	End of	
 	 	of Period	 	Expenses	 	Write-offs	 	Period	

	 	

	 	

	 	

	
Allowance for doubtful accounts:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2000	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	
 	Year ended December 31, 2001	 	 	—	 	 	 	386	 	 	 	—	 	 	 	386	 	
 	Year ended December 31, 2002	 	$	386	 	 	$	(195	)	 	$	(191	)	 	$	—	 	
       All other financial statement schedules have been omitted because the information required to be set forth herein is not applicable or is shown either in the financial statements or the notes thereto.

Item 17.     	Undertakings.	
       The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

       Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

       The undersigned registrant hereby undertakes that:
 	 	
 	       (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.	
 	 	
 	       (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.	
II-7

 

SIGNATURES

       Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of South San Francisco, state of California, on January 27, 2004.
 	 	
 	CYTOKINETICS, INCORPORATED	

 	By: 	/s/ JAMES H. SABRY, M.D., PH.D.	

	
 	James H. Sabry, M.D., Ph.D.	
 	President and Chief Executive Officer	
POWER OF ATTORNEY

       KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints James H. Sabry, M.D., Ph.D. and Robert I. Blum and each of them singly, as true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign the Registration Statement filed herewith and any or all amendments to said Registration Statement (including post-effective amendments and registration statements filed pursuant to Rule 462 and otherwise), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents the full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his substitute, may lawfully do or cause to be done by virtue hereof.

       Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	 	Title	 	Date	

	 	

	 	

	
 	
/s/ JAMES H. SABRY, M.D., PH.D.

James H. Sabry, M.D., Ph.D.	 	Director, President and Chief Executive Officer
(Principal Executive Officer)	 	January 27, 2004	
 	
/s/ ROBERT I. BLUM

Robert I. Blum	 	Executive Vice President, Finance & Corporate Development and Chief Financial Officer
(Principal Financial and Accounting Officer)	 	January 27, 2004	
 	
/s/ STEPHEN DOW

Stephen Dow	 	Director	 	January 27, 2004	
 	
/s/ A. GRANT HEIDRICH, III

A. Grant Heidrich, III	 	Director	 	January 27, 2004	
 	
/s/ CHARLES HOMCY, M.D.

Charles Homcy, M.D.	 	Director	 	January 27, 2004	
II-8

 

Signature	 	Title	 	Date	

	 	

	 	

	
 	
/s/ WILLIAM J. RUTTER, PH.D.

William J. Rutter, Ph.D.	 	Director	 	January 27, 2004	
 	
/s/ MICHAEL SCHMERTZLER

Michael Schmertzler	 	Director	 	January 27, 2004	
 	
/s/ JAMES A. SPUDICH, PH.D.

James A. Spudich, Ph.D.	 	Director	 	January 27, 2004	
II-9

 

EXHIBIT INDEX
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	1.1*	 	 	Form of Underwriting Agreement.	
 	3.1	 	 	Form of Certificate of Incorporation of the Registrant to be filed after the closing of the offering made under this Registration Statement.	
 	3.2	 	 	Form of Bylaws of the Registrant to be in effect after the closing of the offering made under this Registration Statement.	
 	4.1*	 	 	Specimen Common Stock Certificate.	
 	4.2	 	 	Fourth Amended and Restated Investors Rights Agreement, dated March 21, 2003, by and among the Registrant and certain stockholders of the Registrant.	
 	4.3	 	 	Master Security Agreement, dated September 25, 1998, by and between the Registrant and Comdisco.	
 	4.4	 	 	Warrant for the purchase of shares of Series A preferred stock, dated September 25, 1998, issued by the Registrant to Comdisco.	
 	4.5	 	 	Master Security Agreement, dated December 16, 1999, by and between the Registrant and Comdisco	
 	4.6	 	 	Warrant for the purchase of shares of Series B preferred stock, dated December 16, 1999, issued by the Registrant to Comdisco.	
 	4.7	 	 	Master Security Agreement, dated February 2, 2001, by and between the Registrant and General Electric Capital Corporation.	
 	4.8	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Bristow Investments, L.P.	
 	4.9	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to the Laurence and Magdalena Shushan Family Trust.	
 	4.10	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Slough Estates USA Inc.	
 	4.11	 	 	Warrant for the purchase of shares of Series B preferred stock, dated August 30, 1999, issued by the Registrant to The Magnum Trust.	
 	5.1*	 	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	
 	10.1*	 	 	Form of Indemnification Agreement between the Registrant and each of its directors and officers.	
 	10.2	 	 	1997 Stock Option/ Stock Issuance Plan.	
 	10.3	 	 	2004 Equity Incentive Plan.	
 	10.4	 	 	2004 Employee Stock Purchase Plan.	
 	10.5	 	 	Build-to-Suit Lease, dated May 27, 1997, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	
 	10.6	 	 	First Amendment to Lease, dated April 13, 1998, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	
 	10.7	 	 	Sublease Agreement, dated May 1, 1998, by and between the Registrant and Metaxen LLC.	
 	10.8	 	 	Sublease Agreement, dated March 1, 1999, by and between Metaxen, LLC and Exelixis Pharmaceuticals, Inc.	
 	10.9	 	 	Assignment and Assumption Agreement and Consent, dated July 11, 1999, by and among Exelixis Pharmaceuticals, Metaxen, LLC, Xenova Group PLC and Britannia Pointe Grande Limited Partnership.	
 	10.10	 	 	Second Amendment to Lease, dated July 11, 1999, by and between Britannia Pointe Grand Limited Partnership and Exelixis Pharmaceuticals, Inc.	
 	10.11	 	 	First Amendment to Sublease Agreement, dated July 20, 1999, by and between the Registrant and Metaxen.	

 
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	10.12	 	 	Agreement and Consent, dated July 20, 1999, by and among Exelixis Pharmaceuticals, Inc., the Registrant and Britannia Pointe Grand Limited Partnership.	
 	10.13	 	 	Amendment to Agreement and Consent, dated July 31, 2000, by and between the Registrant, Exelixis, Inc., and Britannia Pointe Grande Limited Partnership.	
 	10.14	 	 	Assignment and Assumption of Lease, dated September 28, 2000, by and between Exelixis, Inc. and the Registrant.	
 	10.15	 	 	Sublease Agreement, dated September 28, 2000, by and between the Registrant and Exelixis, Inc.	
 	10.16	 	 	Sublease Agreement, dated December 29, 1999, by and between the Registrant and COR Therapeutics, Inc.	
 	10.17(1)	 	 	Collaboration and License Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	
 	10.18(1)	 	 	Memorandum, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	
 	10.19(1)	 	 	Letter Amendment to Collaboration Agreement, dated October 28, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.20(1)	 	 	Letter Amendment to Collaboration Agreement, dated November 5, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.21(1)	 	 	Letter Amendment to Collaboration Agreement, dated December 13, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.22(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 11, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.23(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.24(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.25(1)	 	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.26	 	 	Series D Preferred Stock Purchase Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Wellcome International B.V.	
 	10.27	 	 	Amendment No. 1 to Series D Preferred Stock Purchase Agreement, dated April 2, 2003, by and among the Registrant, Glaxo Wellcome International B.V. and Glaxo Group Limited.	
 	10.28(1)	 	 	Exclusive License Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated April 21, 1998.	
 	10.29	 	 	Modification Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated September 1, 2000.	
 	10.30(1)	 	 	Collaboration and License Agreement, dated December 15, 2003, by and between AstraZeneca AB and the Registrant.	
 	10.31(1)	 	 	Collaboration Agreement, dated December 28, 2001, by and between Exelixis, Inc. and the Registrant.	
 	10.32(1)	 	 	First Letter Amendment of Collaboration Agreement, dated April 10, 2003, by and between Exelixis, Inc. and the Registrant.	
 	10.33	 	 	Robert I. Blum Promissory Note, dated July 12, 2002.	
 	10.34	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated May 20, 2002.	
 	10.35	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated October 18, 2000.	

 
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	10.36	 	 	David J. Morgans Promissory Note, dated July 12, 2002.	
 	10.37	 	 	Jay K. Trautman Promissory Note, dated July 12, 2002.	
 	10.38	 	 	James H. Sabry and Sandra J. Spence Promissory Note, dated November 12, 2001.	
 	10.39	 	 	Robert I. Blum Cash Bonus Agreement, dated September 1, 2002.	
 	10.40	 	 	Robert I. Blum Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	10.41	 	 	David J. Morgans Cash Bonus Agreement, dated September 1, 2002.	
 	10.42	 	 	David J. Morgans Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	10.43	 	 	Jay K. Trautman Cash Bonus Agreement, dated September 1, 2002.	
 	10.44	 	 	Jay K. Trautman Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	23.1	 	 	Consent of PricewaterhouseCoopers LLP, Independent Accountants.	
 	23.2*	 	 	Consent of Counsel (included in Exhibit 5.1).	
 	24.1	 	 	Power of Attorney (see Page II-7 of the original filing).	

 	 	 	
 	*	To be filed by amendment.	

 	†	Previously filed.	

(1) 	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.	

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

CYTOKINETICS, INCORPORATED

Cytokinetics, Incorporated, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:

A. The original Certificate of Incorporation of the corporation was filed
with the Secretary of State of the State of Delaware on August 5, 1997.

B. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware (the "DGCL"), this Amended and Restated Certificate of
Incorporation restates and amends the provisions of the Amended and Restated
Certificate of Incorporation of the corporation.

C. This Amended and Restated Certificate of Incorporation has been duly
approved by the Board of Directors of the corporation in accordance with
Sections 242 and 245 of the DGCL.

D. This Amended and Restated Certificate of Incorporation has been duly
approved by the written consent of the stockholders of the corporation in
accordance with Sections 228, 242 and 245 of the DGCL.

E. The Certificate of Incorporation of the corporation is hereby amended
and restated in its entirety to read as follows:

ARTICLE I

The name of the corporation is Cytokinetics, Incorporated.

ARTICLE II

The address of the corporation's registered office in the State of
Delaware is 30 Old Rudnick Lane, City of Dover, County of Kent 19901. The name
of its registered agent at such address is CorpAmerica, Inc.

ARTICLE III

The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the DGCL.

ARTICLE IV

The corporation shall have authority to issue shares as follows:

120,000,000 shares of Common Stock, par value $0.001 per share. Each
share of Common Stock shall entitle the holder thereof to one (1) vote on each
matter submitted to a vote at a meeting of stockholders.

10,000,000 shares of Preferred Stock, par value $0.001 per share, which
may be issued from time to time in one or more series pursuant to a resolution
or resolutions providing for such issue duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board of Directors).
The Board of Directors is further authorized, subject to limitations prescribed
by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of any wholly unissued series of Preferred Stock, including without
limitation authority to fix by resolution or resolutions the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any such series, and the number of shares constituting any such
series and the designation thereof, or any of the foregoing.

The Board of Directors is further authorized to increase (but not above
the total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of shares
of any series, the number of which was fixed by it, subsequent to the issuance
of shares of such series then outstanding, subject to the powers, preferences
and rights, and the qualifications, limitations and restrictions thereof stated
in the Certificate of Incorporation or the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of shares
of any series is so decreased, then the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.

ARTICLE V

The number of directors that constitutes the entire Board of Directors of
the corporation shall be determined in the manner set forth in the Bylaws of the
corporation. At each annual meeting of stockholders, directors of the
corporation shall be elected to hold office until the expiration of the term for
which they are elected and until their successors have been duly elected and
qualified; except that if any such election shall not be so held, such election
shall take place at a stockholders' meeting called and held in accordance with
the DGCL.

The directors of the corporation shall be divided into three classes as
nearly equal in size as is practicable, hereby designated Class I, Class II and
Class III. The term of office of the initial Class I directors shall expire at
the first regularly-scheduled annual meeting of the stockholders following the
effective date of this corporation's initial public offering (the "EFFECTIVE
DATE"), the term of office of the initial Class II directors shall expire at the
second annual meeting of the stockholders following the Effective Date and the
term of office of the initial Class III directors shall expire at the third
annual meeting of the stockholders following the Effective Date. At each annual
meeting of stockholders, commencing with the first regularly-scheduled annual
meeting of stockholders following the Effective Date, each of the successors
elected to replace the directors of a Class whose term shall have expired at
such annual meeting shall be elected to hold office until the third annual
meeting next succeeding his or her election and until his or her respective
successor shall have been duly elected and qualified.

Notwithstanding the foregoing provisions of this Article, each director
shall serve until his or her successor is duly elected and qualified or until
his or her death, resignation, or removal. If the number of directors is
hereafter changed, any newly created directorships or decrease in directorships
shall be so apportioned among the classes as to make all classes as nearly equal
in number as is practicable, provided that no decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.

Any director may be removed from office by the stockholders of the
corporation only for cause. Vacancies occurring on the Board of Directors for
any reason and newly created directorships resulting from an increase in the
authorized number of directors may be filled only by vote of a majority of the
remaining members of the Board of Directors, although less than a quorum, at any
meeting of the Board of Directors. A person so elected by the Board of Directors
to fill a vacancy or newly created directorship shall hold office until the next
election of the Class for which such director shall have been chosen and until
his or her successor shall have been duly elected and qualified.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the corporation is expressly authorized to adopt,
amend or repeal the Bylaws of the corporation.

ARTICLE VII

The election of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.

ARTICLE VIII

No action shall be taken by the stockholders of the corporation except at
an annual or special meeting of the stockholders called in accordance with the
Bylaws, and no action shall be taken by the stockholders by written consent. The
affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the then
outstanding voting securities of the corporation, voting together as a single
class, shall be required for the amendment, repeal or modification of the
provisions of Article V, Article VI or Article VIII of this Certificate of
Incorporation or Sections 2.1 (Place of Meetings), 2.2 (Annual Meeting), 2.3
(Special Meeting), 2.4 (Advance Notice Procedures; Notice of Stockholders'
Meetings), 2.9 (Voting), or 3.2 (Number of Directors) of the corporation's
Bylaws.

ARTICLE IX

The corporation shall indemnify and hold harmless, to the fullest extent
permitted by the DGCL as it presently exists or may hereafter be amended, any
director or officer of the corporation who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "PROCEEDING") by reason of
the fact that he or she, or a person for whom he or she is the legal
representative, is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust,

enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person in connection with any such Proceeding. The corporation
shall be required to indemnify a person in connection with a Proceeding
initiated by such person only if the Proceeding was authorized by the Board.

The corporation shall have the power to indemnify and hold harmless, to
the extent permitted by applicable law as it presently exists or may hereafter
be amended, any employee or agent of the corporation who was or is made or is
threatened to be made a party or is otherwise involved in any Proceeding by
reason of the fact that he or she, or a person for whom he or she is the legal
representative, is or was an employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person in connection with any such Proceeding.

Neither any amendment nor repeal of this Article IX, nor the adoption of
any provision of this corporation's Certificate of Incorporation inconsistent
with this Article IX, shall eliminate or reduce the effect of this Article IX in
respect of any matter occurring, or any cause of action, suit or claim accruing
or arising or that, but for this Article IX, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.

ARTICLE X

Except as provided in Article IX above, the corporation reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

IN WITNESS WHEREOF, Cytokinetics, Incorporated has caused this Amended and
Restated Certificate of Incorporation to be signed by the President and Chief
Executive Officer of the corporation on this ____ day of _________ 2004.

By:
--------------------------------
James Sabry
President and Chief Executive Officer

Exhibit 3.2

AMENDED AND RESTATED BYLAWS OF

CYTOKINETICS, INCORPORATED

(as amended on January 21, 2004 effective as of the
closing of the corporation's initial public offering)

TABLE OF CONTENTS

PAGE

ARTICLE I - CORPORATE OFFICES........................................................      1

1.1         REGISTERED OFFICE............................................      1
1.2         OTHER OFFICES................................................      1

ARTICLE II - MEETINGS OF STOCKHOLDERS................................................      1

2.1         PLACE OF MEETINGS............................................      1
2.2         ANNUAL MEETING...............................................      1
2.3         SPECIAL MEETING..............................................      1
2.4         ADVANCE NOTICE PROCEDURES; NOTICE OF STOCKHOLDERS' MEETINGS..      2
2.5         MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.................      3
2.6         QUORUM.......................................................      3
2.7         ADJOURNED MEETING; NOTICE....................................      4
2.8         CONDUCT OF BUSINESS..........................................      4
2.9         VOTING.......................................................      4
2.10        STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING......      4
2.11        RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS..      4
2.12        PROXIES......................................................      5
2.13        LIST OF STOCKHOLDERS ENTITLED TO VOTE........................      5
2.14        INSPECTORS OF ELECTION.......................................      5

ARTICLE III - DIRECTORS..............................................................      6

3.1         POWERS.......................................................      6
3.2         NUMBER OF DIRECTORS..........................................      6
3.3         ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS......      7
3.4         RESIGNATION AND VACANCIES....................................      7
3.5         PLACE OF MEETINGS; MEETINGS BY TELEPHONE.....................      7
3.6         REGULAR MEETINGS.............................................      8
3.7         SPECIAL MEETINGS; NOTICE.....................................      8
3.8         QUORUM.......................................................      8
3.9         BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING............      9
3.10        FEES AND COMPENSATION OF DIRECTORS...........................      9
3.11        APPROVAL OF LOANS TO OFFICERS................................      9
3.12        REMOVAL OF DIRECTORS.........................................

9

ARTICLE IV - COMMITTEES..............................................................      9

4.1         COMMITTEES OF DIRECTORS......................................      9
4.2         COMMITTEE MINUTES............................................     10
4.3         MEETINGS AND ACTION OF COMMITTEES............................     10

ARTICLE V - OFFICERS.................................................................     10

5.1         OFFICERS.....................................................     10

-i-

TABLE OF CONTENTS
(CONTINUED)

PAGE

5.2         APPOINTMENT OF OFFICERS......................................     11
5.3         SUBORDINATE OFFICERS.........................................     11
5.4         REMOVAL AND RESIGNATION OF OFFICERS..........................     11
5.5         VACANCIES IN OFFICES.........................................     11
5.6         REPRESENTATION OF SHARES OF OTHER CORPORATIONS...............     11
5.7         AUTHORITY AND DUTIES OF OFFICERS.............................     11

ARTICLE VI - RECORDS AND REPORTS.....................................................     12

6.1         MAINTENANCE AND INSPECTION OF RECORDS........................     12
6.2         INSPECTION BY DIRECTORS......................................     12

ARTICLE VII - GENERAL MATTERS........................................................     12

7.1         EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.............     12
7.2         STOCK CERTIFICATES; PARTLY PAID SHARES.......................     12
7.3         SPECIAL DESIGNATION ON CERTIFICATES..........................     13
7.4         LOST CERTIFICATES............................................     13
7.5         CONSTRUCTION; DEFINITIONS....................................     13
7.6         DIVIDENDS....................................................     14
7.7         FISCAL YEAR..................................................     14
7.8         SEAL.........................................................     14
7.9         TRANSFER OF STOCK............................................     14
7.10        STOCK TRANSFER AGREEMENTS....................................     14
7.11        REGISTERED STOCKHOLDERS......................................     14
7.12        WAIVER OF NOTICE.............................................     15

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION.....................................     15

8.1         NOTICE BY ELECTRONIC TRANSMISSION............................     15
8.2         DEFINITION OF ELECTRONIC TRANSMISSION........................     16
8.3         INAPPLICABILITY..............................................     16

ARTICLE IX - INDEMNIFICATION.........................................................     16

9.1         INDEMNIFICATION OF DIRECTORS AND OFFICERS....................     16
9.2         INDEMNIFICATION OF OTHERS....................................     16
9.3         PREPAYMENT OF EXPENSES.......................................     17
9.4         DETERMINATION; CLAIM.........................................     17
9.5         NON-EXCLUSIVITY OF RIGHTS....................................     17
9.6         INSURANCE....................................................     17
9.7         OTHER INDEMNIFICATION........................................     17
9.8         AMENDMENT OR REPEAL..........................................     17

ARTICLE X - AMENDMENTS...............................................................     18

-ii-

AMENDED AND RESTATED BYLAWS OF CYTOKINETICS, INCORPORATED

ARTICLE I - CORPORATE OFFICES

1.1   REGISTERED OFFICE.

The registered office of Cytokinetics, Incorporated shall be fixed in the
corporation's certificate of incorporation, as the same may be amended from time
to time.

1.2   OTHER OFFICES.

The corporation's Board of directors (the "Board") may at any time
establish other offices at any place or places where the corporation is
qualified to do business.

ARTICLE II - MEETINGS OF STOCKHOLDERS

2.1   PLACE OF MEETINGS.

Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the Board. The Board may, in its sole
discretion, determine that a meeting of stockholders shall not be held at any
place, but may instead be held solely by means of remote communication as
authorized by Section 211(a)(2) of the Delaware General Corporation Law (the
"DGCL"). In the absence of any such designation or determination, stockholders'
meetings shall be held at the corporation's principal executive office.

2.2   ANNUAL MEETING.

The annual meeting of stockholders shall be held each year. The Board
shall designate the date and time of the annual meeting. In the absence of such
designation the annual meeting of stockholders shall be held on the second
Tuesday of May of each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding business day. At the annual meeting, directors shall be elected and
any other proper business may be transacted.

2.3   SPECIAL MEETING.

A special meeting of the stockholders may be called at any time by the
Board, chairperson of the Board, chief executive officer or president (in the
absence of a chief executive officer), but such special meetings may not be
called by any other person or persons.

No business may be transacted at such special meeting other than the
business specified in such notice to stockholders. Nothing contained in this
paragraph of this Section 2.3 shall be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the Board
may be held.

2.4   ADVANCE NOTICE PROCEDURES; NOTICE OF STOCKHOLDERS' MEETINGS.

(i)   At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the board of directors, (B) otherwise properly brought before the meeting by
or at the direction of the board of directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days before the one year anniversary of the date on which the
corporation first mailed its proxy statement to stockholders in connection with
the previous year's annual meeting of stockholders; provided, however, that in
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than thirty (30) days from the date
of the prior year's meeting, notice by the stockholder to be timely must be so
received not later than the close of business on the later of one hundred twenty
(120) calendar days in advance of such annual meeting and ten (10) calendar days
following the date on which public announcement of the date of the meeting is
first made. A stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the corporation that are
beneficially owned by the stockholder, (d) any material interest of the
stockholder in such business, and (e) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (i). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (i), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.

(ii)  Only persons who are nominated in accordance with the
procedures set forth in this paragraph (ii) shall be eligible for election as
directors. Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the board of directors or by any stockholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this paragraph (ii). Such nominations, other than those
made by or at the direction of the board of directors, shall be made pursuant to
timely notice in writing to the secretary of the corporation in accordance with
the provisions of paragraph (i) of this Section 2.4. Such stockholder's notice
shall set forth (a) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director: (A) the name, age, business
address and residence address of such person, (B) the principal occupation or
employment of such person, (C) the class and number of shares of the corporation
that are beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for elections of directors, or is otherwise required, in each case
pursuant to Regulation 14A

-2-

under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
director if elected); and (b) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (i) of this Section
2.4. At the request of the board of directors, any person nominated by a
stockholder for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this paragraph (ii). The chairman of the
meeting shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.

These provisions shall not prevent the consideration and approval or
disapproval at an annual meeting of reports of officers, directors and
committees of the board of directors, but in connection therewith no new
business shall be acted upon at any such meeting unless stated, filed and
received as herein provided. Notwithstanding anything in these bylaws to the
contrary, no business brought before a meeting by a stockholder shall be
conducted at an annual meeting except in accordance with procedures set forth in
this Section 2.4.

All notices of meetings of stockholders shall be sent or otherwise given
in accordance with either Section 2.5 or Section 8.1 of these bylaws not less
than 10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notice shall specify the place, if any,
date and hour of the meeting, the means of remote communication, if any, by
which stockholders and proxy holders may be deemed to be present in person and
vote at such meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.

2.5   MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

Notice of any meeting of stockholders shall be given:

(i)   if mailed, when deposited in the United States mail, postage
prepaid, directed to the stockholder at his or her address as it appears on the
corporation's records; or

(ii)  if electronically transmitted as provided in Section 8.1 of
these bylaws.

An affidavit of the secretary or an assistant secretary of the corporation
or of the transfer agent or any other agent of the corporation that the notice
has been given by mail or by a form of electronic transmission, as applicable,
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.

2.6   QUORUM.

The holders of a majority of the stock issued and outstanding and entitled
to vote, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at all meetings of the stockholders. If,
however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the chairperson of the meeting, or (ii) the
stockholders entitled to vote at the meeting, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.

-3-

2.7   ADJOURNED MEETING; NOTICE.

When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the
time, place if any thereof, and the means of remote communications if any by
which stockholders and proxy holders may be deemed to be present in person and
vote at such adjourned meeting are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.

2.8   CONDUCT OF BUSINESS.

The chairperson of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.

2.9   VOTING.

The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to Section 217 (relating to voting rights of fiduciaries, pledgors and
joint owners of stock) and Section 218 (relating to voting trusts and other
voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.

2.10  STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Subject to the rights of the holders of the shares of any series of
Preferred Stock or any other class of stock or series thereof having a
preference over the Common Stock as dividend or upon liquidation, any action
required or permitted to be taken by the stockholders of the corporation must be
effected at a duly called annual or special meeting of stockholders of the
corporation and may not be effected by any consent in writing by such
stockholders.

2.11  RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which record date shall
not precede the date on which the resolution fixing the record date is adopted
and which shall not be more than 60 nor less than 10 days before the date of
such meeting, nor more than 60 days prior to any other such action.

-4-

If the Board does not so fix a record date:

(i)   The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.

(ii)  The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.

2.12  PROXIES.

Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by proxy
authorized by an instrument in writing or by a transmission permitted by law
filed in accordance with the procedure established for the meeting, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. The revocability of a proxy that states on
its face that it is irrevocable shall be governed by the provisions of Section
212 of the DGCL.

2.13  LIST OF STOCKHOLDERS ENTITLED TO VOTE.

The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. The corporation shall not
be required to include electronic mail addresses or other electronic contact
information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting for a period of at least 10
days prior to the meeting: (i) on a reasonably accessible electronic network,
provided that the information required to gain access to such list is provided
with the notice of the meeting, or (ii) during ordinary business hours, at the
corporation's principal executive office. In the event that the corporation
determines to make the list available on an electronic network, the corporation
may take reasonable steps to ensure that such information is available only to
stockholders of the corporation. If the meeting is to be held at a place, then
the list shall be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
If the meeting is to be held solely by means of remote communication, then the
list shall also be open to the examination of any stockholder during the whole
time of the meeting on a reasonably accessible electronic network, and the
information required to access such list shall be provided with the notice of
the meeting. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.

2.14  INSPECTORS OF ELECTION

A written proxy may be in the form of a telegram, cablegram, or other
means of electronic transmission which sets forth or is submitted with
information from which it can be determined that the telegram, cablegram, or
other means of electronic transmission was authorized by the person.

-5-

Before any meeting of stockholders, the board of directors shall appoint
an inspector or inspectors of election to act at the meeting or its adjournment.
The number of inspectors shall be either one (1) or three (3). If any person
appointed as inspector fails to appear or fails or refuses to act, then the
chairperson of the meeting may, and upon the request of any stockholder or a
stockholder's proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(i)   determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies;

(ii)  receive votes, ballots or consents;

(iii) hear and determine all challenges and questions in any way
arising in connection with the right to vote;

(iv)  count and tabulate all votes or consents;

(v)   determine when the polls shall close;

(vi)  determine the result; and

(vii) do any other acts that may be proper to conduct the election
or vote with fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If
there are three (3) inspectors of election, the decision, act or certificate of
a majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.

ARTICLE III - DIRECTORS

3.1   POWERS.

Subject to the provisions of the DGCL and any limitations in the
certificate of incorporation or these bylaws relating to action required to be
approved by the stockholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board.

3.2   NUMBER OF DIRECTORS.

The authorized number of directors shall be determined from time to time
by resolution of the Board, provided the Board shall consist of at least one
member. No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.

-6-

3.3   ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

Except as provided in Section 3.4 of these bylaws, each director,
including a director elected to fill a vacancy, shall hold office until the
expiration of the term for which elected and until such director's successor is
elected and qualified or until such director's earlier death, resignation or
removal. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws. The certificate of incorporation
or these bylaws may prescribe other qualifications for directors.

If so provided in the certificate of incorporation, the directors of the
corporation shall be divided into three classes.

3.4   RESIGNATION AND VACANCIES.

Any director may resign at any time upon notice given in writing or by
electronic transmission to the corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.

Unless otherwise provided in the certificate of incorporation or these
bylaws, vacancies and newly created directorships resulting from any increase in
the authorized number of directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director. If
the directors are divided into classes, a person so elected by the directors
then in office to fill a vacancy or newly created directorship shall hold office
until the next election of the class for which such director shall have been
chosen and until his or her successor shall have been duly elected and
qualified.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the DGCL.

If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole Board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the DGCL as far as applicable.

3.5   PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

The Board may hold meetings, both regular and special, either within or
outside the State of Delaware.

-7-

Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the Board, or any committee designated by the Board, may
participate in a meeting of the Board, or any committee, by means of conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.

3.6   REGULAR MEETINGS.

Regular meetings of the Board may be held without notice at such time and
at such place as shall from time to time be determined by the Board.

3.7   SPECIAL MEETINGS; NOTICE.

Special meetings of the Board for any purpose or purposes may be called at
any time by the chairperson of the Board, the chief executive officer, the
president, the secretary or a majority of the authorized number of directors.

Notice of the time and place of special meetings shall be:

(i)   delivered personally by hand, by courier or by telephone;

(ii)  sent by United States first-class mail, postage prepaid;

(iii) sent by facsimile; or

(iv)  sent by electronic mail,

directed to each director at that director's address, telephone number,
facsimile number or electronic mail address, as the case may be, as shown on the
corporation's records.

If the notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be
delivered or sent at least 24 hours before the time of the holding of the
meeting. If the notice is sent by United States mail, it shall be deposited in
the United States mail at least four days before the time of the holding of the
meeting. Any oral notice may be communicated to the director. The notice need
not specify the place of the meeting (if the meeting is to be held at the
corporation's principal executive office) nor the purpose of the meeting.

3.8   QUORUM.

At all meetings of the Board, a majority of the authorized number of
directors shall constitute a quorum for the transaction of business. The vote of
a majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board, except as may be otherwise specifically provided
by statute, the certificate of incorporation or these bylaws. If a quorum is not
present at any meeting of the Board, then the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present.

-8-

A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.

3.9   BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the
Board, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing or by electronic transmission and the writing or writings or electronic
transmission or transmissions are filed with the minutes of proceedings of the
Board or committee. Such filing shall be in paper form if the minutes are
maintained in paper form and shall be in electronic form if the minutes are
maintained in electronic form.

3.10  FEES AND COMPENSATION OF DIRECTORS.

Unless otherwise restricted by the certificate of incorporation or these
bylaws, the Board shall have the authority to fix the compensation of directors.

3.11  APPROVAL OF LOANS TO OFFICERS.

The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the Board, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board shall
approve, including, without limitation, a pledge of shares of stock of the
corporation.

3.12  REMOVAL OF DIRECTORS.

Any director may be removed from office by the stockholders of the
corporation only for cause.

No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.

ARTICLE IV - COMMITTEES

4.1   COMMITTEES OF DIRECTORS.

The Board may, by resolution passed by a majority of the authorized number
of directors, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board or in these bylaws, shall have and may exercise all the powers and

-9-

authority of the Board in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority to (i) approve or adopt, or recommend to the stockholders, any action
or matter expressly required by the DGCL to be submitted to stockholders for
approval, or (ii) adopt, amend or repeal any bylaw of the corporation,

4.2   COMMITTEE MINUTES.

Each committee shall keep regular minutes of its meetings and report the
same to the Board when required.

4.3   MEETINGS AND ACTION OF COMMITTEES.

Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of:

(i)   Section 3.5 (place of meetings and meetings by telephone);

(ii)  Section 3.6 (regular meetings);

(iii) Section 3.7 (special meetings and notice);

(iv)  Section 3.8 (quorum);

(v)   Section 7.12 (waiver of notice); and

(vi)  Section 3.9 (action without a meeting)

with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the Board and its members. However:

(i)   the time of regular meetings of committees may be determined
either by resolution of the Board or by resolution of the committee;

(ii)  special meetings of committees may also be called by
resolution of the Board; and

(iii) notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The Board may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.

ARTICLE V - OFFICERS

5.1   OFFICERS.

The officers of the corporation shall be a president and a secretary. The
corporation may also have, at the discretion of the Board, a chairperson of the
Board, a vice chairperson of the Board, a chief executive officer, a chief
financial officer or treasurer, one or more vice presidents, one or more
assistant vice presidents, one or more

-10-

assistant treasurers, one or more assistant secretaries, and any such other
officers as may be appointed in accordance with the provisions of these bylaws.
Any number of offices may be held by the same person.

5.2   APPOINTMENT OF OFFICERS.

The Board shall appoint the officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Sections 5.3
and 5.5 of these bylaws, subject to the rights, if any, of an officer under any
contract of employment.

5.3   SUBORDINATE OFFICERS.

The Board may appoint, or empower the chief executive officer or, in the
absence of a chief executive officer, the president, to appoint, such other
officers and agents as the business of the corporation may require. Each of such
officers and agents shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the Board may from
time to time determine.

5.4   REMOVAL AND RESIGNATION OF OFFICERS.

Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board at any regular or special meeting
of the Board or, except in the case of an officer chosen by the Board, by any
officer upon whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice. Unless otherwise
specified in the notice of resignation, the acceptance of the resignation shall
not be necessary to make it effective. Any resignation is without prejudice to
the rights, if any, of the corporation under any contract to which the officer
is a party.

5.5   VACANCIES IN OFFICES.

Any vacancy occurring in any office of the corporation shall be filled by
the Board or as provided in Section 5.2.

5.6   REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairperson of the Board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the Board or the president or a vice president, is
authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority granted herein may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.

5.7   AUTHORITY AND DUTIES OF OFFICERS.

All officers of the corporation shall respectively have such authority and
perform such duties in the management of the business of the corporation as may
be designated from time to time by the Board or the

-11-

stockholders and, to the extent not so provided, as generally pertain to their
respective offices, subject to the control of the Board.

ARTICLE VI - RECORDS AND REPORTS

6.1   MAINTENANCE AND INSPECTION OF RECORDS.

The corporation shall, either at its principal executive office or at such
place or places as designated by the Board, keep a record of its stockholders
listing their names and addresses and the number and class of shares held by
each stockholder, a copy of these bylaws as amended to date, accounting books,
and other records.

Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal executive
office.

6.2   INSPECTION BY DIRECTORS.

Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his or her position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether a
director is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.

ARTICLE VII - GENERAL MATTERS

7.1   EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

The Board, except as otherwise provided in these bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the Board or within the agency power of an officer, no officer,
agent or employee shall have any power or authority to bind the corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or for any amount.

7.2   STOCK CERTIFICATES; PARTLY PAID SHARES.

The shares of the corporation shall be represented by certificates,
provided that the Board may provide by resolution or resolutions that some or
all of any or all classes or series of its stock shall be uncertificated shares.

-12-

Any such resolution shall not apply to shares represented by a certificate until
such certificate is surrendered to the corporation. Notwithstanding the adoption
of such a resolution by the Board, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the chairperson or vice-chairperson of the Board, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.

7.3   SPECIAL DESIGNATION ON CERTIFICATES.

If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the DGCL, in lieu of the
foregoing requirements there may be set forth on the face or back of the
certificate that the corporation shall issue to represent such class or series
of stock a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, the designations, the preferences, and
the relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.

7.4   LOST CERTIFICATES.

Except as provided in this Section 7.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.

7.5   CONSTRUCTION; DEFINITIONS.

Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the DGCL shall govern the construction of these
bylaws. Without limiting the generality of this provision, the

-13-

singular number includes the plural, the plural number includes the singular,
and the term "person" includes both a corporation and a natural person.

7.6   DIVIDENDS.

The Board, subject to any restrictions contained in either (i) the DGCL,
or (ii) the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock. Dividends may be paid in cash, in property, or in
shares of the corporation's capital stock.

The Board may set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose and may
abolish any such reserve. Such purposes shall include but not be limited to
equalizing dividends, repairing or maintaining any property of the corporation,
and meeting contingencies.

7.7   FISCAL YEAR.

The fiscal year of the corporation shall be fixed by resolution of the
Board and may be changed by the Board.

7.8   SEAL.

The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the Board. The corporation may use the corporate seal by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.

7.9   TRANSFER OF STOCK.

Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.

7.10  STOCK TRANSFER AGREEMENTS.

The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the DGCL.

7.11  REGISTERED STOCKHOLDERS.

The corporation:

(i)   shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote
as such owner;

(ii)  shall be entitled to hold liable for calls and assessments the
person registered on its books as the owner of shares; and

-14-

(iii) shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of another person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.

7.12  WAIVER OF NOTICE.

Whenever notice is required to be given under any provision of the DGCL,
the certificate of incorporation or these bylaws, a written waiver, signed by
the person entitled to notice, or a waiver by electronic transmission by the
person entitled to notice, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to notice. Attendance of
a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice or any waiver by
electronic transmission unless so required by the certificate of incorporation
or these bylaws.

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION

8.1   NOTICE BY ELECTRONIC TRANSMISSION.

Without limiting the manner by which notice otherwise may be given
effectively to stockholders pursuant to the DGCL, the certificate of
incorporation or these bylaws, any notice to stockholders given by the
corporation under any provision of the DGCL, the certificate of incorporation or
these bylaws shall be effective if given by a form of electronic transmission
consented to by the stockholder to whom the notice is given. Any such consent
shall be revocable by the stockholder by written notice to the corporation. Any
such consent shall be deemed revoked if:

(i)   the corporation is unable to deliver by electronic
transmission two consecutive notices given by the corporation in accordance with
such consent; and

(ii)  such inability becomes known to the secretary or an assistant
secretary of the corporation or to the transfer agent, or other person
responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed
given:

(i)   if by facsimile telecommunication, when directed to a number
at which the stockholder has consented to receive notice;

(ii)  if by electronic mail, when directed to an electronic mail
address at which the stockholder has consented to receive
notice;

-15-

(iii) if by a posting on an electronic network together with
separate notice to the stockholder of such specific posting,
upon the later of (A) such posting and (B) the giving of such
separate notice; and

(iv)  if by any other form of electronic transmission, when directed
to the stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer
agent or other agent of the corporation that the notice has been given by a form
of electronic transmission shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.

8.2   DEFINITION OF ELECTRONIC TRANSMISSION.

An "electronic transmission" means any form of communication, not directly
involving the physical transmission of paper, that creates a record that may be
retained, retrieved, and reviewed by a recipient thereof, and that may be
directly reproduced in paper form by such a recipient through an automated
process.

8.3   INAPPLICABILITY.

Notice by a form of electronic transmission shall not apply to Sections
164, 296, 311, 312 or 324 of the DGCL.

ARTICLE IX - INDEMNIFICATION

9.1   INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall indemnify and hold harmless, to the fullest extent
permitted by the DGCL as it presently exists or may hereafter be amended, any
director or officer of the corporation who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "PROCEEDING") by reason of
the fact that he or she, or a person for whom he or she is the legal
representative, is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or non-profit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and
expenses reasonably incurred by such person in connection with any such
Proceeding. The corporation shall be required to indemnify a person in
connection with a Proceeding initiated by such person only if the Proceeding was
authorized by the Board.

9.2   INDEMNIFICATION OF OTHERS

The corporation shall have the power to indemnify and hold harmless, to
the extent permitted by applicable law as it presently exists or may hereafter
be amended, any employee or agent of the corporation who was or is made or is
threatened to be made a party or is otherwise involved in any Proceeding by
reason of the fact that he or she, or a person for whom he or she is the legal
representative, is or was an employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person in connection with any such Proceeding.

-16-

9.3   PREPAYMENT OF EXPENSES

The corporation shall pay the expenses incurred by any officer or director
of the corporation, and may pay the expenses incurred by any employee or agent
of the corporation, in defending any Proceeding in advance of its final
disposition; provided, however, that the payment of expenses incurred by a
person in advance of the final disposition of the Proceeding shall be made only
upon receipt of an undertaking by the person to repay all amounts advanced if it
should be ultimately determined that the person is not entitled to be
indemnified under this Article IX or otherwise.

9.4   DETERMINATION; CLAIM

If a claim for indemnification or payment of expenses under this Article
IX is not paid in full within sixty days after a written claim therefor has been
received by the corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification or payment of expenses under applicable law.

9.5   NON-EXCLUSIVITY OF RIGHTS

The rights conferred on any person by this Article IX shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, these bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.

9.6   INSURANCE

The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the DGCL.

9.7   OTHER INDEMNIFICATION

The corporation's obligation, if any, to indemnify any person who was or
is serving at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or non-profit entity
shall be reduced by any amount such person may collect as indemnification from
such other corporation, partnership, joint venture, trust, enterprise or
non-profit enterprise.

9.8   AMENDMENT OR REPEAL

Any repeal or modification of the foregoing provisions of this Article IX
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification."

-17-

ARTICLE X - AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders
entitled to vote. However, the corporation may, in its certificate of
incorporation, confer the power to adopt, amend or repeal bylaws upon the
directors. The fact that such power has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal bylaws.

-18-

CYTOKINETICS, INCORPORATED

CERTIFICATE OF AMENDMENT OF BYLAWS

The undersigned hereby certifies that he or she is the duly elected,
qualified, and acting Secretary or Assistant Secretary of Cytokinetics,
Incorporated, a Delaware corporation and that the foregoing bylaws, comprising
18 pages, were amended and restated, contingent upon the closing of the
corporation's initial public offering, on [July __, 2004] by the corporation's
board of directors.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
___ day of __________, 2004.

_____________________________
Robert Blum
Secretary

Exhibit 4.2

CYTOKINETICS, INCORPORATED

FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

This Fourth Amended and Restated Investors' Rights Agreement (the
"Agreement") is made as of the 21st day of March, 2003 by and among
Cytokinetics, Incorporated, a Delaware corporation (the "Company") and the
investors listed on Exhibit A hereto, each of which is herein referred to as an
"Investor."

RECITALS

WHEREAS, certain of the Investors (the "Prior Parties") hold shares of
the Company's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and/or shares of Common Stock issued
upon conversion thereof (the "Prior Shares") and possess, registration rights,
information rights, rights of first refusal, and other rights pursuant to that
certain Third Amended and Restated Investor Rights Agreement dated as July 26,
2001 between the Company and such Prior Parties (the "Prior Agreement"); and

WHEREAS, the Prior Parties desire to amend and restate in its entirety
the Prior Agreement and to accept the rights created pursuant hereto in lieu of
the rights granted to them under the Prior Agreement; and

WHEREAS, certain Investors are parties to the Series E Preferred Stock
Purchase Agreement, dated as of March 21, 2003, between the Company and such
Investors (the "Purchase Agreement"), such Investors' obligations under which
are conditioned upon the execution and delivery of this Agreement by such
Investors, the Company and the execution of this Agreement or a written consent
to amend and restate the Prior Agreement by the Prior Parties holding in excess
of sixty percent (60%), on an as converted basis, of the Prior Shares:

NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties to the Prior Agreement hereby and pursuant to
written consent agree that the Prior Agreement shall be superseded, amended and
restated in its entirety by this Agreement, and the parties hereto further agree
as follows:

AGREEMENT

The parties hereby agree as follows:

1.       REGISTRATION RIGHTS. The Company and the Investors covenant
and agree as follows:

1.1      DEFINITIONS. For purposes of this Section 1:

(a)      The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), the declaration or ordering of
effectiveness of such registration statement or document and the continuation in
effect of

such registration statement, not subject to any stop order issued by the
Securities and Exchange Commission ("SEC"), for the period set forth in Section
1.5(a) hereof;

(b)      The term "Registrable Securities" means (i)
the shares of Common Stock issuable or issued upon conversion of the Series A
Preferred Stock ("Series A Stock"), Series B Preferred Stock ("Series B Stock"),
Series C Preferred Stock ("Series C Stock") Series D Preferred Stock (the
"Series D Stock"), and the Series E Preferred Stock ("Series E Stock", together
with the Series A Stock, Series B Stock, Series C Stock and Series D Stock,
collectively, the "Preferred Stock") and (ii) any other shares of Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in this Section 1.1(b)(i); provided, however, that the foregoing
definition shall exclude in all cases any Registrable Securities sold by a
person in a transaction in which his or her rights under this Agreement are not
assigned. Notwithstanding the foregoing, Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(l) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale; and provided further, that any reference in this
agreement to a specific number of Registrable Securities shall be subject to
adjustment for any stock splits, reverse stock splits, stock dividends,
combinations, recapitalizations and similar transactions;

(c)      The number of shares of "Registrable
Securities then outstanding" shall be determined by the number of shares of
Common Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities;

(d)      The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.12 of this Agreement;

(e)      The term "Form S-3" means such form under
the Securities Act as in effect on the date hereof or any successor form under
the Securities Act;

(f)      The term "SEC" means the Securities and
Exchange Commission; and

(g)      The term "Qualified IPO" means a firm
commitment underwritten public offering by the Company of shares of its Common
Stock pursuant to a registration statement on Form S-1 under the Securities Act,
in which the aggregate cash proceeds to the Company are not less than
$40,000,000 (net of underwriting discounts and commissions).

1.2      REQUEST FOR REGISTRATION.

(a)      Demand Rights.

-2-

(i)      If the Company shall receive at any
time after the earlier of (A) December 31, 2003 or (B) six (6) months after the
effective date of the first registration statement for a public offering of
securities of the Company (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145 transaction), a
written request from the Holders of (x) at least fifty-one percent (51%) of the
Registrable Securities then outstanding in the case of the first such request,
or (y) at least twenty-five percent (25%) of the Registrable Securities then
outstanding in the case of the second such request, that the Company file a
registration statement under the Securities Act covering the sale of at least
twenty percent (20%) of the Registrable Securities held by the Holders
requesting such registration, then the Company shall, within ten (10) days of
the receipt thereof, give written notice of such request in accordance with
Section 3.3 hereof to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best commercially reasonable efforts to effect as
soon as practicable, and in any event within 90 days of the receipt of such
request, the registration under the Securities Act of all Registrable Securities
which the Holders request to be registered within twenty (20) days of the
mailing of such notice by the Company.

(ii)     If the Company shall receive at any
time after twelve (12) months from the effective date of the first registration
statement for a public offering of securities of the Company (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or similar plan or an SEC
Rule 145 transaction), a written request from the holders of at least thirty
percent (30%) of the aggregate number of shares of Common Stock heretofore
issued upon conversion of the Series C Stock and shares of Common Stock issuable
upon conversion of the Series C Stock then outstanding that the Company file a
registration statement under the Securities Act covering the registration of at
least thirty percent (30%) of the aggregate number of shares of Common Stock
heretofore issued upon conversion of the Series C Stock and shares of Common
Stock issuable upon conversion of Series C Stock then outstanding the Company
shall, within ten (10) days of the receipt thereof, give written notice in
accordance with Section 3.3 of such request to all holders of Common Stock
issued or issuable upon conversion of Series C Stock and shall, subject to the
limitations of subsection 1.2(b), use its best commercially reasonable efforts
to effect as soon as practicable, and in any event within 90 days of the receipt
of such request, the registration under the Securities Act of all Common Stock
issued or issuable upon conversion of the Series C Stock which the holders of
such Common Stock request to be registered within twenty (20) days of the
mailing of such notice by the Company, provided that any registration carried
out pursuant to this Section 1.2 (a)(ii) shall be on Form S-3 if such form is
available for such offering.

(b)      If the Holders initiating the registration
request hereunder (collectively, the "Initiating Holders") intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter will be selected by a
majority in interest of the Initiating Holders and shall be reasonably
acceptable to the Company. In such event, the right of any Holder to include
their Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their

-3-

securities through such underwriting shall (together with the Company as
provided in subsection 1.5(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting,
provided, however, that (A) no Holder shall be required to make any
representations or warranties to, or agreements with, the Company or any
underwriter other than representations, warranties or agreements regarding the
identity of such Holder, the title to the Registrable Securities being sold by
such Holder, the power and authority of such Holder to enter into the
underwriting agreement, the amount and ownership of the securities of the
Company held by such Holder, such Holder's intended method of distribution and
any other customary representations and warranties concerning the Holder and its
Registrable Securities reasonably requested by the Company or the underwriters
and (B) no Holder shall be required to make any representations or warranties
concerning the Company or its business, properties, prospects, financial
condition or related matters. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities, other than shares
sold by the Company which are included in such underwriting with the consent of
a majority in interest of the Initiating Holders, are first entirely excluded
from the underwriting.

(c)      Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting a registration statement pursuant to
this Section 1.2, a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the request
of the Initiating Holders; provided, however, that the Company may not utilize
this right more than once in any twelve-month period.

(d)      In addition, the Company shall not be
obligated to effect, or to take any action to effect, any registration pursuant
to this Section 1.2:

(i)      For purposes of registrations
requested pursuant to Section 1.2 (a)(i), (A) after the Company has effected two
(2) such registrations pursuant to Section 1.2(a)(i) and such registrations have
been declared or ordered effective and remained in effect, not subject to any
stop order issued by the SEC, in accordance with the provisions of Section
1.5(a) hereof or (B) within six (6) months of the effective date of another
registration;

(ii)     For purposes of registrations
requested pursuant to Section 1.2 (a)(ii), (A) after the Company has effected
two (2) such registrations pursuant to Section 1.2(a)(ii) and such registrations
have been declared or ordered effective and remained in effect, not subject to
any stop order issued by the SEC, in accordance with the provisions of Section
1.5(a) hereof or (B) within six (6) months of the effective date of another
registration;

-4-

(iii)    During the period starting with the
date ninety (90) days prior to the Company's good faith estimate of the date of
filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration subject to Section 1.3 hereof; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or

(iv)     If the Initiating Holders propose
to dispose of shares of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to Section 1.4 below.

1.3      COMPANY REGISTRATION. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock under the Securities Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration in accordance with Section 3.3. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Company, the Company shall, subject to the provisions of Section
1.8, cause to be registered under the Securities Act all of the Registrable
Securities that each such Holder has requested to be registered.

1.4      FORM S-3 REGISTRATION. In case the Company shall
receive from Holders of the Registrable Securities then outstanding a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

(a)      promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and

(b)      as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 1.4: (i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$500,000; (iii) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the

-5-

Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than 90 days
after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (iv) if the Company has, within the twelve (12)
month period preceding the date of such request, already effected one
registration on Form S-3 for the Holders pursuant to this Section 1.4 or within
six (6) months of the effective date of another registration; (v) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance; or (vi) during the period ending one
hundred eighty (180) days after the effective date of a registration statement
subject to Section 1.2 or Section 1.3.

(c)      Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.

(d)      All Holders proposing to distribute their
securities through an underwriting under this Section 1.4 shall (together with
the Company as provided in subsection 1.5(e)) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting, provided, however, that (A) no Holder shall be required to
make any representations or warranties to, or agreements with, the Company or
any underwriter other than representations, warranties or agreements regarding
the identity of such Holder, the title to the Registrable Securities being sold
by such Holder, the power and authority of such Holder to enter into the
underwriting agreement, the amount and ownership of the securities of the
Company held by such Holder, such Holder's intended method of distribution and
any other customary representations and warranties concerning the Holder and its
Registrable Securities reasonably requested by the Company or the underwriters
and (B) no Holder shall be required to make any representations or warranties
concerning the Company or its business, properties, prospects, financial
condition or related matters.

1.5      OBLIGATIONS OF THE COMPANY. Whenever required under
this Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:

(a)      Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up to one
hundred twenty (120) days.

(b)      Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement for up to one hundred
twenty (120) days.

-6-

(c)      Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

(d)      Use its best commercially reasonable efforts
to register and qualify the securities covered by such registration statement
under such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.

(e)      In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement, provided, however, that
with respect to registrations pursuant to Sections 1.2 and 1.4 (A) no Holder
shall be required to make any representations or warranties to, or agreements
with, the Company or any underwriter other than representations, warranties or
agreements regarding the identity of such Holder, the title to the Registrable
Securities being sold by such Holder, the power and authority of such Holder to
enter into the underwriting agreement, the amount and ownership of the
securities of the Company held by such Holder, such Holder's intended method of
distribution and any other customary representations and warranties concerning
the Holder and its Registrable Securities reasonably requested by the Company or
the underwriters and (B) no Holder shall be required to make any representations
or warranties concerning the Company or its business, properties, prospects,
financial condition or related matters, and, provided further, that with respect
to registrations pursuant to Section 1.3 no Holder shall be required to make any
representations or warranties to, or agreements with, the Company or any
underwriter other than the representations set forth in Part (A) of this
paragraph, above, and, if the Holders are required by the underwriters, the same
representations and warranties required by the underwriters on the part of the
Company concerning the Company or its business, properties, prospects, financial
condition or related matters provided that such representations will be
qualified as to the knowledge of such selling Holder.

(f)      Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days. In such
case, the Company shall promptly prepare a supplement or amendment to such
prospectus and furnish to each seller of Registrable Securities a reasonable
number of copies of such supplement to or an amendment of such prospectus as may
be necessary so that, after delivery to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The number of days during which the
Company is preparing such supplement or amendment shall be added to the period
set forth in Section 1.5(a) hereof.

-7-

(g)      Cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed.

(h)      Provide a transfer agent and registrar for
all Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective date
of such registration.

(i)      Use its best commercially reasonable efforts
to furnish, at the request of any Holder requesting registration of Registrable
Securities pursuant to this Section 1, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 1, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.

(j)      In the event of any underwritten public
offering, cooperate with the Holders requesting registration, the underwriter
participating in the offering and their counsel in any due diligence
investigation reasonably requested by the Holders or the underwriters in
connection therewith, and participate, to the extent reasonably requested by the
underwriter for the offering (including, without limitation, participating in
"roadshow" meetings with prospective investors) and that would be customary for
underwritten primary offerings of a comparable amount of equity securities by
the Company.

1.6      FURNISH INFORMATION. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
such Holder's Registrable Securities. The Company shall have no obligation with
respect to any registration requested pursuant to Section 1.2 or Section 1.4 of
this Agreement if, as a result of the application of the preceding sentence, the
number of shares or the anticipated aggregate offering price of the Registrable
Securities to be included in the registration does not equal or exceed the
number of shares or the anticipated aggregate offering price required to
originally trigger the Company's obligation to initiate such registration as
specified in subsection 1.2(a) or subsection 1.4(b), whichever is applicable;
provided, however, that such registration shall not be deemed a registration for
purposes of Section 1.2(d).

-8-

1.7      EXPENSES OF REGISTRATION.

(a)      DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them (collectively "Registration Expenses") shall be borne by the
Company; provided, however, that if the Holders bear the Registration Expenses
for any registration proceeding begun pursuant to Section 1.2 and subsequently
withdrawn by the Holders registering shares therein, such registration
proceeding shall not be counted as a requested registration pursuant to Section
1.2 hereof, except in the event that such withdrawal is based upon material
adverse information relating to the Company that is different from the
information known or available (upon request from the Company or otherwise) to
the Holders requesting registration at the time of their request for
registration under Section 1.2, in which event such registration shall not be
treated as a counted registration for purposes of Section 1.2 hereof, even
though the Holders do not bear the Registration Expenses for such registration.

(b)      COMPANY REGISTRATION. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities pursuant to
Section 1.3 for each Holder, including (without limitation) all registration,
filing, and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holder or Holders selected by them
shall be borne by the Company.

(c)      REGISTRATION ON FORM S-3. All expenses other
than underwriting discounts and commissions incurred in connection with a
registration requested pursuant to Section 1.4, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders selected by them shall be borne by the Company.

1.8      UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their good faith will not jeopardize
the success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their good faith is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their good faith will not jeopardize the
success of the offering. The Company will include in such registration (i)
first, the securities the Company proposes to sell for its own account; (ii)
second, to the extent that the number of securities the Company proposes to sell
is less than the number of securities which the Company has been advised can be
sold in such offering that is compatible with the success of the 

-9-

offering, such number of Registrable Securities which the Holders have requested
to be included in such registration pursuant to Section 1.3 hereof; provided,
however, in no event shall such number of Registrable Securities which the
Holders have requested to be included in such registration be reduced below
twenty-five percent (25%) of the total amount of securities included in such
registration, unless such offering is the Qualified IPO and such registration
does not include shares of any other selling stockholders, in which event any or
all of the Registrable Securities of the Holders may be excluded in accordance
with the immediately preceding sentence; and (iii) third, to the extent that the
number of securities which are to be included in such registration pursuant to
clauses (i) and (ii) is, in the aggregate, less than the number of securities
which the Company has been advised can be sold in such offering that is
compatible with the success of the offering, such number of other securities
requested to be included in the offering for the account of any holders not
contractually entitled to registration which, in the opinion of the
underwriters, is compatible with the success of the offering. In no event will
shares of any other selling stockholder be included in such registration which
would reduce the number of shares which have been requested to be included by
Holders without the written consent of Holders of not less than sixty six and
two thirds percent (66 2/3%) of the Registrable Securities proposed to be sold
in the offering. The number of Registrable Securities included in such
registration statement shall be allocated pro rata among the Holders based on
the number of Registrable Securities held by each Holder or in such other
proportions as shall mutually be agreed to by such selling Holders, but in no
event shall any shares being sold by a Holder exercising a demand registration
right similar to that granted in Section 1.2 be excluded from such offering. For
purposes of this Section 1.8 concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder" and any pro-rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.

1.9      DELAY OF REGISTRATION. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.

1.10     INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under this Section 1:

(a)      To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, its legal counsel, its
accountants, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or

-10-

supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any Holder,
underwriter or controlling person for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.

(b)      To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, its legal
counsel, its accountants, any underwriter, any other Holder selling securities
in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that
in no event shall any indemnity under this subsection 1.10(b) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.

(c)      Promptly after receipt by an indemnified
party under this Section 1.10 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
1.10, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing

-11-

interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to so notify the indemnifying party
shall not relieve the indemnifying party of any liability (i) that it may have
to the indemnified party hereunder (except to the extent the indemnifying party
forfeits rights or defenses by reason of such failure), or (ii) that it may have
to any indemnified party other than under this 1.10.

(d)      If the indemnification provided for in this
Section 1.10 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations; provided, that in no event shall any contribution by a
Holder under this Subsection 1.10(d) exceed the net proceeds from the offering
received by such Holder, except in the case of willful fraud by such Holder. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

(e)      Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

(f)      The obligations of the Company and Holders
under this Section 1.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.

1.11     REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may at
any time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:

(a)      make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public so
long as the Company remains subject to the periodic reporting requirements under
Sections 13 or 15(d) of the Exchange Act;

(b)      take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable

-12-

after the end of the fiscal year in which the first registration statement filed
by the Company for the offering of its securities to the general public is
declared effective;

(c)      file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and

(d)      furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.

1.12     ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register Registrable Securities pursuant to this Section 1
may be assigned (but only with all related obligations) by a Holder to (i) a
transferee or assignee of at least 400,000 shares of such securities, (ii) a
transferee or assignee of all of such Registrable Securities held by such
transferring Holder, if less than 400,000 shares, or (iii) a general partner,
limited partner, retired partner, member or retired member, affiliate, parent or
majority-owned subsidiary of the transferee or Holder, provided that prior to
such transfer or assignment the Company is furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned and with an agreement to be
bound to the rights and obligations under Sections 1 and 3 of this Agreement as
a Holder hereunder executed by such transferee or assignee; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act; and, provided further, that
such transferee or assignee is not a competitor of the Company as determined in
good faith by the Company's Board of Directors. For the purposes of determining
the number of shares of Registrable Securities held by a transferee or assignee,
the holdings of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided that all assignees and transferees who would
not qualify individually for assignment of registration rights shall have a
single attorney-in-fact for the purpose of exercising any rights, receiving
notices or taking any action under Section 1.

1.13     LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of

-13-

the Registrable Securities of the Holders which is included or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subsection 1.2(a) or within one hundred twenty (120) days of the effective date
of any registration effected pursuant to Section 1.2, provided, however, that
with respect to the inclusion by such holder or prospective holder of securities
in any registration under Section 1.2(a)(ii) of this Agreement, the consent
required under this Section 1.13 shall also include the prior written consent of
the holders of a majority of the shares of Series C Preferred Shares.

1.14     "MARKET STAND-OFF" AGREEMENT. Each Holder hereby
agrees that, during the period of duration (up to, but not exceeding, 180 days)
specified by the Company and an underwriter of Common Stock or other securities
of the Company, following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
provided, however, that:

(a)      such agreement shall be applicable only to
the first such registration statement of the Company which covers Common Stock
(or other securities) to be sold on its behalf to the public in an underwritten
offering; and

(b)      all officers, directors, and key employees
of the Company, all five-percent security holders, and all other persons with
registration rights (whether or not pursuant to this Agreement) enter into
similar agreements.

In order to enforce the foregoing covenant and until the end of such
stand-off period (i) each certificate representing Registrable Securities shall
have a legend imprinted thereon that such Registrable Securities are subject to
a market stand-off agreement restricting the transfer thereof for a period of
180 days following the initial public offering of the Company's securities and
(ii) the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction). Each Holder agrees that, if
so requested, such Holder will execute an agreement in the form provided by the
underwriter containing terms which are essentially consistent with the
provisions of this Section 1.14.

Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.

1.15     TERMINATION OF REGISTRATION RIGHTS. No Holder shall
be entitled to exercise any right provided for in this Section 1 after the
earlier of (i) five (5) years following the consummation of a Qualified IPO, or
(ii) such time as Rule 144 or another similar exemption under the Securities Act
is available for the sale of all of such Holder's shares during a three
(3)-month period without registration.

-14-

2.       COVENANTS OF THE COMPANY.

2.1      DELIVERY OF FINANCIAL STATEMENTS. The Company shall
deliver to each Holder of at least 400,000 shares of Registrable Securities:

(a)      as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by an independent public accounting firm of
nationally recognized standing selected by the Company;

(b)      as soon as practicable, but in any event
within thirty (30) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, a
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter;

(c)      within thirty (30) days of the end of each
month, an unaudited income statement and a statement of cash flows and balance
sheet for and as of the end of such month, in reasonable detail;

(d)      as soon as practicable, but in any event
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, and, as soon as
prepared, any other budgets or revised budgets prepared by the Company; and

(e)      with respect to the financial statements
called for in subsections (b) and (c) of this Section 2.1, an instrument
executed by the Chief Financial Officer or President of the Company and
certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the exception
of footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period specified,
subject to year-end audit adjustment, provided that the foregoing shall not
restrict the right of the Company to change its accounting principles consistent
with GAAP, if the Board of Directors determines that it is in the best interest
of the Company to do so.

2.2      INSPECTION. The Company shall permit each Holder of
at least 400,000 shares of Registrable Securities, at such Holder's expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information (i) which it reasonably
considers to be a trade secret or similar confidential information unless such
holder executes a nondisclosure agreement reasonably acceptable to the Company
or (ii) to any Holder that is a competitor to the Company or acting on behalf of
a competitor to the Company as determined in good faith by the Board of
Directors.

2.3      RIGHT OF FIRST OFFER. Subject to the terms and
conditions specified in this Section 2.3, the Company hereby grants to each
Holder a right of first offer with respect to future

-15-

sales by the Company of its Shares (as hereinafter defined). A Holder who
chooses to exercise the right of first offer may designate as purchasers under
such right, in accordance with the provisions of Section 2.3(e), itself or its
partners or affiliates in such proportions as it deems appropriate.

Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Holder in accordance with the following provisions:

(a)      The Company shall deliver a notice by
certified mail ("Notice") to the Holders stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and material terms, if any, upon which it proposes to offer such Shares.

(b)      Within 15 calendar days after delivery of
the Notice, the Holder may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion of such Shares which equals
the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Holder bears to the total number of shares of
Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). After such 15-day period, the Company
will provide notice to all Holders as to whether or not the right of first offer
has been or will be exercised by all Holders. If any Holders do not exercise
their right of first offer, the Shares that would otherwise be allocated to such
non-exercising Holders shall be available for allocation to each exercising
Holder on a pro-rata basis (based upon the number of shares of Common Stock
issued and held, or issuable upon conversion and exercise of all convertible or
exercisable securities then held by such Holder relative to the total number of
such shares held by all exercising Holders), provided that the additional right
of first offer must be exercised, if at all, within five days after the
exercising Holder has received notice from the Company that the original right
of first offer was not exercised by all Holders.

(c)      The Company may, during the 45-day period
following the expiration of the period provided in subsection 2.3(b) hereof,
offer the remaining unsubscribed portion of the Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Holders in accordance herewith.

(d)      The right of first offer in this paragraph
2.3 shall not be applicable (i) to the issuance or sale of Common Stock (or
options therefor) to employees, consultants and directors, pursuant to plans or
agreements approved by the Board of Directors for the primary purpose of
soliciting or retaining their services, (ii) to the sale of shares in connection
with a firm commitment underwritten public offering, (iii) to the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities, (iv) to the issuance of securities in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise or in connection with a
corporate partnering agreement approved by the Board of Directors, (v) to the
issuance of securities to financial institutions or lessors in connection with
commercial credit arrangements, equipment

-16-

financing, or similar transactions approved by the Board of Directors, (vi) to
the issuance or sale of the Series E Preferred Stock, (vii) to the issuance of
dividends or distributions on shares of Preferred Stock, or (viii) warrants
which are currently outstanding for the purchase of shares of the Company's
Common Stock or Preferred Stock.

(e)      The right of first offer set forth in this
Section 2.3 may be assigned by a Holder to (i) a transferee or assignee of at
least 400,000 shares of such securities, (ii) a transferee or assignee of all of
such Registrable Securities held by such Transferring Holder, if less than
400,000 shares, or (iii) a partner, affiliate or majority-owned subsidiary of
the transferee, provided that such transferee or assignee is not a competitor of
the Company as determined in good faith by the Company's Board of Directors.

2.4      QUALIFIED SMALL BUSINESS. The Company will use
reasonable efforts to comply with the reporting and record keeping requirements
of Section 1202 of the Code, any regulations promulgated thereunder and any
similar state laws and regulations, and agrees not to repurchase any stock of
the Company if such repurchase would cause the Stock not to so qualify as
"Qualified Small Business Stock," so long as the Company's Board of Directors
determines that it is in the best interests of and not unduly burdensome to the
Company to comply with the provisions of Section 1202 of the Code. The Company
further covenants to submit to its stockholders and to state and federal
taxation authorities such forms and filings as may be required to document such
compliance, including the California Franchise Tax Board Form 3565, Small
Business Stock Questionnaire, with its franchise or income tax return for the
current income year.

2.5      ADDITIONAL COVENANTS.

(a)      For so long as an Investor of Series C Stock
holds 1,000,000 or more shares of Series C Stock, or the shares of Common Stock
issued on conversion thereof equivalent to 1,000,000 shares of Series C Stock (a
"Major Investor") the Company shall:

(i)      Deliver to such Major Investor all
reports and information required by Section 2.1,

(ii)     Permit such Major Investor
reasonable access, during regular business hours, to contact the Company's
senior management,

(iii)    Provide to such Major Investor
other non-scientific information reasonably requested by such Major Investor,
provided that the Company consents to the provision of such information (which
consent shall not be unreasonably withheld), and, provided further, that such
Major Investor delivers to the Company a confidentiality agreement, in a form
reasonably satisfactory to the Company, which states, among other things and
without limitation, that such Major Investor shall not use such information for
any purpose other than for evaluation and monitoring its investment in the
Company, and

(iv)     Provide to such Major Investor, on
a timely basis, management reports in form and substance mutually agreed to by
the Company and such Major Investor.

-17-

(b)      For so long as an Investor, who was at any
time a Major Investor, holds any Registrable Securities of the Company, the
Company shall provide to such Investor any and all information that the Company
provides to non-affiliate holders of Common Stock holding a number of shares of
Common Stock equal to or less than the number of shares of Common Stock such
Investor holds or may be deemed to hold upon conversion of any Registrable
Securities held by such Investor at such time.

(c)      Any Major Investor requesting disclosure,
reports or information from the Company pursuant to any provision of this
Section 2, shall work with and assist the Company to prevent the compilation and
delivery of any such requested material or information from placing an undue
burden on the Company or the Company's senior management.

(d)      The Company's obligation under Section 2.5
(a)(iii) shall terminate as to any Major Investor upon the occurrence of both of
the following events:

(i)      The Company undergoes (A) an
initial public offering of its Common Stock pursuant to a registration statement
filed under the Securities Act of 1933 or (B) a merger, consolidation or sale of
all or substantially all of its assets; and

(ii)     After the occurrence of a
transaction listed in (i) above, such Major Investor no longer maintains a
representative director on the Board of Directors of the Company.

2.6      TERMINATION OF COVENANTS.

(a)      The covenants set forth in Sections 2.1
through Section 2.3 shall terminate as to each Holder and be of no further force
or effect immediately prior to the consummation of a Qualified IPO.

(b)      The covenants set forth in Sections 2.1 and
2.2 shall terminate as to each Holder and be of no further force or effect when
the Company first becomes subject to the periodic reporting requirements of
Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events
described in Section 2.6(a) above; provided, however, that the Company covenants
and agrees to enter into an agreement including such covenants if the Company
ceases to be subject to such periodic reporting requirements.

3.       MISCELLANEOUS.

3.1      SUCCESSORS AND ASSIGNS. Except as otherwise provided
in this Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties (including transferees of any of the Preferred Stock or any
Common Stock issued upon conversion thereof). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

-18-

3.2      AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived only with the written consent of the Company and the
holders of at least sixty percent (60%) of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company, provided that, this Agreement shall not be changed in any way that
would adversely affect the rights and privileges of any Holder holding Series A
Preferred Stock, Series B Preferred Stock, Series C Stock, Series D Stock and/or
Series E Stock in a manner different from the Holders of the other series of
Preferred Stock without the written consent of the holders of a majority of the
adversely affected series of Preferred Stock. Notwithstanding anything herein to
the contrary, any Additional Purchaser who purchases Stock at the Second Closing
or the Third Closing, as the case may be, as such terms are defined in the
Purchase Agreement, in accordance with Section 1.2 of the Purchase Agreement
shall become a party to this Agreement as an Investor without any amendment of
this Agreement pursuant to this Section 3.2 or any consent or approval of any
other Investor. Exhibit A hereto shall be supplemented to reflect the addition
of any Additional Purchasers in the Second Closing.

3.3      NOTICES. Unless otherwise provided, any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by telegram or fax, or seventy-two (72) hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address or fax number as set forth
on the signature page or Exhibit A hereto or as subsequently modified by written
notice.

3.4      SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (a) such provision shall be excluded from this Agreement, (b)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (c) the balance of the Agreement shall be enforceable in accordance
with its terms.

3.5      GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.

3.6      COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. 3.7 TITLES AND
SUBTITLES. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

3.8      AGGREGATION OF STOCK. All shares of the Preferred
Stock held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.

-19-

[Signature Page Follows]

-20-

The parties have executed this Investors' Rights Agreement as of the
date first above written.

COMPANY:

CYTOKINETICS, INCORPORATED

By:________________________________________

Print Name: James Sabry

Title: President & CEO

Address: 280 E. Grand Avenue
So. San Francisco, CA  94080

INVESTORS:

[Investor Signature Pages To Follow]

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

LIFE SCIENCE VENTURE FUND

By:  ReqMed Company, Ltd.
Its General Partner

By:________________________________________

Name:______________________________________

Title:_____________________________________

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

SEVIN ROSEN FUND VII L.P.

By:  SRB Associates VII L.P.,
Its General Partner

By:________________________________________

Name:  John V. Jaggers

Title: General Partner

SEVIN ROSEN VII AFFILIATES FUND L.P.

By:  SRB Associates VII L.P.,
Its General Partner

By:________________________________________

Name:  John V. Jaggers

Title: General Partner

SEVIN ROSEN FUND VIII L.P.

By:  SRB Associates VIII L.P.,
Its General Partner

By:________________________________________

Name:  John V. Jaggers

Title: General Partner

SEVIN ROSEN VIII AFFILIATES FUND L.P.

By:  SRB Associates VIII L.P.,
Its General Partner

By:________________________________________

Name:  John V. Jaggers

Title: General Partner

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

MAYFIELD IX,
A DELAWARE LIMITED PARTNERSHIP

By:  Mayfield IX Management, L.L.C.
Its: General Partner

By:________________________________________

Name:______________________________________

Title: Managing Director

MAYFIELD ASSOCIATES FUND IV,
A DELAWARE LIMITED PARTNERSHIP

By:  Mayfield IX Management, L.L.C.
Its: General Partner

By:________________________________________

Name:______________________________________

Title: Managing Director

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

CELL TRUST II

By:________________________________________

Name:______________________________________

Title: Administrative Trustee

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

THE A. GRANT III & JEANETTE YVONNE
HEIDRICH COMMUNITY PROPERTY TRUST

By: __________________________________

Name: ________________________________

Title: _______________________________

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

BIOMEDICINE, L.P.

By:  International BM Biomedicine
Holdings
(Cayman) Ltd.
Its: General Partner

By: __________________________________

Name: Dr. Gaudenz I. Staehelin

Title: Chairman

By: __________________________________

Name: Philip J. Sutcliffe

Title: Director

By: __________________________________

Name: Julie Arnall

Title: Director

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

MIZUHO CAPITAL CO., LTD.

By: __________________________________

Name: Osamu Kita

Title: President
Address: Mizuho Capital Co., Ltd.
Attn: Kazumasa Aoe,
Chief Investment Officer
4-3 Nihombashi-kabutocho, 
Chuo-ku,
Tokyo 103-0026
Fax: +81-3-3664-3449

MHCC NO. 3 LIMITED LIABILITY FUND

By:  Mizuho Capital Co., Ltd.
Its:  General Partner

By: __________________________________

Name: Osamu Kita

Title: President
Address: Mizuho Capital Co., Ltd.
Attn: Kazumasa Aoe,
Chief Investment Officer
4-3 Nihombashi-kabutocho,
Chuo-ku,
Tokyo 103-0026
Fax: +81-3-3664-3449

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY (SEVF2)

By: __________________________________

Name: Tyler Edelstein

Title: Managing Director, Separate
Investments
Address: Stanford Management Company
Attn: Victoria von Schell
2770 Sand Hill Road
Menlo Park, CA 94025

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

GENERAL AMERICAN INVESTORS COMPANY,
INC.

By: __________________________________

Name:  Eugene L. DeStaebler, Jr.

Title: Vice-President, Administration

SIGNATURE PAGE - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS AGREEMENT

SCHWEIZERHALL INVESTMENT LTD

By: __________________________________

Name: ________________________________

Title: _______________________________

SIGNATURE PAGE - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS AGREEMENT

CREDIT SUISSE FIRST BOSTON EQUITY
PARTNERS, L.P.

By:  Hemisphere Private Equity 
Partners, Ltd., Its General 
Partner

By: __________________________________

Name: ________________________________

Title: _______________________________
Address: c/o CSFB Advisory Partners,
L.L.C.
11 Madison Avenue
New York, NY 10010
Attn: Ron Millard
Fax:  (646) 935-7498

CREDIT SUISSE FIRST BOSTON EQUITY
PARTNERS (BERMUDA), L.P.

By:  Hemisphere Private Equity 
Partners, Ltd., Its General
Partner

By: __________________________________

Name: ________________________________

Title: _______________________________
Address: c/o CSFB Advisory Partners,
L.L.C.
11 Madison Avenue
New York, NY 10010
Attn: Ron Millard
Fax:  (646) 935-7498

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

CREDIT SUISSE FIRST BOSTON U.S.
EXECUTIVE ADVISORS, L.P.

By:  Hemisphere Private Equity 
Partners, Ltd., Its General
Partner

By: __________________________________

Name: ________________________________

Title: _______________________________
Address: c/o CSFB Advisory Partners,
L.L.C.
11 Madison Avenue
New York, NY 10010
Attn: Ron Millard
Fax:  (646) 935-7498

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

ALTA BIOPHARMA PARTNERS II, L.P.

By:  Alta BioPharma Management 
Partners II, LLC

By: __________________________________

Name: ________________________________

Title: Managing Director
Address: Alta Partners
One Embarcadero Center
Suite 4050
San Francisco, CA 94111
Attn: Elaine Walker Penny
Fax: (415) 362-6178

ALTA EMBARCADERO BIOPHARMA PARTNERS
II, LLC

By: __________________________________

Name: ________________________________

Title: V.P. of Finance & Admin.
Address: Alta Partners
One Embarcadero Center
Suite 4050
San Francisco, CA 94111
Attn: Elaine Walker Penny
Fax: (415) 362-6178

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

MVI MEDICAL VENTURE INVESTMENTS
LIMITED

By: __________________________________

Name: John Arnold

Title: Director

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

GLAXO GROUP LIMITED

By: __________________________________

Name: Donald F. Parman

Title: Attorney-In-Fact

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

VULCAN VENTURES INC.

By: __________________________________

Name: William D. Savoy

Title: Vice President

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

AEOLUS TECHNOLOGY CORPORATION

By: __________________________________

Name: ________________________________

Title: _______________________________
Address: TrustNet (British Virgin 
Islands) Limited
TrustNet Chambers
P.O. Box 3444
RoadTown, Tortola
British Virgin Islands

SIGNATURE PAGE - SERIES E - FOURTH AMENDED & RESTATED INVESTORS' RIGHTS
AGREEMENT

Exhibit 4.3

LOAN AND SECURITY AGREEMENT

THIS AGREEMENT (the "Agreement"), dated as of September 25, 1998 (the
"Closing Date") is entered into by and between Cytokinetics, Incorporated, a
Delaware corporation having a principal place of business at 280 East Grand
Avenue, South San Francisco, CA 94080 (the "Borrower") and Comdisco, Inc., a
Delaware corporation having a principal place of business at 6111 North River
Road, Rosemont, Illinois 60018 (the "Lender"). In consideration of the mutual
agreements contained herein, the parties hereto agree as follows:

WHEREAS, Borrower has requested Lender to make available to Borrower a
loan in the aggregate principal amount of up to ONE MILLION FIVE HUNDRED
THOUSAND and 00/100 DOLLARS ($1,500,000.00) (as the same may from time to time
be amended, modified, supplemented or revised, the "Loan"), which shall be
available in minimum installments of TWO HUNDRED FIFTY THOUSAND and 00/100
DOLLARS ($250,000) each (the "Advance") on various dates prior to September 25,
1999 ("Advance Date(s)"), which would be evidenced by Secured Promissory Note(s)
executed by Borrower substantially in the form of EXHIBIT A hereto (as the same
may from time to time be amended, modified, supplemented or restated the
"Note(s)");

NOW, THEREFORE, it is agreed:

SECTION 1. THE LOAN

1.1      Subject to the terms and conditions set forth herein, Lender
shall lend to Borrower the aggregate original principal amount of ONE MILLION
FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000) together with interest at
the rate of eight and one quarter percent (8.25%) per annum due and payable in
monthly installments as set forth in the Note

1.2      Upon the occurrence of and during an Event of Default (as
defined herein), interest shall thereafter be calculated at a rate of five
percent (5%) in excess of the rate that would otherwise be applicable ("Default
Rate"). All such interest shall be due and payable in arrears, on the first day
of the following month.

1.3      Notwithstanding any provision in this Agreement, the Note, or
any other "Loan Document" (as defined herein), it is not the parties' intent to
contract for, charge or receive interest at a rate that is greater than the
maximum rate permissible by law which a court of competent jurisdiction shall
deem applicable hereto (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans) (the "Maximum Rate"). If the Borrower actually pays Lender an amount of
interest, chargeable on the total aggregate principal Secured Obligations of
Borrower under this Agreement and the Note (as said rate is calculated over a
period of time that is the longer of (i) the time from the date of this
Agreement through the maturity time as set forth on the Note, or (ii) the entire
period of time that any principal is outstanding on the Note), which amount of
interest exceeds interest calculated at the Maximum Rate on said principal
chargeable over said period of time, then such excess interest actually paid by
Borrower shall be applied first, to the payment of principal outstanding on the
Note; second, after all principal is repaid, to the payment of Lender's out of
pocket costs, expenses, and professional fees which are owed by Borrower to
Lender under this Agreement or the Loan Documents; and third, after all
principal, costs, expenses, and professional fees owed by Borrower to Lender are
repaid, the excess (if any) shall be refunded to Borrower.

-1-

1.4      In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 1.1

1.5      Upon and during the continuation of an Event of Default
hereunder (as defined herein), all Secured Obligations, including principal,
interest, compounded interest, and reasonable professional fees, shall bear
interest at a rate per annum equal to the Default Rate.

1.6      Borrower shall have the option to prepay the Note, in whole or
in part, at any time after the date hereof by paying the principal amount
together with all accrued and unpaid interest with respect to such principal
amount, as of the date of such prepayment and the Balloon Payment as described
in the Note together with a prepayment premium equal to the difference, if any,
between (x) the amount being prepaid and (y) the present value, discounted at
the Treasury Rate, of each installment of principal and interest being prepaid
discounted to the date of prepayment. If the amount in (x) is greater than the
amount in (y), no prepayment premium shall be due. The "Treasury Rate" shall
mean the then prevailing yield on US Treasury Constant Maturities for the most
recent business day, as quoted in the Federal Reserve Statistical Release H15,
as of the date of prepayment for an obligation of comparable maturity to the
maturity date of the Note.

SECTION 2. SECURITY INTEREST

As security for the payment of all indebtedness ("Indebtedness") of the
Borrower to the Lender hereunder and under the Note, as the same may be renewed,
extended for any period or rearranged, and the performance by the Borrower of
its other obligations hereunder (the Indebtedness and such other obligations
being hereinafter sometimes collectively referred to as the "Secured
Obligations"), the Borrower hereby assigns to the Lender, and grants to the
Lender a first priority security interest in, all the Borrower's right, title,
and interest in and to the following property ("Collateral"): (i) the equipment
and other property (the "Equipment") described in Exhibit B attached hereto; and
(ii) all proceeds, products, replacements, additions to, substitutions for and
accessions to any and all Equipment including, without limitation, the proceeds
applicable to the insurance referred to in Section 4 hereof.

Equipment shall consist of computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain types of
microscopy equipment and other items of equipment approved by Lender. Up to 20%
of the Loan may be used for software and tenant improvements.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER

The Borrower represents, warrants and agrees that:

3.1      it has good title in and to the Equipment, free of all liens,
security interests, encumbrances and claims whatsoever, except for the interest
of the Lender therein;

3.2      it has the full power and authority to, and does hereby grant
and convey to the Lender, a valid first priority perfected security interest in
the Collateral as security for the Secured Obligations, free of all liens,
security interests, encumbrances and claims, and shall execute such

-2-

Uniform Commercial Code ("UCC") financing statements in connection herewith as
the Lender may reasonably request. No other lien, security interest, adverse
claim or encumbrance has been created by Borrower or is known by Borrower to
exist with respect to any Collateral;

3.3      it is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on the Collateral or the business of the Borrower
taken as a whole;

3.4      the execution, delivery and performance of the Note, this
Agreement, the Warrant Agreement dated September 25, 1998 pursuant to which
Borrower granted to Lender the right to purchase the number of shares
of preferred stock as set forth therein ("Warrant Agreement"), and all financing
statements, certificates and other documents required to be delivered or
executed in connection herewith (collectively, the "Loan Documents") have been
duly authorized by all necessary corporate action of Borrower, the individual or
individuals executing the Loan Documents were duly authorized to do so, the
Equipment is personal property and as used by the Borrower will not be or become
fixtures under applicable law, and the Loan Documents constitute legal, valid
and binding obligations of the Borrower, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization
or other similar laws generally affecting the enforcement of the rights of
creditors;

3.5      the Loan Documents do not and will not violate any provisions
of its Certificate of Incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Collateral, other than those created by this
Agreement;

3.6      the execution, delivery and performance of the Loan Documents
do not require the consent or approval of any other person or entity including,
without limitation, any regulatory authority or governmental body of the United
States or any state thereof or any political subdivision of the United States or
any state thereof.

3.7      as of the date hereof no fact or condition exists that would
(or could, with the passage of time, the giving of notice, or both) constitute
an Event of Default under this Agreement or any of the Loan Documents and no
event which has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing. For purposes of this Agreement, "Material
Adverse Effect" means a material adverse effect upon (i) the business,
operations, properties, assets or financial condition of Borrower; or (ii) the
ability of Borrower to perform the Secured Obligations.

SECTION 4. INSURANCE AND RISK OF LOSS

4.1      Risk of loss of, damage to or destruction of the Equipment
shall be borne by the Borrower and effective from the date of this Agreement and
until the payment and performance in full of all Secured Obligations, Borrower
shall at its own expense cause to be carried and maintained all risk casualty
insurance (covering risk of fire, theft and other such risks as the Lender may
require, including standard and extended coverage) with respect to each item of
Equipment in an amount no less than the replacement costs applicable to such
item of Equipment during the term of this Agreement. All policies evidencing
such casualty insurance shall contain a

-3-

standard mortgagee's endorsement and shall provide for at least thirty days
prior written notice by the underwriter or insurance company to the Lender in
the event of cancellation or expiration. Borrower shall provide Lender with
insurance certificates evidencing the foregoing at time of closing.

4.2      If any item of Equipment is lost or rendered unusable as a
result of any physical damage to or destruction of such item of Equipment during
the period from the date hereof to and including the maturity date under the
Note or the date all Secured Obligations hereunder have been fully satisfied,
whichever is later, Borrower shall give to Lender prompt notice thereof.
Borrower shall determine, within fifteen (15) days after the date of occurrence
of such loss, damage or destruction, whether such item of Equipment can be
repaired and restored to the condition in which such item of Equipment was
required to be maintained as of the date immediately preceding such damage. If
Borrower determines that such item of Equipment can be repaired, Borrower, at
its expense, shall cause such item of Equipment to be promptly repaired. If
Borrower determines that such item of I Equipment is lost or cannot be repaired,
Borrower shall promptly notify the Lender and such item of Equipment shall be
deemed to have suffered a "Casualty Loss" for purposes of this Section as of the
date of the occurrence of such loss. Within fifteen (15) days following the
occurrence of any such loss, damage or destruction, Borrower shall notify the
Lender of the item(s) of Equipment which has suffered such Casualty Loss ("Loss
Item"), and within thirty (30) days thereafter (the "Settlement Date"), Borrower
shall either (a) replace such item(s) of Equipment with equipment of the same
model, type and feature configuration, in an operating condition and repair no
less than that required hereunder of the damaged or lost equipment immediately
prior to the date of such damage or loss, and having a fair market value no less
than the Casualty Value (as defined herein) applicable to such item of Equipment
as of the date immediately prior to such damage, in which case such replacement
equipment shall for all purposes hereunder become part of the Collateral and
(without limiting the preceding provisions) Borrower shall grant to Lender a
first lien and security interest in respect of such replacement equipment
pursuant to the terms of this Agreement, and Borrower shall provide the Lender
evidence satisfactory to the Lender of Borrower's good and marketable title to
such replacement equipment (free of any liens, security interests or
encumbrances other than those created by this Agreement and Borrower shall be
entitled to receive the amount of any insurance or other recovery received by
Lender up to cost of obtaining the replacement equipment; or (b) so long as no
Event of Default or event which with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing,
Borrower may provide substitute equipment satisfactory to Lender to become part
of the Collateral and Borrower shall grant to Lender a first lien and security
interest in respect of such substitute equipment pursuant to the terms of this
Agreement, and Borrower shall provide the Lender evidence satisfactory to Lender
of Borrower's good and marketable title to such substitute equipment (free of
any liens, security interests or encumbrances other than created by this
Agreement and Lender shall provide any required endorsements in connection with
any insurance proceeds received by Borrower pursuant to such insurance policies;
or (c) Borrower shall pay Lender the insurance proceeds payable pursuant to such
insurance policies ("Insurance Proceeds") with respect to such Loss Item(s) and
the principal amount of the Note (and interest accrued on the principal amount
so prepayable) shall become due and payable on the Settlement Date to the extent
of the replacement cost for all such Loss Item(s). For purposes of this Section
4.2, Casualty Value shall mean an amount equal to the greater of the fair market
value of the Equipment as of the date of the Casualty Loss or the outstanding
principal and accrued interest on the Loan. Moneys so received shall be applied,
on the date of such receipt, as follows: first, to pay any

-4-

accrued interest on the outstanding principal amount of the Note on such date;
second, to prepay, the outstanding principal amount of the Note (to the extent
of the fair market value attributable to such Loss Item(s)); third, to pay any
other Indebtedness of amounts then due and owing to the Lender hereunder; and
fourth, so long as there has occurred no Event of Default under Section 8 hereof
and no event which with the giving of notice or passage of time or both would
constitute an Event of Default, has occurred and is continuing, Borrower and
Lender hereby agree that the balance of any such Insurance Proceeds shall be
paid promptly to the Borrower.

4.3      Effective upon the date hereof under the Note and while there
are any Secured Obligations outstanding, Borrower shall cause to be carried and
maintained comprehensive general liability insurance with regard to the
Collateral against risks customarily insured against in the Borrower's business.
Such risks shall include, without limitation, the risks of death, bodily injury
and property damage associated with the Collateral. All policies evidencing such
insurance shall provide for at least thirty (30) days prior written notice by
the underwriter or insurance company to the Lender in the event of cancellation
or expiration.

4.4      Borrower shall and does hereby indemnify and hold Lender, its
agents and shareholders harmless from and against any and all claims, costs,
expenses, damages and liabilities (including without limitation such claims,
costs, expenses, damages and liabilities based on liability in tort including
without limitation strict liability in tort) including reasonable attorneys'
fees, arising out of Borrower's ownership, possession, operation, control, use,
maintenance, delivery, or other disposition of the Collateral. Notwithstanding
the foregoing, Borrower shall not be responsible under the terms of this Section
4.4 to a party indemnified hereunder for any claims, costs, expenses, damages
and liabilities occasioned by the negligence or willful misconduct of such
indemnified party.

SECTION 5. COVENANTS OF BORROWER

Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

5.1      Borrower shall maintain the Equipment in good operating order,
repair, condition and appearance and protect the Equipment from deterioration,
other than normal wear and tear. Borrower shall not use the Equipment or permit
its use for any purpose other than for which it was designed. Borrower's
obligation regarding the maintenance of the Equipment shall include, without
limitation, all maintenance, repair, refurbishment and replacement recommended
or advised either by the manufacturer, or that commonly performed by prudent
business and/or professional practice. Any exceptions or qualifications
expressed in this Agreement relating to normal or ordinary wear and tear shall
not be deemed to limit Borrower's obligations pursuant to the preceding
sentence.

5.2      Borrower shall only relocate any item of the Collateral
provided that: (a) it shall have caused to be filed and/or delivered to the
Lender all UCC financing statements, certificates or other documents or
instruments necessary to continue in effect the first prior perfected security
interest of the Lender in the Collateral, and (b) it shall have given the Lender
no less than fifteen (15) days prior written notice of such relocation.

-5-

5.3      Upon the request of Lender, Borrower shall, during business
hours, make the Equipment available to Lender for inspection at the place where
it is normally located and shall make Borrower's log and maintenance records
pertaining to the Equipment available to the Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

5.4      Upon the request of Lender, Borrower shall cause the Equipment
to be plainly, permanently and conspicuously marked, by stenciling or by metal
tag or plate affixed thereto, indicating Lender's security interest in the
Equipment. Borrower shall replace any such stenciling, tag or plate which may be
removed or destroyed or become illegible. Borrower shall keep all Equipment free
from any marking or labeling which might be interpreted as a claim of ownership
adverse to Borrower's.

5.5      Borrower covenants and agrees to pay when due, all taxes, fees
or other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral.

5.6      Borrower shall furnish to Lender the financial statements
listed hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

(a)      as soon as practicable (and in any event within
thirty (30) days) after the end of each month: an internally prepared
income statement, balance sheet, and cash flow statement, (including
the commencement of any material litigation by or against Borrower),
each certified by Borrower's Chief Executive or Financial Officer to be
true and correct;

(b)      as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited Financial
Statements, setting forth in comparative form the corresponding figures
for the preceding fiscal year, and accompanied by any audit report and
opinion of the independent certified public accountants selected by
Borrower; and

(c)      promptly any additional information (including but
not limited to tax returns, income statements, balance sheets, and
names of principal creditors) as Lender reasonably believes necessary
to evaluate Borrower's continuing ability to meet financial
obligations.

5.7      Notwithstanding the foregoing, after the effective date of the
initial registration statement covering a public offering of Borrower's
securities, the term "Financial Statements" shall be deemed to refer to only
those statements required by the Securities and Exchange Commission, to be
provided no less frequently than quarterly. Borrower will from time to time
execute, deliver and file, alone or with Lender, any financing statements,
security agreements or other documents; and take all further action that may be
necessary, or that Lender may reasonably request, to confirm, perfect, preserve
and protect the security interests intended to be granted hereby, and in
addition, and for such purposes only, Borrower hereby authorizes Lender to
execute and deliver on behalf of Borrower and to file such financing statements,
security

-6-

agreement and other documents without the signature of Borrower either in
Lender's name or in the name of Borrower as agent and attorney-in-fact for
Borrower.

5.8      Borrower shall protect and defend Borrower's title as well as
the interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any attachment or levy, liens or encumbrances whatsoever (except any placed
thereon by Lender, or any liens arising by operation of law with respect to any
obligations not yet overdue or any other liens consented to in writing by
Lender) and shall give Lender immediate written notice thereof.

SECTION 6. CONDITIONS PRECEDENT TO LOAN

The obligation of Lender to fund the Loan on each Advance Date(s) shall be
subject to satisfaction by Borrower or waiver by Lender, in Lender's sole
discretion, of the following conditions:

6.1      (a) The Advance Date(s) for any installment shall occur on or
before September 25, 1999.

6.2      DOCUMENT DELIVERY. Borrower, on or prior to the Closing Date,
shall have delivered to Lender the following, in form and substance reasonably
satisfactory to Lender:

(a)      executed originals of the Agreement, Note(s), Warrant
Agreement and any documents reasonably required by Lender to effectuate
the liens of Lender, with respect to all Collateral;

(b)      certified copy of resolutions of Borrower's board of
directors evidencing approval of the borrowing and other transactions
evidenced by the Loan Documents;

(c)      certified copies of the Certificate of Incorporation
and the Bylaws of Borrower, as amended through the Closing Date;

(d)      certificate of good standing for Borrower from its
state of incorporation and similar certificates from all other
jurisdictions in which it does business and where the failure to be
qualified would have a Material Adverse Effect;

(e)      such other documents as Lender may reasonably
request.

6.3      ADVANCE REQUEST. Borrower, on or prior to each Advance
Date(s), shall have delivered to Lender the following:

(a)      a minimum of two (2) business days prior to the
Advance Date(s), written notice in the form of an Advance Request, or
as otherwise specified by Lender from time to time, specifying amount
of such Advance and wire transfer instructions;

(b)      such other documents as Lender may reasonably
request.

-7-

6.4      PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a first
priority perfected security interest in the Collateral. Such actions shall
include, without limitation, the delivery to Lender of all appropriate financing
statements, executed by Borrower, as to the Collateral granted by Borrower for
all jurisdictions as may be necessary or desirable to perfect the security
interest of Lender in such Collateral

6.5      ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the
Advance Date, no fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute an Event of Default under
this Agreement or any of the Loan Documents.

6.6      MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance
Date, no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.

SECTION 7. ASSIGNMENT BY LENDER

7.1      Borrower acknowledges and understands that Lender may sell and
assign all or a part of its interest hereunder and under the Note and Loan
Documents to any person or entity (an "Assignee"). After such assignment the
term Lender shall mean such Assignee, and such Assignee shall be vested with all
rights, powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note, it will endorse thereon a notation as to the
portion of the principal of the Note which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid
thereon.

SECTION 8. DEFAULT

The occurrence of any one or more of the following events (herein
called "Events of Default") shall constitute a default hereunder and under the
Note:

8.1      The Borrower defaults in the payment of any principal or
interest payable under this Agreement, the Note or any of the other Loan
Documents and such default continues for more than five (5) days after the due
date thereof;

8.2      The Borrower defaults in the payment or performance of any
other covenant or obligation of the Borrower hereunder or under the Note or any
other Loan Documents for more than ten (10) days after the Lender has given
notice of such default to the Borrower;

8.3      Any representation or warranty made herein by the Borrower
shall prove to have been false or misleading in any material respect;

8.4      The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the

-8-

adjudication of Borrower as a bankrupt, or the filing by Borrower of any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future statute, law or regulation, or the filing of any answer by
Borrower admitting, or the failure by Borrower to deny, the material allegations
of a petition filed against it for any such relief, or the seeking or consenting
by Borrower to, or acquiescence by Borrower in, the appointment of any trustee,
receiver or liquidator of Borrower or of all or any substantial part of the
properties of Borrower, or the inability of Borrower to pay its debts when due,
or the commission by Borrower of any act of bankruptcy as defined in the Federal
Bankruptcy Act, as amended;

8.5 The failure by Borrower, within sixty (60) days after the
commencement of any proceeding against Borrower seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, to obtain the
dismissal of such proceeding or, within sixty (60) days after the appointment,
without the written consent or acquiescence of Lender, of any trustee, receiver
or liquidator of Borrower or of all or any substantial part of the properties of
Borrower, to vacate such appointment; or 

8.6 The default by Borrower under any other notes or other agreement 
for borrowed money, lease or other agreement between Borrower and Lender.

SECTION 9. REMEDIES

Upon the occurrence hereof of any one or more Events of Default,
Lender, at its option, may declare the Note to be accelerated and immediately
due and payable, (provided, that upon the occurrence of an Event of Default of
the type described in 8.4 or 8.5, the Note and all other Secured Obligations
shall automatically be accelerated and made due and payable without any further
act) whereupon the unpaid principal of and accrued interest on such Note shall
become immediately due and payable, and shall thereafter bear interest at the
Default Rate and calculated in accordance with Section 1.2. Lender may exercise
all rights and remedies with respect to the Collateral granted pursuant hereto
for such Note, or otherwise available to it under applicable law, including the
right to release, hold or otherwise dispose of all or any part of the Collateral
and the right to utilize, process and commingle the Collateral.

Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
five (5) calendar day's notice to Borrower. Lender may require Borrower to
assemble the Collateral and make it available to Lender at a place designated by
Lender which is reasonably convenient to Lender and Borrower, The proceeds of
any sale, disposition or other realization upon all or any part of the
collateral shall be distributed by Lender in the following order of priorities:

First, to Lender in an amount sufficient to pay in full Lender's
reasonable costs and professionals' and advisors' fees and expenses;

-9-

Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose In
its sole discretion; and

Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction
may direct.

The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Secured Obligations.

SECTION 10. MISCELLANEOUS

10.1     Borrower shall remain liable to Lender for any unpaid Secured
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender's offices.

10.2     The powers conferred upon Lender by this Agreement are solely
to protect its interest in the Collateral and shall not impose any duty upon
Lender to exercise any such powers.

10.3     This is a continuing Agreement and the grant of a security
interest hereunder shall remain in full force and effect and all the rights,
powers and remedies of Lender hereunder shall continue to exist until the
Secured Obligations are paid in full as the same become due and payable. When
Borrower has paid in full all Secured Obligations, Lender will execute a written
termination statement, reassigning to Borrower, without recourse, the Collateral
and all rights conveyed hereby and return possession (if Lender has possession)
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of any other rights, powers and remedies of Lender. Furthermore,
regardless of whether or not the UCC is in effect in the jurisdiction where such
rights, powers and remedies are asserted, Lender shall have the rights, powers
and remedies of a secured party under the UCC.

10.4     Upon payment in full of all Secured Obligations, the Lender
shall cancel the Note, this Agreement and all UCC financing statements, if any,
and shall promptly deliver all such canceled documents to the Borrower.

10.5     GOVERNING LAW. This Agreement, the Note and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Illinois excluding conflict
of laws principles that would cause the application of laws of any other
jurisdiction.

10.6     CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note or any of the other
Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note and the other Loan Documents. Service of

-10-

process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if given in accordance with the requirements for
notice set forth in Section 10.8 below and shall be deemed effective and
received as set forth in Section 10.8 below. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of either party to bring proceedings in the courts of any other
jurisdiction.

10.7     Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

10.8     Any notice required or given hereunder shall be deemed
properly given upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) or three (3) days after
mailed, postage prepaid, in each case, addressed to the designated recipient at
its address set forth herein or such other address as such party may advise the
other party by notice given in accordance with this provision.

10.9     Lender and Borrower acknowledge that there are no agreements
or understandings, written or oral, between Lender and Borrower with respect to
the Loan, other than as set forth herein, in the Note and the other Loan
Documents and that this Agreement, the Note and the other Loan Documents contain
the entire agreement between Lender and Borrower with respect thereto. None of
the terms of this Agreement, the Note and the other Loan Documents may be
amended except by an instrument executed by each of the parties hereto.

10.10    No omission, or delay, by Lender at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Borrower at any time designated, shall be a
waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.

10.11    All agreements, representations and warranties contained in
this Agreement or the Note, or in any Loan Documents delivered pursuant hereto
or in connection herewith shall be for the benefit of Lender and any Assignee
and shall survive the execution and delivery of this Agreement or the Note and
the expiration or other termination of this Agreement or the Note.

10.12    This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

10.13    This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note or any of the other Loan
Documents without Lender's express written consent and any such attempted
assignment shall be void and of no effect. Any assignment by Borrower in
connection with a "Merger" (as defined below) shall be subject to Lender's prior
consent. Any consent granted by Lender shall be conditioned upon such surviving
entity or transferee assuming Borrower's Secured Obligations hereunder pursuant
to assignment documents reasonably acceptable to Lender. If Lender reasonably
withholds its consent to such assignment in

-11-

connection with a Merger, the outstanding principal and accrued and unpaid
interest shall be prepaid in whole without a prepayment premium.

For purposes of this Agreement, a "Merger" shall mean any consolidation
or merger of the Borrower with or into any other corporation or entity, any sale
or conveyance of an or substantially all of the assets or stock of the Borrower
by or to any other person or entity in which Borrower is not the surviving
entity.

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

BORROWER: CYTOKINETICS, INCORPORATED.

By:    /s/ Jon C. Richards
------------------------------
Title: Chief Financial Officer
Date:  10-1-98

ACCEPTED IN ROSEMONT, ILLINOIS:

LENDER: COMDISCO, INC.

By: /s/ JAMES P. LABE
------------------------------
Title: PRESIDENT
COMDISCO VENTURES DIVISION

Date:  SEP 30 1998

-12-

Amendment No. One to Loan and Security Agreement

This Amendment Agreement No. One ("Amendment") to the Loan and Security
Agreement dated as of September 25, 1998 is entered into this 1st day of
February, 1999 by and between Cytokinetics, inc., a Delaware corporation, with
its chief executive offices and principal place of business at 280 East Grand
Avenue Suite 2, South San Francisco, CA 94080 ("Borrower") and Comdisco, Inc., a
Delaware corporation, with its chief executive offices and principal place of
business at 6111 North River Road, Rosemont, IL 60018 ("Lender").

RECITALS

WHEREAS, pursuant to the terms and conditions set forth in the Loan and
Security Agreement dated as of September 25, 1998 between Borrower and Lender
(hereinafter, "Loan Agreement"), the parties have entered into that certain
Secured Promissory Note dated February 3, 1999 herewith (the "Note(s)") whereby
for value received, Borrower promises to pay certain payments to Lender in the
principal amount of Six Hundred Sixty Two Thousand Six Hundred Ninety four and
81/100 Dollars ($662,694.81); 

WHEREAS, in connection with the issuance of the Note, Lender and
Borrower wish to amend the Loan Agreement to include the Exhibit B as required
under the Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, Borrower and Lender hereby agree as follows:

1.       Except as expressly set forth herein, all terms used herein shall have
the meanings set forth in the Loan Agreement.

2.       Borrower and Lender agree that the Exhibit B attached hereto shall be
incorporated and made a part of the Loan Agreement and the equipment described
thereon shall be "Equipment" as set forth in the Loan Agreement.

3.       Except as specifically amended hereby, the terms and conditions of the
Loan Agreement are hereby reaffirmed and remain in full force and effect, and
from and after the date hereof the "Agreement" shall mean the "Agreement" as
amended by this Amendment.

4.       This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

1

IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this
Amendment as of the day and year first above written.

BORROWER                                CYTOKINETICS, INC.

Signature:  /s/ Jon C. Richards
----------------------------

Print Name: Jon C. Richards

Title:      Chief Financial Officer

ACCEPTED IN ROSEMONT, ILLINOIS

LENDER                                  COMDISCO, INC.

Signature:  /s/ Jill Hanses
----------------------------
Print Name: Jill Hanses

Title:  SRVP

2

EXHIBIT B

Cytokinetics, Inc.

---------------------------------------------------------------------------------------------------------------------------
DATE
REF#     VENDOR     REC/INV    PO#          INVOICE #                DESCRIPTION                   SERIAL #          COST
---------------------------------------------------------------------------------------------------------------------------
(brief)
---------------------------------------------------------------------------------------------------------------------------

Furniture
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              Desk-director 3x24 corner, 4x24 ret  N/A               1,165.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              Desk-director locking pedestal       N/A               1,165.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-adm                            N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-adm                            N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
253   Item         20-Oct   CS10198    87449 CA            Work Station                         No S/N              778.11
---------------------------------------------------------------------------------------------------------------------------
254   Item         20-Oct   CS10198    87449 CA            Work Station                         No S/N              778.11
---------------------------------------------------------------------------------------------------------------------------
23,686.22
---------------------------------------------------------------------------------------------------------------------------
LAB EQ:
---------------------------------------------------------------------------------------------------------------------------
1   VWR          28-Aug   CY185                13218620  Freezer, gen upright 20.9cft (-20)   U17H391576VH        895.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR           5-Aug   CY108                  277640  Generator PT DA 21 1 2/2EC           H2840271366211F   1,016.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          10-Aug   CY164                10480030  Nanopure infinity UV/UF 120V         899980816921      4,033.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          11-AUQ   CY110                58752390  Freezer uprt auto/DF 23.3cft (-80)   U10H39050UH       4,190.55
---------------------------------------------------------------------------------------------------------------------------
2   VWR          11-Aug   CY209                  292020  Radiation SRVY w/Probet              9825-319            625.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          13-Aug   CY108                11293240  Polytron, PTMR2100 Homogenizer       324474            1,196.00
---------------------------------------------------------------------------------------------------------------------------
3   VWR          29-Jul   061798C              57664663  Dual slab gelkit 220MM               NO S/N              643.80
---------------------------------------------------------------------------------------------------------------------------
4   VWR          17-Jul   CY110                58832690  Oven, Hybridiser, techne HB-1D       826905-8          2,931.75
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752380  Incubator, CSA model 1 545           1103097           1,450.52
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752380  Incubator, WTR JKT model 3015        600298            2,397.95
---------------------------------------------------------------------------------------------------------------------------
5   VWR           8-Jul   CY108                  192070  Generator PT-DA2107/2EC              H284027136613G      888.00
---------------------------------------------------------------------------------------------------------------------------
5   Beckman       9-Jul   CY110                58752400  Afgra 6R rfrg bnch cntrifuge         ALR98G01          6,556.00
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752400  GH-3.8 Horiz rotor w/4 ALM           98U 20801         2,133.50
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752400  Carrier assy, mtcroplus              Consumable          977.50
---------------------------------------------------------------------------------------------------------------------------
14   PE Bio        4-Jul   CY107                90172820  Analyzer, general 100/120V (system)  100000668        55,000.00
---------------------------------------------------------------------------------------------------------------------------
16   Tech Ins     22-Jul   CY138                  102160  TMS mainbody W/B INO w/ lenses.eye   To be returned    3,127.59
---------------------------------------------------------------------------------------------------------------------------
20   Stratgen     21-Jul   CY153                  670159  Stratalinker 2400, 120V              9823647           1,435.50
---------------------------------------------------------------------------------------------------------------------------
23   MJ Research  11-Aug   980615                  50435  DNA engine chassis                   EN007984          5,495.00
---------------------------------------------------------------------------------------------------------------------------
24   MJ Research  11-Aug   980615                  50435  Dual Alpha PTC 200/225               ALO18393          2,495.00
---------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

REF#     VENDOR          TOTAL     CK#                        % FUNDED   TOTAL FUNDED
-------------------------------------------------------------------------------------

Furniture
------------------------------------------------------------------------------------
8   Corp Int       1,165.00  2196/2077                       80%       $   932.00
------------------------------------------------------------------------------------
8   Corp Int       1,165.00  2196/2077                       80%       $   932.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   830.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $    88000
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880,00
------------------------------------------------------------------------------------
8   Corp int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
253   Item             778.11  VISA          778.11  accrue   100%       $   778.11
------------------------------------------------------------------------------------
254   Item             778.11  VISA          778.11  accrue   100%       $   778.11
------------------------------------------------------------------------------------
23,686.22                        ok                  $19,260.22
------------------------------------------------------------------------------------
LAB EQ:
------------------------------------------------------------------------------------
1   VWR              895.00       2187     895.00            80%       $   716,00
------------------------------------------------------------------------------------
2   VWR            1,016.00       2186                       80%       $   812.80
------------------------------------------------------------------------------------
2   VWR            4,033.00       2186                       80%       $ 3,226.40
------------------------------------------------------------------------------------
2   VWR            4,190.55       2186                       80%       $ 3,352.44
------------------------------------------------------------------------------------
2   VWR              625.00       2186                       80%       $   500.00
------------------------------------------------------------------------------------
2   VWR            1,196.00       2186  11,060.55            80%       $   956.80
------------------------------------------------------------------------------------
3   VWR              643.80       2110     643.80            80%       $   515.04
------------------------------------------------------------------------------------
4   VWR            2,931.75       2072   2,931.75            80%       $ 2,345.40
------------------------------------------------------------------------------------
5   VWR            1,450.52       2056                       70%       $ 1,015.36
------------------------------------------------------------------------------------
5   VWR            2,397.95       2056                       70%       $ 1,678.57
------------------------------------------------------------------------------------
5   VWR              888.00       2056                       70%       $   621.60
------------------------------------------------------------------------------------
5   Beckman        6,556.00       2056                       70%       $ 4,589.20
------------------------------------------------------------------------------------
5   VWR            2,133.50       2056                       70%       $ 1,493.45
------------------------------------------------------------------------------------
5   VWR              977.50       2056  14,403.47            70%       $   684.25
------------------------------------------------------------------------------------
14   PE Bio        55,000.00       2087  55,000.00            70%       $38,500.00
------------------------------------------------------------------------------------
16   Tech Ins       3,127.59       2098   3.127.59            80%       $ 2,502.07
------------------------------------------------------------------------------------
20   Stratgen       1,435.50       2130   1,435.50            80%       $ 1,148.40
------------------------------------------------------------------------------------
23   MJ Research    5,495.00       2174                       80%       $ 4,396.00
------------------------------------------------------------------------------------
24   MJ Research    2,495.00       2174                       80%       $ 1,996.00
------------------------------------------------------------------------------------

1/29/99

1 of 6

Cytokinetics, Inc.

DATE
REF #     VENDOR     REC/INV    PO#          INVOICE #                  DESCRIPTION                         SERIAL #          COST
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
26  MJ Research    11-Aug   980615                 50435  Minicycler 16W Hot Bonnet                   MC008706            2,995.00
------------------------------------------------------------------------------------------------------------------------------------
29  Savant         31-Jul   Cy125                 155171  Gel pump w/charcoal filter                  GEP140-9G310051-1   2,085.00
------------------------------------------------------------------------------------------------------------------------------------
32  Cryosafe        2-Sep   Cy239                    578  Liquid Nitrogen auto till liquid tank       562007PS9809        5,495.00
------------------------------------------------------------------------------------------------------------------------------------
33  Cryosafe        2-Sep   Cy239                    578  Complete invt sys                           562007P89S09        1,100.00
------------------------------------------------------------------------------------------------------------------------------------
37  Savant         11-Sep   CY260                 156820  DNA speedvac & rotor                        110-813470196-1G    4,072.50
------------------------------------------------------------------------------------------------------------------------------------
39  Molecular Dev  15-Sep   Shumate  C. Shumate exp rept  Spectramax 340, softmax pro                 MO1115 (LO2022)    12,800.00
------------------------------------------------------------------------------------------------------------------------------------
200  BioRad         15-Sep   91498                1430358  Ultramark Microplate Reader                 10006              19,995.00
------------------------------------------------------------------------------------------------------------------------------------
201  BioRad         31-Jul   CY173                1402499  Econo Pump Model EP-1                       700-BR08532         1,315.37
------------------------------------------------------------------------------------------------------------------------------------
202  Beckman         6-Oct   CY313    352838FT01           Rotor Assy/w bottle cap, PP & AY            98U1947             4,482.28
------------------------------------------------------------------------------------------------------------------------------------
203  Beckman         8-Oct   CY313    352838FT02           J2-HS Centrifuge 208V 60HZ                  CJA98K01           11,631.90
------------------------------------------------------------------------------------------------------------------------------------
204  Beckman        10-Sep   CY244    349358FT01           Multimek 96 Pipettor                        304181APS          46,350.00
------------------------------------------------------------------------------------------------------------------------------------
205  Beckman        10-Sep   CY244    349358FT01           Multimek Pro Software                       304181APS           5,000.00
------------------------------------------------------------------------------------------------------------------------------------
206  Beckman        10-Sep   CY244    349358FT01           Disposable Tip Wash System                  304181APS           6,000.00
------------------------------------------------------------------------------------------------------------------------------------
207  Beckman         2-Oct   CY266    348803FT00A          SW55TI Swinging Bucket Titanium Rotor       98U2605             8,160.00
------------------------------------------------------------------------------------------------------------------------------------
208  Beckman         2-Oct   CY266    348803FT00A          DU 640 UV/VIS Scanning Spcetrophotometer    4323214             7,140.00
------------------------------------------------------------------------------------------------------------------------------------
209  Beckman         2-Oct   CY266    348803FT00A          Transport                                   4323214               659.60
------------------------------------------------------------------------------------------------------------------------------------
210  Beckman         2-Oct   CY266    348803FT00A          Micro Auto 6 Cell Holder unheated           4323214               673.20
------------------------------------------------------------------------------------------------------------------------------------
211  Beckman         2-Oct   CY266    348803FT00A          External Storage Device                     4323214               584.80
------------------------------------------------------------------------------------------------------------------------------------
212  Beckman         2-Oct   CY266    348803FT00A          UV Silica Cuvette (set4)                    4323214               530.40
------------------------------------------------------------------------------------------------------------------------------------
213  Beckman         2-Oct   CY266    348803FT00A          Optima TLX Ultracentrifuge                  CTX98G04           21,938.07
------------------------------------------------------------------------------------------------------------------------------------
214  Beckman         2-Oct   CY266    348803FT00A          TLA 110 Fixed Angle Titanium Rotor Pkg      98U314              4,726.00
------------------------------------------------------------------------------------------------------------------------------------
215  Beckman         2-Oct   CY266    348803FT00A          TLA 100 Fixed Angle Titanium Rotor Pkg      98U1338             3,066.80
------------------------------------------------------------------------------------------------------------------------------------
216  Beckman         2-Oct   CY266    348803FT00A          Avanti J-25 Centrifuge for 50/60 HX         JHX98K02           14,756.00
------------------------------------------------------------------------------------------------------------------------------------
217  Beckman         2-Oct   CY266    348803FT00A          JA 25.50 Fixed Angle Rotor Assy             JHX98K02            2,352.80
------------------------------------------------------------------------------------------------------------------------------------
218  Beckman         2-Oct   CY266    348803FT00A          JLA-16 Rotor w/single locking lid           98U752              3,284.00
------------------------------------------------------------------------------------------------------------------------------------
219  Beckman         2-Oct   CY266    348803FT00A          Optima LE 80 K preparative Untracentrifuge  COL9840            27,404.00
------------------------------------------------------------------------------------------------------------------------------------
220  Beckman         2-Oct   CY266    348803FT00A          Type 19 Fixed angle Alum. Rotor Assy        98E3701             5,508.00
------------------------------------------------------------------------------------------------------------------------------------
221  Beckrnan        2-Oct   CY266    348803FT00A          Type 45TI Fixed angle titanium Rotor Assy   98U3423             7,344.00
------------------------------------------------------------------------------------------------------------------------------------
222  Beckman         2-Oct   CY266    348803FT00A          Type 70.1 Fixed angle Titan. Rotor Assy     98U3968             7,208.00
------------------------------------------------------------------------------------------------------------------------------------
223  ComDisco        8-Oct                          12910  New Brunswick Orbital Shaker G-25           190524971           3,360.00
------------------------------------------------------------------------------------------------------------------------------------
224  ComDisco        8-Oct                          12910  New Brunswick Orbital Shaker G-25           181188              3,360.00
------------------------------------------------------------------------------------------------------------------------------------
225  CCS Packard    14-Sep   9149802              3090407  Jun-Air Compressor w/air hose               405282              1,550.00
------------------------------------------------------------------------------------------------------------------------------------
226  Forma Scient   18-Sep   CY243                2735850  Lab Glassware Dryer                         18937-514           7,428.00
------------------------------------------------------------------------------------------------------------------------------------
227  Forma Scient   16-Sep   CY263                2738190  Bio Safe Cab TT 6Ft SLD                     19497-69            5,090.00
------------------------------------------------------------------------------------------------------------------------------------
230  MicroSource    22-Sep   CY294                  94728  MicroSource Plates "Killer' Plate           N/A                 1,100.00
------------------------------------------------------------------------------------------------------------------------------------
231  VWR            22-Sep   CY261               13582370  55702-497 REF,Chr,VWR49C,FS,MST,115VT       12076807            2,996.94
------------------------------------------------------------------------------------------------------------------------------------
232  VWR            18-Sep   CY252               13463890  Scotsman 325 Ice Flaker                     051918-03N          2,675.00
------------------------------------------------------------------------------------------------------------------------------------
233  VWR            17-Sep   CY185               13124400  Revco/Lindberg 24.4 CuFt Upright (-80)      80508h-381550-SH    8,398.00
------------------------------------------------------------------------------------------------------------------------------------
234  VWR            29-Sep   CY314                 432300  Bath.GP. Microcntl CSA 5.5L1 1 5VT          698060478             576.90
------------------------------------------------------------------------------------------------------------------------------------
235  VWR             5-Oct   CY318               15794230  Storage Mat Applicator                      No SIN                904.76
------------------------------------------------------------------------------------------------------------------------------------
236  VWR             5-Oct   CY317               15769580  Elect Pip 8CH                               N72553                786.05
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               3929                1,905.00
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               9165                1,905.00
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               8991                1,905.00
------------------------------------------------------------------------------------------------------------------------------------

REF#      VENDOR          TOTAL     CK#                      % FUNDED  TOTAL FUNDED
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------
26  MJ Research       2,995.00   2174   10,985.00             80%    $   2,396.00
-----------------------------------------------------------------------------------
29  Savant            2,085.00   2180    2,085.00             80%    $   1,668.00
-----------------------------------------------------------------------------------
32  Cryosafe          5,495.00   2213              accrue     80%    $   4,396.00
-----------------------------------------------------------------------------------
33  Cryosafe          1,100.00   2213    6,595.00  accrue     80%    $     880.00
-----------------------------------------------------------------------------------
37  Savant            4,072.50   2238    4,072.50            100%    $   4,072.50
-----------------------------------------------------------------------------------
39  Molecular Dev    12,800.00   2252   12,800.00            100%    $  12,800.00
-----------------------------------------------------------------------------------
200  BioRad           19,995.00   2273                        100%    $  19,995.00
-----------------------------------------------------------------------------------
201  BioRad            1,315.37   2273   21,310.37             80%    $   1,052.30
-----------------------------------------------------------------------------------
202  Beckman           4,482.28   2274                        100%    $   4,482.28
-----------------------------------------------------------------------------------
203  Beckman          11,631.90   2274                        100%    $  11,631.90
-----------------------------------------------------------------------------------
204  Beckman          46,350.00   2274                         80%    $  37,080.00
-----------------------------------------------------------------------------------
205  Beckman           5,000.00   2274                         80%    $   4,000,00
-----------------------------------------------------------------------------------
206  Beckman           6,000.00   2274   73,464.18             80%    $   4,800.00
-----------------------------------------------------------------------------------
207  Beckman           8,160.00   2275                        100%    $   8,160.00
-----------------------------------------------------------------------------------
208  Beckman           7,140.00   2275                        100%    $   7,140.00
-----------------------------------------------------------------------------------
209  Beckman             659.60   2275                        100%    $     659.60
-----------------------------------------------------------------------------------
210  Beckman             673.20   2275                        100%    $     673.20
-----------------------------------------------------------------------------------
211  Beckman             584.80   2275                        100%    $     584.80
-----------------------------------------------------------------------------------
212  Beckman             530.40   2275                        100%    $     530.40
-----------------------------------------------------------------------------------
213  Beckman          21,938.07   2275                        100%    $  21,938.07
-----------------------------------------------------------------------------------
214  Beckman           4,726.00   2275                        100%    $   4,726.00
-----------------------------------------------------------------------------------
215  Beckman           3,066.80   2275                        100%    $   3,066.80
-----------------------------------------------------------------------------------
216  Beckman          14,756.00   2275                        100%    $  14,756.00
-----------------------------------------------------------------------------------
217  Beckman           2,352.80   2275                        100%    $   2,352.80
-----------------------------------------------------------------------------------
218  Beckman           3,284.00   2275                        100%    $   3,284.00
-----------------------------------------------------------------------------------
219  Beckman          27,404.00   2275                        100%    $  27,404.00
-----------------------------------------------------------------------------------
220  Beckman           5,508.00   2275                        100%    $   5,508.00
-----------------------------------------------------------------------------------
221  Beckrnan          7,344.00   2275                        100%    $   7,344.00
-----------------------------------------------------------------------------------
222  Beckman           7,203.00   2275  115,335.67            100%    $   7,208.00
-----------------------------------------------------------------------------------
223  ComDisco          3,360.00   2279                        100%    $   3,360.00
-----------------------------------------------------------------------------------
224  ComDisco          3,360.00   2279    6,720.00            100%    $   3,360.00
-----------------------------------------------------------------------------------
225  CCS Packard       1,550.00   2282    1,550.00            100%    $   1,550.00
-----------------------------------------------------------------------------------
226  Forma Scient      7,428,00   2292                        100%    $   7,428.00
-----------------------------------------------------------------------------------
227  Forma Scient      5,090.00   2292   12,518.00            100%    $   5,090.00
-----------------------------------------------------------------------------------
230  MicroSource       1,100.00   2300    1,100.00  accru     100%    $   1,100.00
-----------------------------------------------------------------------------------
231  VWR               2,996.94   2324                        100%    $   2,996.94
-----------------------------------------------------------------------------------
232  VWR               2,675.00   2324                        100%    $   2,675.00
-----------------------------------------------------------------------------------
233  VWR               8,398.00   2324                        100%    $   8,398.00
-----------------------------------------------------------------------------------
234  VWR                 576.90   2324                        100%    $     576.90
-----------------------------------------------------------------------------------
235  VWR                 904.76   2324                        100%    $     904.76
-----------------------------------------------------------------------------------
236  VWR                 786.05   2324   16,337.65            100%    $     786.05
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------

2 of 6

Cytokinetics, Inc.

DATE
REF #     VENDOR     REC/INV    PO#          INVOICE #                  DESCRIPTION                             SERIAL #
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V              8992
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micrcent refrig, w/o rotor 115V            540703929
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   8906011
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   980601A
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   980601F
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Vortex mixer, multi tube                   1071
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Balance, analyt premier                    116040045
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  PH meter, 430 meter w/kit 120V             3889
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             1-Jul   061798C             57664640  Lauda circ, E 106T, 115V/60HZ              W09037
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             1-Jul   061798C             57664640  Lauda circ, E 106T, 115V/60HZ              W09035
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            26-Jun   061798C             57664660  Dual slab gelkit 220MM                     No S/N
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            26-Jun   061798C             57664661  Transillum, dual, Bnch TP VWR115VT         060898-006
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664670  Balance, PRF, LVL, Delta, PR5002DRT        1117151544
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              960
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              958
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              963
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664633  Finnpette digitl 12ch                      F501984510050
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             2-Jul   061798C             57664631  Finnpette dig.12ch 50-300UL                FS9064
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             9-Jul   061798C             57664651  Ultrason cell distr 1/2 IN/450             C080306G
----------------------------------------------------------------------------------------------------------------------------------
83  BioRad         22-Jui   CY134                1396445  Uno Column                                 347BR2689
----------------------------------------------------------------------------------------------------------------------------------
84  BioRad         22-Jul   CY134                1396445  Auto Steam Select Valve                    347BR2689
----------------------------------------------------------------------------------------------------------------------------------
85  BioRad         22-Jul   CY134                1396445  Auto Steam Select Valve                    347BR2689
----------------------------------------------------------------------------------------------------------------------------------
93  BioRad         22-Jul   CY134                1396445  Select Valve                               347BR2689
----------------------------------------------------------------------------------------------------------------------------------
94  BioRad         22-Jul   CY134                1396445  Select Valve                               347BR2689
----------------------------------------------------------------------------------------------------------------------------------
86  BioRad         23-Jul   CY134                1396830  Auto Biologic System                       347BR2689
----------------------------------------------------------------------------------------------------------------------------------
87  BioRad         23-Jul   CY134                1396830  Biologic Dynaloop kit                      347BR2689
----------------------------------------------------------------------------------------------------------------------------------
88  BioRad         31-Jul   CY173                1402499  Econo Pump, model EP-1, 110V               700BR08532
----------------------------------------------------------------------------------------------------------------------------------
81  Life Tech      28-Jul   CY165                 743380  EDAS 120 system                            EKB74902512
----------------------------------------------------------------------------------------------------------------------------------
80  BioRad         12-Aug   CY134                1409267  Dynaloop 90ML replacement loop             347BR2689
----------------------------------------------------------------------------------------------------------------------------------
82  Microfluids    19-Aug   CY201                   3793  M110S Large Pump Assy                      98058
----------------------------------------------------------------------------------------------------------------------------------
89  PEBio          14-Sep                       90194114  TF, Kit BDT PR-100                         No S/N
----------------------------------------------------------------------------------------------------------------------------------
90  PEBio          14-Sep                       90196900  10MMD/250MML Glass Column                  No S/N
----------------------------------------------------------------------------------------------------------------------------------
245  Beckman        29-Oct   CY313     352838FT03          JLA-16 Rotor w/single locking lid          98U752
----------------------------------------------------------------------------------------------------------------------------------
246  CCS Packard     6-Oct   CY253                3100462  Platestak, scanner, deck                   1347
----------------------------------------------------------------------------------------------------------------------------------
247  CCS Packard     6-Oct   Cs100698             3100458  500ML Birdfeeder                           N/A
----------------------------------------------------------------------------------------------------------------------------------
249  MXR             8-Oct   CY266                 369682  Konica SRX-101 Processor                   105210881
----------------------------------------------------------------------------------------------------------------------------------
WXR            29-Oct                         370525  SRX-101 Film Processor                     105210881
----------------------------------------------------------------------------------------------------------------------------------
250  Therm-X        26-Oct   CY347                  54128  Watlow Mini Benchtop controller/couple     P/N Mini TR-00-000 (No S/N)
----------------------------------------------------------------------------------------------------------------------------------
251  PE Bio          4-Jul   CY107               90172820  Genetic Analyzer 100/120V 310              100000668
----------------------------------------------------------------------------------------------------------------------------------
252  Univ. Imaging  23-Oct   CY269                   6623  Hamamtsu C4742-95 12 Bit Interline Camera  270465
with 2x2 or 4x4 binning
----------------------------------------------------------------------------------------------------------------------------------
252  Univ. Imaging  23-Oct   CY269                   6623  Acquisition Option for Hamamatsu Camera    270465
----------------------------------------------------------------------------------------------------------------------------------

REF#      VENDOR       COST       TOTAL       CK#                         % FUNDED  TOTAL FUNDED
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
7  VWR             1,905.00   1,905.00       2015                         70%    $   1,333.50
------------------------------------------------------------------------------------------------
7  VWR             5,033.00   5,033.00       2015                         70%    $   3,523.10
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR             1,081.00   1,081.00       2015                         70%    $     756.70
------------------------------------------------------------------------------------------------
7  VWR             5,466.00   5,466.00       2015                         70%    $   3,826.20
------------------------------------------------------------------------------------------------
7  VWR               567.88     567.88       2015                         70%    $     397.52
------------------------------------------------------------------------------------------------
7  VWR             1,186.25   1,186.25       2015                         70%    $     830.38
------------------------------------------------------------------------------------------------
7  VWR             1,186.25   1,186.25       2015                         70%    $     830.38
------------------------------------------------------------------------------------------------
7  VWR               643.80     643.80       2015                         70%    $     450.66
------------------------------------------------------------------------------------------------
7  VWR             1,108.51   1,108.51       2015                         70%    $     775.96
------------------------------------------------------------------------------------------------
7  VWR             2,796.00   2,796.00       2015                         70%    $   1,957.20
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               573.18     573.18       2015                         70%    $     401.23
------------------------------------------------------------------------------------------------
7  VWR               573.18     573.18       2015                         70%    $     401.23
------------------------------------------------------------------------------------------------
7  VWR             2,296.00   2,296.00       2015  34,779.70              70%    $   1,607.20
------------------------------------------------------------------------------------------------
83  BioRad            997.50     997.50       2139                         80%    $     798.00
------------------------------------------------------------------------------------------------
84  BioRad            855.00     855.00       2139                         80%    $     684.00
------------------------------------------------------------------------------------------------
85  BioRad            855.00     855.00       2139                         80%    $     684.00
------------------------------------------------------------------------------------------------
93  BioRad            506.25     506.25       2139                         80%    $     405.00
------------------------------------------------------------------------------------------------
94  BioRad            506.25     506.25       2139                         80%    $     405.00
------------------------------------------------------------------------------------------------
86  BioRad         22,311.00  22,311.00       2139                         80%    $  17,848.80
------------------------------------------------------------------------------------------------
87  BioRad            697.50     697.50       2139                         80%    $     558.00
------------------------------------------------------------------------------------------------
88  BioRad          1,350.00   1,350.00  2139/2273  28,078.50              80%    $   1,080.00
------------------------------------------------------------------------------------------------
81  Life Tech       3,141.00   3,141.00       2140   3,141.00              80%    $   2,512.80
------------------------------------------------------------------------------------------------
80  BioRad            645.00     645.00       2155     645.00              80%    $     516.00
------------------------------------------------------------------------------------------------
82  Microfluids    23,800.00  23,800.00       2175  23,800.00              80%    $  19,040.00
------------------------------------------------------------------------------------------------
89  PEBio             675.00     675.00       2201                        100%    $     675.00
------------------------------------------------------------------------------------------------
90  PEBio             575.00     575.00       2201   1,250.00             100%    $     575.00
------------------------------------------------------------------------------------------------
245  Beckman         2,956.44   2,956.44       2353   2,956.44             100%    $   2,956.44
------------------------------------------------------------------------------------------------
246  CCS Packard    23,225.00  23,225.00       2356  23,225.00             100%    $  23,225.00
------------------------------------------------------------------------------------------------
247  CCS Packard     1,100.00   1,100.00  accrued     1,100.00             100%    $   1,100.00
------------------------------------------------------------------------------------------------
249  MXR             3,812.00   3,812.00       2374   3,812.00             100%    $   3,812.00
------------------------------------------------------------------------------------------------
WXR             3,812.00   3,812.00       2301   3,812.00  no invo    100%    $   3,812.00
------------------------------------------------------------------------------------------------
250  Therm-X           658.00     658.00       2389     658.00             100%    $     658.00
------------------------------------------------------------------------------------------------
251  PE Bio         55,000.00  55,000.00       2087  55,000.00              70%    $  38,500.00
------------------------------------------------------------------------------------------------
252  Univ. Imaging  14,900.00  14,900.00       2392                        100%    $  14,900.00
------------------------------------------------------------------------------------------------
252  Univ. Imaging   4,800.00   4,800.00       2392                        100%    $   4,800.00
------------------------------------------------------------------------------------------------

3 of 6

Cytokinetics, Inc.

---------------------------------------------------------------------------------------------------------------------------------
DATE
REF #    VENDOR      REC/INV    PO#    INVOICE #                      DESCRIPTION                        SERIAL #         COST
---------------------------------------------------------------------------------------------------------------------------------

252   Univ. Imaging   23-Oct  CY269         6623  Lamda Light Source with 175 W Ozone Free Bulb      N/A                 3,985.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Liquid Light Guide for Lambda-10C                  N/A                 1,400.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-OCt  CY259         6623  Epi Replacement Adapter for Zeiss Inverted Scope   N/A                   700.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Sutter LS cold Mirror and Adapter                  N/A                   600.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Lambda-10 Ten Position Filter Whieel with Shutter  N/A                 5,650.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Lambda-10 Excitation Adapter for Zeiss AxioVert    N/A                   200.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  2 Axis (X,Y) Motor controler                       9009                4,200.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior Motorized Travel Stage for Inv. Scopes       3966                6,350.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior Specimen Holder for H 107 Stage              N/A                   350.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior 9 pin. RS-232 cable                          N/A                    50.00
---------------------------------------------------------------------------------------------------------------------------------
237   Zymark          16-Sep  CY245       105607  Twister-zymark, 110V/220V & kit ext. landscape     TW9838N0227        10,050.00
finger
---------------------------------------------------------------------------------------------------------------------------------
609,863.67
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE:
---------------------------------------------------------------------------------------------------------------------------------
40   Sabry            8-Apr  catalog  153620042  Dell dimension system                              DY3KP               3,345.00
---------------------------------------------------------------------------------------------------------------------------------
41   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKX4    1,301.00
---------------------------------------------------------------------------------------------------------------------------------
42   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRL7    1,301.00
---------------------------------------------------------------------------------------------------------------------------------
43   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKC7    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
44   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPG8    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
45   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKN9    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
46   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPT4    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
47   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKV3    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
48   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPY4    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
49   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRF6      812.00
---------------------------------------------------------------------------------------------------------------------------------
50   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRX9      812.00
---------------------------------------------------------------------------------------------------------------------------------
51   Spectrum        27-Aug  Malik        32450  Decaview monit 15" w/cards                         552067822             571.00
---------------------------------------------------------------------------------------------------------------------------------
55   Informax        29-Jun  CY100         4038  Vector NTI5.0                                      BLLIUV-4038         2,195.00
---------------------------------------------------------------------------------------------------------------------------------
56   Informax        29-Jun  CY100         4038  Vector NTI5.0                                      BLLIUV-4038         2,195.00
---------------------------------------------------------------------------------------------------------------------------------
95   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
96   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
97   informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
98   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
57   MDL              5-Aug  8059801     141153  ISIS Draw software                                 ID214XE980234         495.00
---------------------------------------------------------------------------------------------------------------------------------
58   MDL              5-Aug  8059801     141153  ISIS Base software                                 IB214XE980100         925.00
---------------------------------------------------------------------------------------------------------------------------------
59   Computown       10-Sep  verbal      358223  IBM Pc 300PL 4.2 GB w/19in monitor                 1S689216U23N2684    2,720.00
---------------------------------------------------------------------------------------------------------------------------------
60   Computown       10-Sep  verbal      358223  IBM Pc 300PL 4.2 GB w/19in monitor                 1S689216U23N2641    2,720.00
---------------------------------------------------------------------------------------------------------------------------------
238   Computown       17-Sep              360244  Procurve Switch 4000M                              SG83160178          2,300.00
---------------------------------------------------------------------------------------------------------------------------------
239   Computown       22-Sep              361793  PC 300PL 4.2GB sys w/19in monitor                  23N1467             2,720.00
---------------------------------------------------------------------------------------------------------------------------------
240   Computown       22-Sep              361793  PC 300PL 4.2GB sys w/19in monitor                  23N1033             2,720.00
---------------------------------------------------------------------------------------------------------------------------------
241   Computown        6-Oct              366561  M Pro P2-4009.1GB                                  23F3332             3,250.00
---------------------------------------------------------------------------------------------------------------------------------
242   Computown        6-Oct  10598       366588  128MB 100MHZ ECC Module                            Memory - No S/N       437.50
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------
REF #    VENDOR         TOTAL    CK #                      % FUNDED  TOTAL FUNDED
---------------------------------------------------------------------------------

252   Univ. Imaging    3,985.00  2392                        100%    $   3,985.00
---------------------------------------------------------------------------------
252   Univ. Imaging    1,400.00  2392                        100%    $   1,400.00
---------------------------------------------------------------------------------
252   Univ. Imaging      700.00  2392                        100%    $     700.00
---------------------------------------------------------------------------------
252   Univ. Imaging      600.00  2392                        100%    $     600.00
---------------------------------------------------------------------------------
252   Univ. Imaging    5,650.00  2392                        100%    $   5,650.00
---------------------------------------------------------------------------------
252   Univ. Imaging      200.00  2392                        100%    $     200.00
---------------------------------------------------------------------------------
252   Univ. Imaging    4,200.00  2392                        100%    $   4,200.00
---------------------------------------------------------------------------------
252   Univ. Imaging    6,350.00  2392                        100%    $   6,350.00
---------------------------------------------------------------------------------
252   Univ. Imaging      350.00  2392                        100%    $     350.00
---------------------------------------------------------------------------------
252   Univ. Imaging       50.00  2392   43,185.00            100%    $      50.00
---------------------------------------------------------------------------------
237   Zymark          10,050.00  2327   10,050.00            100%    $  10,050.00
---------------------------------------------------------------------------------
609,863.67        609,863.67  ok                $ 531,290.91
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
COMPUTER HARDWARE:            -  
---------------------------------------------------------------------------------
40   Sabry            3,345.00  1045    3,345.00  accrue     65%    $   2,174.25
---------------------------------------------------------------------------------
41   CDW              1,301.00  2143              accrue     80%    $   1,040.80
---------------------------------------------------------------------------------
42   CDW              1,301.00  2143              accrue     80%    $   1,040.80
---------------------------------------------------------------------------------
43   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
44   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
45   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
46   CDW              1,002.00  2143              accrue     30%    $     801.60
---------------------------------------------------------------------------------
47   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
48   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
49   CDW                812.00  2143              accrue     80%    $     649.60
---------------------------------------------------------------------------------
50   CDW                812.00  2143   10,238.00  accrue     80%    $     649.60
---------------------------------------------------------------------------------
51   Spectrum           571.00  2144      571.00             80%    $     456.80
---------------------------------------------------------------------------------
55   Informax         2,195.00  2166                         70%    $   1,536.50
---------------------------------------------------------------------------------
56   Informax         2,195.00  2166                         70%    $   1,536.50
---------------------------------------------------------------------------------
95   Informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
96   Informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
97   informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
98   Informax           795.00  2166    7,570.00             70%    $     556.50
---------------------------------------------------------------------------------
57   MDL                495.00  2173                         80%    $     396.00
---------------------------------------------------------------------------------
58   MDL                925.00  2173    1,420.00             80%    $     740.00
---------------------------------------------------------------------------------
59   Computown        2,720.00  2189                         80%    $   2,176.00
---------------------------------------------------------------------------------
60   Computown        2,720.00  2189    5,440.00             80%    $   2,176.00
---------------------------------------------------------------------------------
238   Computown        2,300.00  2331                        100%    $   2,300.00
---------------------------------------------------------------------------------
239   Computown        2,720.00  2331                        100%    $   2,720.00
---------------------------------------------------------------------------------
240   Computown        2,720.00  2331                        100%    $   2,720.00
---------------------------------------------------------------------------------
241   Computown        3,250.00  2331                        100%    $   3,250.00
---------------------------------------------------------------------------------
242   Computown          437.50  2331                        100%    $     437.50
---------------------------------------------------------------------------------

4 of 6

Cytokinetics, Inc.

DATE
REF #  VENDOR    REC/INV   PO#     INVOICE #                  DESCRIPTION                      SERIAL #         COST       TOTAL
----------------------------------------------------------------------------------------------------------------------------------

243  Computown    6-Oct  10598        366588  128MB 100MHZ ECC Module                     Memory - No S/N       437.50     437.50
----------------------------------------------------------------------------------------------------------------------------------
248  Computown   20-Oct  Verbal       370998  Thinkpad                                    72299               3,050.00   3,050.00
----------------------------------------------------------------------------------------------------------------------------------
Computown   20-Oct  Verbal       370998  Thinkpad                                    71299/1             3,050.00   3,050.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   31-Jul               345499  Server 330 P2-333 #864021                   1S861021Y23AAD88    3,685.00   3,685.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   31-Jul               345499  50 GB Internal AIT tape drive sdx-300       3Y3KP               3,710.00   3,710.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               345499  Win NT server v4.0 #227.01152               BPC814C01665        1,460.00   1,460.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1014    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1047    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1467    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1032    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1049    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1503    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1033    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1051    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
72,548.00  72,548.00
----------------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT-OTHER:
----------------------------------------------------------------------------------------------------------------------------------
62  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311698     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
63  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311711     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
64  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311680     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
65  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311690     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
66  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311692     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
67  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311699     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
68  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311708     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
69  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311702     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
70  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311694     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
71  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311681     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
Computown    2-Jul  Sabry      336481-A  LaserJet 4000TN 17PPM 8MB 1200X1200DPI PCL6 1SUSNC128841        1,545.00   1,545.00
----------------------------------------------------------------------------------------------------------------------------------
72  Computown    2-Jul  Sabry        340497  IBM Pc 300PL 4.2 GB HD                      1S689216U23N1017    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
73  Computown    2-Jul  Sabry        340497  IBM Pc 300PL 4.2 GB HD                      1S689216U23N2668    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
91  Sears       13-Sep  Vaughan  exp report  Freezer 17 in                               BA83212874            579.99     579.99
----------------------------------------------------------------------------------------------------------------------------------
92  Sears       13-Sep  Vaughan  exp report  Refrig 18 in                                BA3609110             899.98     899.98
----------------------------------------------------------------------------------------------------------------------------------
15,420.97  15,420.97
----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE HARDWARE:
----------------------------------------------------------------------------------------------------------------------------------
74  ACD         14-Jul                       Toshiba DK424 (Model DKSue424A)             G28977             11,277.00  11,277.00
----------------------------------------------------------------------------------------------------------------------------------
Voice Center                                1239496
----------------------------------------------------------------------------------------------------------------------------------
ARCHITECT FEES:
----------------------------------------------------------------------------------------------------------------------------------
75  Dowler      28-May            9804001-2  Architect, blueprints, programming          NO S/N              3,600.98   3,600.98
----------------------------------------------------------------------------------------------------------------------------------
76  Dowler      15-Jul              9804003  Architect, construction documents           NO S/N              1,530.00   1,530.00
----------------------------------------------------------------------------------------------------------------------------------
255  Dowler      19-Oct              9804007  Architect, blueprints                       NO S/N                 50.00      50.00
----------------------------------------------------------------------------------------------------------------------------------
256  Dowler      19-Oct              9804006  Architect, construction documents           NO S/N              1,567.50   1,567.50
----------------------------------------------------------------------------------------------------------------------------------
Dowler       8-Sep              9804005  Architect                                   NO S/N              2,190.00   2,190.00

REF #  VENDOR      CK #                        % FUNDED TOTAL FUNDED
--------------------------------------------------------------------

243  Computown       2331  11,865.00             100%  $     437.50
--------------------------------------------------------------------
248  Computown  accrued     3,050.00             100%  $   3,050.00
--------------------------------------------------------------------
Computown  accrued     3,050.00             100%  $   3,050.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   2,948.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   2,968.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,168.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001  25,999.00              80%  $   1,714.40
--------------------------------------------------------------------
72,548.00  ok               $  60,372.65
--------------------------------------------------------------------
OFFICE EQUIPMENT-OTHER:
--------------------------------------------------------------------
62  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
63  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
64  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
65  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
66  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
67  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
68  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
69  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
70  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
71  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
Computown       1033   9,655.00              70%  $   1,081.50
--------------------------------------------------------------------
72  Computown       2058                         70%  $   1,500.10
--------------------------------------------------------------------
73  Computown       2058   4,286.00              70%  $   1,500.10
--------------------------------------------------------------------
91  Sears           2217                        100%  $     579.99
--------------------------------------------------------------------
92  Sears           2217   1,479.97             100%  $     899.98
--------------------------------------------------------------------
15,420.97  ok               $  11,238.67
--------------------------------------------------------------------
TELEPHONE HARDWARE:
--------------------------------------------------------------------
74  ACD        2014/2146  11,277.00  ok          80%  $   9,021.60
--------------------------------------------------------------------

--------------------------------------------------------------------
ARCHITECT FEES:
--------------------------------------------------------------------
75  Dowler          1016   3,600.98              70%  $   2,520.69
--------------------------------------------------------------------
76  Dowler          2099   1,530.00              80%  $   1,224.00
--------------------------------------------------------------------
255  Dowler     accrued        50.00             100%  $      50.00
--------------------------------------------------------------------
256  Dowler     accrued     1,567.50             100%  $   1,567.50
--------------------------------------------------------------------
Dowler          2286   2,190.00  need c      80%  $   1,752.00

5 of 6

Cytokinetics, Inc.

DATE
REF #  VENDOR       REC/INV  PO#  INVOICE #   DESCRIPTION   SERIAL #    COST        TOTAL       CK #
------------------------------------------------------------------------------------------------------------------

77  Dowler       15-Jul          9804004  Architect      NO S/N        38.34        38.34       2100      38.34
------------------------------------------------------------------------------------------------------------------
8,976.82     8,976.82              8,976.82
------------------------------------------------------------------------------------------------------------------
CABLING COSTS:
------------------------------------------------------------------------------------------------------------------
78  Valley Comm  26-Jun           38799A  Voice Cabling  NO S/N    11,363.67    11,363.67       2059  11,363.67
------------------------------------------------------------------------------------------------------------------
78  Valley Comm  26-Jun           38799A  Voice Cabling  NO S/N     9,671.04     9,671.04  accrued     9,671.04
------------------------------------------------------------------------------------------------------------------
21,034.71    21,034.71             21,034.71
------------------------------------------------------------------------------------------------------------------
TENANT IMPROVEMENT COSTS-OTHER
------------------------------------------------------------------------------------------------------------------
79  Cardkey      26-Aug           558778  Security Sys   0385-98G  12,052.00    12,052.00  1036/2158  12,052.00
------------------------------------------------------------------------------------------------------------------
12,052.00    12,052.00             12,052.00
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
91,694.20    91,694.20             91,694.20
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
TOTAL INV.  774,859.39

REF #  VENDOR                % FUNDED  TOTAL FUNDED
---------------------------------------------------

77  Dowler                     80%  $      30.67
---------------------------------------------------
ok                 $   7,144.86
---------------------------------------------------
CABLING COSTS:
---------------------------------------------------
78  Valley Comm                70%  $   7,954.57
---------------------------------------------------
78  Valley Comm  journal       70%  $   6,769.73
---------------------------------------------------
ok                 $  14,724.30
---------------------------------------------------
TENANT IMPROVEMENT COSTS-OTHER
---------------------------------------------------
79  Cardkey                    80%  $   9,641.60
---------------------------------------------------

-                  $   9,641.60
---------------------------------------------------

---------------------------------------------------
TOTAL HARDWARE     $ 631,184.05
---------------------------------------------------
TOTAL SOFT & TI    $  31,510.76
---------------------------------------------------
TOTAL FUNDED       $ 662,694.81

6 of 6

Exhibit 4.4

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

WARRANT AGREEMENT

TO PURCHASE SHARES OF THE SERIES A PREFERRED STOCK OF

CYTOKINETICS, INC.

DATED AS OF SEPTEMBER 25, 1998 (THE "EFFECTIVE DATE")

WHEREAS, Cytokenetics, Inc., a Delaware corporation (the "Company") has
entered into a Loan And Security Agreement dated as of September 25, 1998, and
related Promissory Note(s) (collectively, the "Loans") with Comdisco, Inc., a
Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Loans, the right to purchase shares of its Series A
Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loans and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.       GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For the first $1,000,000 portion of the Loans, the Company hereby
grants to the Warrantholder, and the Warrantholder is entitled, upon the terms
and subject to the conditions hereinafter set forth, to subscribe to and
purchase, from the Company, 45,000 fully paid and non-assessable shares of the
Company's Series A Preferred Stock ("Preferred Stock") at a purchase price of
$1.00 per share (the "Exercise Price") provided however, that from and after the
effective date of the registration statement for the Company's initial public
offering of its equity securities, the securities purchasable by the
Warrantholder upon the exercise of this Warrant Agreement shall be shares of the
Company's Common Stock ("Common Stock") which shares shall be purchasable by the
Warrantholder in the same number that the Warrantholder would otherwise have
been entitled to purchase had this Warrant Agreement remained exercisable for
shares of the Company's Preferred Stock. From and after the effective date of
the registration statement for the Company's initial public offering of its
equity securities, the Warrantholder shall not have any further right pursuant
to this Warrant Agreement to purchase shares of the Company's Preferred Stock.
The shares of Preferred Stock or Common Stock that are issuable from time to
time upon the exercise of this Warrant Agreement are sometimes referred to
herein as the "Stock.

In the event that the Company requests and the Warrantholder funds any
portion of the additional $250,000 Advances between the first $1,000,000 and up
to $1,500,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, for each Advance funded, 11,250 shares of Stock at the Exercise Price.

The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.

2.       TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) seven (7) years
or (ii) three (3) years from the effective date of the Company's initial public
offering, whichever is shorter.

- 1 -

3.       EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Stock in accordance with the following formula:

X = Y(A-B)
------
A

Where: X = the number of shares of Stock to be issued to the
Warrantholder.

Y = the number of shares of Stock requested to be exercised
under this Warrant Agreement.

A = the fair market value of one (1) share of Stock.

B = the Exercise Price.

For purposes of the above calculation, current fair market value of
Stock shall mean with respect to each share of Stock:

(i)      if the exercise is in connection with an initial
public offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Stock is convertible at
the time of such exercise;

(ii)     if this Warrant is exercised after, and not in
connection with the Company's initial public offering, and:

(a)      if traded on a securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise; or

(b)      if actively traded over-the-counter, the
fair market value shall be deemed to be the product of (x) the
average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise;

(iii)    if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Stock shall
be the product of (x) the highest price per share which the Company
could obtain from a willing buyer (not a current employee or director)
for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors
and (y) the number of shares of Common Stock into which each shares of
Stock is convertible at the time of such exercise unless the Company
shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving party, in which case
the fair market value of Stock shall be deemed to be the value received
by the holders of the Company's Stock on a common equivalent basis
pursuant to such merger or acquisition.

- 2 -

Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.       RESERVATION OF SHARES.

(a)      Authorization and Reservation of Shares. During the term of
this Warrant Agreement, the Company will at all times have authorized and
reserved a sufficient number of shares of its Stock to provide for the exercise
of the rights to purchase Stock as provided for herein.

(b)      Registration or Listing. If any shares of Stock required to be
reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
Securities Act of 1933, as amended ("1933 Act"), as then in effect, or any
similar Federal statute then enforced, or any state securities law, required by
reason of any transfer involved in such conversion), or listing on any domestic
securities exchange, before such shares may be issued upon conversion, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered, listed or approved for
listing on such domestic securities exchange, as the case may be.

5.       NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.       NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.       WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.

8.       ADJUSTMENT RIGHTS.

The purchase price per share and the number of shares of Stock
purchasable hereunder are subject to adjustment, as follows:

(a)      Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation whether or not the Company is the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (hereinafter referred to as a "Merger Event"), then, as a part
of such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.

(b)      Reclassification of Shares. If the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights

- 3 -

under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.

(c)      Subdivision or Combination of Shares. If the Company at any
time shall combine or subdivide its Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

(d)      Stock Dividends. If the Company at any time shall pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all
shares of the Company's stock outstanding immediately after such dividend or
distribution. The Warrantholder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Stock issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

(e)      Antidilution Rights. Additional antidilution rights applicable
to the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit _ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

(f)      Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Stock shall be entitled thereto) or for determining rights to vote in respect of
such Merger Event, dissolution, liquidation or winding up; (B) in the case of
any such Merger Event, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Stock shall be entitled to exchange
their Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least twenty (20) days
written notice prior to the effective date thereof.

Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

(g)      Timely Notice. Failure to timely provide such notice required
by subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a)      Reservation of Stock. The Stock issuable upon exercise of the
Warrantholder's rights has been duly and validly reserved and, when issued in
accordance with the provisions of this Warrant Agreement, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Stock issuable pursuant to this Warrant Agreement may be subject

- 4 -

to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended. The issuance of certificates for
shares of Stock upon exercise of the Warrant Agreement shall be made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Stock. The Company shall not be required to pay any tax
which may be payable in respect of any transfer involved and the issuance and
delivery of any certificate in a name other than that of the Warrantholder.

(b)      Due Authority. The execution and delivery by the Company of
this Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Loans and this Warrant Agreement are not
inconsistent with the Company's Charter or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Loans and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

(c)      Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.

(d)      Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:

(i)      The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 1,126,110 shares are issued
and outstanding, and (B) 5,550,000 shares of preferred stock, of which
5,300,000 shares are issued and outstanding and are convertible into
5,550,000 shares of Common Stock at $1.00 per share.

(ii)     The Company has reserved (A) 2,000,000 shares of
Common Stock for issuance under its under its 1997 Stock Option/Stock
Issuance Plan under which 1,503,890 options have been granted. There
are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire any authorized
but unissued shares of the Company's capital stock or other securities
of the Company.

(iii)    In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.

(e)      Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

(f)      Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the Stock
upon exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.

(g)      Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Stock issuable upon the exercise of the
Warrant in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.      REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

- 5 -

This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

(a)      Investment Purpose. The right to acquire Stock issuable upon
exercise of the Warrantholder's rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and the Warrantholder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or exemption.

(b)      Private Issue. The Warrantholder understands (i) that the
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.

(c)      Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Stock issuable
upon exercise of such rights unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel (which counsel may
either be inside or outside counsel to the Warrantholder) satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act has been taken, or (B) an exemption from the
registration requirements of the 1933 Act is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Stock issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner, and shall terminate as
to any particular share of Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Stock then
outstanding as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend.

(d)      Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.

(e)      Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1934 Act (the "1934 Act"), or file reports
pursuant to Section 15(d), of the 1934 Act", or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Stock pursuant to this Warrant Agreement, or
(ii) the Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Stock which might be made by it in reliance upon Rule 144 under the 1933 Act
may be made only in accordance with the terms and conditions of that Rule.

(f)      Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

11.      TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of

- 6 -

transfer in the form attached hereto as Exhibit III (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.

12.      MISCELLANEOUS.

(a)      Effective Date. The provisions of this Warrant Agreement shall
be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Company.

(b)      Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.

(c)      Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.

(d)      Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(e)      Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, attention: Venture Lease
Administration, cc: Legal Department, attn.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847)518-5088 and (ii) to the Company at 280 East
Grand Avenue, Suite 2, South San Francisco, CA 94080, attention: President
(and/or if by facsimile, (650) 624-3010 or at such other address as any such
party may subsequently designate by written notice to the other party.

(f)      Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

(g)      No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

(h)      Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.

(i)      Severability. In the event any one or more of the provisions
of this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

(j)      Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.

- 7 -

IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.

COMPANY: CYTOKENETICS, INC.

By: /s/ JON C. RICHARDS
---------------------
Title: Chief Financial Officer

WARRANTHOLDER: COMDISCO, INC.

By: /s/ JAMES P. LABE
---------------------
Title: JAMES P. LABE
PRESIDENT COMDISCO VENTURES DIVISION

- 8 -

EXHIBIT I

NOTICE OF EXERCISE

TO:      ________________________

(1)      The undersigned Warrantholder hereby elects to purchase _________
shares of the Series A Preferred Stock of ___________, pursuant to the
terms of the Warrant Agreement dated the ____ day of _________ 19___
(the "Warrant Agreement") between _____________________ and the
Warrantholder, and tenders herewith payment of the purchase price for
such shares in full, together with all applicable transfer taxes, if
any.

(2)      In exercising its rights to purchase the Series A Preferred Stock of
________________, the undersigned hereby confirms and acknowledges the
investment representations and warranties made in Section 10 of the
Warrant Agreement.

(3)      Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the undersigned or in such
other name as is specified below.

_______________________________
(Name)

_______________________________
(Address)

WARRANTHOLDER: COMDISCO, INC.

By:    _________________________

Title: _________________________

Date:  _________________________

- 9 -

EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned _________________ , hereby acknowledge receipt of the
"Notice of Exercise" from Comdisco, Inc., to purchase _______ shares of the
Series A Preferred Stock of____________ pursuant to the terms of the Warrant
Agreement, and further acknowledges that _______ shares remain
subject to  purchase under the terms of the Warrant Agreement,

COMPANY:

By:    _______________________

Title: _______________________

Date:  _______________________

- 10 -

EXHIBIT III

TRANSFER NOTICE

(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT AGREEMENT EXECUTE THIS FORM AND
SUPPLY REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to

___________________________________________________________
(Please Print)

whose address is
___________________________________________________________

___________________________________________________________

Dated: ______________________________

Holder's Signature: _________________

Holder's Address: ___________________

_____________________________________

Signature Guaranteed: _____________________________________

NOTE:    The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant Agreement.

- 11 -

Exhibit 4.5

LOAN AND SECURITY AGREEMENT

THIS AGREEMENT (the "Agreement"), dated as of December 16, 1999 (the
"Closing Date") is entered into by and between Cytokinetics, Incorporated, a
Delaware corporation having a principal place of business at 280 East Grand
Avenue, South San Francisco, CA 94080 (the "Borrower") and Comdisco, Inc., a
Delaware corporation having a principal place of business at 6111 North River
Road, Rosemont, Illinois 60018 (the "Lender"). In consideration of the mutual
agreements contained herein, the parties hereto agree as follows:

WHEREAS, Borrower has requested Lender to make available to Borrower a
loan in the aggregate principal amount of up to FIVE MILLION and 00/100 DOLLARS
($5,000,000) (as the same may from time to time be amended, modified,
supplemented or revised, the "Loan"), which shall be available in minimum
installments of TWO HUNDRED FIFTY THOUSAND and 00/100 DOLLARS ($250,000) each
(the "Advance") on various dates prior to December 16, 2000 ("Advance Date(s)"),
which would be evidenced by Secured Promissory Note(s) executed by Borrower
substantially in the form of EXHIBIT A-1 AND A-2 hereto (as the same may from
time to time be amended, modified, supplemented or restated the "Note(s)");

NOW, THEREFORE, it is agreed:

SECTION 1. THE LOAN

1.1      Subject to the terms and conditions set forth herein, Lender
shall lend to Borrower the aggregate original principal amount of FIVE MILLION
AND 00/100 DOLLARS ($5,000,000) in two parts, the first part in the amount of
Two Million Dollars ($2,000,000) ("Part I") and the second part in the amount of
Three Million dollars ($3,000,000) ("Part II') together with interest at the
rate of eight and one quarter percent (8.25%) per annum due and payable in
monthly installments as set forth in the Note.

Proceeds of this Loan may finance computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain microscopy
equipment and other equipment approved by Lender and evidenced by Secured
Promissory Note(s) executed by Borrower substantially in the form of EXHIBIT A-1
. Up to 20% of the Loan may be used to finance software and tenant improvements
evidenced by Secured Promissory Note(s) executed by Borrower substantially in
the form of EXHIBIT A-2. Lender will not finance custom equipment, installation
costs, delivery costs, rolling stock, special tooling, molds and hand held
items.

1.2      Upon the occurrence of and during an Event of Default (as
defined herein), interest shall thereafter be calculated at a rate of five
percent (5%) in excess of the rate that would otherwise be applicable ("Default
Rate"). All such interest shall be due and payable in arrears, on the first day
of the following month.

1.3      Notwithstanding any provision in this Agreement, the Note, or
any other "Loan Document" (as defined herein), it is not the parties' intent to
contract for, charge or receive interest at a rate that is greater than the
maximum rate permissible by law which a court of competent jurisdiction shall
deem applicable hereto (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans) (the "Maximum Rate"). If the Borrower actually pays Lender an amount of
interest, chargeable on the

Loan and Security Agr.                 -1-

total aggregate principal Secured Obligations of Borrower under this Agreement
and the Note (as said rate is calculated over a period of time that is the
longer of (i) the time from the date of this Agreement through the maturity time
as set forth on the Note, or (ii) the entire period of time that any principal
is outstanding on the Note), which amount of interest exceeds interest
calculated at the Maximum Rate on said principal chargeable over said period of
time, then such excess interest actually paid by Borrower shall be applied
first, to the payment of principal outstanding on the Note; second, after all
principal is repaid, to the payment of Lender's out of pocket costs, expenses,
and professional fees which are owed by Borrower to Lender under this Agreement
or the Loan Documents; and third, after all principal, costs, expenses, and
professional fees owed by Borrower to Lender are repaid, the excess (if any)
shall be refunded to Borrower.

1.4      In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 1.1.

1.5      Upon and during the continuation of an Event of Default
hereunder (as defined herein), all Secured Obligations, including principal,
interest, compounded interest, and reasonable professional fees, shall bear
interest at a rate per annum equal to the Default Rate.

1.6      Borrower shall have the option to prepay the Note, in whole or
in part, at any time after the date hereof by paying the principal amount
together with all accrued and unpaid interest with respect to such principal
amount, as of the date of such prepayment and the Balloon Payment as described
in the Note together with a prepayment premium equal to the difference, if any,
between (x) the amount being prepaid and (y) the present value, discounted at
the Treasury Rate, of each installment of principal and interest being prepaid
discounted to the date of prepayment. If the amount in (x) is greater than the
amount in (y), no prepayment premium shall be due. The "Treasury Rate" shall
mean the then prevailing yield on US Treasury Constant Maturities for the most
recent business day, as quoted in the Federal Reserve Statistical Release H15,
as of the date of prepayment for an obligation of comparable maturity to the
maturity date of the Note.

SECTION 2. SECURITY INTEREST

As security for the payment of all indebtedness ("Indebtedness") of the
Borrower to the Lender hereunder and under the Note, as the same may be renewed,
extended for any period or rearranged, and the performance by the Borrower of
its other obligations hereunder (the Indebtedness and such other obligations
being hereinafter sometimes collectively referred to as the "Secured
Obligations"), the Borrower hereby assigns to the Lender, and grants to the
Lender a first priority security interest in, all the Borrower's right, title,
and interest in and to the following property ("Collateral"): (i) the equipment
and other property (the "Equipment") described in Exhibit B attached hereto; and
(ii) all proceeds, products, replacements, additions to, substitutions for and
accessions to any and all Equipment including, without limitation, the proceeds
applicable to the insurance referred to in Section 4 hereof.

Equipment shall consist of computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain types of
microscopy equipment and other items of equipment approved by Lender. Up to 20%
of the Loan may be used for software and tenant improvements.

Loan and Security Agr.                 -2-

SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER

The Borrower represents, warrants and agrees that:

3.1      it has good title in and to the Equipment, free of all liens,
security interests, encumbrances and claims whatsoever, except for the interest
of the Lender therein;

3.2      it has the full power and authority to, and does hereby grant
and convey to the Lender, a valid first priority perfected security interest in
the Collateral as security for the Secured Obligations, free of all liens,
security interests, encumbrances and claims, and shall execute such Uniform
Commercial Code ("UCC") financing statements in connection herewith as the
Lender may reasonably request. No other lien, security interest, adverse claim
or encumbrance has been created by Borrower or is known by Borrower to exist
with respect to any Collateral;

3.3      it is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on the Collateral or the business of the Borrower
taken as a whole;

3.4      the execution, delivery and performance of the Note, this
Agreement, the Warrant Agreement dated December 16, 1999 pursuant to which
Borrower granted to Lender the right to purchase the number of shares of
preferred stock as set forth therein ("Warrant Agreement"), and all financing
statements, certificates and other documents required to be delivered or
executed in connection herewith (collectively, the "Loan Documents") have been
duly authorized by all necessary corporate action of Borrower, the individual or
individuals executing the Loan Documents were duly authorized to do so, the
Equipment is personal property and as used by the Borrower will not be or become
fixtures under applicable law, and the Loan Documents constitute legal, valid
and binding obligations of the Borrower, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization
or other similar laws generally affecting the enforcement of the rights of
creditors;

3.5      the Loan Documents do not and will not violate any provisions
of its Certificate of Incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Collateral, other than those created by this
Agreement;

3.6      the execution, delivery and performance of the Loan Documents
do not require the consent or approval of any other person or entity including,
without limitation, any regulatory authority or governmental body of the United
States or any state thereof or any political subdivision of the United States or
any state thereof.

3.7      as of the date hereof no fact or condition exists that would
(or could, with the passage of time, the giving of notice, or both) constitute
an Event of Default under this Agreement or any of the Loan Documents and no
event which has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing. For purposes of this Agreement, "Material
Adverse Effect" means a material adverse effect upon (i) the business,
operations, properties, assets or financial condition of Borrower; or (ii) the
ability of Borrower to perform the Secured Obligations.

Loan and Security Agr.                 -3-

SECTION 4. INSURANCE AND RISK OF LOSS

4.1      Risk of loss of, damage to or destruction of the Equipment
shall be borne by the Borrower and effective from the date of this Agreement and
until the payment and performance in full of all Secured Obligations, Borrower
shall at its own expense cause to be carried and maintained all risk casualty
insurance (covering risk of fire, theft and other such risks as the Lender may
require, including standard and extended coverage) with respect to each item of
Equipment in an amount no less than the replacement costs applicable to such
item of Equipment during the term of this Agreement. All policies evidencing
such casualty insurance shall contain a standard mortgagee's endorsement and
shall provide for at least thirty days prior written notice by the underwriter
or insurance company to the Lender in the event of cancellation or expiration.
Borrower shall provide Lender with insurance certificates evidencing the
foregoing at time of closing.

4.2      If any item of Equipment is lost or rendered unusable as a
result of any physical damage to or destruction of such item of Equipment during
the period from the date hereof to and including the maturity date under the
Note or the date all Secured Obligations hereunder have been fully satisfied,
whichever is later, Borrower shall give to Lender prompt notice thereof.
Borrower shall determine, within fifteen (15) days after the date of occurrence
of such loss, damage or destruction, whether such item of Equipment can be
repaired and restored to the condition in which such item of Equipment was
required to be maintained as of the date immediately preceding such damage. If
Borrower determines that such item of Equipment can be repaired, Borrower, at
its expense, shall cause such item of Equipment to be promptly repaired. If
Borrower determines that such item of I Equipment is lost or cannot be repaired,
Borrower shall promptly notify the Lender and such item of Equipment shall be
deemed to have suffered a "Casualty Loss" for purposes of this Section as of the
date of the occurrence of such loss. Within fifteen (15) days following the
occurrence of any such loss, damage or destruction, Borrower shall notify the
Lender of the item(s) of Equipment which has suffered such Casualty Loss ("Loss
Item"), and within thirty (30) days thereafter (the "Settlement Date"), Borrower
shall either (a) replace such item(s) of Equipment with equipment of the same
model, type and feature configuration, in an operating condition and repair no
less than that required hereunder of the damaged or lost equipment immediately
prior to the date of such damage or loss, and having a fair market value no less
than the Casualty Value (as defined herein) applicable to such item of Equipment
as of the date immediately prior to such damage, in which case such replacement
equipment shall for all purposes hereunder become part of the Collateral and
(without limiting the preceding provisions) Borrower shall grant to Lender a
first lien and security interest in respect of such replacement equipment
pursuant to the terms of this Agreement, and Borrower shall provide the Lender
evidence satisfactory to the Lender of Borrower's good and marketable title to
such replacement equipment (free of any liens, security interests or
encumbrances other than those created by this Agreement and Borrower shall be
entitled to receive the amount of any insurance or other recovery received by
Lender up to cost of obtaining the replacement equipment; or (b) so long as no
Event of Default or event which with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing,
Borrower may provide substitute equipment satisfactory to Lender to become part
of the Collateral and Borrower shall grant to Lender a first lien and security
interest in respect of such substitute equipment pursuant to the terms of this
Agreement, and Borrower shall provide the Lender evidence satisfactory to Lender
of Borrower's good and marketable title to such substitute equipment (free of
any liens, security interests or

Loan and Security Agr.                 -4-

encumbrances other than created by this Agreement and Lender shall provide any
required endorsements in connection with any insurance proceeds received by
Borrower pursuant to such insurance policies; or (c) Borrower shall pay Lender
the insurance proceeds payable pursuant to such insurance policies ("Insurance
Proceeds")with respect to such Loss Item(s) and the principal amount of the Note
(and interest accrued on the principal amount so prepayable) shall become due
and payable on the Settlement Date to the extent of the replacement cost for all
such Loss Item(s). For purposes of this Section 4.2, Casualty Value shall mean
an amount equal to the greater of the fair market value of the Equipment as of
the date of the Casualty Loss or the outstanding principal and accrued interest
on the Loan. Moneys so received shall be applied, on the date of such receipt,
as follows: first, to pay any accrued interest on the outstanding principal
amount of the Note on such date; second, to prepay, the outstanding principal
amount of the Note (to the extent of the fair market value attributable to such
Loss Item(s)); third, to pay any other Indebtedness of amounts then due and
owing to the Lender hereunder; and fourth, so long as there has occurred no
Event of Default under Section 8 hereof and no event which with the giving of
notice or passage of time or both would constitute an Event of Default, has
occurred and is continuing, Borrower and Lender hereby agree that the balance of
any such Insurance Proceeds shall be paid promptly to the Borrower.

4.3      Effective upon the date hereof under the Note and while there
are any Secured Obligations outstanding, Borrower shall cause to be carried and
maintained comprehensive general liability insurance with regard to the
Collateral against risks customarily insured against in the Borrower's business.
Such risks shall include, without limitation, the risks of death, bodily injury
and property damage associated with the Collateral. All policies evidencing such
insurance shall provide for at least thirty (30) days prior written notice by
the underwriter or insurance company to the Lender in the event of cancellation
or expiration.

4.4      Borrower shall and does hereby indemnify and hold Lender, its
agents and shareholders harmless from and against any and all claims, costs,
expenses, damages and liabilities (including without limitation such claims,
costs, expenses, damages and liabilities based on liability in tort including
without limitation strict liability in tort) including reasonable attorneys'
fees, arising out of Borrower's ownership, possession, operation, control, use,
maintenance, delivery, or other disposition of the Collateral. Notwithstanding
the foregoing, Borrower shall not be responsible under the terms of this Section
4.4 to a party indemnified hereunder for any claims, costs, expenses, damages
and liabilities occasioned by the negligence or willful misconduct of such
indemnified party.

SECTION 5. COVENANTS OF BORROWER

Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

5.1      Borrower shall maintain the Equipment in good operating order,
repair, condition and appearance and protect the Equipment from deterioration,
other than normal wear and tear. Borrower shall not use the Equipment or permit
its use for any purpose other than for which it was designed. Borrower's
obligation regarding the maintenance of the Equipment shall include, without
limitation, all maintenance, repair, refurbishment and replacement recommended
or advised either by the manufacturer, or that commonly performed by prudent
business and/or professional practice. Any exceptions or qualifications
expressed in this Agreement relating to normal or

Loan and Security Agr.                 -5-

ordinary wear and tear shall not be deemed to limit Borrower's obligations
pursuant to the preceding sentence.

5.2      Borrower shall only relocate any item of the Collateral
provided that: (a) it shall have caused to be filed and/or delivered to the
Lender all UCC financing statements, certificates or other documents or
instruments necessary to continue in effect the first prior perfected security
interest of the Lender in the Collateral, and (b) it shall have given the Lender
no less than fifteen (15) days prior written notice of such relocation.

5.3      Upon the request of Lender, Borrower shall, during business
hours, make the Equipment available to Lender for inspection at the place where
it is normally located and shall make Borrower's log and maintenance records
pertaining to the Equipment available to the Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

5.4      Upon the request of Lender, Borrower shall cause the Equipment
to be plainly, permanently and conspicuously marked, by stenciling or by metal
tag or plate affixed thereto, indicating Lender's security interest in the
Equipment. Borrower shall replace any such stenciling, tag or plate which may be
removed or destroyed or become illegible. Borrower shall keep all Equipment free
from any marking or labeling which might be interpreted as a claim of ownership
adverse to Borrower's.

5.5      Borrower covenants and agrees to pay when due, all taxes, fees
or other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral.

5.6      Borrower shall furnish to Lender the financial statements
listed hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

(a)      as soon as practicable (and in any event within
thirty (30) days) after the end of each month: an internally prepared
income statement, balance sheet, and cash flow statement, (including
the commencement of any material litigation by or against Borrower),
each certified by Borrower's Chief Executive or Financial Officer to be
true and correct;

(b)      as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited Financial
Statements, setting forth in comparative form the corresponding figures
for the preceding fiscal year, and accompanied by any audit report and
opinion of the independent certified public accountants selected by
Borrower; and

(c)      promptly any additional information (including but
not limited to tax returns, income statements, balance sheets, and
names of principal creditors) as Lender reasonably believes necessary
to evaluate Borrower's continuing ability to meet financial
obligations.

Loan and Security Agr.                 -6-

5.7      Notwithstanding the foregoing, after the effective date of the
initial registration statement covering a public offering of Borrower's
securities, the term "Financial Statements" shall be deemed to refer to only
those statements required by the Securities and Exchange Commission, to be
provided no less frequently than quarterly. Borrower will from time to time
execute, deliver and file, alone or with Lender, any financing statements,
security agreements or other documents; and take all further action that may be
necessary, or that Lender may reasonably request, to confirm, perfect, preserve
and protect the security interests intended to be granted hereby, and in
addition, and for such purposes only, Borrower hereby authorizes Lender to
execute and deliver on behalf of Borrower and to file such financing statements,
security agreement and other documents without the signature of Borrower either
in Lender's name or in the name of Borrower as agent and attorney-in-fact for
Borrower.

5.8      Borrower shall protect and defend Borrower's title as
well as the interest of the Lender against all persons claiming any interest
adverse to Borrower or Lender and shall at all times keep the Collateral free
and clear from any attachment or levy, liens or encumbrances whatsoever (except
any placed thereon by Lender, or any liens arising by operation of law with
respect to any obligations not yet overdue or any other liens consented to in
writing by Lender) and shall give Lender immediate written notice thereof.

SECTION 6. CONDITIONS PRECEDENT TO LOAN

The obligation of Lender to fund the Loan on each Advance Date(s) shall be
subject to satisfaction by Borrower or waiver by Lender, in Lender's sole
discretion, of the following conditions:

6.1      (a) The Advance Date(s) for any installment shall occur on or
before December 16, 2000.

6.2      DOCUMENT DELIVERY. Borrower, on or prior to the Closing Date,
shall have delivered to Lender the following, in form and substance reasonably
satisfactory to Lender:

(a)      executed originals of the Agreement, Note(s), Warrant
Agreement and any documents reasonably required by Lender to effectuate
the liens of Lender, with respect to all Collateral;

(b)      certified copy of resolutions of Borrower's board of
directors evidencing approval of the borrowing and other transactions
evidenced by the Loan Documents;

(c)      certified copies of the Certificate of Incorporation
and the Bylaws of Borrower, as amended through the Closing Date;

(d)      certificate of good standing for Borrower from its
state of incorporation and similar certificates from all other
jurisdictions in which it does business and where the failure to be
qualified would have a Material Adverse Effect;

(e)      such other documents as Lender may reasonably
request.

6.3      ADVANCE REQUEST. Borrower, on or prior to each Advance
Date(s), shall have delivered to Lender the following:

Loan and Security Agr.                 -7-

(a)      a minimum of two (2) business days prior to the
Advance Date(s), written notice in the form of an Advance Request, or
as otherwise specified by Lender from time to time, specifying amount
of such Advance and wire transfer instructions;

(b)      such other documents as Lender may reasonably
request.

6.4      PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a first
priority perfected security interest in the Collateral. Such actions shall
include, without limitation, the delivery to Lender of all appropriate financing
statements, executed by Borrower, as to the Collateral granted by Borrower for
all jurisdictions as may be necessary or desirable to perfect the security
interest of Lender in such Collateral

6.5      ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the
Advance Date, no fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute an Event of Default under
this Agreement or any of the Loan Documents.

6.6      MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance
Date, no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.

SECTION 7. ASSIGNMENT BY LENDER

7.1      Borrower acknowledges and understands that Lender may sell and
assign all or a part of its interest hereunder and under the Note and Loan
Documents to any person or entity (an "Assignee"). After such assignment the
term Lender shall mean such Assignee, and such Assignee shall be vested with all
rights, powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note, it will endorse thereon a notation as to the
portion of the principal of the Note which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid
thereon.

SECTION 8. DEFAULT

The occurrence of any one or more of the following events (herein
called "Events of Default") shall constitute a default hereunder and under the
Note:

8.1      The Borrower defaults in the payment of any principal or
interest payable under this Agreement, the Note or any of the other Loan
Documents and such default continues for more than five (5) days after the due
date thereof;

Loan and Security Agr.                 -8-

8.2      The Borrower defaults in the payment or performance of any
other covenant or obligation of the Borrower hereunder or under the Note or any
other Loan Documents for more than ten (10) days after the Lender has given
notice of such default to the Borrower;

8.3      Any representation or warranty made herein by the Borrower
shall prove to have been false or misleading in any material respect;

8.4      The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the adjudication of Borrower
as a bankrupt, or the filing by Borrower of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or the filing of any answer by Borrower admitting, or the failure by
Borrower to deny, the material allegations of a petition filed against it for
any such relief, or the seeking or consenting by Borrower to, or acquiescence by
Borrower in, the appointment of any trustee, receiver or liquidator of Borrower
or of all or any substantial part of the properties of Borrower, or the
inability of Borrower to pay its debts when due, or the commission by Borrower
of any act of bankruptcy as defined in the Federal Bankruptcy Act, as amended;

8.5      The failure by Borrower, within sixty (60) days after the
commencement of any proceeding against Borrower seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, to obtain the
dismissal of such proceeding or, within sixty (60) days after the appointment,
without the written consent or acquiescence of Lender, of any trustee, receiver
or liquidator of Borrower or of all or any substantial part of the properties of
Borrower, to vacate such appointment; or

8.6      The default by Borrower under any other notes or other
agreement for borrowed money, lease or other agreement between Borrower and
Lender.

SECTION 9. REMEDIES

Upon the occurrence hereof of any one or more Events of Default,
Lender, at its option, may declare the Note to be accelerated and immediately
due and payable, (provided, that upon the occurrence of an Event of Default of
the type described in 8.4 or 8.5, the Note and all other Secured Obligations
shall automatically be accelerated and made due and payable without any further
act) whereupon the unpaid principal of and accrued interest on such Note shall
become immediately due and payable, and shall thereafter bear interest at the
Default Rate and calculated in accordance with Section 1.2. Lender may exercise
all rights and remedies with respect to the Collateral granted pursuant hereto
for such Note, or otherwise available to it under applicable law, including the
right to release, hold or otherwise dispose of all or any part of the Collateral
and the right to utilize, process and commingle the Collateral.

Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere.

Loan and Security Agr.                 -9-

Borrower agrees that any such public or private sale may occur upon five (5)
calendar day's notice to Borrower. Lender may require Borrower to assemble the
Collateral and make it available to Lender at a place designated by Lender which
is reasonably convenient to Lender and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the collateral shall be
distributed by Lender in the following order of priorities:

First, to Lender in an amount sufficient to pay in full Lender's
reasonable costs and professionals' and advisors' fees and expenses;

Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose in
its sole discretion; and

Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction
may direct.

The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Secured Obligations.

SECTION 10. MISCELLANEOUS

10.1     Borrower shall remain liable to Lender for any unpaid Secured
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender's offices.

10.2     The powers conferred upon Lender by this Agreement are solely
to protect its interest in the Collateral and shall not impose any duty upon
Lender to exercise any such powers.

10.3     This is a continuing Agreement and the grant of a security
interest hereunder shall remain in full force and effect and all the rights,
powers and remedies of Lender hereunder shall continue to exist until the
Secured Obligations are paid in full as the same become due and payable. When
Borrower has paid in full all Secured Obligations, Lender will execute a written
termination statement, reassigning to Borrower, without recourse, the Collateral
and all rights conveyed hereby and return possession (if Lender has possession)
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of any other rights, powers and remedies of Lender. Furthermore,
regardless of whether or not the UCC is in effect in the jurisdiction where such
rights, powers and remedies are asserted, Lender shall have the rights, powers
and remedies of a secured party under the UCC.

10.4     Upon payment in full of all Secured Obligations, the Lender
shall cancel the Note, this Agreement and all UCC financing statements, if any,
and shall promptly deliver all such canceled documents to the Borrower.

10.5     GOVERNING LAW. This Agreement, the Note and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement shall be governed by, and

Loan and Security Agr.                 -10-

construed and enforced in accordance with the laws of the State of Illinois
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.

10.6     CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note or any of the other
Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note and the other Loan Documents. Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 10.8 below and shall be deemed effective and received as set
forth in Section 10.8 below. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of either
party to bring proceedings in the courts of any other jurisdiction.

10.7     Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

10.8     Any notice required or given hereunder shall be deemed
properly given upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) or three (3) days after
mailed, postage prepaid, in each case, addressed to the designated recipient at
its address set forth herein or such other address as such party may advise the
other party by notice given in accordance with this provision.

10.9     Lender and Borrower acknowledge that there are no agreements
or understandings, written or oral, between Lender and Borrower with respect to
the Loan, other than as set forth herein, in the Note and the other Loan
Documents and that this Agreement, the Note and the other Loan Documents contain
the entire agreement between Lender and Borrower with respect thereto. None of
the terms of this Agreement, the Note and the other Loan Documents may be
amended except by an instrument executed by each of the parties hereto.

10.10    No omission, or delay, by Lender at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Borrower at any time designated, shall be a
waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.

10.11    All agreements, representations and warranties contained in
this Agreement or the Note, or in any Loan Documents delivered pursuant hereto
or in connection herewith shall be for the benefit of Lender and any Assignee
and shall survive the execution and delivery of this Agreement or the Note and
the expiration or other termination of this Agreement or the Note.

10.12    This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

Loan and Security Agr.                 -11-

10.13    This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note or any of the other Loan
Documents without Lender's express written consent and any such attempted
assignment shall be void and of no effect. Any assignment by Borrower in
connection with a "Merger" (as defined below) shall be subject to Lender's prior
consent. Any consent granted by Lender shall be conditioned upon such surviving
entity or transferee assuming Borrower's Secured Obligations hereunder pursuant
to assignment documents reasonably acceptable to Lender. If Lender reasonably
withholds its consent to such assignment in connection with a Merger, the
outstanding principal and accrued and unpaid interest shall be prepaid in whole
without a prepayment premium.

For purposes of this Agreement, a "Merger" shall mean any consolidation
or merger of the Borrower with or into any other corporation or entity, any sale
or conveyance of an or substantially all of the assets or stock of the Borrower
by or to any other person or entity in which Borrower is not the surviving
entity.

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

BORROWER: CYTOKINETICS, INCORPORATED.

By: /s/ JAMES SABRY
---------------------
Title: 
Date: _________________

ACCEPTED IN ROSEMONT, ILLINOIS:

LENDER: COMDISCO, INC.

By: /s/ JILL C. HANSES
--------------------
Title: JILL C. HANSES SENIOR VICE
PRESIDENT
Date: DEC 23 1999

Loan and Security Agr.                 -12-

EXHIBIT A-1
SECURED PROMISSORY NOTE

Date: ____________
$______
Due: _____________

FOR VALUE RECEIVED, Cytokinetics, Inc., Inc. a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of ____________________________and 00/100 Dollars
($______________) together with interest at eight and one quarter percent
(8.25%) per annum from the date of this Note to maturity of each installment on
the principal hereof remaining from time to time unpaid, such principal and
interest to be paid 48 equal monthly installments of $___________each,
commencing__________________and on the same day of each month thereafter to and
including_____________ and an additional installment in the amount of $____(15%)
("Balloon Payment")* to be paid on___________________, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein. Attached hereto as Exhibit B is a
list of Collateral which is being financed with the proceeds of the Loan
evidenced by this Note, which Collateral shall be deemed to be listed on Exhibit
B to the Loan Agreement.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

BORROWER:                          CYTOKINETICS, INC.
280 East Grand Ave
South San Francisco, CA 94080

Signature: _________________________

Print Name: ________________________

Title: ______________________________

* Borrower may request Lender to finance the Balloon Payment over 12 months at
8%. In that case a new promissory note will be prepared.

-1-

EXHIBIT A-2
SECURED PROMISSORY NOTE

Date: ____________
$______
Due: _____________

FOR VALUE RECEIVED, Cytokinetics, Inc., Inc. a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of ____________________________and 00/100 Dollars
($ _______) together with interest at eight and one quarter percent (8.25%) per
annum from the date of this Note to maturity of each installment on the
principal hereof remaining from time to time unpaid, such principal and interest
to be paid 36 equal monthly installments of $__________each,
commencing__________________and on the same day of each month thereafter to and
including____________ and an additional installment in the amount of $____(15%)
("Balloon Payment")* to be paid on _______, such installments to be applied
first to accrued and unpaid interest and the balance to unpaid principal.
Interest shall be computed on the basis of a year consisting of twelve months of
thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein. Attached hereto as Exhibit B is a
list of Collateral which is being financed with the proceeds of the Loan
evidenced by this Note, which Collateral shall be deemed to be listed on Exhibit
B to the Loan Agreement.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

BORROWER:                          CYTOKINETICS, INC.
280 East Grand Ave
South San Francisco, CA 94080

Signature: _________________________

Print Name: ________________________

Title: _____________________________

* Borrower may request Lender to finance the Balloon Payment over 12 months at
8%. In that case a new promissory note will be prepared.

-1-

Amendment No. 1 to Loan and Security Agreement

This Amendment Agreement No. 1 ("Amendment") to the Loan and Security
Agreement dated as of December 16, 1999 is entered into this 29 Th day of June,
2000 by and between Cytokinetics, Inc., a California corporation, with its chief
executive offices and principal place of business at 280 East Grand Avenue,
Suite 2, South San Francisco, CA 94080 ("Borrower") and Comdisco, Inc., a
Delaware corporation, with its chief executive offices and principal place of
business at 6111 North River Road, Rosemont, IL 60018 ("Lender").

RECITALS

WHEREAS, PURSUANT to the terms and conditions set forth in the Loan and
Security Agreement dated as of December 16, 1999 between Borrower and Lender
(hereinafter, "Loan Agreement"), the parties have entered into that certain
Secured Promissory Note dated June 29, herewith (the "Note(s)") whereby for
value received, Borrower promises to pay certain payments to Lender in the
original principal amount of Six Hundred Twenty Seven Thousand Five Hundred
Thirteen and 27/100 Dollars ($627,513.27);

WHEREAS, IN connection with the issuance of the Note, Lender and
Borrower wish to amend the Loan Agreement to include the Exhibit B as required
under the Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, Borrower and Lender hereby agree as follows:

1.       Except as expressly set forth herein, all terms used herein shall have
the meanings set forth in the Loan Agreement.

2.       Borrower and Lender agree that the Exhibit B attached hereto shall be
incorporated and made a part of the Loan Agreement and the equipment described
thereon shall be "Equipment" as set forth in the Loan Agreement.

3.       Except as specifically amended hereby, the terms and conditions of the
Loan Agreement are hereby reaffirmed and remain in full force and effect, and
from and after the date hereof the "Agreement" shall mean the "Agreement" as
amended by this Amendment.

4.       This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

1

IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this
Amendment as of the day and year first above written.

BORROWER                                   CYTOKINETICS, INC

Signature: /s/ JAMES SABRY
----------------
Print Name: JAMES SABRY

Title: CEO

ACCEPTED IN ROSEMONT, ILLINOIS

LENDER                                     COMDISCO, INC.

Signature: _________________________

Print Name: ________________________

Title: _____________________________

2

EXHIBIT B

CYTOKINETICS
SCHEDULE OF FIXED ASSETS

INVOICE
DATE               VENDOR                 DESCRIPTION          INVOICE #                 SERIAL NO.                QTY
-----------------   ------------------   --------------------------   ----------   ------------------------------------   ---

COMPUTER HARDWARE

09/03/99          Dell                 Dell PIII 500K GX1/T         272857823                   4UJ1W                    5
09/03/99          Dell                 Dell 6450 PIII/MT             27322227                   4UJ20                    2
09/08/99          The Computer Guys    HP Procurve Switch 4000M       11485      SG92602333,SY1899,SY1699,000AJ14D767
09/21/99          The Computer Guys    HP NetServer E60               11558                  US93300835
09/24/99          Dell                 G810 21" Monitor             280963745      QI93098826,QI93098830,QI93098834      3
09/28/99          The Computer Guys    Shiva Lanrover/E               11592                  PE 13005984                 1
10/05/99          Dell                 Dell 6450 PIII/MT            284567401                   6HVIQ                    1
10/06/99          Dell                 Dell PIII 500K GX1/T         284566569                   6JMA6                    2
10/08/99          Dell                 G810 21" Monitor             284564598                 QI91584578                 1
10/14/99          Dell                 Inspiron 3500 A366GT         280591603                   V3TG3                    1
10/19/00          Dell                 Dell PIII 500K GX1/T         288359367         7BA1L,7BA1S,7BA1X,7BA20,7BA21      5
10/29/99          Dell                 G810 21" Monitor             292634888                    n/a                     1
11/04/99          Dell                 Dell PIII 500K GX1/T         296076011         815TD;815TJ;815TM;815TR;815TY      5
11/08/99          The Computer Guys    HP Laser Jet 4050N             11958                   USQC054318                 1
11/09/99          The Computer Guys    IOMEGA Zip 100MB External      11971                      n/a                     1
11/10/99          The Computer Guys    HP NetServer LH4r Xeon 500     11975                      n/a                     1
11/22/99          The Computer Guys    HP Laser Jet 5000N             12111                      n/a                     1
12/21/99          Dell                 Dell PIII 500K               313855363      BU1R6; BU1R8; BU1R9; BU1RB;BU1D1      5
12/23/99          Dell                 Dimension 500MHZ,PIII        314609751                                            1
12/23/99          Dell                 Dell 500PIII/M               314665654            CODIJ;CODIQ;CODIW;CODIZ         4
01/06/00          The Computer Guys    HP 18.2 Ultra 2 SCSI           12396                      n/a                     5
01/07/00          Dell                 Dell PIII GX1/T+Base W/4MB   319602017        CLHV3;CLHV5;CLFV7;CLHV8;CLHVA       5
01/17/00          Dell                 Dell 500PIII/M               322740937            CZUPL;CZUPP;CZUPS;CZUPV         4

INVOICE
DATE                    VENDOR                   DESCRIPTION                 INVOICE #      SERIAL NO.    QTY
-----------------      ------------------   -------------------------------   ----------------   -----------   ---

Computer Software

09/27/99             The MathWorks        Neural Network - Windows              99030491           n/a        3
10/12/99             The Computer Guys    Microsoft Project98                    11710             n/a        5
11710             n/a        2
11710             n/a        1
11/15/99             Rogue Wave           DBTools.h++Core Library for V          38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
11/29/99             MathSoft             S-PLUS 2000 Professional for        82855-327270         n/a        2
12/28/99             InforMax, Inc.       Adv.Supp. Renewal for 2 Licer        4038 ASR            n/a        1
01/03/00             IDBS                 Activity Base - HTSProject             30200             n/a        1
01/04/00             The Computer Guys    Microsoft MOLP-A                       12379             n/a       25
12379             n/a       25
01/06/00             MDL Inform Systems,  Sculpt for windows 95/98/NT4          01.06.00       OCN00049069    1
[ILLEGIBLE]
01/10/00             MDL Inform Systems,  Sculpt for windows on CD              706917        OCN00554031    1
[ILLEGIBLE]
01/18/00             Applikon             Bioexpert Windows NT Softwa       00042/310550 n/a                  1

INVOICE
DATE                 VENDOR                   DESCRIPTION           INVOICE #                   SERIAL NO.                 QTY
----------      ----------------------   ---------------------------   ----------   ---------------------------------------   ---

EQUIPMENT

08/18/99      Composite Rotor          Centrifuge Sorval 6000rmp     0007224-IN   #7224,#7226
22794E2NTRC8,100000283,S01443,22794E2NT
08/28/99      PE Biosystems            Geneamp 5700 SEQ DET Syst       90451346   RC8
09/10/99      Beckman Coulter          Multimek 96,200UL             413325FT01
09/16/99      Hudson Control Group     Platecrane 200100                   6626   #11139-152
09/21/99      BMG Labtechnologies      POLARstar Galaxy                    1493   4030553
10/07/99      CCS Packard              Standard Deck Plate           04-10-1485
10/12/99      Microsource Discovery    Killer Plates                      94841
10/29/99      Hudson Control Group     Platecrane 200100                   6641   #11139-163
10/25/99      Linc-Quantum             HP-G1948A 1100 API                 71170   US08410901                                 1
10/30/99      Li-Cor                   Global IR2 DNA Sequencer            6202
11/05/99      Comdisco Laboratory      New Brunswick G27 Shaker           15779
11/12/99      Sanyo Sales & Supply     Incubator C02                 9813076-IN   90907519                                   1
[ILLEGIBLE]
11/17/99      MJ Research              PTC-2200                           65847   EN010448,EN010460
11/23/99      MJ Research              ALD-1244                           66140
12/13/99      CCS Packard              Platetrak PTS-120799-03.2     03-12-1713
12/15/99      VWR Scientific           Rotoraps                         2388195
12/16/99      VWR Scientific           Pump,Syring Sage Mod M362        2405107                                              1
12/30/99      Universal Imaging Corp   Barcode Kit                         7769   N781468, N895971                           2
01/02/00      Sigma-Aldrich            Lopap-Pharm (SC011-1 Kit)       92520726                                              1
01/03/00      VWR Scientific           Pump 115V                        2520170   KK081058                                   1
01/13/00      Universal Imaging Corp   HTS SU310                           7816
01/18/00      Bio-Rad                  Ultramark Reader 110-240V         176691
01/19/00      Marsh Biomedical         Plate Estate Storage System       245011   666/659/371                                1
01/27/00      Varian                   Prostar 210 SDM                  1251025

INVOICE
DATE             VENDOR                    DESCRIPTION            INVOICE #       SERIAL NO.      QTY
----------    -------------------   ------------------------------   ----------   ----------------   ---

FURNITURE

09/16/99    Corporate Interiors   Worksurface                         1262            n/a
09/23/99    Corporate Interiors   Regular Herman Shelf/H Herm         1317      A0520.1360, WR72
10/01/99    Corporate Interiors   67"Hx48"W Powered Panel          1296 (Rev)         n/a
10/01/99    Corporate Interiors   RA Stations                         1348            n/a
10/11/99    Corporate Interiors   BC Series Lab Stool w/Pneum         1339            n/a
[ILLEGIBLE]
10/20/99    Corporate Interiors   File Full Height Locking Pedes      1362            n/a
10/20/99    Corporate Interiors   Ergonomic Clickit Arm w/Plata       1350            n/a
[ILLEGIBLE]
10/20/99    Corporate Interiors   60"Herman Miller Tack Board         1340            n/a
10/21/99    Corporate Interiors   42"Four Drawer Locking              1331            n/a
01/03/00    Corporate Interiors   4'x30" Workstation                  1380            n/a

INVOICE
DATE                   VENDOR                       DESCRIPTION               INVOICE #   SERIAL NO.   QTY
------------------   -----------------------   ----------------------------------   ---------   ----------   ---

TENANT IMPROVEMENT

10/13/99           Sprig Electric            Install two 208V L(carat)NEMA circ     36273        n/a
[ILLEGIBLE]
10/13/99           Sprig Electric            Relocate power for equipment           36323        n/a
10/13/99           Sprig Electric            Install furniture whips & pull 2-      36374        n/a
[ILLEGIBLE]
10/13/99           Sprig Electric            Repair flourescent lights              36384        n/a
10/21/99           Sprig Electric            Replace high pressure fixtures         36429        n/a
01/12/00           Peninsula Security Svc    Radionics Readykey                     13815        n/a
[ILLEGIBLE]

Exhibit 4.6

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

WARRANT AGREEMENT

TO PURCHASE SHARES OF THE SERIES B PREFERRED STOCK OF

CYTOKINETICS, INC.

DATED AS OF DECEMBER 16, 1999 (THE "EFFECTIVE DATE")

WHEREAS, Cytokenetics, Inc., a Delaware corporation (the "Company") has
entered into a Loan And Security Agreement dated as of December 16,1999, and
related Promissory Note(s) (collectively, the "Loans") with Comdisco, Inc., a
Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Loans, the right to purchase shares of its Series B
Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loans and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.       GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For the first $1,000,000 portion of the Loans, the Company hereby
grants to the Warrantholder, and the Warrantholder is entitled, upon the terms
and subject to the conditions hereinafter set forth, to subscribe to and
purchase, from the Company, 14,483 fully paid and non-assessable shares of the
Company's Series B Preferred Stock ("Preferred Stock") at a purchase price of
$2.90 per share (the "Exercise Price") provided however, that from and after the
effective date of the registration statement for the Company's initial public
offering of its equity securities, the securities purchasable by the
Warrantholder upon the exercise of this Warrant Agreement shall be shares of the
Company's Common Stock ("Common Stock") which shares shall be purchasable by the
Warrantholder in the same number that the Warrantholder would otherwise have
been entitled to purchase had this Warrant Agreement remained exercisable for
shares of the Company's Preferred Stock. From and after the effective date of
the registration statement for the Company's initial public offering of its
equity securities, the Warrantholder shall not have any further right pursuant
to this Warrant Agreement to purchase shares of the Company's Preferred Stock.
The shares of Preferred Stock or Common Stock that are issuable from time to
time upon the exercise of this Warrant Agreement are sometimes referred to
herein as the "Stock.

In the event that the Company requests and the Warrantholder funds any
portion of the additional Advances between the first $1,000,000 and up to
$2,000,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, 14,483 shares of Stock at the Exercise Price.

In the event that the Company requests and the Warrantholder funds any
portion of the additional Advances between the first $2,000,000 and up to
$5,000,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, 16,206 shares of Stock at the Exercise Price for each increment of
remaining $1,000,000 funded under the Loan.

For purposes of calculating the number of shares issuable hereunder,
after the first dollar of each $1,000,000 installment is funded, the applicable
number of shares referred to above shall be issuable. The number and purchase
price of such shares are subject to adjustment as provided in Section 8 hereof.

- 1 -

2.       TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) seven (7) years
or (ii) three (3) years from the effective date of the Company's initial public
offering, whichever is shorter.

3.       EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Stock in accordance with the following formula:

X = Y(A-B)/A

Where: X = the number of shares of Stock to be issued to the
Warrantholder.

Y =  the number of shares of Stock requested to be exercised
under this Warrant Agreement.

A =  the fair market value of one (1) share of Stock.

B =  the Exercise Price.

For purposes of the above calculation, current fair market value of
Stock shall mean with respect to each share of Stock:

(i)      if the exercise is in connection with an initial
public offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Stock is convertible at
the time of such exercise;

(ii)     if this Warrant is exercised after, and not in
connection with the Company's initial public offering, and:

(a)      if traded on a securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise; or

(b)      if actively traded over-the-counter, the
fair market value shall be deemed to be the product of (x) the
average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise;

(iii)    if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Stock shall
be the product

- 2 -

of (x) the highest price per share which the Company could obtain from
a willing buyer (not a current employee or director) for shares of
Common Stock sold by the Company, from authorized but unissued shares,
as determined in good faith by its Board of Directors and (y) the
number of shares of Common Stock into which each shares of Stock is
convertible at the time of such exercise unless the Company shall
become subject to a merger, acquisition or other consolidation pursuant
to which the Company is not the surviving party, in which case the fair
market value of Stock shall be deemed to be the value received by the
holders of the Company's Stock on a common equivalent basis pursuant to
such merger or acquisition.

Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.       RESERVATION OF SHARES.

(a)      Authorization and Reservation of Shares. During the term of
this Warrant Agreement, the Company will at all times have authorized and
reserved a sufficient number of shares of its Stock to provide for the exercise
of the rights to purchase Stock as provided for herein.

(b)      Registration or Listing. If any shares of Stock required to be
reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
Securities Act of 1933, as amended ("1933 Act"), as then in effect, or any
similar Federal statute then enforced, or any state securities law, required by
reason of any transfer involved in such conversion), or listing on any domestic
securities exchange, before such shares may be issued upon conversion, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered, listed or approved for
listing on such domestic securities exchange, as the case may be.

5.       NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.       NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.       WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.

8.       ADJUSTMENT RIGHTS.

The purchase price per share and the number of shares of Stock
purchasable hereunder are subject to adjustment, as follows:

(a)      Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation whether or not the Company is the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (hereinafter referred to as a "Merger Event"), then, as a part
of such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this

- 3 -

Warrant Agreement (including adjustments of the Exercise Price and number of
shares of Preferred Stock purchasable) shall be applicable to the greatest
extent possible.

(b)      Reclassification of Shares. If the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

(c)      Subdivision or Combination of Shares. If the Company at any
time shall combine or subdivide its Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

(d)      Stock Dividends. If the Company at any time shall pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all
shares of the Company's stock outstanding immediately after such dividend or
distribution. The Warrantholder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Stock issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

(e)      Antidilution Rights. Additional antidilution rights applicable
to the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit _ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

(f)      Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Stock shall be entitled thereto) or for determining rights to vote in respect of
such Merger Event, dissolution, liquidation or winding up; (B) in the case of
any such Merger Event, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Stock shall be entitled to exchange
their Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least twenty (20) days
written notice prior to the effective date thereof.

Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

(g)      Timely Notice. Failure to timely provide such notice required
by subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained

- 4 -

in any insufficient notice received by Warrantholder. The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a)      Reservation of Stock. The Stock issuable upon exercise of the
Warrantholder's rights has been duly and validly reserved and, when issued in
accordance with the provisions of this Warrant Agreement, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Stock issuable pursuant to this Warrant Agreement may be subject to restrictions
on transfer under state and/or Federal securities laws. The Company has made
available to the Warrantholder true, correct and complete copies of its Charter
and Bylaws, as amended. The issuance of certificates for shares of Stock upon
exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Stock. The Company shall not be required to pay any tax which may be payable
in respect of any transfer involved and the issuance and delivery of any
certificate in a name other than that of the Warrantholder.

(b)      Due Authority. The execution and delivery by the Company of
this Warrant Agreement and the performance of ail obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Loans and this Warrant Agreement are not
inconsistent with the Company's Charter or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Loans and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

(c)      Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.

(d)      Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:

(i)      The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 1,126,110 shares are issued
and outstanding, and (B) 5,550,000 shares of preferred stock, of which
5,300,000 shares are issued and outstanding and are convertible into
5,550,000 shares of Common Stock at $1.00 per share.

(ii)     The Company has reserved (A) 2,000,000 shares of
Common Stock for issuance under its under its 1997 Stock Option/Stock
Issuance Plan under which 1,503,890 options have been granted. There
are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire any authorized
but unissued shares of the Company's capital stock or other securities
of the Company.

(iii)    In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.

(e)      Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

(f)      Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the Stock
upon exercise of this Warrant will constitute a transaction exempt from (i) the

- 5 -

registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.

(g)      Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Stock issuable upon the exercise of the
Warrant in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.      REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

(a)      Investment Purpose. The right to acquire Stock issuable upon
exercise of the Warrantholder's rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and the Warrantholder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or exemption.

(b)      Private Issue. The Warrantholder understands (i) that the
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.

(c)      Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Stock issuable
upon exercise of such rights unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel (which counsel may
either be inside or outside counsel to the Warrantholder) satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act has been taken, or (B) an exemption from the
registration requirements of the 1933 Act is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Stock issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner, and shall terminate as
to any particular share of Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Stock then
outstanding as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend.

(d)      Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.

(e)      Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1934 Act (the "1934 Act"), or file reports
pursuant to Section 15(d), of the 1934 Act", or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Stock pursuant to this Warrant Agreement, or
(ii) the Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may
be made only in accordance with the terms and conditions of that Rule.

- 6 -

(f)      Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

11.      TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of transfer in the form
attached hereto as Exhibit III (the "Transfer Notice"), at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.

12.      MISCELLANEOUS.

(a)      Effective Date. The provisions of this Warrant Agreement shall
be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Company.

(b)      Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.

(c)      Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.

(d)      Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(e)      Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, attention: Venture Lease
Administration, cc: Legal Department, attn.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847)518-5088 and (ii) to the Company at 280 East
Grand Avenue, Suite 2, South San Francisco, CA 94080, attention: President
(and/or if by facsimile, (650) 624-3010 or at such other address as any such
party may subsequently designate by written notice to the other party.

(f)      Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

(g)      No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

(h)      Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.

(i)      Severability. In the event any one or more of the provisions
of this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

- 7 -

(j)      Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.

COMPANY: CYTOKENETICS, INC.

By: /s/ JAMES SABRY
---------------------------

Title:_________________________

WARRANTHOLDER: COMDISCO, INC,

By: /s/ JILL C. HANSES
---------------------------

Title: SENIOR VICE PRESIDENT

- 8 -

EXHIBIT I

NOTICE OF EXERCISE

TO:      _________________________

(1)      The undersigned Warrantholder hereby elects to purchase. ______shares
of the Series A Preferred Stock of _______, pursuant to the terms of
the Warrant Agreement dated the ________ day of _______, 19__ (the
"Warrant Agreement") between _______ and the Warrantholder, and tenders
herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.

(2)      In exercising its rights to purchase the Series A Preferred Stock of
____, the undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 10 of the Warrant
Agreement.

(3)      Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the undersigned or in such
other name as is specified below.

___________________________________
(Name)

___________________________________
(Address)

WARRANTHOLDER: COMDISCO, INC.

By:    _____________________________

Title: _____________________________

Date:  _____________________________

- 9 -

EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned ___________, hereby acknowledge receipt of the "Notice
of Exercise" from Comdisco, Inc., to purchase _____ shares of the Series A
Preferred Stock of __________ pursuant to the terms of the Warrant Agreement,
and further acknowledges that ______ shares remain subject to purchase under the
terms of the Warrant Agreement.

COMPANY:

By: _____________________________

Title: __________________________

Date: ___________________________

- 10 -

EXHIBIT III

TRANSFER NOTICE

(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT AGREEMENT EXECUTE THIS FORM AND
SUPPLY REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to

__________________________________________________
(Please Print)

whose address is__________________________________

__________________________________________________

Dated: ___________________

Holder's Signature: ______

Holder's Address:   ______

____________________________

Signature Guaranteed: ____________________________

NOTE:    The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant Agreement.

- 11 -

Exhibit 4.7

MASTER SECURITY AGREEMENT
dated as of FEBRUARY 2, 2001 ("AGREEMENT")

THIS AGREEMENT is between GENERAL ELECTRIC CAPITAL CORPORATION
(together with its successors and assigns, if any, "SECURED PARTY") and
CYTOKINETICS, INCORPORATED ("DEBTOR"). Secured Party has an office at 401
Merritt 7 2nd Floor, Norwalk, CT 06856. Debtor is a corporation organized and
existing under the laws of the state of Delaware. Debtor's mailing address and
chief place of business is 280 East Grand Avenue, Suite 2, South San Francisco,
CA 9408O.

1.       CREATION OF SECURITY INTEREST.

Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ( "COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS"). Notwithstanding
anything to the contrary contained in this Agreement, to the extent that Secured
Party asserts a purchase money security interest in any items of Collateral (
"PMSI COLLATERAL"): (i) the PMSI COLLATERAL shall secure only that portion of
the Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the "PMSI
INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI Indebtedness.

2.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

Debtor represents, warrants and covenants as of the date of this
Agreement and as of the date of each Collateral Schedule that:

(a) Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

(b) Debtor has adequate power and capacity to enter into, and to
perform its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

(c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements enforceable in accordance with their terms, except to the
extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws;

(d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

(e) The entry into, and performance by, Debtor of the Debt Documents
will not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in any
breach of or constitute a default under any contract to which Debtor is a party,
or result in the creation of any lien, claim or encumbrance on any of Debtor's
property (except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

(f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

(g) All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition;

(h) The Collateral is not, and will not be, used by Debtor for
personal, family or household purposes;

(i) The Collateral is, and will remain, in good condition and repair
and Debtor will not be negligent in its care and use;

(j) Debtor is, and will remain, the sole and lawful owner, and in
possession of the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

(k) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any risk
of the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen's, mechanic's, repairmen's and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called "PERMITTED LIENS").

3.       COLLATERAL.

(a) Until the declaration of any default, Debtor shall remain in
possession of the Collateral; except that Secured Party shall have the right to
possess (i) any chattel paper or instrument that constitutes a part of the
Collateral, and (ii) any other Collateral in which Secured Party's security
interest may be perfected only by possession. Secured Party may inspect any of
the Collateral during normal business hours after giving Debtor reasonable prior
notice. If Secured Party asks, Debtor will promptly notify Secured Party in
writing of the location of any Collateral.

(b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal
wear and tear excepted, (iii) use and maintain the Collateral only in compliance
with manufacturers recommendations and all applicable laws, and (iv) keep all of
the Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

(c) Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease, mortgage, grant a
security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.

(d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on its use, or on this Agreement or any of the other Debt Documents.
At its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor agrees to reimburse Secured Party, on demand, all costs and expenses
incurred by Secured Party in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Indebtedness.

(e) Debtor shall, at all times, keep accurate and complete records of
the Collateral, and Secured Party shall have the right to inspect and make
copies of all of Debtor's books and records relating to the Collateral during
normal business hours, after giving Debtor reasonable prior notice.

(f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Parry. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

4.       INSURANCE.

(a) Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause whatsoever.

(b) Debtor agrees to keep the Collateral insured against loss or damage
by fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide that coverage may not be canceled or altered by the insurer except upon
thirty (30) days prior written notice to Secured Party. Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured Party
shall not act as Debtors attorney-in-fact unless Debtor is in default. Proceeds
of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the Indebtedness.

5.       REPORTS.

(a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any relocation of its chief executive offices, (iii) any
relocation of any of the Collateral, (iv) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (v) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

(b) Debtor will deliver to Secured Party Debtors complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Debtor. If Secured
Party requests, Debtor will deliver to Secured Party copies of Debtors quarterly
financial reports certified by Debtors chief financial officer, within ninety
(90) days after the close of each of Debtors fiscal quarter. Debtor will deliver
to Secured Party copies of all Forms 10-K and 10-Q, if any, within 30 days after
the dates on which they are filed with the Securities and Exchange Commission.

6.       FURTHER ASSURANCES.

(a) Debtor shall, upon request of Secured Party, furnish to Secured
Party such further information, execute and deliver to Secured Party such
documents and instruments (including, without limitation, Uniform Commercial
Code financing statements) and shall do such other acts and things as Secured
Party may at any time reasonably request relating to the perfection or
protection of the security interest created by this Agreement or for the purpose
of carrying out the intent of this Agreement. Without limiting the foregoing,
Debtor shall cooperate and do all acts deemed necessary or advisable by Secured
Party to continue in Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any subordinations,
releases, landlord, lessor, or mortgagee waivers, and similar documents as may
be from time to time requested by, and in form and substance satisfactory to,
Secured Party.

(b) Debtor irrevocably grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute and file
applications for title, transfers of title, financing statements, notices of
lien and other documents pertaining to any or all of the Collateral; this power
is coupled with Secured Party's interest in the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain and promptly deliver to Secured Party such certificate showing the lien
of this Agreement with respect to the Collateral.

(c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys' fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

7.       DEFAULT AND REMEDIES.

(a) Debtor shall be in default under this Agreement and each of the
other Debt Documents if:

(i) Debtor breaches its obligation to pay when due any
installment or other amount due or coming due under any of the Debt Documents

(ii) Debtor, without the prior written consent of Secured
Party, attempts to or does sell, rent, lease, mortgage, grant a security
interest in, or

otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;

(iii) Debtor breaches any of its insurance obligations under
Section 4;

(iv) Debtor breaches any of its other obligations under any of
the Debt Documents and fails to cure that breach within thirty (30) days after
written notice from Secured Party;

(v) Any warranty, representation or statement made by Debtor
in any of the Debt Documents or otherwise in connection with any of the
Indebtedness shall be false or misleading in any material respect;

(vi) Any of the Collateral is subjected to attachment,
execution, levy, seizure or confiscation in any legal proceeding or otherwise,
or if any legal or administrative proceeding is commenced against Debtor or any
of the Collateral, which in the good faith judgment of Secured Party subjects
any of the Collateral to a material risk of attachment, execution, levy, seizure
or confiscation and no bond is posted or protective order obtained to negate
such risk;

(vii) Debtor breaches or is in default under any other
agreement between Debtor and Secured Party;

(viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "GUARANTOR") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern;

(ix) If Debtor or any Guarantor is a natural person, Debtor or
any such Guarantor dies or becomes incompetent;

(x) A receiver is appointed for all or of any part of the
property of Debtor or any Guarantor, or Debtor or any Guarantor makes any
assignment for the benefit of creditors; or

(xi) Debtor or any Guarantor files a petition under any
bankruptcy, insolvency or similar law, or any such petition is filed against
Debtor or any Guarantor and is not dismissed within forty-five (45) days

(b) If Debtor is in default, the Secured Party, at its option, may
declare any or all of the Indebtedness to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The accelerated obligations
and liabilities shall bear interest (both before and after any judgment) until
paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

(c) After default, Secured Party shall have all of the rights and
remedies of a Secured Party under the Uniform Commercial Code, and under any
other applicable law. Without limiting the foregoing, Secured Party shall have
the right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
said sale, or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the obligations then in default. If
requested by Secured Party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may also render
any or all of the Collateral unusable at the Debtor's premises and may dispose
of such Collateral on such premises without liability for rent or costs. Any
notice that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) days prior to such action,

(d) Proceeds from any sale or lease or other disposition shall be
applied: first, to all costs of repossession, storage, and disposition including
without limitation attorneys', appraisers', and auctioneers' fees; second, to
discharge the obligations then in default; third, to discharge any other
Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or
settling liens and claims against the Collateral; and lastly, to Debtor, if
there exists any surplus. Debtor shall remain fully liable for any deficiency.

(e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Part)' in connection with the enforcement, assertion,
defense or preservation of Secured Party's rights and remedies under this
Agreement, or if prohibited by law, such lesser sum as may be permitted. Debtor
further agrees that such fees and costs shall constitute Indebtedness.

(f) Secured Party's rights and remedies under this Agreement or
otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of the Secured Party
to exercise any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of that or any other right,
power or privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER
SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY
SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.

(g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

8.       MISCELLANEOUS.

(a) This Agreement, any Note and/or any of the other Debt Documents may
be assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to

confirm in writing receipt of the notice of assignment as may be reasonably
requested by assignee.

(b) All notices to be given in connection with this Agreement shall be
in writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

(c) Secured Party may correct patent errors and fill in all blanks in
this Agreement or in any Collateral Schedule consistent with the agreement of
the parties.

(d) Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

(e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

(f) This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefeasibly paid in full to Secured Party. The
surrender, upon payment or otherwise, of any Note or any of the other documents
evidencing any of the Indebtedness shall not affect the right of Secured Party
to retain the Collateral for such other Indebtedness as may then exist or as it
may be reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to return or
restore the payment of all or any portion of the Indebtedness (all as though
such payment had never been made).

(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

SECURED PARTY:                             DEBTOR:

GENERAL ELECTRIC CAPITAL CORPORATION       CYTOKINETICS, INCORPORATED

By: ________________________________       By: /s/ James Sabry
---------------------------------

Name: THOMAS ANNINO                        Name: 

Title: _____________________________       Title: _____________________________

GECC:

By: /s/ John Edel
----------------------------------

Name: John Edel
--------------------------------

Title: SVP
-------------------------------

CROSS-COLLATERAL AND CROSS-DEFAULT AGREEMENT

General Electric Capital Corporation
401 Merritt 72nd Floor
Norwalk, CT 06856

Gentlemen:

You (and/or your successors or assigns, "you") have entered into or
purchased one or more conditional sale contracts, lease agreements, chattel
mortgages, security agreements, notes and other choses in action (herein
designated "Accounts") arising from the bona fide sale or lease to us, by
various vendors or lessors, of equipment and inventory (herein designated
"Collateral") and/or you have made direct loans to or otherwise extended credit
to us evidenced by Accounts creating security interests in Collateral.

In order to induce you to extend our time of payment on one or more
Accounts and/or to make additional loans to us and/or to purchase additional
Accounts and/or to lease us additional equipment, and in consideration of you so
doing, and for other good and valuable consideration, the receipt of which we
hereby acknowledge, we agree as follows:

All presently existing and hereafter acquired Collateral in which you
have or shall have a security interest shall secure the payment and performance
of all of our liabilities and obligations to you of every kind and character,
whether joint or several, direct or indirect, absolute or contingent, due or to
become due, and whether under presently existing or hereafter created Accounts
or agreements, or otherwise.

We further agree that your security interest in the property covered by
any Account now held or hereafter acquired by you shall not be terminated in
whole or in part until and unless all indebtedness of every kind, due or to
become due, owed by us to you is fully paid and satisfied and the terms of every
Account have been fully performed by us. It is further agreed that you are to
retain your security interest in all property covered by all Accounts held or
acquired by you, as security for payment and performance under each such
Account, notwithstanding the fact that one or more of such Accounts may become
fully paid.

This instrument is intended to create cross-default and cross-security
between and among all the within described Accounts now owned or hereafter
acquired by you.

A default under any Account or agreement shall be deemed to be a
default under all other Accounts and agreements. A default shall result if we
fail to pay any sum when due on any Account or agreement, or if we breach any of
the other terms and conditions thereof, or if we become insolvent, cease to do
business as a going concern, make an assignment for the benefit of creditors, or
if a petition for a receiver or in bankruptcy is filed by or against us, or if
any of our property is seized, attached or levied upon. Upon our default any or
all Accounts and agreements shall, at your option, become immediately due and
payable without notice or demand to us or any other party obligated thereon, and
you shall have and may exercise any and all rights and remedies of a secured
party under the Uniform Commercial Code as enacted in the applicable
jurisdiction and as otherwise granted to you under any Account or other
agreement. We hereby waive, to the maximum extent permitted by law, notices of
default, notices of repossession and sale or other disposition of collateral,
and all other notices, and in the event any such notice cannot be waived, we
agree that if such notice is mailed to us postage prepaid at the address shown
below at least five (5) days prior to the exercise by you of any of your rights
or remedies, such notice shall be deemed to be reasonable and shall fully
satisfy any requirement for giving notice.

All rights granted to you hereunder shall be cumulative and not
alternative, shall be in addition to and shall in no manner impair or affect
your rights and remedies under any existing Account, agreement, statute or rule
of law, and remedies under any existing Account, agreement, statute or rule of
law.

This agreement may not be varied or altered nor its provisions waived
except by your duly executed written agreement. This agreement shall inure to
the benefit of your successors and assigns and shall be binding upon our heirs.
administrators, executors, legal representatives, successors and assigns.

IN WITNESS WHEREOF, this agreement is executed this___ day of___, ___.

CYTOKINETICS, INCORPORATED
(Name of Proprietorship, Partnership or
Corporation, as applicable)

By: /s/ James Sabry
--------------------------------------
(Signature)

Title:____________________________________
(Owner, Partner or Officer, as
applicable)

Address: 280 East Grand Avenue Suite 2,
South San Francisco, CA 94080

Exhibit 4.8

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE. OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Bristow Investments, L.P., a
California limited partnership (the "Holder"), is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time after the date
hereof and prior to the Commencement Date (as defined below), to subscribe for
and purchase from Cytokinetics, Inc., a Delaware corporation (the "Company"),
16,000 shares of the Company's Common Stock at an exercise price ("Exercise
Price") of $0.29 per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco. California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a fair market value as of such date equal to the aggregate Exercise Price
of the Warrant (or such

portion thereof); whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares so purchased. The Company agrees
that if at the time of the surrender of this Warrant and purchase the holder
hereof shall be entitled to exercise this Warrant, the shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
exercised as aforesaid. For purposes of clause (iii) of the preceding sentence,
the fair market value of one share of the Company's Common Stock shall be
determined as follows: (1) if the Company's Common Stock is listed on a national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then such fair market value shall be the closing price
per share reported for such class on such national stock exchange or on the
NASDAQ National Market System, or the average of the final "bid" and "asked"
prices reported on such over-the-counter market, as applicable, at the close of
business on the date of calculation as reported in the Wall Street Journal; and
(2) if the Company's Common Stock is not listed on any national stock exchange,
on the NASDAQ National Market System or on any other over-the-counter market,
then the Board of Directors of the Company shall determine such fair market
value as of the date of calculation in its reasonable good faith judgment, and
shall (upon written request by the holder hereof) advise the holder hereof of
such determination prior to any decision by such holder to exercise its purchase
rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10- K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change and the Exercise Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i)      If, pursuant to such Merger, the
shareholders of the Company receive solely cash and/or publicly traded
securities in exchange for their shares of stock in the Company, as stated in
the Merger Notice, and this Warrant has not been exercised prior to the closing
of such transaction, this Warrant shall terminate.

(ii)     Notwithstanding anything to the contrary,
if, pursuant to such Merger, the shareholders of the Company receive
non-publicly traded securities in exchange for their shares of stock in the
Company, or if the aggregate value of the consideration consisting of cash
and/or publicly traded securities to be received by the Holder for the
securities underlying this Warrant, as stated in the Merger Notice, does not
equal or exceed the aggregate Exercise Price of such underlying securities, then
this Warrant shall not terminate pursuant to the provisions of Section 10(a)(i)
above, and the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the holder hereof shall have the
right thereafter, by exercising this Warrant (in lieu of the shares of the
common stock of the Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i)      the Company shall take a record of the
holders of its Common Stock for the purposes of entitling them to receive any
dividend (other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares or stock of any class or
any other securities or property, or to receive any other right; or

(ii)     of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation; or

-5-

(iii)    of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
-------------------------
Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1)      __________________, the undersigned, hereby elects to purchase
____________________________shares of Common Stock (the "Shares") at an exercise
price of $0.29 per share of Cytokinetics, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the aggregate purchase price
of $____________in full (if exercising pursuant to net exercise provisions,
enter $-0-), together with all applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Section
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2)      Please issue a certificate or certificates representing the
Shares (or the number of shares of Common Stock remaining after application of
the net exercise provisions of Section 2 (iii) of the attached warrant) in the
name of the undersigned or in such other name as is specified below:

_______________________________
(Name)

_______________________________

_______________________________
(Address)

(3)      The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

____________________________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

________________________________________
(Please Print)

whose address is _______________________

_______________________
(Please Print)

Dated: _____________________,___________.

Holder's Signature: ____________________

Holder's Address: ______________________

______________________

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.9

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED. SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Laurence S. Shuhsan and
Magdalena Shushan, Trustees of the Laurence and Magdalena Shushan Family Trust,
under agreement dated October 8, 1997 (the "Holder"), is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time after the
date hereof and prior to the Commencement Date (as defined below), to subscribe
for and purchase from Cytokinetics, Inc., a Delaware corporation (the
"Company"), 4,000 shares of the Company's Common Stock at an exercise price
("Exercise Price") of $0.29 per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of-an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco, California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a

fair market value as of such date equal to the aggregate Exercise Price of the
Warrant (or such portion thereof); whereupon the holder of this Warrant shall be
entitled to receive a certificate for the number of shares so purchased. The
Company agrees that if at the time of the surrender of this Warrant and purchase
the holder hereof shall be entitled to exercise this Warrant, the shares so
purchased shall be and be deemed to be issued to such holder as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been exercised as aforesaid. For purposes of clause (iii) of the
preceding sentence, the fair market value of one share of the Company's Common
Stock shall be determined as follows: (1) if the Company's Common Stock is
listed on a national stock exchange, on the NASDAQ National Market System or on
any other over-the-counter market, then such fair market value shall be the
closing price per share reported for such class on such national stock exchange
or on the NASDAQ National Market System, or the average of the final "bid" and
"asked" prices reported on such over-the-counter market, as applicable, at the
close of business on the date of calculation, as reported in the Wall Street
Journal; and (2) if the Company's Common Stock is not listed on any national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then the Board of Directors of the Company shall
determine such fair market value as of the date of calculation in its reasonable
good faith judgment, and shall (upon written request by the holder hereof)
advise the holder hereof of such determination prior to any decision by such
holder to exercise its purchase rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10-K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Rectification, etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the securities to which purchase rights under this Warrant exist into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter be to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant immediately prior to such
subdivision, combination, reclassification or other change and the Exercise
Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i)      If, pursuant to such Merger, the
shareholders of the Company receive solely cash and/or publicly traded
securities in exchange for their shares of stock in the Company, as stated in
the Merger Notice, and this Warrant has not been exercised prior to the closing
of such transaction, this Warrant shall terminate.

(ii)     Notwithstanding anything to the contrary,
if, pursuant to such Merger, the shareholders of the Company receive
non-publicly traded securities in exchange for their shares of stock in the
Company, or if the aggregate value of the consideration consisting of cash
and/or publicly traded securities to be received by the Holder for the
securities underlying this Warrant, as stated in the Merger Notice, does not
equal or exceed the aggregate Exercise Price of such underlying securities, then
this Warrant shall not terminate pursuant to the provisions of Section 10(a)(i)
above, and the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the holder hereof shall have the
right thereafter, by exercising this Warrant (in lieu of the shares of the
common stock of the Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i)      the Company shall take a record of the
holders of its Common Stock for the purposes of entitling them to receive any
dividend (other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares or stock of any class or
any other securities or property, or to receive any other right; or

(ii)     of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation; or

-5-

(iii)    of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
-----------------------

Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1) ___________, the undersigned, hereby elects to purchase ___________
shares of Common Stock (the "Shares") at an exercise price of $0.29 per share of
Cytokinetics, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the aggregate purchase price of $______ in full (if
exercising pursuant to net exercise provisions, enter $-0-), together with all
applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Section
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2) Please issue a certificate or certificates representing the Shares
(or the number of shares of Common Stock remaining after application of the net
exercise provisions of Section 2 (iii) of the attached warrant) in the name of
the undersigned or in such other name as is specified below:

___________________________
(Name)

___________________________

___________________________
(Address)

(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_________________________________________
(Please Print)

whose address is  _______________________

_______________________
(Please Print)

Dated: _____________________, ______.

Holder's Signature: _____________________

Holder's Address: _______________________

_______________________

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.10

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Slough Estates USA Inc., a
Delaware corporation (the "Holder"), is entitled, upon the terms and subject to
the conditions hereinafter set forth, at any time after the date hereof and
prior to the Commencement Date (as defined below), to subscribe for and purchase
from Cytokinetics, Inc., a Delaware corporation (the "Company"), 180,000 shares
of the Company's Common Stock at an exercise price ("Exercise Price") of $0.29
per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco, California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a fair market value as of such date equal to the aggregate Exercise Price
of the Warrant (or such

portion thereof); whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares so purchased. The Company agrees
that if at the time of the surrender of this Warrant and purchase the holder
hereof shall be entitled to exercise this Warrant, the shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
exercised as aforesaid. For purposes of clause (iii) of the preceding sentence,
the fair market value of one share of the Company's Common Stock shall be
determined as follows: (1) if the Company's Common Stock is listed on a national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then such fair market value shall be the closing price
per share reported for such class on such national stock exchange or on the
NASDAQ National Market System, or the average of the final "bid" and "asked"
prices reported on such over-the-counter market, as applicable, at the close of
business on the date of calculation, as reported in the Wall Street Journal; and
(2) if the Company's Common Stock is not listed on any national stock exchange,
on the NASDAQ National Market System or on any other over-the-counter market,
then the Board of Directors of the Company shall determine such fair market
value as of the date of calculation in its reasonable good faith judgment, and
shall (upon written request by the holder hereof) advise the holder hereof of
such determination prior to any decision by such holder to exercise its purchase
rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10-K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change and the Exercise Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i) If, pursuant to such Merger, the shareholders of
the Company receive solely cash and/or publicly traded securities in exchange
for their shares of stock in the Company, as stated in the Merger Notice, and
this Warrant has not been exercised prior to the closing of such transaction,
this Warrant shall terminate.

(ii) Notwithstanding anything to the contrary, if,
pursuant to such Merger, the shareholders of the Company receive non-publicly
traded securities in exchange for their shares of stock in the Company, or if
the aggregate value of the consideration consisting of cash and/or publicly
traded securities to be received by the Holder for the securities underlying
this Warrant, as stated in the Merger Notice, does not equal or exceed the
aggregate Exercise Price of such underlying securities, then this Warrant shall
not terminate pursuant to the provisions of Section 10(a)(i) above, and the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the holder hereof shall have the right thereafter,
by exercising this Warrant (in lieu of the shares of the common stock of the
Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance ot any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i) the Company shall take a record of the holders of
its Common Stock for the purposes of entitling them to receive any dividend
(other than a cash dividend) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares or stock of any class or any other
securities or property, or to receive any other right; or

(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

-5-

(iii) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
----------------------------
Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1) ____________________, the undersigned, hereby elects to
purchase____________________________shares of Common Stock (the "Shares") at an
exercise price of $0.29 per share of Cytokinetics, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the aggregate purchase
price of $____________in full (if exercising pursuant to net exercise
provisions, enter $-0-), together with all applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Secton
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2) Please issue a certificate or certificates representing the Shares
(or the number of shares of Common Stock remaining after application of the net
exercise provisions of Section 2 (iii) of the attached warrant) in the name of
the undersigned or in such other name as is specified below:

__________________________
(Name)

__________________________

__________________________
(Address)

(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

_________________________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_________________________________________
(Please Print)

whose address is    _____________________

_____________________
(Please Print)

Dated:_____________________,__________.

Holder's Signature:___________________

Holder's Address:  ___________________

___________________  

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.11

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 901 OR
REGULATIONS UNDER THE SECURITIES ACT IF APPLICABLE, OR (C) INSIDE THE UNITED
STATES (i) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR (ii) IN COMPLIANCE WITH ANOTHER APPLICABLE EXEMPTION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, SUCH COMPLIANCE, AT THE
OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF COUNSEL, IN FORM
ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS
WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.

No. W-_________ SERIES B PREFERRED STOCK PURCHASE WARRANT As of August 30, 1999
CYTOKINETICS, INCORPORATED

THIS CERTIFIES that, for value received, The Magnum Trust (the
"Holder") or its assigns, is entitled to subscribe for and purchase, from
Cytokinetics, Incorporated, a Delaware corporation (the "Company"), shares of
the Company's Series B Preferred Stock, upon the terms and subject to the
conditions set forth herein, at any time on or after the date of this Warrant,
and on or before, but in no case after August 30, 2006.

1.       Exercise Price; Number of Warrant Shares. The purchase price
of one share of Series B Preferred Stock under this Warrant shall be $2.90 per
share, subject to adjustment pursuant to Sections 7 and 8 (such price as it
shall be adjusted, the "Exercise Price"). The number of shares of Series B
Preferred Stock purchasable upon exercise of this Warrant is 100,000, which
shares upon such purchase shall be fully paid and non-assessable (the "Warrant
Shares").

2.       Exercise, of Warrant.

(a)      Exercise Procedure. The purchase rights represented
by this Warrant are exercisable by the Holder or its assignee, in whole or in
part, at any time before August 30, 2006, by the surrender of this Warrant and a
Notice of Exercise in the form attached as Exhibit A duly executed at, the
office of the Company in South San Francisco, California (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of such holder appearing on the books of the Company), and upon
payment of the Exercise Price of the shares thereby purchased (by cash or by
check or bank draft payable to the order of the Company or by cancellation of
indebtedness of the Company to the holder, if any, at the time of exercise in an
amount equal to the Exercise Price of the shares thereby purchased or pursuant
to the net exercise proceeding set forth in Section 2(b), below); whereupon the
Holder shall be entitled to receive a certificate for the number of shares of
Series B Preferred Stock so purchased. If this Warrant is exercised as to only a
portion of the shares for which it is exercisable, the Company shall, upon such
exercise, deliver to the Holder a new Warrant representing the remaining shares
for which the Warrant shall then be exercisable. This Warrant shall be deemed to
have been exercised

immediately prior to the close of business on the date of delivery of such
Notice of Exercise and payment as provided above, and the person entitled to
receive the shares issuable upon such exercise shall be treated for all purposes
as the holder of such shares of record as of the close of business on such date.
As promptly as practicable on or after such date, the Company shall issue and
deliver to such person a certificate for the number of shares issuable upon such
exercise.

(b)      Net Exercise.

(1)      In lieu of the cash payment set forth in
Section 2(a) above, the Holder shall have the right ("Conversion Right") to
convert this Warrant or any portion thereof (without payment of any kind) into
that number of shares of Series B Preferred Stock equal to (i) the product of
(A) the number of shares of Series B Preferred then issuable upon such whole or
partial exercise of this Warrant and (B) the excess, if any, of (X) the Market
Price Per Share (as determined pursuant to Section 2(b)(3) below) with respect
to the date of conversion over (Y) the Exercise Price in effect on the business
day next preceding the date of conversion, divided by (ii) the Market Price Per
Share with respect to the date of conversion.

(2)      Manner of Conversion. The conversion rights
provided for in this Section 2(b) may be exercised in whole or in pan and at any
time and from time to time while any portion of this Warrant remains
outstanding. In order to exercise its conversion rights under this Section, the
Holder shall surrender to the Company, at its offices, this Warrant certificate
accompanied by a duly completed Notice of Conversion in the form annexed hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Warramholder (i) a certificate or certificates representing the
number of shares of Series B Preferred to which the Warrantholder shall be
entitled as a result of the conversion, and (ii) if the Warrant certificate is
being converted in part only, a new certificate of like tenor and date for the
balance of the unconverted portion of the Warrant certificate.

(3)      Market Price Per Share. As used herein, the
"Market Price Per Share" on any date shall mean the fair market value of each
share of Series B Preferred Stock as determined in good faith by the Board of
Directors of the Company, provided that, after the Company's registration and
sale of shares of its Common Stock pursuant to a public offering, the term
"Market Price Per Share" shall mean the closing price per share of the Company's
Common Stock for the trading day immediately preceding the date of exercise. The
closing price for each such day shall be the last sale price or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
in either case on the principal securities exchange on which the shares of such
Common Stock of the Company are listed or admitted to trading or, if applicable,
the last sale price, or, in case no sale takes place on such day, the average of
the closing bid and asked prices of such Common Stock on NASDAQ or any
comparable system, or if such Common Stock is not reported on NASDAQ, or a
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose. If such bid and asked prices
are not available, then "Market Price Per

-2-

Share" shall be equal to the fair market value of such Common Stock as
determined in good faith by the Board of Directors of the Company.

3.       Restrictions on Transfer.

(a)      Investment Representation. The Holder agrees that the
Holder will not offer, sell or otherwise dispose of this Warrant or any
securities issued on exercise of this Warrant except under circumstances which
will not result in a violation of the Securities Act. Upon exercise of this
Warrant, the Holder shall confirm in writing, by executing the form attached as
Exhibit C hereto, that the securities purchased thereby are being acquired for
investment solely for the Holder's own account and not as a nominee for any
other Person, and not with a view toward distribution or resale.

(b)      Certificate Legends. This warrant and all securities
issued upon exercise of this Warrant (unless registered under the Securities
Act) shall be stamped or imprinted with a legend in substantially the following
form (in addition to any legends required by applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

(c)      Disposition of Warrant or Shares. With respect to any
offer, sale or other disposition of this Warrant or any securities issued upon
exercise of this Warrant before an initial public offering, the Holder agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of the Holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration under the Securities Act or
qualification under any applicable state securities laws of this Warrant or such
shares, as the case may be, and indicating whether or not under the Securities
Act certificates for this Warrant or such shares, as the case may be, to be sold
or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to insure compliance with the
Securities Act. Each certificate representing this Warrant or the securities
thus transferred (except a transfer pursuant to Rule 144) shall bear a legend as
to the applicable restrictions on transferability in order to insure compliance
with the Securities Act, unless in the aforesaid reasonably satisfactory opinion
of counsel for the Holder or the security holder, as the case may be, such
legend is not necessary in order to insure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restriction.

-3-

4.       No Rights as Shareholder. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to exercise; provided, however, that the Holder shall have
"piggy-back" registration rights equivalent to those given to holders of Series
B Preferred Stock pursuant to that certain First Amended and Restated Investors'
Rights Agreement dated August 30,1999 by and among such holders and the Company,
as the same may be amended from time to time (the "Rights Agreement"), and,
provided further, that the Holder shall be bound by the transfer restrictions
set forth in the Rights Agreement, including, without limitation, the Market
Stand-Off provisions contained therein.

5.       Loss. Theft, Destruction or Mutilation of Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction, of indemnity reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
make and deliver a new Warrant of like tenor in lieu of this Warrant.

6.       Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall be a legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day not a legal holiday.

7.       Change of Control, Qualified IPO and Anti-Dilution.

(a)      Merger, Sale of Assets, etc. If at any time
after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or acquisition with or into any other
entity, which merger, consolidation or acquisition is of 100% of the voting
securities of the Company (a "Termination Transaction"), the Company shall give
the Holder written notice ("Merger Notice") of such impending transaction not
later than thirty (30) days prior to the closing of such transaction. The Merger
Notice shall describe the material terms and conditions of the impending
transaction, including the price and aggregate value of securities and other
consideration to be received by holders of Series B Preferred stock, by holders
of Common Stock and by the Holder for the shares underlying this Warrant on an
as exercised basis, and the Company shall thereafter give the Holder prompt
notice of any material changes to such terms and conditions. If this Warrant has
not been exercised or converted prior to the closing of a Termination
Transaction that is the subject of such a Merger Notice, this Warrant shall
terminate. Notwithstanding anything to the contrary in this Section 7(a), if,
after the closing of a Termination Transaction, the shareholders of the Company
prior to the closing will hold securities representing more than 50% of the
voting control of the surviving entity, this warrant shall not terminate. In the
event of such a non-terminating transaction, and in the event of a transaction
of the sale or conveyance of all or substantially all of the assets of the
Company, the Company shall, as a condition precedent to such transaction, cause
effective provisions to be made so that the holder hereof shall have the right
thereafter, by exercising this Warrant (in lieu of the shares of the common
stock of the Company immediately theretofore purchasable and receivable upon
exercise of this Warrant) to purchase the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such transaction
by any holders of Series B Preferred Stock or holders of Common Stock, as
applicable. Any such provision shall include provisions for adjustments in
respect of such shares of

-4-

stock and other securities and property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 7(a) shall similarly apply to successive
transactions, unless this Warrant is first terminated pursuant this Section
7(a).

(b)      Splits and Combinations. If the Company at any time
subdivides any of its outstanding shares of Series B Preferred Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, if the outstanding
shares of Series B Preferred Stock are combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased. Upon any adjustment of the Exercise Price under this
Section 7(b), the number of shares of Series B Preferred Stock issuable upon
exercise of this Warrant shall equal the number of shares determined by dividing
(i) the aggregate Exercise Price payable for the purchase of all shares issuable
upon exercise of this Warrant immediately prior to such adjustment by (ii) the
Exercise Price per share in effect immediately after such adjustment.

(c)      Reclassifications. If the Company changes any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately and proportionately adjusted.

(d)      Dividends and Distribution. If the Company declares
a non-cash dividend or other distribution on the Series B Preferred Stock or the
Company's Common Stock or if a dividend or other distribution on the Series B
Preferred Stock or the Company's Common Stock occurs (other than a cash
dividend) then, as part of such dividend or distribution, lawful provision shall
be made so that there shall thereafter be deliverable upon the exercise of this
Warrant or any portion thereof, in addition to the number of shares of Series B
Preferred Stock receivable thereupon and without payment of any additional
consideration, the amount of the dividend or other distribution to which the
holder of the number of shares of Series B Preferred Stock obtained upon
exercise hereof, and the holder of the number of shares of Common Stock into
which such Series B Preferred Stock shall be convertible, would have been
entitled to receive had the exercise occurred as of the record date for such
dividend or distribution.

(e)      Liquidation; Dissolution. If the Company shall
dissolve, liquidate or wind up its affairs, the Holder shall have the right, but
not the obligation, to exercise this Warrant effective as of the date of such
dissolution, liquidation or winding up. If any such dissolution, liquidation or
winding up results in any cash distribution to the Holder in excess of the
aggregate Exercise Price for the shares of Series B Preferred Stock for which
this Warrant is exercised, then the Holder may, at its option, exercise this
Warrant without making payment of such aggregate Exercise Price and, in such
case, the Company shall, upon distribution to the Holder, consider such
aggregate Exercise Price to have been paid in full, and in making such
settlement to the Holder, shall deduct an amount equal to such aggregate
Exercise Price from the amount payable to the Holder.

-5-

(f)      Other Dilutive Events. If any event occurs as to
which the other provisions of this Section 7 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles hereof, then, in each such case, the Company shall appoint a firm of
independent public accountants of recognized national standing (which may be the
Company's regular auditors) which shall give their opinion upon the adjustment,
if any, on a basis consistent with the essential intent and principles
established in this Section 7, necessary to preserve, without dilution, the
purchase rights represented by this Warrant. Upon receipt of such opinion, the
Company shall promptly mail a copy thereof to the Holder and shall make the
adjustments described therein.

(g)      Certificates and Notices.

(i)      Adjustment Certificates. Upon any adjustment
of the Exercise Price and/or the number of shares of securities purchasable upon
exercise of this Warrant, a certificate signed by (A) the Company's President
and Chief Financial Officer, or (B) any independent firm of certified public
accounts of recognized national standing the Company selects at its own expense,
setting forth in reasonable detail the events requiring the adjustment and the
method by which such adjustment was calculated, shall be mailed to the Holder
and shall specify the adjusted Exercise Price and the number of shares of
securities purchasable upon exercise of the Warrant after giving effect to the
adjustment.

(ii)     Extraordinary Corporate Events. If the
Company, after the date hereof, proposes to effect (A) any transaction described
in Section 7(c) hereof, (B) a liquidation, dissolution or winding up of the
Company described in Section 7(f) hereof, (C) a sale of assets transaction
described in Section 7(a) hereof, or (D) any public offering of securities of
the Company or any payment of a dividend or distribution with respect to Series
B Preferred Stock or Common Stock of the Company, then, in each such case, the
Company shall mail to the Holder a notice describing such proposed action and
specifying the date on which the Company's books shall close, or a record shall
be taken, for determining the holders of stock entitled to participate in such
action, or the date on which such reclassification, liquidation, dissolution,
winding up or other action shall take place or commence, as the case may be, and
the date as of which it is expected that holders of stock of record shall be
entitled to receive securities and/or other property deliverable upon such
action, if any such date is to be fixed. Such notice shall be mailed to the
Holder at least thirty (30) days prior to the record date for such action in the
case of any action described in clause (A) or clause (C) above, and in the case
of any action described in clause (B) above, at least fifteen (15) days prior to
the date on which the action described is to take place and at least fifteen
(15) days prior to the record date for determining holders of Series B Preferred
Stock or Common Stock entitled to receive securities and/or other property in
connection with such action.

(h)      No Impairment. The Company shall not, by amendment of
the Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but shall at all times in good faith assist in the carrying out of all
the provisions of this Section 7 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment.

-6-

(i)      Application. Except as otherwise provided herein, all
sections of this Section 7 are intended to operate independently of one another.
If an event occurs that requires the application of more than one section, all
applicable sections shall be given independent effect.

(j)      Authorized Shares. The Company covenants that during
the period the Warrant is outstanding, it shall reserve from its authorized and
unissued Series B Preferred Stock and Common Stock a sufficient number of shares
to provide for the issuance of Series B Preferred Stock upon the exercise of
this Warrant and issuance of Common Stock upon conversion of such Series B
Preferred Stock.

8.       Exercise Price Adjustment. The number of shares of Common
Stock issuable upon conversion of the Warrant Shares and the terms for such
conversion, shall be subject to adjustment from time to time in the manner
governing the Company's Series B Preferred Stock in the Company's Certificate of
Incorporation. The provisions set forth for the Warrant Shares in the Company's
Certificate of Incorporation relating to the above adjustments, as of the date
of this Warrant, shall not be amended, modified or waived without the prior
written consent of the Holder, unless such amendment, modification or waiver is
in accordance with the Company's Certificate of Incorporation and applicable law
and affects the Holder in the same manner as it affects all other shareholders
of Series B Preferred Stock.

9.       Notices. All notices permitted or required hereunder shall be
in writing and shall be delivered by hand, by overnight courier providing
regular nationwide service or by deposit in the United States mail, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
the Company or the Holder, as the case may be, at the address of such party
below:

(i)  if to the Company to:

Cytokinetics, Incorporated
Attn: Robert Blum, Vice President, Business Development
280 East Grand Avenue
South San Francisco, CA 94080

(ii) if to the Holder to:

The Magnum Trust
c/o Peter E.F. Newbald
No. 1 Seaton Place
St. Helier, Jersey JE4 SYJ
Channel Islands

With a copy of any notice to Holder to:

Gregory Tolaram
Hamilton Capital Limited
101 Front Street
Mercury House
Hamilton HM 12, Bermuda

-7-

Notices given by mail shall be deemed to be effective on the earlier of
the date shown on proof of receipt of such mail or, unless the recipient proves
that the notice was received later or not received, five (5) days after the date
of mailing thereof. Other notices shall be deemed given on the date of receipt.
The Company and any Holder may change the address specified above by written
notice to the other party hereto.

10.      Miscellaneous. This Warrant may be amended and any term of
this Warrant may be waived only by a written instrument signed by the Company
and the Warrant holder. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of the State of California and for all purposes shall be construed in accordance
with and governed by the laws of said state applied without reference to
conflict of laws principles except to the extent that the Warrant Shares and
terms relating thereto are governed by Delaware law.

Dated: As of August 30, 1999

CYTOKINETICS, INCORPORATED

/s/ James Sabry
---------------------------------
Name: JAMES SABRY
Title: PRESIDENT AND CEO

-8-

EXHIBIT A

NOTICE OF EXERCISE

TO: CYTOKINETICS, INCORPORATED

(1)      The undersigned hereby elects to purchase _____ shares of
Series B Preferred Stock of Cytokinetics, Incorporated pursuant to the terms of
the attached Warrant, and tenders payment of the purchase price in full,
together with all applicable transfer taxes, if any.

(2)      Please issue a certificate or certificates representing said
shares of Series B Preferred Stock in the name of the undersigned.

(3)      The undersigned represents that the aforesaid shares of Series
B Preferred Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.

(Date)

_________________________________
(Signature)

_________________________________
(Print Name)

EXHIBIT B

NOTICE OF CONVERSION

To: ___________________

(1)      The undersigned Warrant Holder hereby elects to exercise its
conversion rights under Section 2(b) of the Warrant dated as
of_______________________, 1999 between Cytokinetics, Incorporated and such
Holder (the "Warrant") and to acquire________________shares of stock of
Cytokinetics, Incorporated pursuant to such Section 2(b).

(2)      In exercising its rights to convert the Warrant, the
undersigned hereby confirms and acknowledges the investment representations and
warranties made in Section 3(a) of the Warrant.

(3)      Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below.

_________________________________
(name for issuance)

_________________________________
(address)

_________________________________
(address)

WARRANT HOLDER:

_________________________________
(Warrant Holder signature)

Date:____________________________

EXHIBIT C

INVESTMENT REPRESENTATION STATEMENT

STOCKHOLDER       :     ___________________________

COMPANY           :     Cytokinetics, Incorporated

SECURITY          :     Series B Preferred Stock

AMOUNT            :

DATE              :

In connection with the purchase of the above-listed Securities, the undersigned
Stockholder represents to the Company the following:

(a)      Stockholder is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. Stockholder is acquiring these Securities for investment for
Stockholder's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").

(b)      Stockholder acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Stockholder's investment intent as expressed herein. In this
connection, Stockholder understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Stockholder's representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Stockholder further understands that the Securities must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Stockholder
further acknowledges and understands that the Company is under no obligation to
register the Securities except as described in the Amended and Restated Investor
Rights Agreement of even date herewith. Stockholder understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, a legend prohibiting their transfer without the consent of the
Commissioner of Corporations of the State of California and any other legend
required under applicable state securities laws.

(c)      Stockholder is familiar with the provision of Rule
144, promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired,

directly or indirectly from the issuer thereof, in a non-public offering subject
to the satisfaction of certain conditions.

The Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires the resale to occur not
less than one year after the later of the date the Securities were sold by the
Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of certain conditions of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require)
the Securities may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month period not exceeding the limitations specified in Rule 144, and
(4) the timely filing of a Form 144, if applicable.

(d)      Stockholder further understands that in the event all
of the applicable requirements of 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Stockholder understands that no assurances can be given that any such
other registration exemption will be available in such event.

Signature of Stockholder;

Date: ________________________

-2-

Exhibit 10.2

CYTOKINETICS, INCORPORATED

1997 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I.       PURPOSE OF THE PLAN

This 1997 Stock Option/Stock Issuance Plan is intended to
promote the interests of Cytokinetics, Incorporated by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

II.      STRUCTURE OF THE PLAN

A.       The Plan shall be divided into two separate equity
programs:

-        the Discretionary Option Grant Program under
which eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock, and

-        the Stock Issuance Program under which
eligible persons may, at the discretion of the Plan Administrator, be issued
shares of Common Stock directly, either through the immediate purchase of such
shares or as a bonus for services rendered the Corporation (or any Parent or
Subsidiary).

B.       The provisions of Articles One and Four shall apply
to all equity programs under the Plan and shall govern the interests of all
persons under the Plan.

III.     ADMINISTRATION OF THE PLAN

A.       Except as provided in Paragraph B of this Section
III, the Plan shall be administered by the Board or one or more committees
appointed by the Board, provided that (1) beginning with the Section 12
Registration Date, the Primary Committee shall have sole and exclusive authority
to administer the Plan with respect to Section 16 Insiders, and (2)
administration of the Plan may otherwise, at the Board's discretion, be vested
in the Primary Committee or a Secondary Committee.

B.       Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and may
be removed by the Board at any time. The Board may also at any time terminate
the functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.

C.       Each Plan Administrator shall, within the scope of
its administrative functions under the Plan, have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Discretionary Option
Grant and Stock Issuance Programs and to make such determinations under, and
issue such interpretations of, the provisions of such programs and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Discretionary Option Grant and Stock
Issuance Programs under its jurisdiction or any option or stock issuance
thereunder.

D.       Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member of
the Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

IV.      ELIGIBILITY

A.       The persons eligible to participate in the
Discretionary Option Grant and Stock Issuance Programs are as follows:

(i)      Employees,

(ii)     non-employee members of the Board
or the board of directors of any Parent or Subsidiary, and

(iii)    consultants and other independent
advisors who provide services to the Corporation (or any Parent or
Subsidiary).

B.       Each Plan Administrator shall, within the scope of
its administrative jurisdiction under the Plan, have full authority to
determine, (i) with respect to the option grants under the Discretionary Option
Grant Program, which eligible persons are to receive option grants, the time or
times when such option grants are to be made, the number of shares to be covered
by each such grant, the status of the granted option as either an Incentive
Option or a Non-Statutory Option, the time or times when each option is to
become exercisable, the vesting schedule (if any) applicable to the option
shares and the maximum term for which the option is to remain outstanding and
(ii) with respect to stock issuances under the Stock Issuance Program, which
eligible persons are to receive stock issuances, the time or times when such
issuances are

2.

to be made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration for such
shares.

C.       The Plan Administrator shall have the absolute
discretion either to grant options in accordance with the Discretionary Option
Grant Program or to effect stock issuances in accordance with the Stock Issuance
Program.

V.       STOCK SUBJECT TO THE PLAN

A.       The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not exceed
2,000,000 shares.

B.       Shares of Common Stock subject to outstanding options
shall be available for subsequent issuance under the Plan to the extent those
options expire or terminate for any reason prior to exercise in full. Unvested
shares issued under the Plan and subsequently cancelled or repurchased by the
Corporation, at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall not be added back to the
number of shares of Common Stock reserved for issuance under the Plan.

C.       If any change is made to the Common Stock by reason
of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
any one person may be granted stock options, separately exercisable stock
appreciation rights and direct stock issuances under this Plan per calendar
year, and (iii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option under the Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I.       OPTION TERMS

Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

A.       EXERCISE PRICE.

3.

1.       The exercise price per share shall be fixed
by the Plan Administrator but shall not be less than eighty-five percent (85%)
of the Fair Market Value per share of Common Stock on the option grant date,
provided that the Plan Administrator may fix the exercise price at less than 85%
if the optionee, at the time of the option grant, shall have made a payment to
the Company (including payment made by means of a salary reduction) equal to the
excess of the Fair Market Value of the Common Stock on the option grant date
over such exercise price.

2.       The exercise price shall become immediately
due upon exercise of the option and may, subject to the provisions of Section I
of Article Four and the documents evidencing the option, be payable in one or
more of the forms specified below:

(i)      cash or check made payable to the
Corporation,

(ii)     with respect to the exercise of
options after the Section 12 Registration Date, shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or

(iii)    with respect to the exercise of
options for vested shares after the Section 12 Registration Date and to
the extent the sale complies with all applicable laws relating to the
regulation and sale of securities, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently
provide irrevocable written instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise,
and (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

B.       EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.

C.       EFFECT OF TERMINATION OF SERVICE.

1.       The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of Service
or death:

4.

(i)      Any option outstanding at the time
of the Optionee's cessation of Service for any reason shall remain
exercisable for such period of time thereafter as shall be determined
by the Plan Administrator and set forth in the documents evidencing the
option (which shall in no event be less than six (6) months in the case
of death or disability nor less than thirty (30) days in the case of
any other cessation of Service), provided no such option shall be
exercisable after the expiration of the option term.

(ii)     Any option exercisable in whole or
in part by the Optionee at the time of death may be subsequently
exercised by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution.

(iii)    Subject to clause C.2.(ii) below of
this Section I, during the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised.

2.       The Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:

(i)      extend the period of time for which
the option is to remain exercisable following the Optionee's cessation
of Service from the limited exercise period otherwise in effect for
that option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of the
option term, and/or

(ii)     permit the option to be exercised,
during the applicable post-Service exercise period, not only with
respect to the number of vested shares of Common Stock for which such
option is exercisable at the time of the Optionee's cessation of
Service but also with respect to one or more additional installments in
which the Optionee would have vested had the Optionee continued in
Service.

D.       STOCKHOLDER RIGHTS. The holder of an option shall
have no stockholder rights with respect to the shares subject to the option
until such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

E.       VESTING. The vesting schedule imposed with respect to
any option grant or share issuance shall be as determined by Plan Administrator
and set forth in the documents evidencing such option.

5.

F.       REPURCHASE RIGHTS. The Plan Administrator shall have
the discretion to grant options which are exercisable for unvested shares of
Common Stock and to reserve the right to repurchase any or all of those unvested
shares should the optionee thereafter cease to be in Service to the Corporation.
The terms upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Plan Administrator and set forth
in the document evidencing such repurchase right.

G.       LIMITED TRANSFERABILITY OF OPTIONS. During the
lifetime of the Optionee, options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death.

II.      INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

A.       ELIGIBILITY. Incentive Options may only be granted to
Employees.

B.       EXERCISE PRICE. The exercise price per share shall
not be less than one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the option grant date.

C.       DOLLAR LIMITATION. The aggregate Fair Market Value of
the shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any Employee under the Plan (or
any other option plan of the Corporation or any Parent or Subsidiary) may for
the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

D.       10% STOCKHOLDER. If any Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.

III.     CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Discretionary
Option Grant Program and to grant in substitution

6.

new options covering the same or different number of shares of Common Stock but
with an exercise price per share based on the Fair Market Value per share of
Common Stock on the new grant date.

ARTICLE THREE

STOCK ISSUANCE PROGRAM

I.       STOCK ISSUANCES

Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.

II.      STOCK ISSUANCE TERMS

A.       PURCHASE PRICE.

1.       The purchase price per share shall be fixed
by the Plan Administrator, but shall not be less than eighty-five percent (85%)
of the Fair Market Value per share of Common Stock on the issuance date.

2.       Subject to the provisions of Section I of
Article Four, shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

(i)      cash or check made payable to the
Corporation, or

(ii)     past services rendered to the
Corporation (or any Parent or Subsidiary).

B.       VESTING PROVISIONS.

1.       Shares of Common Stock issued under the
Stock Issuance Program may, in the discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service or upon attainment of
specified performance objectives. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program, namely:

(i)      the Service period to be completed
by the Participant or the performance objectives to be attained,

7.

(ii)     the number of installments in which
the shares are to vest,

(iii)    the interval or intervals (if any)
which are to lapse between installments, and

(iv)     the effect which death, Permanent
Disability or other event designated by the Plan Administrator is to
have upon the vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Stock
Issuance Agreement.

2.       Any new, substituted or additional
securities or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
the Participant's unvested shares of Common Stock by reason of any stock
dividend, stock split, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant's unvested shares of
Common Stock and (ii) such escrow arrangements as the Plan Administrator shall
deem appropriate.

3.       The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to the Participant
under the Stock Issuance Program, whether or not the Participant's interest in
those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.

4.       Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock issued under
the Stock Issuance Program or should the performance objectives not be attained
with respect to one or more such unvested shares of Common Stock, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to the surrendered shares.

5.       The Plan Administrator may in its discretion
waive the surrender and cancellation of one or more unvested shares of Common
Stock which would otherwise occur upon the cessation of the Participant's
Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant's
interest in the shares as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

8.

ARTICLE FOUR

MISCELLANEOUS

I.       FINANCING

The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program or
the purchase price of shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

II.      SHARE ESCROW/LEGENDS

Unvested shares issued under the Plan may, in the Plan
Administrator's discretion, be held in escrow by the Corporation until the
Participant's interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those
unvested shares.

III.     CORPORATE TRANSACTION

A.       Except as otherwise provided in the agreements
evidencing an option, each outstanding option under the Discretionary Option
Grant Program shall automatically accelerate in the event of a Corporate
Transaction so that each such option shall, immediately prior to the effective
date of the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for any or all of those shares as fully-vested shares of Common
Stock, provided that an outstanding option shall not so accelerate if and to the
extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation (or parent thereof) or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof), (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those option shares or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.

B.       Except as otherwise provided in the agreements
creating the repurchase rights, outstanding repurchase rights, if any, shall
terminate automatically, and the shares of

9.

Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, provided that such repurchase right
shall not lapse to the extent: (i) those repurchase rights are to be assigned to
the successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the option is issued or the
repurchase right is created.

C.       Immediately following the consummation of the
Corporate Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

D.       Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments to reflect such Corporate Transaction shall
also be made to (i) the exercise price payable per share under each outstanding
option, provided the aggregate exercise price payable for such securities shall
remain the same, (ii) the maximum number and/or class of securities available
for issuance over the remaining term of the Plan and (iii) the maximum number
and/or class of securities for which any one person may be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances under the Plan per calendar year.

E.       Repurchase rights which are assigned in connection
with a Corporate Transaction shall be exercisable with respect to the property
issued to the Optionee of Participant upon consummation of such Corporate
Transaction in exchange for the Common Stock held by the Optionee or Participant
subject to the repurchase rights immediately prior to the Corporate Transaction.

F.       Except as otherwise limited by the Plan Administrator
at the time an Option is granted, vesting under outstanding options will
automatically accelerate in the event the Optionee's Service subsequently
terminates by reason of an Involuntary Termination within twenty-four (24)
months following the effective date of any Corporate Transaction in which those
options are assumed or replaced and do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully-vested shares until the earlier
of (i) the expiration of the option term or (ii) the expiration of the one
(l)-year period measured from the effective date of the Involuntary Termination.
The portion of any Incentive Option accelerated in connection with a Corporate
Transaction or Change in Control shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded and the provisions governing the exercise and holding period are met.
To the extent such dollar limitation is exceeded, the accelerated portion of
such option shall be exercisable as a Non-Statutory Option under the Federal
tax laws.

G.       Except as otherwise limited by the Plan Administrator
at the time the option is granted under the Discretionary Option Program or the
repurchase rights are created, the

10.

outstanding repurchase rights with respect to shares held by an Optionee or
Participant will automatically lapse and cease to be exercisable in the event
the Optionee's or the Participant's Service subsequently terminates by means of
an Involuntary Termination within twenty-four (24) months following the
effective date of any Corporate Transaction in which those repurchase rights are
assigned or otherwise continue.

H.       The outstanding options or repurchase rights shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

IV.      HOSTILE CHANGE IN CONTROL

A.       In the event of any Hostile Change in Control, each
outstanding option under the Discretionary Option Grant Program shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Hostile Change in Control, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock.

B.       Outstanding repurchase rights, if any, shall
terminate automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Hostile
Change in Control.

V.       TAX WITHHOLDING

A.       The Corporation's obligation to deliver shares of
Common Stock upon the exercise of options or the issuance or vesting of such
shares under the Plan shall be subject to the satisfaction of all applicable
Federal, state and local income and employment tax withholding requirements.

B.       The Plan Administrator may, in its discretion,
provide any or all holders of Non-Statutory Options or unvested shares of Common
Stock under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Taxes incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:

Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%)) designated by
the holder.

Stock Delivery: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock

11.

previously acquired by such holder (other than in connection with the option
exercise or share vesting triggering the Taxes) with an aggregate Fair Market
Value equal to the percentage of the Taxes (not to exceed one hundred percent
(100%)) designated by the holder.

VI.      EFFECTIVE DATE AND TERM OF THE PLAN

A.       The Plan shall become effective immediately upon the
Plan Effective Date. Options may be granted under the Discretionary Option Grant
at any time on or after the Plan Effective Date. However, no options granted
under the Plan may be exercised, and no shares shall be issued under the Plan,
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all options previously granted under this Plan shall
terminate and cease to be outstanding, and no further options shall be granted
and no shares shall be issued under the Plan.

B.       The Plan shall terminate upon the earliest of (i) the
tenth anniversary of the Plan Effective Date, (ii) the date on which all shares
available for issuance under the Plan shall have been issued as fully-vested
shares or (iii) the termination of all outstanding options in connection with a
Corporate Transaction. Upon such plan termination, all outstanding option grants
and unvested stock issuances shall thereafter continue to have force and effect
in accordance with the provisions of the documents evidencing such grants or
issuances.

VII.     AMENDMENT OF THE PLAN

A.       The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options or unvested stock issuances at the time outstanding
under the Plan unless the Optionee or the Participant consents to such amendment
or modification. In addition, certain amendments may require stockholder
approval if so determined by the Board or pursuant to applicable laws or
regulations.

B.       Options to purchase shares of Common Stock may be
granted under the Discretionary Option Grant and shares of Common Stock may be
issued under the Stock Issuance Program that are in each instance in excess of
the number of shares then available for issuance under the Plan, provided any
excess shares actually issued under those programs shall be held in escrow until
there is obtained any required approval of an amendment sufficiently increasing
the number of shares of Common Stock available for issuance under the Plan. If
such approval is not obtained within twelve (12) months after the date the first
such excess issuances are made, then (i) any unexercised options granted on the
basis of such excess shares shall terminate and cease to be outstanding and (ii)
the Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically cancelled and cease to be outstanding.

12.

VIII.    USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

IX.      REGULATORY APPROVALS

A.       The implementation of the Plan, the granting of any
stock option under the Plan and the issuance of any shares of Common Stock (i)
upon the exercise of any granted option or (ii) under the Stock Issuance Program
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options granted under it and the shares of Common Stock issued pursuant to it.

B.       No shares of Common Stock or other assets shall be
issued or delivered under the Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which Common Stock is then listed for trading.

X.       NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.

[Remainder of This Page Intentionally Left Blank]

13.

APPENDIX

The following definitions shall be in effect under the Plan:

A.       BOARD shall mean the Corporation's Board of Directors.

B.       CODE shall mean the Internal Revenue Code of 1986, as amended.

C.       COMMON STOCK shall mean the Corporation's common stock.

D.       CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(i)      a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or

(ii)     the sale, transfer or other disposition of
all or substantially all of the Corporation's assets.

E.       CORPORATION shall mean Cytokinetics, Incorporated, a Delaware
corporation, and its successors.

F.       DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.

G.       EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

H.       EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.

I.       FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

(i)      If the Common Stock is at the time traded on
the Nasdaq National Market, then the Fair Market Value shall be deemed
equal to the closing selling price per share of Common Stock on the
date in question, as such price is reported on the Nasdaq National
Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair

A-1.

Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(ii)     If the Common Stock is at the time listed on
any Stock Exchange, then the Fair Market Value shall be deemed equal to
the closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.

(iii)    For purposes of any option grants made on
the Underwriting Date, the Fair Market Value shall be deemed to be
equal to the price per share at which the Common Stock is to be sold in
the initial public offering pursuant to the Underwriting Agreement.

(iv)     For purposes of any option grants made prior
to the Underwriting Date, the Fair Market Value shall be determined by
the Plan Administrator, after taking into account such factors as it
deems appropriate.

J.       HOSTILE CHANGE IN CONTROL shall mean a change in ownership or
control of the Corporation effected through either of the following
transactions;

(i)      the acquisition, directly or indirectly by
any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, or

(ii)     a change in the composition of the Board
over a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time the Board approved such election or nomination.

K.       INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

A-2.

L.       INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:

(i)      such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or

(ii)     such individual's voluntary resignation
following (A) a change in his or her position with the Corporation
which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary,
fringe benefits and participation in any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C)
a relocation of such individual's place of employment by more than
fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's
consent.

M.       MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

N.       1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

O.       NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

P.       OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant Program.

Q.       PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

R.       PARTICIPANT shall mean any person who is issued shares of
Common Stock under the Stock Issuance Program.

S.       PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more.

A-3.

T.       PLAN shall mean the Corporation's 1997 Stock Option/Stock
Issuance Plan, as set forth in this document.

U.       PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

V.       PLAN EFFECTIVE DATE shall mean the date on which the Plan was
adopted by the Board.

W.       PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders following the Section 12 Registration Date.

X.       SECONDARY COMMITTEE shall mean a committee of two (2) or more
Board members appointed by the Board to administer any aspect of Plan not
required hereunder to be administered by the Primary Committee. The members of
the Secondary Committee may be Board members who are Employees eligible to
receive discretionary option grants or direct stock issuances under the Plan or
any other stock option, stock appreciation, stock bonus or other stock plan of
the Corporation (or any Parent or Subsidiary).

Y.       SECTION 12 REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12(g) or Section 15 of the 1934
Act.

Z.       SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

AA.      SERVICE shall mean the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.

AB.      STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.

AC.      STOCK ISSUANCE AGREEMENT shall mean the agreement entered into
by the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.

AD.      STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under the Plan.

A-4.

AE.      SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

AF.      TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those options
or the vesting of those shares.

AG.      10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

AH.      UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

AI.      UNDERWRITING DATE shall mean the date on which the
Underwriting Agreement is executed and priced in connection with an initial
public offering of the Common Stock.

A-5.

CYTOKINETICS, INCORPORATED
STOCK OPTION AGREEMENT

RECITALS

A. The Board of Directors of the Corporation has adopted the
Cytokinetics, Incorporated 1997 Stock Option/Stock Issuance Plan (the "Plan")
for the purpose of attracting and retaining the services of persons who
contribute to the growth and financial success of the Corporation.

B. Optionee is a person who the Plan Administrator believes
has and will contribute to the growth and financial success of the Corporation
and this Agreement is executed pursuant to and is intended to carry out the
purposes of the Plan.

AGREEMENT

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, the Corporation hereby grants to
Optionee, as of the grant date (the "Grant Date") specified in the accompanying
Notice of Grant of Stock Option (the "Grant Notice"), a stock option to purchase
up to that number of shares of the Corporation's Common Stock (the "Option
Shares") as is specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term at the option price per
share (the "Option Price") specified in the Grant Notice. Capitalized terms used
herein which are not otherwise defined shall have the meaning ascribed to such
terms in the Plan.

2. OPTION TERM. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5, 6 or 17.

3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.

4. DATES OF EXERCISE. This option may not be exercised in
whole or in part at any time prior to the time the Plan is approved by the
Corporation's shareholders in accordance with Paragraph 17. Provided such
shareholder approval is obtained, this option shall thereupon become exercisable
for the Option Shares in one or more installments as is specified in the Grant
Notice. As the option becomes exercisable in one or more installments, the
installments shall accumulate and the option shall remain

exercisable for such installments until the Expiration Date or the sooner
termination of the option term under Paragraph 5 or Paragraph 6 of this
Agreement.

5. SPECIAL TERMINATION OF OPTION TERM. The option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
exercisable) prior to the Expiration Date should any of the following provisions
become applicable:

(i)      Except as otherwise provided in subparagraph
(ii) or (iii) below, should Optionee cease to remain in Service while
this option is outstanding, then the period for exercising this option
shall be reduced to a three (3)-month period commencing with the date
of such cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date. Upon the expiration
of such three (3)-month period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding.

(ii)     Should Optionee die while this option is
outstanding, then the personal representative of the Optionee's estate
or the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the law of descent and
distribution shall have the right to exercise this option. Such right
shall lapse and this option shall cease to be exercisable upon the
earlier of (A) the expiration of the twelve (12) month period measured
from the date of Optionee's death or (B) the Expiration Date. Upon the
expiration of such twelve (12) month period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding.

(iii)    Should Optionee become permanently disabled
and cease by reason thereof to remain in Service while this option is
outstanding, then the Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during
which to exercise this option, but in no event shall this option be
exercisable at any time after the Expiration Date. Optionee shall be
deemed to be permanently disabled if Optionee is unable to engage in
any substantial gainful activity for the Corporation or the parent or
subsidiary corporation retaining his/her services by reason of any
medically determinable physical or mental impairment, which can be
expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than twelve (12) months. Upon
the expiration of such limited period of exercisability or (if earlier)
upon the Expiration Date, this option shall terminate and cease to be
outstanding.

(iv)     During the limited period of exercisability
applicable under subparagraph (i), (ii) or (iii) above, this option may
be exercised for any or all of the Option Shares for which this option
is, at the time of the

-2-

Optionee's cessation of Service, exercisable in accordance with the
exercise schedule specified in the Grant Notice and the provisions of
Paragraph 6 of this Agreement.

(v)      For purposes of this Paragraph 5 and for all
other purposes under this Agreement:

A.       The Optionee shall be deemed to remain in
SERVICE for so long as the Optionee continues to render periodic
services to the Corporation or any parent or subsidiary corporation,
whether as an Employee, a non-employee member of the board of
directors, or an independent contractor or consultant.

B.       The Optionee shall be deemed to be an
EMPLOYEE of the Corporation and to continue in the Corporation's employ
for so long as the Optionee remains in the employ of the Corporation or
one or more of its parent or subsidiary corporations, subject to the
control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

C.       A corporation shall be considered to be a
SUBSIDIARY corporation of the Corporation if it is a member of an
unbroken chain of corporations beginning with the Corporation, provided
each such corporation in the chain (other than the last corporation)
owns, at the time of determination, stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

D.       A corporation shall be considered to be a
PARENT corporation of the Corporation if it is a member of an unbroken
chain ending with the Corporation, provided each such corporation in
the chain (other than the Corporation) owns, at the time of
determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.

6.       EFFECT OF CORPORATE TRANSACTION.

A.       Optionee shall automatically vest with respect to a
portion of the Option Shares in the event of a Corporate Transaction so that
such portion shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable with for vested shares of Common Stock,
provided that no Option Shares shall automatically vest in full if and to the
extent: (i) this option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation (or parent thereof) or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof), or (ii) such option is to be

-3-

replaced with a cash incentive program of the successor corporation which
preserves the spread existing on the unvested option shares at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to those option shares. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive. The
portion of the Option Shares which will automatically vest hereunder shall be a
number of shares equal to the number of unvested Option Shares immediately prior
to the Corporate Transaction multiplied by a fraction, the numerator of which is
the number of complete months of which elapsed after the Vesting Commencement
Date set forth in the Grant Notice and the date of the Corporate Transaction,
and the denominator of which is the number of months required under the Grant
Notice for the rights of Optionee to become fully vested.

B.       To the extent not previously exercised, this Option
shall terminate and cease to be exercisable upon the consummation of a Corporate
Transaction unless it is expressly assumed by the successor corporation or
parent thereof.

C.       Option Shares available under any options which are
assumed or replaced in the Corporate Transaction and do not otherwise accelerate
at that time, shall automatically vest in full in the event the Optionee's
Service should subsequently terminated by reason of an Involuntary Termination
within twenty-four (24) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (l)-year period measured from the effective
date of the Involuntary Termination.

D.       This Agreement shall not in any way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise make changes
in its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

6.       EFFECT OF HOSTILE CHANGE IN CONTROL

In the event of any Hostile Change in Control, Optionee shall
automatically vest in full with respect to all Option Shares so that each such
option shall, immediately prior to the effective date of the Hostile Change in
Control, be fully exercisable for any or all of Option Shares as fully-vested
shares of Common Stock.

7.       ADJUSTMENT IN OPTION SHARES.

A. In the event any change is made to the Corporation's
outstanding Common Stock by reason of any stock split, stock dividend,
combination of shares, exchange of shares, or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the total number of Option Shares
subject to this option, (ii) the number of Option Shares

-4-

for which this option is to be exercisable from and after each installment date
specified in the Grant Notice and (iii) the Option Price payable per share in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

B. If this option is to be assumed in connection with a
Corporate Transaction described in Paragraph 6 or is otherwise to remain
outstanding, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issuable to the Optionee in the consummation of
such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall also be made to
the Option Price payable per share, provided the aggregate Option Price payable
hereunder shall remain the same.

8.       PRIVILEGE OF STOCK OWNERSHIP. The holder of this
option shall not have any of the rights of a shareholder with respect to the
Option Shares until such individual shall have exercised the option and paid the
Option Price.

9.       MANNER OF EXERCISING OPTION.

A.       In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death, the
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:

(i)      Execute and deliver to the Secretary of the
Corporation a stock purchase agreement (the "Purchase Agreement") in
substantially the form of Exhibit B to the Grant Notice.

(ii)     Pay the aggregate Option Price for the
purchased shares in one or more forms approved under the Plan.

(iii)    Furnish to the Corporation appropriate
documentation that the person or persons exercising the option, if
other than Optionee, have the right to exercise this option.

B.       For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Purchase Agreement shall have been
delivered to the Corporation, and the fair market value of a share of Common
Stock on any relevant date shall be determined in accordance with subparagraphs
(i) through (iii) below:

(i)      If the Common Stock is not at the time
listed or admitted to trading on any stock exchange but is traded on
the NASDAQ National Market System, the fair market value shall be the
closing selling price of one share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers through its

-5-

NASDAQ system or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such quotation
exists shall be determinative of fair market value.

(ii)     If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the
date in question on the stock exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on such
exchange on the date in question, then the fair market value shall be
the closing selling price on the exchange on the last preceding date
for which such quotation exists.

(iii)    If the Common Stock at the time is neither
listed nor admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Plan Administrator determines that
the value determined pursuant to subparagraphs (i) and (ii) above does
not accurately reflect the fair market value of the Common Stock, then
such fair market value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall
deem appropriate.

C.       As soon after the Exercise Date as practical, the
Corporation shall mail or deliver to Optionee or to the other person or persons
exercising this option a certificate or certificates representing the shares so
purchased and paid for, with the appropriate legends affixed thereto.

D.       In no event may this option be exercised for any
fractional shares.

10.      COMPLIANCE WITH LAWS AND REGULATIONS.

A.       The exercise of this option and the issuance of
Option Shares upon such exercise shall be subject to compliance by the
Corporation and the Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange on which
shares of the Corporation's Common Stock may be listed at the time of such
exercise and issuance.

B.       In connection with the exercise of this option,
Optionee shall execute and deliver to the Corporation such representations in
writing as may be requested by the Corporation in order for it to comply with
the applicable requirements of Federal and State securities laws.

-6-

11.      SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3 or 6, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the successors and
assigns of the Corporation.

12.      LIABILITY OF CORPORATION.

A.       If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without shareholder approval be issued under the Plan, then this option shall be
void with respect to such excess shares, unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of Article IV,
Section 3, of the Plan.

B.       The inability of the Corporation to obtain approval
from any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.

13.      NOTICES. Any notice required to be given or delivered
to the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of the Corporate Secretary at its principal
corporate offices. Any notice required to be given or delivered to Optionee
shall be in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Grant Notice. All notices shall be deemed to
have been given or delivered upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.

14.      LOANS. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, assist the Optionee in the
exercise of this option by (i) authorizing the extension of a loan to the
Optionee from the Corporation or (ii) permitting the Optionee to pay the option
price for the purchased Common Stock in installments over a period of years. The
terms of any such loan or installment method of payment (including the interest
rate, the requirements for collateral and the terms of repayment) shall be
established by the Plan Administrator in its sole discretion.

15.      CONSTRUCTION. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.

-7-

16.      GOVERNING LAW. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.

17.      SHAREHOLDER APPROVAL. The grant of this option is
subject to approval of the Plan by the Corporation's shareholders within twelve
(12) months after the adoption of the Plan by the Board of Directors.
Notwithstanding any provision of this Agreement to the contrary, this option may
not be exercised in whole or in part until such shareholder approval is
obtained. In the event that such shareholder approval is not obtained, then this
option shall thereupon terminate in its entirety and the Optionee shall have no
further rights to acquire any Option Shares hereunder.

18.      ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK
OPTION. In the event this option is designated an incentive stock option in the
Grant Notice, the following terms and conditions shall also apply to the grant:

A.       This option shall cease to qualify for favorable tax
treatment as an incentive stock option under the Federal tax laws if (and to the
extent) this option is exercised for one or more Option Shares: (i) more than
three (3) months after the date the Optionee ceases to be an Employee for any
reason other than death or permanent disability (as defined in Paragraph 5) or
(ii) more than one (1) year after the date the Optionee ceases to be an Employee
by reason of permanent disability.

B.       Should this option be designated as immediately
exercisable in the Grant Notice, then this option shall not become exercisable
in the calendar year in which granted if (and to the extent) the aggregate fair
market value (determined at the Grant Date) of the Corporation's Common Stock
for which this option would otherwise first become exercisable in such calendar
year would, when added to the aggregate fair market value (determined as of the
respective date or dates of grant) of the Corporation's Common Stock for which
this option or one or more other incentive stock options granted to the Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Corporation or its parent or subsidiary corporations) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion will first become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18.B would not
be contravened.

C.       Should this option be designated as exercisable in
installments in the Grant Notice, then no installment under this option (whether
annual or monthly) shall qualify for favorable tax treatment as an incentive
stock option under the Federal tax laws if (and to the extent) the aggregate
fair market value (determined at the Grant Date) of the Corporation's Common
Stock for which such installment first becomes exercisable hereunder will, when
added to the aggregate fair market value (determined as of the respective date
or dates of grant) of the Corporation's Common Stock for

-8-

which one or more other incentive stock options granted to the Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the
Corporation or any parent or subsidiary corporation) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate.

19.      WITHHOLDING. Optionee hereby agrees to make
appropriate arrangements with the Corporation or parent or subsidiary
corporation employing Optionee for the satisfaction of all Federal, State or
local income tax withholding requirements and Federal social security employee
tax requirements applicable to the exercise of this option.

-9-

Immediately Exercisable

CYTOKINETICS, INCORPORATED
STOCK PURCHASE AGREEMENT

AGREEMENT made as of this __ day of_______, 19_, by and among
Cytokinetics, Incorporated, (the "Corporation"),_________________, the holder of
a stock option (the "Optionee") under the Corporation's 1997 Stock Option/Stock
Issuance Plan and _________________, the Optionee's spouse.

I.       EXERCISE OF OPTION

1.1      EXERCISE. Optionee hereby purchases____________shares
("Purchased Shares") of the Corporation's common stock ("Common Stock") pursuant
to that certain option ("Option") granted Optionee on_____________________,
19____("Grant Date") to purchase up to________________shares of the Common Stock
("Total Purchasable Shares") under the Corporation's 1997 Stock Option/Stock
Issuance Plan (the "Plan") at an option price of $_____________ per share
("Option Price").

1.2      PAYMENT. Concurrently with the delivery of this
Agreement to the Corporate Secretary of the Corporation, Optionee shall pay the
Option Price for the Purchased Shares in accordance with the provisions of the
agreement between the Corporation and Optionee evidencing the Option (the
"Option Agreement") and shall deliver whatever additional documents may be
required by the Option Agreement as a condition for exercise, together with a
duly-executed blank Assignment Separate from Certificate (in the form attached
hereto as Exhibit I) with respect to the Purchased Shares.

1.3      DELIVERY OF CERTIFICATES. The certificates
representing the Purchased Shares hereunder shall be held in escrow by the
Corporate Secretary of the Corporation in accordance with the provisions of
Article VII.

1.4      SHAREHOLDER RIGHTS. Until such time as the
Corporation actually exercises its repurchase right, rights of first refusal or
special purchase right under this Agreement, Optionee (or any successor in
interest) shall have all the rights of a shareholder (including voting and
dividend rights) with respect to the Purchased Shares, including the Purchased
Shares held in escrow under Article VII, subject, however, to the transfer
restrictions of Article IV.

II.      SECURITIES LAW COMPLIANCE

2.1      EXEMPTION FROM REGISTRATION. The Purchased Shares
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), and are accordingly being issued to Optionee in reliance upon the
exemption from such registration provided by Rule 701 of the Securities and
Exchange Commission for stock issuances under compensatory

benefit plans such as the Plan. Optionee hereby acknowledges previous receipt of
a copy of the documentation for such Plan in the form of Exhibit C to the Notice
of Grant of Stock Option (the "Grant Notice") accompanying the Option Agreement.

2.2      RESTRICTED SECURITIES.

A.       Optionee hereby confirms that Optionee has been
informed that the Purchased Shares are restricted securities under the 1933 Act
and may not be resold or transferred unless the Purchased Shares are first
registered under the Federal securities laws or unless an exemption from such
registration is available. Accordingly, Optionee hereby acknowledges that
Optionee is prepared to hold the Purchased Shares for an indefinite period and
that Optionee is aware that Rule 144 of the Securities and Exchange Commission
issued under the 1933 Act is not presently available to exempt the sale of the
Purchased Shares from the registration requirements of the 1933 Act.

B.       Upon the expiration of the ninety (90)-day period
immediately following the date on which the Corporation first becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Purchased Shares, to the extent vested under Article
V, may be sold (without registration) pursuant to the applicable requirements of
Rule 144. If Optionee is at the time of such sale an affiliate of the
Corporation for purposes of Rule 144 or was such an affiliate during the
preceding three (3) months, then the sale must comply with all the requirements
of Rule 144 (including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the two (2)-year holding period requirement
of the Rule will not be applicable. If Optionee is not at the time of the sale
an affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Purchased Shares held for less than
three (3) years following payment in cash of the Option Price therefor) will be
applicable to the sale.

C.       Should the Corporation not become subject to the
reporting requirements of the Exchange Act, then Optionee may, provided he/she
is not at the time an affiliate of the Corporation (nor was such an affiliate
during the preceding three (3) months), sell the Purchased Shares (without
registration) pursuant to paragraph (k) of Rule 144 after the Purchased Shares
have been held for a period of three (3) years following the payment in cash of
the Option Price for such shares.

2.3      DISPOSITION OF SHARES. Optionee hereby agrees that
Optionee shall make no disposition of the Purchased Shares (other than a
permitted transfer under paragraph 4.1) unless and until there is compliance
with all of the following requirements:

(a)      Optionee shall have notified the Corporation
of the proposed disposition and provided a written summary of the terms
and conditions of the proposed disposition.

-2-

(b)      Optionee shall have complied with all
requirements of this Agreement applicable to the disposition of the
Purchased Shares.

(c)      Optionee shall have provided the Corporation
with written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Purchased Shares under the 1933 Act or (ii) all
appropriate action necessary for compliance with the registration
requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.

(d)      Optionee shall have provided the Corporation
with written assurances, in form and substance satisfactory to the
Corporation, that the proposed disposition will not result in the
contravention of any transfer restrictions applicable to the Purchased
Shares pursuant to the provisions of the Commissioner Rules identified
in paragraph 2.5.

The Corporation shall not be required (i) to transfer on its
books any Purchased Shares which have been sold or transferred in violation of
the provisions of this Article II nor (ii) to treat as the owner of the
Purchased Shares, or otherwise to accord voting or dividend rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.

2.4      RESTRICTIVE LEGENDS. In order to reflect the
restrictions on disposition of the Purchased Shares, the stock certificates for
the Purchased Shares will be endorsed with restrictive legends, including one or
more of the following legends:

(i)      "The shares represented by this certificate
have not been registered under the Securities Act of 1933. The shares may not be
sold or offered for sale in the absence of (a) an effective registration
statement for the shares under such Act, (b) a 'no action' letter of the
Securities and Exchange Commission with respect to such sale or offer, or (c)
satisfactory assurances to the Corporation that registration under such Act is
not required with respect to such sale or offer."

(ii)     "The shares represented by this certificate
are unvested and accordingly may not be sold, assigned, transferred, encumbered,
or in any manner disposed of except in conformity with the terms of a written
agreement dated_____________________, 19__ between the Corporation and the
registered holder of the shares (or the predecessor in interest to the shares).
Such agreement grants certain repurchase rights and rights of first refusal to
the Corporation (or its assignees) upon the sale, assignment, transfer,
encumbrance or other disposition of the Corporation's shares or upon termination
of service with the Corporation. The Corporation will upon written request
furnish a copy of such agreement to the holder hereof without charge."

-3-

III.           SPECIAL TAX ELECTION

3.1      SECTION 83(b) ELECTION APPLICABLE TO THE EXERCISE OF
A NON-STATUTORY STOCK OPTION. If the Purchased Shares are acquired hereunder
pursuant to the exercise of a non-statutory stock option, as specified in the
Grant Notice, then the Optionee understands that under Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), the excess of the fair
market value of the Purchased Shares on the date any forfeiture restrictions
applicable to such shares lapse over the Option Price paid for such shares will
be reportable as ordinary income on such lapse date. For this purpose, the term
"forfeiture restrictions" includes the right of the Corporation to repurchase
the Purchased Shares pursuant to the Repurchase Right provided under Article V
of this Agreement. Optionee understands that he/she may elect under Section
83(b) of the Code to be taxed at the time the Purchased Shares are acquired
hereunder, rather than when and as such Purchased Shares cease to be subject to
such forfeiture restrictions. Such election must be filed with the Internal
Revenue Service within thirty (30) days after the date of this Agreement. Even
if the fair market value of the Purchased Shares at the date of this Agreement
equals the Option Price paid (and thus no tax is payable), the election must be
made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS
ELECTION IS ATTACHED AS EXHIBIT II HERETO. OPTIONEE UNDERSTANDS THAT FAILURE TO
MAKE THIS FILING WITHIN THE THIRTY (30)-DAY PERIOD WILL RESULT IN THE
RECOGNITION OF ORDINARY INCOME BY THE OPTIONEE AS THE FORFEITURE RESTRICTIONS
LAPSE.

3.2      CONDITIONAL SECTION 83(b) ELECTION APPLICABLE TO THE
EXERCISE OF AN INCENTIVE STOCK OPTION. If the Purchased Shares are acquired
hereunder pursuant to the exercise of an incentive stock option under the
Federal tax laws, as specified in the Grant Notice, then the following tax
principles shall be applicable to the Purchased Shares:

A.       For regular tax purposes, no taxable income
will be recognized at the time the Option is exercised.

B.       The excess of (i) the fair market value of
the Purchased Shares on the date the Option is exercised or (if later)
on the date any forfeiture restrictions applicable to the Purchased
Shares lapse over (ii) the Option Price paid for the Purchased Shares
will be includible in the Optionee's taxable income for alternative
minimum tax purposes.

C.       If the Optionee makes a disqualifying
disposition of the Purchased Shares, then the Optionee will recognize
ordinary income in the year of such disposition equal in amount to the
excess of (i) the fair market value of the Purchased Shares on the date
the Option is exercised or (if later) on the date any forfeiture
restrictions applicable to the Purchased Shares lapse over (ii) the
Option Price paid for the Purchased Shares. Any additional gain
recognized upon the disqualifying disposition will be either short-term
or long-

-4-

term capital gain depending upon the period for which the Purchased
Shares are held prior to the disposition.

D.       For purposes of the foregoing, the term
"forfeiture restrictions" will include the right of the Corporation to
repurchase the Purchased Shares pursuant to the Repurchase Right
provided under Article V of this Agreement. The term "disqualifying
disposition" means any sale or other disposition (1/) of the Purchased
Shares within two (2) years after the Grant Date or within one (1) year
after the execution date of this Agreement.

E.       In the absence of final Treasury Regulations
relating to incentive stock options, it is not certain whether the
Optionee may, in connection with the exercise of the Option for any
Purchased Shares at the time subject to forfeiture restrictions, file a
protective election under Section 83(b) of the Code which would limit
(I) the Optionee's alternative minimum taxable income upon exercise and
(II) the Optionee's ordinary income upon a disqualifying disposition,
to the excess of (i) the fair market value of the Purchased Shares on
the date the Option is exercised over (ii) the Option Price paid for
the Purchased Shares. THE APPROPRIATE FORM FOR MAKING SUCH A PROTECTIVE
ELECTION IS ATTACHED AS EXHIBIT II TO THIS AGREEMENT AND MUST BE FILED
WITH THE INTERNAL REVENUE SERVICE WITHIN THIRTY (30) DAYS AFTER THE
DATE OF THIS AGREEMENT. HOWEVER, SUCH ELECTION IF PROPERLY FILED WILL
ONLY BE ALLOWED TO THE EXTENT THE FINAL TREASURY REGULATIONS PERMIT
SUCH A PROTECTIVE ELECTION.

3.3      OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be made by registered
or certified mail, return receipt requested, and Optionee must retain two (2)
copies of the completed form for filing with his or her State and Federal tax
returns for the current tax year and an additional copy for his or her records.

---------------------------

1/ Generally, a disposition of shares purchased under an incentive stock
option includes any transfer of legal title, including a transfer by sale,
exchange or gift, but does not include a transfer to the Optionee's spouse, a
transfer into joint ownership with right of survivorship if Optionee remains one
of the joint owners, a pledge, a transfer by bequest or inheritance or certain
tax free exchanges permitted under the Code.

-5-

IV.      TRANSFER RESTRICTIONS

4.1      RESTRICTION ON TRANSFER. Optionee shall not transfer,
assign, encumber or otherwise dispose of any of the Purchased Shares which are
subject to the Corporation's Repurchase Right under Article V. In addition,
Purchased Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise made the subject of disposition
in contravention of the Corporation's First Refusal Right under Article VI. Such
restrictions on transfer, however, shall not be applicable to (i) a gratuitous
transfer of the Purchased Shares made to the Optionee's spouse or issue,
including adopted children, or to a trust for the exclusive benefit of the
Optionee or the Optionee's spouse or issue, provided and only if the Optionee
obtains the Corporation's prior written consent to such transfer, (ii) a
transfer of title to the Purchased Shares effected pursuant to the Optionee's
will or the laws of intestate succession or (iii) a transfer to the Corporation
in pledge as security for any purchase-money indebtedness incurred by the
Optionee in connection with the acquisition of the Purchased Shares.

4.2      TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of one of the
permitted transfers specified in paragraph 4.1 must, as a condition precedent to
the validity of such transfer, acknowledge in writing to the Corporation that
such person is bound by the provisions of this Agreement and that the
transferred shares are subject to (i) both the Corporation's Repurchase Right
and the Corporation's First Refusal Right granted hereunder and (ii) the market
stand-off provisions of paragraph 4.4, to the same extent such shares would be
so subject if retained by the Optionee.

4.3      DEFINITION OF OWNER. For purposes of Articles IV, V,
VI and VII of this Agreement, the term "Owner" shall include the Optionee and
all subsequent holders of the Purchased Shares who derive their chain of
ownership through a permitted transfer from the Optionee in accordance with
paragraph 4.1.

4.4      MARKET STAND-OFF PROVISIONS.

A.       In connection with any underwritten public offering
by the Corporation of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Corporation's
initial public offering, Owner shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any Purchased Shares without the prior written
consent of the Corporation or its underwriters. Such limitations shall be in
effect for such period of time from and after the effective date of such
registration statement as may be requested by the Corporation or such
underwriters; provided, however, that in no event shall such period exceed one
hundred-eighty (180) days. The limitations of this paragraph 4.4 shall remain in
effect for the two-year period immediately following the effective date of the
Corporation's initial public offering and shall thereafter terminate and cease
to have any force or effect.

-6-

B.       Owner shall be subject to the market stand-off
provisions of this paragraph 4.4 provided and only if the officers and directors
of the Corporation are also subject to similar arrangements.

C.       In the event of any stock dividend, stock split,
recapitalization or other change affecting the Corporation's outstanding Common
Stock effected as a class without receipt of consideration, then any new,
substituted or additional securities distributed with respect to the Purchased
Shares shall be immediately subject to the provisions of this paragraph 4.4, to
the same extent the Purchased Shares are at such time covered by such
provisions.

D.       In order to enforce the limitations of this paragraph
4.4, the Corporation may impose stop-transfer instructions with respect to the
Purchased Shares until the end of the applicable stand-off period.

V.       REPURCHASE RIGHT

5.1      GRANT. The Corporation is hereby granted the right
(the "Repurchase Right"), exercisable at any time during the sixty (60)-day
period following the date the Optionee ceases for any reason to remain in
Service or (if later) during the sixty (60)-day period following the execution
date of this Agreement, to repurchase at the Option Price all or (at the
discretion of the Corporation and with the consent of the Optionee) any portion
of the Purchased Shares in which the Optionee has not acquired a vested interest
in accordance with the vesting provisions of paragraph 5.3 (such shares to be
hereinafter called the "Unvested Shares"). For purposes of this Agreement, the
Optionee shall be deemed to remain in Service for so long as the Optionee
continues to render periodic services to the Corporation or any parent or
subsidiary corporation, whether as an employee, a non-employee member of the
board of directors, or an independent contractor or consultant.

5.2      EXERCISE OF THE REPURCHASE RIGHT. The Repurchase
Right shall be exercisable by written notice delivered to the Owner of the
Unvested Shares prior to the expiration of the applicable sixty (60)-day period
specified in paragraph 5.1. The notice shall indicate the number of Unvested
Shares to be repurchased and the date on which the repurchase is to be effected,
such date to be not more than thirty (30) days after the date of notice. To the
extent one or more certificates representing Unvested Shares may have been
previously delivered out of escrow to the Owner, then Owner shall, prior to the
close of business on the date specified for the repurchase, deliver to the
Secretary of the Corporation the certificates representing the Unvested Shares
to be repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Option Price
previously paid for the Unvested Shares which are to be repurchased.

-7-

5.3      TERMINATION OF THE REPURCHASE RIGHT. The Repurchase
Right shall terminate with respect to any Unvested Shares for which it is not
timely exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Purchased
Shares in which the Optionee vests in accordance with the vesting schedule
specified in the Grant Notice. All Purchased Shares as to which the Repurchase
Right lapses shall, however, continue to be subject to (i) the First Refusal
Right of the Corporation and its assignees under Article VI, (ii) the market
stand-off provisions of paragraph 4.4 and (iii) the Special Purchase Right under
Article VIII.

5.4      AGGREGATE VESTING LIMITATION. If the Option is
exercised in more than one increment so that the Optionee is a party to one or
more other Stock Purchase Agreements ("Prior Purchase Agreements") which are
executed prior to the date of this Agreement, then the total number of Purchased
Shares as to which the Optionee shall be deemed to have a fully-vested interest
under this Agreement and all Prior Purchase Agreements shall not exceed in the
aggregate the number of Purchased Shares in which the Optionee would otherwise
at the time be vested, in accordance with the vesting provisions of paragraph
5.3, had all the Purchased Shares been acquired exclusively under this
Agreement.

5.5      FRACTIONAL SHARES. No fractional shares shall be
repurchased by the Corporation. Accordingly, should the Repurchase Right extend
to a fractional share (in accordance with the vesting provisions of paragraph
5.3) at the time the Optionee ceases Service, then such fractional share shall
be added to any fractional share in which the Optionee is at such time vested in
order to make one whole vested share no longer subject to the Repurchase Right.

5.6      ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the
event of any stock dividend, stock split, recapitalization or other change
affecting the Corporation's outstanding Common Stock as a class effected without
receipt of consideration, then any new, substituted or additional securities or
other property (including money paid other than as a regular cash dividend)
which is by reason of any such transaction distributed with respect to the
Purchased Shares shall be immediately subject to the Repurchase Right, but only
to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments to reflect the distribution of such securities or
property shall be made to the number of Purchased Shares and Total Purchasable
Shares hereunder and to the price per share to be paid upon the exercise of the
Repurchase Right in order to reflect the effect of any such transaction upon the
Corporation's capital structure; provided, however, that the aggregate purchase
price shall remain the same.

5.7      CORPORATE TRANSACTION.

A.       The Repurchase Rights shall automatically terminate
and cease to be exercisable with respect to a portion of the Purchased Shares
upon the consummation of any Corporate Transaction, provided that such
repurchase right shall not terminate if and to the extent the those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction. The portion of the Purchased Shares
with

-8-

respect to which the repurchase rights will terminate shall be a number of
Purchased Shares equal to the total number of Unvested Shares immediately prior
to the Corporate Transaction multiplied by a fraction, the numerator of which is
the number of complete months which elapsed after the Vesting Commencement Date
set forth in the Grant Notice and the date of the Corporate Transaction, and the
denominator of which is the number of months required under the Grant Notice for
all of the Purchased Shares to become fully vested. Any and all repurchase
rights which will not be either assigned or terminate at the time of the
Corporate Transaction may be exercised by the Company immediately prior to the
Corporate Transaction.

B.       Repurchase rights which are assigned in connection
with a Corporate Transaction shall be exercisable with respect to the property
issued to the Optionee upon consummation of such Corporate Transaction in
exchange for the Common Stock held by the Optionee subject to the repurchase
rights immediately prior to the Corporate Transaction.

C.       Any Repurchase Rights which are assigned in a
Corporate Transaction and do not otherwise become vested at that time, shall
automatically terminate and cease to be exercisable in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within twenty-four (24) months following the effective date of such Corporate
Transaction.

D.       This Agreement shall not in any way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise make changes
in its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

VI.      RIGHT OF FIRST REFUSAL

6.1      GRANT. The Corporation is hereby granted rights of
first refusal (the "First Refusal Right"), exercisable in connection with any
proposed transfer of the Purchased Shares in which the Optionee has vested in
accordance with the vesting provisions of Article V. For purposes of this
Article VI, the term "transfer" shall include any sale, assignment, pledge,
encumbrance or other disposition for value of the Purchased Shares intended to
be made by the Owner, but shall not include any of the permitted transfers under
paragraph 4.1.

6.2      NOTICE OF INTENDED DISPOSITION. In the event the
Owner desires to accept a bona fide third-party offer for the transfer of any or
all of the Purchased Shares (the shares subject to such offer to be hereinafter
called the "Target Shares"), Owner shall promptly (i) deliver to the Corporate
Secretary of the Corporation written notice (the "Disposition Notice") of the
terms and conditions of the offer, including the purchase price and the identity
of the third-party offeror, and (ii) provide satisfactory proof that the
disposition of the Target Shares to such third-party offeror would not be in
contravention of the provisions set forth in Articles II and IV of this
Agreement.

-9-

6.3      EXERCISE OF RIGHT. The Corporation shall, for a
period of forty-five (45) days following receipt of the Disposition Notice, have
the right to repurchase any or all of the Target Shares specified in the
Disposition Notice upon the same terms and conditions specified therein or upon
terms and conditions which do not materially vary from those specified therein.
Such right shall be exercisable by delivery of written notice (the "Exercise
Notice") to Owner prior to the expiration of the forty-five (45)-day exercise
period. If such right is exercised with respect to all the Target Shares
specified in the Disposition Notice, then the Corporation (or its assignees)
shall effect the repurchase of the Target Shares, including payment of the
purchase price, not more than ten (10) business days after delivery of the
Exercise Notice; and at such time Owner shall deliver to the Corporation the
certificates representing the Target Shares to be repurchased, each certificate
to be properly endorsed for transfer. To the extent any of the Target Shares are
at the time held in escrow under Article VII, the certificates for such shares
shall automatically be released from escrow and delivered to the Corporation for
purchase. Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation (or its assignees) shall have the right to pay the purchase price in
the form of cash equal in amount to the value of such property. If the Owner and
the Corporation (or its assignees) cannot agree on such cash value within ten
(10) days after the Corporation's receipt of the Disposition Notice, the
valuation shall be made by an appraiser of recognized standing selected by the
Owner and the Corporation (or its assignees) or, if they cannot agree on an
appraiser within twenty (20) days after the Corporation's receipt of the
Disposition Notice, each shall select an appraiser of recognized standing and
the two appraisers shall designate a third appraiser of recognized standing,
whose appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by the Owner and the Corporation. The closing shall then
be held on the later of (i) the tenth business day following delivery of the
Exercise Notice or (ii) the tenth business day after such cash valuation shall
have been made.

6.4      NON-EXERCISE OF RIGHT. In the event the Exercise
Notice is not given to Owner within forty-five (45) days following the date of
the Corporation's receipt of the Disposition Notice, Owner shall have a period
of thirty (30) days thereafter in which to sell or otherwise dispose of the
Target Shares to the third-party offeror identified in the Disposition Notice
upon terms and conditions (including the purchase price) no more favorable to
such third-party offeror than those specified in the Disposition Notice;
provided, however, that any such sale or disposition must not be effected in
contravention of the provisions of Article II of this Agreement. To the extent
any of the Target Shares are at the time held in escrow under Article VII, the
certificates for such shares shall automatically be released from escrow and
surrendered to the Owner. The third-party offeror shall acquire the Target
Shares free and clear of the Corporation's Repurchase Right under Article V and
the Corporation's First Refusal Right hereunder, but the acquired shares shall
remain subject to (i) the securities law restrictions of paragraph 2.2(a) and
(ii) the market stand-off provisions of paragraph 4.4. In the event Owner does
not effect such sale or disposition of the Target Shares within the specified
thirty (30)-day period, the Corporation's First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph 6.7.

-10-

6.5      PARTIAL EXERCISE OF RIGHT. In the event the
Corporation (or its assignees) makes a timely exercise of the First Refusal
Right with respect to a portion, but not all, of the Target Shares specified in
the Disposition Notice, Owner shall have the option, exercisable by written
notice to the Corporation delivered within thirty (30) days after the date of
the Disposition Notice, to effect the sale of the Target Shares pursuant to one
of the following alternatives:

(i)      sale or other disposition of all the Target
Shares to the third-party offeror identified in the Disposition Notice,
but in full compliance with the requirements of paragraph 6.4, as if
the Corporation did not exercise the First Refusal Right hereunder; or

(ii)     sale to the Corporation (or its assignees)
of the portion of the Target Shares which the Corporation (or its
assignees) has elected to purchase, such sale to be effected in
substantial conformity with the provisions of paragraph 6.3.

Failure of Owner to deliver timely notification to the
Corporation under this paragraph 6.5 shall be deemed to be an election by Owner
to sell the Target Shares pursuant to alternative (i) above.

6.6      RECAPITALIZATION/MERGER.

(a)      In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right hereunder, but only
to the extent the Purchased Shares are at the time covered by such right.

(b)      In the event of any of the following transactions:

(i)      a merger or consolidation in which
the Corporation is not the surviving entity,

(ii)     a sale, transfer or other
disposition of all or substantially all of the Corporation's assets,

(iii)    a reverse merger in which the
Corporation is the surviving entity but in which the Corporation's
outstanding voting securities are transferred in whole or in part to
person or persons other than those who held such securities immediately
prior to the merger, or

-11-

(iv)     any transaction effected primarily
to change the State in which the Corporation is incorporated, or to
create a holding company structure,

the Corporation's First Refusal Right shall remain in
full force and effect and shall apply to the new capital stock or other property
received in exchange for the Purchased Shares in consummation of the transaction
but only to the extent the Purchased Shares are at the time covered by such
right.

6.7      LAPSE. The First Refusal Right under this Article VI
shall lapse and cease to have effect upon the earliest to occur of (i) the first
date on which shares of the Corporation's Common Stock are held of record by
more than five hundred (500) persons, (ii) a determination is made by the
Corporation's Board of Directors that a public market exists for the outstanding
shares of the Corporation's Common Stock, or (iii) a firm commitment
underwritten public offering pursuant to an effective registration statement
under the 1933 Act, covering the offer and sale of the Corporation's Common
Stock in the aggregate amount of at least $5,000,000. However, the market
stand-off provisions of paragraph 4.4 shall continue to remain in full force and
effect following the lapse of the First Refusal Right hereunder.

VII.     ESCROW

7.1      DEPOSIT. Upon issuance, the certificates for any
Unvested Shares purchased hereunder shall be deposited in escrow with the
Corporate Secretary of the Corporation to be held in accordance with the
provisions of this Article VII. Each deposited certificate shall be accompanied
by a duly-executed Assignment Separate from Certificate in the form of Exhibit
I. The deposited certificates, together with any other assets or securities from
time to time deposited with the Corporate Secretary pursuant to the requirements
of this Agreement, shall remain in escrow until such time or times as the
certificates (or other assets and securities) are to be released or otherwise
surrendered for cancellation in accordance with paragraph 7.3. Upon delivery of
the certificates (or other assets and securities) to the Corporate Secretary of
the Corporation, the Owner shall be issued an instrument of deposit
acknowledging the number of Unvested Shares (or other assets and securities)
delivered in escrow.

7.2      RECAPITALIZATION. All regular cash dividends on the
Unvested Shares (or other securities at the time held in escrow) shall be paid
directly to the Owner and shall not be held in escrow. However, in the event of
any stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Article
VII, but only to the extent the Unvested Shares are at the time subject to the
escrow requirements of paragraph 7.1.

-12-

7.3      RELEASE/SURRENDER. The Unvested Shares, together with
any other assets or securities held in escrow hereunder, shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Corporation for repurchase and cancellation:

(i)      Should the Corporation (or its assignees)
elect to exercise the Repurchase Right under Article V with respect to
any Unvested Shares, then the escrowed certificates for such Unvested
Shares (together with any other assets or securities issued with
respect thereto) shall be delivered to the Corporation concurrently
with the payment to the Owner, in cash or cash equivalent (including
the cancellation of any purchase-money indebtedness), of an amount
equal to the aggregate Option Price for such Unvested Shares, and the
Owner shall cease to have any further rights or claims with respect to
such Unvested Shares (or other assets or securities attributable to
such Unvested Shares).

(ii)     Should the Corporation (or its assignees)
elect to exercise its First Refusal Right under Article VI with respect
to any vested Target Shares held at the time in escrow hereunder, then
the escrowed certificates for such Target Shares (together with any
other assets or securities attributable thereto) shall, concurrently
with the payment of the paragraph 6.3 purchase price for such Target
Shares to the Owner, be surrendered to the Corporation, and the Owner
shall cease to have any further rights or claims with respect to such
Target Shares (or other assets or securities).

(iii)    Should the Corporation (or its assignees)
elect not to exercise its First Refusal Right under Article VI with
respect to any Target Shares held at the time in escrow hereunder, then
the escrowed certificates for such Target Shares (together with any
other assets or securities attributable thereto) shall be surrendered
to the Owner for disposition in accordance with provisions of paragraph
6.4.

(iv)     As the interest of the Optionee in the
Unvested Shares (or any other assets or securities attributable
thereto) vests in accordance with the provisions of Article V, the
certificates for such vested shares (as well as all other vested assets
and securities) shall be released from escrow and delivered to the
Owner in accordance with the following schedule:

a.       The initial release of vested
shares (or other vested assets and securities) from escrow
shall be effected within thirty (30) days following the
expiration of the initial twelve (12)-month period measured
from the Grant Date.

b.       Subsequent releases of vested
shares (or other vested assets and securities) from escrow
shall be effected

-13-

at semi-annual intervals thereafter, with the first such
semiannual release to occur eighteen (18) months after the
Grant Date.

c.       Upon the Optionee's cessation of
Service, any escrowed Purchased Shares (or other assets or
securities) in which the Optionee is at the time vested shall
be promptly released from escrow.

d.       Upon any earlier termination of the
Corporation's Repurchase Right in accordance with the
applicable provisions of Article V, any Purchased Shares (or
other assets or securities) at the time held in escrow
hereunder shall promptly be released to the Owner as
fully-vested shares or other property.

(v)      All Purchased Shares (or other assets or
securities) released from escrow in accordance with the provisions of
subparagraph (iv) above shall nevertheless remain subject to (I) the
Corporation's First Refusal Right under Article VI until such right
lapses pursuant to paragraph 6.7, (II) the market stand-off provisions
of paragraph 4.4 until such provisions terminate in accordance
therewith and (III) the Special Purchase Right under Article VIII.

VIII.    MARITAL DISSOLUTION OR LEGAL SEPARATION

8.1      GRANT. In connection with the dissolution of the
Optionee's marriage or the legal separation of the Optionee and the Optionee's
spouse, the Corporation shall have the right (the "Special Purchase Right"),
exercisable at any time during the thirty (30)-day period following the
Corporation's receipt of the required Dissolution Notice under paragraph 8.2, to
purchase from the Optionee's spouse, in accordance with the provisions of
paragraph 8.3, all or any portion of the Purchased Shares which would otherwise
be awarded to such spouse in settlement of any community property or other
marital property rights such spouse may have in such shares.

8.2      NOTICE OF DECREE OR AGREEMENT. The Optionee shall
promptly provide the Secretary of the Corporation with written notice (the
"Dissolution Notice") of (i) the entry of any judicial decree or order resolving
the property rights of the Optionee and the Optionee's spouse in connection with
their marital dissolution or legal separation or (ii) the execution of any
contract or agreement relating to the distribution or division of such property
rights. The Dissolution Notice shall be accompanied by a copy of the actual
decree of dissolution or settlement agreement between the Optionee and the
Optionee's spouse which provides for the award to the spouse of one or more
Purchased Shares in settlement of any community property or other marital
property rights such spouse may have in such shares.

-14-

8.3      EXERCISE OF SPECIAL PURCHASE RIGHT. The Special
Purchase Right shall be exercisable by delivery of written notice (the "Purchase
Notice") to the Optionee and the Optionee's spouse within thirty (30) days after
the Corporation's receipt of the Dissolution Notice. The Purchase Notice shall
indicate the number of shares to be purchased by the Corporation, the date such
purchase is to be effected (such date to be not less than five (5) business
days, nor more than ten (10) business days, after the date of the Purchase
Notice), and the fair market value to be paid for such Purchased Shares. The
Optionee (or the Optionee's spouse, to the extent such spouse has physical
possession of the Purchased Shares) shall, prior to the close of business on the
date specified for the purchase, deliver to the Corporate Secretary of the
Corporation the certificates representing the shares to be purchased, each
certificate to be properly endorsed for transfer. To the extent any of the
shares to be purchased by the Corporation are at the time held in escrow under
Article VII, the certificates for such shares shall be promptly delivered out of
escrow to the Corporation. The Corporation shall, concurrently with the receipt
of the stock certificates, pay to the Optionee's spouse (in cash or cash
equivalents) an amount equal to the fair market value specified for such shares
in the Purchase Notice.

If the Optionee's spouse does not agree with the fair market
value specified for the shares in the Purchase Notice, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such shares shall thereupon be determined by an appraiser of
recognized standing selected by the Corporation and the spouse. If they cannot
agree on an appraiser within twenty (20) days after the date of the Purchase
Notice, each shall select an appraiser of recognized standing, and the two
appraisers shall designate a third appraiser of recognized standing whose
appraisal shall be determinative of such value. The cost of the appraisal shall
be shared equally by the Corporation and the Optionee's spouse. The closing
shall then be held on the fifth business day following the completion of such
appraisal; provided, however, that if the appraised value is more than fifteen
percent (15%) greater than the fair market value specified for the shares in the
Purchase Notice, the Corporation shall have the right, exercisable prior to the
expiration of such five (5)-business-day period, to rescind the exercise of the
Special Purchase Right and thereby revoke its election to purchase the shares
awarded to the spouse.

8.4      LAPSE. The Special Purchase Right under this Article
VIII shall lapse and cease to have effect upon the earlier to occur of (i) the
first date on which the First Refusal Right under Article VI lapses or (ii) the
expiration of the thirty (30)-day exercise period specified in paragraph 8.3, to
the extent the Special Purchase Right is not timely exercised in accordance with
such paragraph.

IX.      GENERAL PROVISIONS

9.1      ASSIGNMENT. The Corporation may assign its Repurchase
Right under Article V, its First Refusal Right under Article VI and/or its
Special Purchase Right under Article VIII to any person or entity selected by
the Corporation's Board of Directors, including (without limitation) one or more
shareholders of the Corporation.

-15-

If the assignee of the Repurchase Right is other than a one
hundred percent (100%) owned subsidiary corporation of the Corporation or the
parent corporation owning one hundred percent (100%) of the Corporation, then
such assignee must make a cash payment to the Corporation, upon the assignment
of the Repurchase Right, in an amount equal to the excess (if any) of (i) the
fair market value of the Unvested Shares at the time subject to the assigned
Repurchase Right over (ii) the aggregate repurchase price payable for the
Unvested Shares thereunder.

9.2      DEFINITIONS. For purposes of this Agreement, the
following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation:

(i)      Any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation shall
be considered to be a parent corporation of the Corporation, provided
each such corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

(ii)     Each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

9.3      No EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement or in the Plan shall confer upon the Optionee any right to continue in
the Service of the Corporation (or any parent or subsidiary corporation of the
Corporation employing or retaining Optionee) for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any parent or subsidiary corporation of the Corporation employing or
retaining Optionee) or the Optionee, which rights are hereby expressly reserved
by each, to terminate the Optionee's Service at any time for any reason
whatsoever, with or without cause.

9.4      NOTICES. Any notice required in connection with (i)
the Repurchase Right, the Special Purchase Right or the First Refusal Right or
(ii) the disposition of any Purchased Shares covered thereby shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit in
the United States mail, registered or certified, postage prepaid and addressed
to the party entitled to such notice at the address indicated below such party's
signature line on this Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this paragraph 9.4 to
all other parties to this Agreement.

-16-

9.5      No WAIVER. The failure of the Corporation (or its
assignees) in any instance to exercise the Repurchase Right granted under
Article V, or the failure of the Corporation (or its assignees) in any instance
to exercise the First Refusal Right granted under Article VI, or the failure of
the Corporation (or its assignees) in any instance to exercise the Special
Purchase Right granted under Article VIII shall not constitute a waiver of any
other repurchase rights and/or rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and the Optionee or the Optionee's spouse. No waiver of any breach
or condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature.

9.6      CANCELLATION OF SHARES. If the Corporation (or its
assignees) shall make available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Purchased Shares to
be repurchased in accordance with the provisions of this Agreement, then from
and after such time, the person from whom such shares are to be repurchased
shall no longer have any rights as a holder of such shares (other than the right
to receive payment of such consideration in accordance with this Agreement), and
such shares shall be deemed purchased in accordance with the applicable
provisions hereof and the Corporation (or its assignees) shall be deemed the
owner and holder of such shares, whether or not the certificates therefor have
been delivered as required by this Agreement.

X.       MISCELLANEOUS PROVISIONS

10.1     OPTIONEE UNDERTAKING. Optionee hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either
the Optionee or the Purchased Shares pursuant to the express provisions of this
Agreement.

10.2     AGREEMENT IS ENTIRE CONTRACT. This Agreement
constitutes the entire contract between the parties hereto with regard to the
subject matter hereof. This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity with the express terms
and provisions of the Plan.

10.3     GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California, as such
laws are applied to contracts entered into and performed in such State without
resort to that State's conflict-of-laws rules.

10.4     COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

10.5     SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and the

-17-

Optionee and the Optionee's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms and conditions hereof,

10.6     POWER OF ATTORNEY. Optionee's spouse hereby appoints
Optionee his or her true and lawful attorney in fact, for him or her and in his
or her name, place and stead, and for his or her use and benefit, to agree to
any amendment or modification of this Agreement and to execute such further
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Optionee's spouse further gives and
grants unto Optionee as his or her attorney in fact full power and authority to
do and perform every act necessary and proper to be done in the exercise of any
of the foregoing powers as fully as he or she might or could do if personally
present, with full power of substitution and revocation, hereby ratifying and
confirming all that Optionee shall lawfully do and cause to be done by virtue of
this power of attorney.

-18-

IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first indicated above.

Cytokinetics, Incorporated

By: _______________________________

Title: ____________________________

Address: ___________________________________

___________________________________

___________________________________
*/
Optionee -

Address: ___________________________________

___________________________________

The undersigned spouse of Optionee has read and hereby
approves the foregoing Stock Purchase Agreement. In consideration of the
Corporation's granting the Optionee the right to acquire the Purchased Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including
(specifically) the right of the Corporation (or its assignees) to purchase any
and all interest or right the undersigned may otherwise have in such shares
pursuant to community property laws or other marital property rights.

___________________________________
Optionee's Spouse

Address: ___________________________________

___________________________________
----------
*/
- I have executed the Section 83(b) election that was attached hereto as an
Exhibit. As set forth in Article III, I understand that I, and not the
Corporation, will be responsible for completing the form and filing the election
with the appropriate office of the Federal and State tax authorities and that if
such filing is not completed within thirty (30) days after the date of this
Agreement, I will not be entitled to the tax benefits provided by Section 83(b).

-19-

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED______________________________ hereby
sell(s), assign(s) and transfer(s) unto Cytokinetics, Incorporated (the
"Corporation"),_____________________(________) shares of the Common Stock of the
Corporation standing in his\her name on the books of the Corporation represented
by Certificate No. ___________________and do hereby irrevocably constitute and
appoint____________________________as Attorney to transfer the said stock on the
books of the Corporation with full power of substitution in the premises.

Dated: ________________

Signature _________________

INSTRUCTION: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise its
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Optionee.

REPURCHASE RIGHTS
EXHIBIT II

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

(1)      The taxpayer who performed the services is:

Name:
Address:
Taxpayer Ident. No.:

(2)      The property with respect to which the election is being made is
____________ shares of the common stock of Cytokinetics, Incorporated.

(3)      The property was issued on ___________ ,19 ____.

(4)      The taxable year in which the election is being made is the calendar
year 19____.

(5)      The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four year period ending on __________ ,
19____.

(6)      The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $ ______ per share.

(7)      The amount paid for such property is $ _____ per share.

(8)      A copy of this statement was furnished to Cytokinetics, Incorporated
for whom taxpayer rendered the services underlying the transfer of
property.

(9)      This statement is executed as of: ________________.

_______________________          _______________________
Spouse (if any)                         Taxpayer

This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Stock Purchase Agreement.

SPECIAL PROTECTIVE ELECTION PURSUANT TO SECTION 83(b) OF THE INTERNAL
REVENUE CODE WITH RESPECT TO PROPERTY ACQUIRED UPON EXERCISE OF AN
INCENTIVE STOCK OPTION

The property described in the above Section 83(b) election is comprised of
shares of common stock acquired pursuant to the exercise of an incentive stock
option under Section 422 of the Code. Accordingly, it is the intent of the
Taxpayer to utilize this election to achieve the following tax results:

1.       The purpose of this election is to have the
alternative minimum taxable income attributable to the purchased shares measured
by the amount by which the fair market value of such shares at the time of their
transfer to the Taxpayer exceeds the purchase price paid for the shares. In the
absence of this election, such alternative minimum taxable income would be
measured by the spread between the fair market value of the purchased shares and
the purchase price which exists on the various lapse dates in effect for the
forfeiture restrictions applicable to such shares. The election is to be
effective to the full extent permitted under the Internal Revenue Code.

2.       Section 421(a)(1) of the Code expressly excludes from
income any excess of the fair market value of the purchased shares over the
amount paid for such shares. Accordingly, this election is also intended to be
effective in the event there is a "disqualifying disposition" of the shares,
within the meaning of Section 421(b) of the Code, which would otherwise render
the provisions of Section 83(a) of the Code applicable at that time.
Consequently, the Taxpayer hereby elects to have the amount of disqualifying
disposition income measured by the excess of the fair market value of the
purchased shares on the date of transfer to the Taxpayer over the amount paid
for such shares. Since Section 421(a) presently applies to the shares which are
the subject of this Section 83(b) election, no taxable income is actually
recognized for regular tax purposes at this time, and no income taxes are
payable, by the Taxpayer as a result of this election.

This form should be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Stock Purchase Agreement.

NOTE: PAGE 2 SHOULD BE ATTACHED ONLY IF YOU ARE EXERCISING AN INCENTIVE
STOCK OPTION.

Exhibit 10.3

CYTOKINETICS, INCORPORATED

2004 EQUITY INCENTIVE PLAN

1.    Purposes of the Plan. The purposes of this Plan are:

-     to attract and retain the best available personnel for
positions of substantial responsibility,

-     to provide additional incentive to Employees, Directors and
Consultants, and

-     to promote the success of the Company's business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units
and Performance Shares.

2.    Definitions. As used herein, the following definitions will apply:

(a)   "Administrator" means the Board or any of its Committees as
will be administering the Plan, in accordance with Section 4 of the Plan.

(b)   "Affiliated SAR" means an SAR that is granted in connection
with a related Option, and which automatically will be deemed to be exercised at
the same time that the related Option is exercised.

(c)   "Applicable Laws" means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan. 

(d) "Award" means, individually or collectively, a grant under the
Plan of Options, SARs, Restricted Stock, Performance Units or Performance
Shares.

(e)   "Award Agreement" means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan. The Award Agreement is subject to the terms and conditions of the
Plan.

(f)   "Board" means the Board of Directors of the Company.

(g)   "Change in Control" means the occurrence of any of the
following events:

(i)   Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or

(ii)  The consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets;

(iii) A change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" means directors who
either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or

(iv)  The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

(h)   "Code" means the Internal Revenue Code of 1986, as amended.
Any reference to a section of the Code herein will be a reference to any
successor or amended section of the Code.

(i)   "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

(j)   "Common Stock" means the common stock of the Company.

(k)   "Company" means Cytokinetics, Incorporated, a Delaware
corporation, or any successor thereto.

(l)   "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.

(m)   "Director" means a member of the Board.

(n)   "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

(o)   "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company will be
sufficient to constitute "employment" by the Company.

(p)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

-2-

(q)   "Exchange Program" means a program under which (i) outstanding
Awards are surrendered or cancelled in exchange for Awards of the same type
(which may have lower exercise prices and different terms), Awards of a
different type, and/or cash, and/or (ii) the exercise price of an outstanding
Award is reduced. The terms and conditions of any Exchange Program will be
determined by the Administrator in its sole discretion.

(r)   "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

(i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value will be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

(ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock will be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

(iii) For purposes of any Awards granted on the Registration
Date, the Fair Market Value will be the initial price to the public as set forth
in the final prospectus included within the registration statement in Form S-1
filed with the Securities and Exchange Commission for the initial public
offering of the Company's Common Stock; or

(iv)  In the absence of an established market for the Common
Stock, the Fair Market Value will be determined in good faith by the
Administrator.

(s)   "Fiscal Year" means the fiscal year of the Company.

(t)   "Freestanding SAR" means a SAR that is granted independently
of any Option.

(u)   "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

(v)   "Inside Director" means a Director who is an Employee.

(w)   "Nonstatutory Stock Option" means an Option that by its terms
does not qualify or is not intended to qualify as an Incentive Stock Option.

(x)   "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

(y)   "Option" means a stock option granted pursuant to the Plan.

-3-

(z)   "Optioned Stock" means the Common Stock subject to an Award.

(aa)  "Outside Director" means a Director who is not an Employee.

(bb)  "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(cc)  "Participant" means the holder of an outstanding Award.

(dd)  "Performance Share" means an Award granted to a Participant
pursuant to Section 9.

(ee)  "Performance Unit" means an Award granted to a Participant
pursuant to Section 9.

(ff)  "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such
restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the
Administrator.

(gg)  "Plan" means this 2004 Equity Incentive Plan.

(hh)  "Registration Date" means the effective date of the first
registration statement that is filed by the Company and declared effective
pursuant to Section 12(g) of the Exchange Act, with respect to any class of the
Company's securities.

(ii)  "Restricted Stock" means shares of Common Stock issued
pursuant to a Restricted Stock award under Section 7 of the Plan, or issued
pursuant to the early exercise of an Option.

(jj)  "Retirement" means a termination of an Outside Director's
status as a Director when (i) the Outside Director's age is 55 or over and he or
she has continuously been a Director for at least seven (7) years on the date of
such termination or (ii) the Outside Director has continuously been a Director
for at least ten (10) years from the date of such termination.

(kk)  "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

(ll)  "Section 16(b) " means Section 16(b) of the Exchange Act.

(mm)  "Service Provider" means an Employee, Director or Consultant.

(nn)  "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

(oo)  "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with an Option, that pursuant to Section 8 is designated
as a SAR.

-4-

(pp)  "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

(qq)  "Tandem SAR" means a SAR that is granted in connection with a
related Option, the exercise of which will require forfeiture of the right to
purchase an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR will be canceled to the same extent).

(rr)  "Unvested Awards" will mean Options or Restricted Stock that
(i) were granted to an individual in connection with such individual's position
as an Employee and (ii) are still subject to vesting or lapsing of Company
repurchase rights or similar restrictions.

3.    Stock Subject to the Plan.

(a)   Stock Subject to the Plan. Subject to the provisions of
Section 13 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan is 3,200,000 Shares plus (i) any Shares
returned to the 1997 Stock Option/Stock Issuance Plan as a result of termination
of options or repurchase of Shares issued under such plan, and (ii) an annual
increase to be added on the first day of the Company's fiscal year beginning in
2005, equal to the lesser of (A) 3,000,000 Shares, (B) 3.5% of the outstanding
Shares on such date or (C) an amount determined by the Board. The Shares may be
authorized, but unissued, or reacquired Common Stock. Shares will not be deemed
to have been issued pursuant to the Plan with respect to any portion of an Award
that is settled in cash. Upon payment in Shares pursuant to the exercise of an
SAR, the number of Shares available for issuance under the Plan will be reduced
only by the number of Shares actually issued in such payment. If the exercise
price of an Option is paid by tender to the Company, or attestation to the
ownership, of Shares owned by the Participant, the number of Shares available
for issuance under the Plan will be reduced by the gross number of Shares for
which the Option is exercised.

(b)   Lapsed Awards. If an Award expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Exchange
Program, the unpurchased Shares which were subject thereto will become available
for future grant or sale under the Plan (unless the Plan has terminated);
provided, however, that Shares that have actually been issued under the Plan,
whether upon exercise of an Award, will not be returned to the Plan and will not
become available for future distribution under the Plan, except that if unvested
Shares are forfeited or repurchased by the Company, such Shares will become
available for future grant under the Plan.

(c)   Share Reserve. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of the Plan.

4.    Administration of the Plan.

(a)   Procedure.

(i)   Multiple Administrative Bodies. Different Committees
with respect to different groups of Service Providers may administer the Plan.

-5-

(ii)  Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan will be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder will be structured to satisfy the requirements for exemption under
Rule 16b-3.

(iv)  Other Administration. Other than as provided above, the
Plan will be administered by (A) the Board or (B) a Committee, which committee
will be constituted to satisfy Applicable Laws.

(b)   Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator will have the authority, in
its discretion:

(i)   to determine the Fair Market Value;

(ii)  to select the Service Providers to whom Awards may be
granted hereunder;

(iii) to determine the number of Shares to be covered by each
Award granted hereunder;

(iv)  to approve forms of agreement for use under the Plan;

(v)   to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Shares relating thereto,
based in each case on such factors as the Administrator will determine;

(vi)  to institute an Exchange Program;

(vii) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan;

(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;

(ix)  to modify or amend each Award (subject to Section 17(c)
of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Awards longer than is otherwise
provided for in the Plan;

-6-

(x)   to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Award that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld (the Fair Market Value
of the Shares to be withheld will be determined on the date that the amount of
tax to be withheld is to be determined and all elections by a Participant to
have Shares withheld for this purpose will be made in such form and under such
conditions as the Administrator may deem necessary or advisable);

(xi)  to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award previously
granted by the Administrator;

(xii) to allow a Participant to defer the receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant under an Award

(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

(c)   Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations will be final and binding on all
Participants and any other holders of Awards.

5.    Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock
Appreciation Rights, Performance Units and Performance Shares may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees.

6.    Stock Options.

(a)   Limitations.

(i)   Each Option will be designated in the Award Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options will be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to such Shares is granted.

(ii)  The following limitations will apply to grants of
Options and Stock Appreciation Rights:

(1)   No Service Provider will be granted, in any Fiscal
Year, Options to purchase more than 1,500,000 Shares.

(2)   In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
1,500,000 Shares, which will not count against the limit set forth in Section
6(a)(2)(ii)(1) above.

-7-

(3)   The foregoing limitations will be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.

(4)   If an Option is cancelled in the same Fiscal Year
in which it was granted (other than in connection with a transaction described
in Section 13), the cancelled Option will be counted against the limits set
forth in subsections (1) and (2) above. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.

(b)   Term of Option. The term of each Option will be stated in the
Award Agreement. In the case of an Incentive Stock Option, the term will be ten
(10) years from the date of grant or such shorter term as may be provided in the
Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option will be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.

(c)   Option Exercise Price and Consideration. 

(i)  Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:

(1)   In the case of an Incentive Stock Option

a)    granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price will be no less than 110% of the
Fair Market Value per Share on the date of grant.

b)    granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price will be no less than 100% of the Fair Market Value per Share on the date
of grant.

c)    Notwithstanding the foregoing, Incentive
Stock Options may be granted with a per Share exercise price of less than 100%
of the Fair Market Value per Share on the date of grant pursuant to a
transaction described in, and in a manner consistent with, Section 424(a) of the
Code.

(2)   In the case of a Nonstatutory Stock Option, the per
Share exercise price will be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.

(ii)  Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions that must be satisfied before the
Option may be exercised.

-8-

(iii) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of: (1) cash; (2) check; (3) promissory note;
(4) other Shares, provided Shares acquired directly or indirectly from the
Company, (A) have been owned by the Participant and not subject to substantial
risk of forfeiture for more than six months on the date of surrender, and (B)
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option will be exercised; (5)
consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan; (6) a reduction in the
amount of any Company liability to the Participant, including any liability
attributable to the Participant's participation in any Company-sponsored
deferred compensation program or arrangement; (7) any combination of the
foregoing methods of payment; or (8) such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws.

(d)   Exercise of Option.

(i)   Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder will be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Award Agreement. An Option may not be exercised for a fraction of a
Share.

An Option will be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Award
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option will be issued in the name of the Participant or, if
requested by the Participant, in the name of the Participant and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a stockholder will
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company will issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 13 of the Plan.

Exercising an Option in any manner will decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

(ii)  Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant's
death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for three (3) months following the Participant's termination. Unless
otherwise provided by the Administrator, if on the

-9-

date of termination the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will revert to
the Plan. If after termination the Participant does not exercise his or her
Option within the time specified by the Administrator, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a
Service Provider as a result of the Participant's Disability, the Participant
may exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant's termination. Unless otherwise provided by the Administrator,
if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.

(iv)  Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant's death within
such period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant's designated beneficiary, provided such
beneficiary has been designated prior to Participant's death in a form
acceptable to the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant's estate or by the person(s) to whom the
Option is transferred pursuant to the Participant's will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months
following Participant's death. Unless otherwise provided by the Administrator,
if at the time of death Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.

7.    Restricted Stock.

(a)   Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Administrator, at any time and from time to time, may grant
Shares of Restricted Stock to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine.

(b)   Restricted Stock Agreement. Each Award of Restricted Stock
will be evidenced by an Award Agreement that will specify the Period of
Restriction, the number of Shares granted, and such other terms and conditions
as the Administrator, in its sole discretion, will determine. Unless the
Administrator determines otherwise, Shares of Restricted Stock will be held by
the Company as escrow agent until the restrictions on such Shares have lapsed.

-10-

(c)   Transferability. Except as provided in this Section 7, Shares
of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.

(d)   Other Restrictions. The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

(e)   Removal of Restrictions. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Administrator, in its discretion,
may accelerate the time at which any restrictions will lapse or be removed.

(f)   Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise full
voting rights with respect to those Shares, unless the Administrator determines
otherwise.

(g)   Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement. If any such
dividends or distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.

(h)   Return of Restricted Stock to Company. On the date set forth
in the Award Agreement, the Restricted Stock for which restrictions have not
lapsed will revert to the Company and again will become available for grant
under the Plan.

8.    Stock Appreciation Rights.

(a)   Grant of SARs. Subject to the terms and conditions of the
Plan, a SAR may be granted to Service Providers at any time and from time to
time as will be determined by the Administrator, in its sole discretion. The
Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any
combination thereof.

(b)   Number of Shares. The Administrator will have complete
discretion to determine the number of SARs granted to any Service Provider.

(c)   Exercise Price and Other Terms. The Administrator, subject to
the provisions of the Plan, will have complete discretion to determine the terms
and conditions of SARs granted under the Plan. However, the exercise price of
Tandem or Affiliated SARs will equal the exercise price of the related Option.

(d)   Exercise of Tandem SARs. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may
be exercised only with respect to the Shares for which its related Option is
then exercisable. With respect to a Tandem SAR granted in connection with an
Incentive Stock Option: (a) the Tandem SAR will expire no later than the
expiration of the

-11-

underlying Incentive Stock Option; (b) the value of the payout with respect to
the Tandem SAR will be for no more than one hundred percent (100%) of the
difference between the exercise price of the underlying Incentive Stock Option
and the Fair Market Value of the Shares subject to the underlying Incentive
Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR
will be exercisable only when the Fair Market Value of the Shares subject to the
Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option.

(e)   Exercise of Affiliated SARs. An Affiliated SAR will be deemed
to be exercised upon the exercise of the related Option. The deemed exercise of
an Affiliated SAR will not necessitate a reduction in the number of Shares
subject to the related Option. 

(f) Exercise of Freestanding SARs. Freestanding SARs will be
exercisable on such terms and conditions as the Administrator, in its sole
discretion, will determine.

(g)   SAR Agreement. Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

(h)   Expiration of SARs. An SAR granted under the Plan will expire
upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement. Notwithstanding the foregoing, the rules of
Section 6(d) also will apply to SARs.

(i)   Payment of SAR Amount. Upon exercise of an SAR, a Participant
will be entitled to receive payment from the Company in an amount determined by
multiplying: 

(i) The difference between the Fair Market Value of a Share on
the date of exercise over the exercise price; times 

(ii) The number of Shares with respect to which the SAR is
exercised.

At the discretion of the Administrator, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.

9.    Performance Units and Performance Shares.

(a)   Grant of Performance Units/Shares. Performance Units and
Performance Shares may be granted to Service Providers at any time and from time
to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant.

(b)   Value of Performance Units/Shares. Each Performance Unit will
have an initial value that is established by the Administrator on or before the
date of grant. Each Performance Share will have an initial value equal to the
Fair Market Value of a Share on the date of grant.

(c)   Performance Objectives and Other Terms. The Administrator will
set performance objectives or other vesting provisions in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Performance Units/Shares that will be

-12-

paid out to the Service Providers. The time period during which the performance
objectives or other vesting provisions must be met will be called the
"Performance Period." Each Award of Performance Units/Shares will be evidenced
by an Award Agreement that will specify the Performance Period, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine. The Administrator may set performance objectives based upon the
achievement of Company-wide, divisional, or individual goals, applicable federal
or state securities laws, or any other basis determined by the Administrator in
its discretion.

(d)   Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance Unit/Share.

(e)   Form and Timing of Payment of Performance Units/Shares.
Payment of earned Performance Units/Shares will be made as soon as practicable
after the expiration of the applicable Performance Period. The Administrator, in
its sole discretion, may pay earned Performance Units/Shares in the form of
cash, in Shares (which have an aggregate Fair Market Value equal to the value of
the earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

(f)   Cancellation of Performance Units/Shares. On the date set
forth in the Award Agreement, all unearned or unvested Performance Units/Shares
will be forfeited to the Company, and again will be available for grant under
the Plan.

10.   Formula Option Grants to Outside Directors.

All grants of Options to Outside Directors pursuant to this Section will
be automatic and nondiscretionary and will be made in accordance with the
following provisions:

(a)   Type of Option. All Options granted pursuant to this Section
will be Nonstatutory Stock Options and, except as otherwise provided herein,
will be subject to the other terms and conditions of the Plan.

(b)   No Discretion. No person will have any discretion to select
which Outside Directors will be granted Options under this Section or to
determine the number of Shares to be covered by such Options (except as provided
in Sections 10(f) and 13).

(c)   First Option. Each person who first becomes an Outside
Director following the Registration Date will be automatically granted an Option
to purchase 20,000 Shares (the "First Option") on or about the date on which
such person first becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director,
but who remains a Director, will not receive a First Option.

-13-

(d)   Subsequent Option. Each Outside Director will be automatically
granted an Option to purchase 15,000 Shares (a "Subsequent Option") on each date
of the annual meeting of the stockholders of the Company beginning in 2005, if
as of such date, he or she will have served on the Board for at least the
preceding six (6) months.

(e)   Terms. The terms of each Option granted pursuant to this
Section will be as follows:

(i)   The term of the Option will be ten (10) years.

(ii)  The exercise price per Share will be 100% of the Fair
Market Value per Share on the date of grant of the Option.

(iii) Subject to Section 14, the First Option will vest and
become exercisable as to 33 1/3% of the Shares subject to such First Option on
each anniversary of its date of grant, provided that the Participant continues
to serve as a Director through each such date.

(iv)  Subject to Section 14, the Subsequent Option will vest
and become exercisable as to 100% of the Shares subject to such Option on the
date of grant, provided that the Participant continues to serve as a Director
through such date.

(v)   If an Outside Director ceases to be a Director, other
than upon the Outside Director's death, Disability or Retirement, the Outside
Director may exercise his or her Option granted pursuant to this Section 10
within twelve (12) months following such termination to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option). If an Outside Director ceases to be a
Director as a result of the Outside Director's death, Disability or Retirement,
the Outside Director may exercise his or her Option granted pursuant to this
Section 10 within three years of such termination (but in no event later than
the expiration of the term of such Option as set forth in the Award Agreement).
If on the date of termination the Outside Director is not vested as to his or
her entire Option granted pursuant to this Section 10, the Shares covered by the
unvested portion of the Option will revert to the Plan. If after termination the
Outside Director does not exercise his or her Option within the time specified
herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan. 

(f) Amendment. The Administrator in its discretion may change the
number of Shares subject to the First Options and Subsequent Options.

11.   Leaves of Absence. Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, or any Subsidiary. For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the 91st day of such
leave any Incentive Stock Option held by the Participant will cease to be
treated as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option.

-14-

12.   Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as
the Administrator deems appropriate.

13.   Adjustments; Dissolution or Liquidation; Merger or Change in
Control.

(a)   Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, may (in its sole discretion)
adjust the number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each outstanding Award,
the numerical Share limits in Sections 3 and 6 of the Plan and the number of
Shares issuable pursuant to Section 10.

(b)   Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.

(c)   Change in Control. In the event of a Change in Control, each
outstanding Award will be assumed or an equivalent option or right substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to assume or
substitute for the Award, the Participant will fully vest in and have the right
to exercise all of his or her outstanding Options and Stock Appreciation Rights,
including Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock shall lapse, and, with respect
to Performance Shares and Performance Units, all performance goals will be
deemed achieved at target levels and all other terms and conditions met. In
addition, if an Option or Stock Appreciation Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change in
Control, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of time determined by the Administrator in its sole
discretion, and the Option or Stock Appreciation Right will terminate upon the
expiration of such period.

With respect to Awards granted to an Outside Director that are
assumed or substituted for, if on the date of or following such assumption or
substitution the Participant's status as a Director or a director of the
successor corporation, as applicable, is terminated other than upon a voluntary
resignation by the Participant, then the Participant will fully vest in and have
the right to exercise Options and/or Stock Appreciation Rights as to all of the
Optioned Stock, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock shall lapse, and,
with respect to Performance Shares and Performance Units, all performance goals
will be deemed achieved at target levels and all other terms and conditions met.

-15-

For the purposes of this subsection (c), an Award will be considered
assumed if, following the Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the Change in Control, the consideration (whether stock, cash, or other
securities or property) or, in the case of a Stock Appreciation Right upon the
exercise of which the Administrator determines to pay cash or a Performance
Share or Performance Unit which the Administrator can determine to pay in cash,
the fair market value of the consideration received in the merger or Change in
Control by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of an Option or Stock
Appreciation Right or upon the payout of a Performance Share or Performance
Unit, for each Share subject to such Award (or in the case of Performance Units,
the number of implied shares determined by dividing the value of the Performance
Units by the per share consideration received by holders of Common Stock in the
Change in Control), to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the Change in Control.

Notwithstanding anything in this Section 13(c) to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor
modifies any of such performance goals without the Participant's consent;
provided, however, a modification to such performance goals only to reflect the
successor corporation's post-Change in Control corporate structure will not be
deemed to invalidate an otherwise valid Award assumption.

14.   No Effect on Employment or Service. Neither the Plan nor any Award
will confer upon a Participant any right with respect to continuing the
Participant's relationship as a Service Provider with the Company, nor will they
interfere in any way with the Participant's right or the Company's right to
terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws. 

15. Date of Grant. The date of grant of an Award will be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination will be provided to each Participant within a
reasonable time after the date of such grant.

16.   Term of Plan. Subject to Section 20 of the Plan, the Plan will
become effective upon its adoption by the Board. It will continue in effect for
a term of five (5) years unless terminated earlier under Section 17 of the Plan.

17.   Amendment and Termination of the Plan.

(a)   Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

-16-

(b)   Stockholder Approval. The Company will obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

(c)   Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any Participant,
unless mutually agreed otherwise between the Participant and the Administrator,
which agreement must be in writing and signed by the Participant and the
Company. Termination of the Plan will not affect the Administrator's ability to
exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.

18.   Conditions Upon Issuance of Shares.

(a)   Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.

(b)   Investment Representations. As a condition to the exercise of
an Award, the Company may require the person exercising such Award to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

19.   Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, will relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

20.   Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval will be obtained in the manner and to the
degree required under Applicable Laws.

-17-

Exhibit 10.4

CYTOKINETICS, INCORPORATED

2004 EMPLOYEE STOCK PURCHASE PLAN

The following constitutes the provisions of the 2004 Employee Stock
Purchase Plan of Cytokinetics, Incorporated

1.    Purpose. The purpose of the Plan is to provide Employees with an
opportunity to purchase Common Stock through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit Plan participation in
a manner that is consistent with the requirements of that section of the Code.

2.    Definitions.

(a)   "Administrator" means the Board or any committee thereof
designated by the Board in accordance with Section 14.

(b)   "Board" means the Board of Directors of the Company.

(c)   "Change of Control" means the occurrence of any of the
following events:

(i)   Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or

(ii)  The consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets; or

(iii) The consummation of a merger or consolidation of the
Company, with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company, or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

(iv)  A change in the composition of the Board, as a result of
which fewer than a majority of the Directors are Incumbent Directors. "Incumbent
Directors" means Directors who either (A) are Directors as of the effective date
of the Plan (pursuant to Section 23), or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those Directors whose election or nomination was not in connection with any
transaction described in subsections (i), (ii) or (iii) or in connection with an
actual or threatened proxy contest relating to the election of Directors of the
Company.

(d)   "Code" means the Internal Revenue Code of 1986, as amended.
Any reference to a section of the Code herein shall be a reference to any
successor or amended section of the Code.

(e)   "Common Stock" means the common stock of the Company.

(f)   "Company" means Cytokinetics, Incorporated, a Delaware
corporation.

(g)   "Compensation" means an Employee's base straight time gross
earnings, commissions (to the extent such commissions are an integral, recurring
part of compensation), overtime and shift premium, but exclusive of payments for
incentive compensation, bonuses and other compensation.

(h)   "Designated Subsidiary" means any Subsidiary that has been
designated by the Administrator from time to time in its sole discretion as
eligible to participate in the Plan.

(i)   "Director" means a member of the Board.

(j)   "Employee" means any individual who is a common law employee
of an Employer and is customarily employed for at least twenty (20) hours per
week and more than five (5) months in any calendar year by the Employer. For
purposes of the Plan, the employment relationship shall be treated as continuing
intact while the individual is on sick leave or other leave of absence approved
by the Employer. Where the period of leave exceeds ninety (90) days and the
individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.

(k)   "Employer" means any one or all of the Company and its
Designated Subsidiaries.

(l)   "Enrollment Date" means the first Trading Day of each Offering
Period.

(m)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended, including the rules and regulations promulgated thereunder.

(n)   "Exercise Date" means the first Trading Day on or after [May
1] and [November 1] of each year. The first Exercise Date under the Plan shall
be [November 1, 2004].

(o)   "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

(i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for the Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable, or;

-2-

(ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable, or;

(iii) In the absence of an established market for the Common
Stock, its Fair Market Value shall be determined in good faith by the
Administrator, or;

(iv)  For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus deemed to be included within
the registration statement on Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Common Stock (the
"Registration Statement").

(p)   "Offering Periods" means the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after [May 1] and
[November 1] of each year and terminating on the first Trading Day on or after
the [May 1] and [November 1] Offering Period commencement date approximately
twelve months later; provided, however, that the first Offering Period under the
Plan shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares the Company's Registration Statement
effective and ending on the first Trading Day on or after the earlier of (i)
[May 1, 2006] or (ii) twenty-seven (27) months from the beginning of the first
Offering Period; and provided, further, that the second Offering Period under
the Plan shall commence on [May 1, 2004]. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan.

(q)   "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(r)   "Plan" means this 2004 Employee Stock Purchase Plan.

(s)   "Purchase Period" means the approximately six (6) month period
commencing on one Exercise Date and ending with the next Exercise Date, except
that the first Purchase Period of any Offering Period shall commence on the
Enrollment Date and end with the next Exercise Date.

(t)   "Purchase Price" means an amount equal to eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date
or on the Exercise Date, whichever is lower; provided however, that the Purchase
Price may be adjusted by the Administrator pursuant to Section 20.

(u)   "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

(v)   "Trading Day" means a day on which the U.S. national stock
exchanges and the Nasdaq System are open for trading.

-3-

3.    Eligibility.

(a)   First Offering Period. Any individual who is an Employee
immediately prior to the first Offering Period under the Plan shall be
automatically enrolled in the first Offering Period.

(b)   Subsequent Offering Periods. Any individual who is an Employee
as of the Enrollment Date of any future Offering Period shall be eligible to
participate in such Offering Period, subject to the requirements of Section 5.

(c)   Limitations. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company or any Parent or Subsidiary of
the Company and/or hold outstanding options to purchase such stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of the capital stock of the Company or of any Parent or Subsidiary of
the Company, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans (as defined in Section 423 of the Code)
of the Company or any Parent or Subsidiary of the Company accrues at a rate
which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined
at the Fair Market Value of the stock at the time such option is granted) for
each calendar year in which such option is outstanding at any time.

4.    Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after [May 1] and [November 1] of each year, or on such other
date as the Administrator shall determine, and continuing thereafter until
terminated in accordance with Section 20; provided, however, that the first
Offering Period under the Plan shall commence with the first Trading Day on or
after the date on which the Securities and Exchange Commission declares the
Company's Registration Statement effective and ending on the first Trading Day
on or after the earlier of (i) [May 1, 2006] or (ii) twenty-seven (27) months
from the beginning of the first Offering Period; and provided, further, that the
second Offering Period under the Plan shall commence on [May 1, 2004]. The
Administrator shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to future offerings
without stockholder approval if such change is announced prior to the scheduled
beginning of the first Offering Period to be affected thereafter.

5.    Participation.

(a)   First Offering Period. An Employee who has become a
participant in the first Offering Period under the Plan pursuant to Section 3(a)
shall be entitled to continue his or her participation in such Offering Period
only if he or she submits to the Company's payroll office (or its designee) a
properly completed subscription agreement authorizing payroll deductions in the
form provided by the Administrator for such purpose (i) no earlier than the
effective date of the filing of the Company's Registration Statement on Form S-8
with respect to the shares of Common Stock issuable under the Plan (the
"Effective Date") and (ii) no later than five (5) business days from the
Effective Date or such other period of time as the Administrator may determine
(the "Enrollment Window"). A participant's failure to submit the subscription
agreement during the Enrollment

-4-

Window pursuant to this Section 5(a) shall result in the automatic termination
of his or her participation in the first Offering Period under the Plan.

(b)   Subsequent Offering Periods. An Employee who is eligible to
participate in the Plan pursuant to Section 3(b) may become a participant by (i)
submitting to the Company's payroll office (or its designee), on or before a
date prescribed by the Administrator prior to an applicable Enrollment Date, a
properly completed subscription agreement authorizing payroll deductions in the
form provided by the Administrator for such purpose, or (ii) following an
electronic or other enrollment procedure prescribed by the Administrator.

6.    Payroll Deductions.

(a)   At the time a participant enrolls in the Plan pursuant to
Section 5, he or she shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not exceeding [15%] of the Compensation
which he or she receives on each such payday.

(b)   Payroll deductions authorized by a participant shall commence
on the first payday following the Enrollment Date and shall end on the last
payday in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10; provided,
however, that for the first Offering Period under the Plan, payroll deductions
shall commence on the first payday on or following the end of the Enrollment
Window.

(c)   All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.

(d)   A participant may discontinue his or her participation in the
Plan as provided in Section 10, or may change the rate of his or her payroll
deductions during the Offering Period by (i) properly completing and submitting
to the Company's payroll office (or its designee), on or before a date
prescribed by the Administrator prior to an applicable Exercise Date, a new
subscription agreement authorizing the change in payroll deduction rate in the
form provided by the Administrator for such purpose, or (ii) following an
electronic or other procedure prescribed by the Administrator; provided,
however, that a participant may only make one payroll deduction change during
each Purchase Period. If a participant has not followed such procedures to
change the rate of payroll deductions, the rate of his or her payroll deductions
shall continue at the originally elected rate throughout the Offering Period and
future Offering Periods (unless terminated as provided in Section 10). The
Administrator may, in its sole discretion, limit the nature and/or number of
payroll deduction rate changes that may be made by participants during any
Offering Period. Any change in payroll deduction rate made pursuant to this
Section 6(d) shall be effective as of the first full payroll period following
five (5) business days after the date on which the change is made by the
participant (unless the Administrator, in its sole discretion, elects to process
a given change in payroll deduction rate more quickly).

(e)   Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(c), a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate originally
elected by the participant effective as of the beginning of the first Purchase
Period

-5-

which is scheduled to end in the following calendar year, unless terminated by
the participant as provided in Section 10.

(f)   At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to the sale or early disposition of
Common Stock by the Employee.

7.    Grant of Option. On the Enrollment Date of each Offering Period,
each Employee participating in such Offering Period shall be granted an option
to purchase on each Exercise Date during such Offering Period (at the applicable
Purchase Price) up to a number of shares of Common Stock determined by dividing
such participant's payroll deductions accumulated prior to such Exercise Date
and retained in the participant's account as of the Exercise Date by the
applicable Purchase Price; provided that in no event shall a participant be
permitted to purchase during each Purchase Period more than [2,500] shares of
Common Stock (subject to any adjustment pursuant to Section 19), and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3(c) and 13. The Employee may accept the grant of such option (i) with
respect to the first Offering Period under the Plan, by submitting a properly
completed subscription agreement in accordance with the requirements of Section
5(a) on or before the last day of the Enrollment Window, and (ii) with respect
to any future Offering Period under the Plan, by electing to participate in the
Plan in accordance with the requirements of Section 5(b). The Administrator may,
for future Offering Periods, increase or decrease, in its absolute discretion,
the maximum number of shares of Common Stock that a participant may purchase
during each Purchase Period of such Offering Period. Exercise of the option
shall occur as provided in Section 8, unless the participant has withdrawn
pursuant to Section 10. The option shall expire on the last day of the Offering
Period.

8.    Exercise of Option.

(a)   Unless a participant withdraws from the Plan as provided in
Section 10, his or her option for the purchase of shares of Common Stock shall
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares of Common Stock shall be purchased; any payroll
deductions accumulated in a participant's account which are not sufficient to
purchase a full share shall be retained in the participant's account for the
subsequent Purchase Period or Offering Period, subject to earlier withdrawal by
the participant as provided in Section 10. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

(b)   Notwithstanding any contrary Plan provision, if the
Administrator determines that, on a given Exercise Date, the number of shares of
Common Stock with respect to which options are to be exercised may exceed (i)
the number of shares of Common Stock that were available for 

-6-

sale under the Plan on the Enrollment Date of the applicable Offering Period, or
(ii) the number of shares of Common Stock available for sale under the Plan on
such Exercise Date, the Administrator may in its sole discretion (x) provide
that the Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Enrollment Date or Exercise Date, as applicable,
in as uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Exercise Date, and continue all Offering Periods
then in effect, or (y) provide that the Company shall make a pro rata allocation
of the shares of Common Stock available for purchase on such Enrollment Date or
Exercise Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Exercise Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20.
The Company may make pro rata allocation of the shares of Common Stock available
on the Enrollment Date of any applicable Offering Period pursuant to the
preceding sentence, notwithstanding any authorization of additional shares of
Common Stock for issuance under the Plan by the Company's shareholders
subsequent to such Enrollment Date.

9.    Delivery. As soon as administratively practicable after each
Exercise Date on which a purchase of shares of Common Stock occurs, the Company
shall arrange the delivery to each participant, as appropriate, the shares
purchased upon exercise of his or her option in a form determined by the
Administrator (in its sole discretion) and pursuant to rules established by the
Administrator. No participant shall have any voting, dividend, or other
shareholder rights with respect to shares of Common Stock subject to any option
granted under the Plan until such shares have been purchased and delivered to
the participant as provided in this Section 9.

10.   Withdrawal.

(a)   Under procedures established by the Administrator, a
participant may withdraw all but not less than all the payroll deductions
credited to his or her account and not yet used to exercise his or her option
under the Plan at any time by (i) submitting to the Company's payroll office (or
its designee) a written notice of withdrawal in the form prescribed by the
Administrator for such purpose, or (ii) following an electronic or other
withdrawal procedure prescribed by the Administrator. All of the participant's
payroll deductions credited to his or her account shall be paid to such
participant as promptly as practicable after the effective date of his or her
withdrawal and such participant's option for the Offering Period shall be
automatically terminated, and no further payroll deductions for the purchase of
shares shall be made for such Offering Period. If a participant withdraws from
an Offering Period, payroll deductions shall not resume at the beginning of the
succeeding Offering Period unless the participant re-enrolls in the Plan in
accordance with the provisions of Section 5.

(b)   A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.

11.   Termination of Employment. Upon a participant's ceasing to be an
Employee, for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to

-7-

purchase shares of Common Stock under the Plan shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.

12.   Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

13.   Stock.

(a)   Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19, the maximum number of shares of Common Stock
which shall be made available for sale under the Plan shall be 1,000,000 shares
of Common Stock.

(b)   Shares of Common Stock to be delivered to a participant under
the Plan shall be registered in the name of the participant or in the name of
the participant and his or her spouse.

14.   Administration. The Board or a committee of members of the Board who
shall be appointed from time to time by, and shall serve at the pleasure of, the
Board, shall administer the Plan. The Administrator shall have full and
exclusive discretionary authority to construe, interpret and apply the terms of
the Plan, to determine eligibility, to adjudicate all disputed claims filed
under the Plan and to establish such procedures that it deems necessary for
administration of the Plan (including, without limitation, to adopt such
procedures and sub-plans as are necessary or appropriate to permit the
participation in the Plan by employees who are foreign nationals or employed
outside the United States). The Administrator, in its sole discretion and on
such terms and conditions as it may provide, may delegate to one or more
individuals all or any part of its authority and powers under the Plan. Every
finding, decision and determination made by the Administrator (or its designee)
shall, to the full extent permitted by law, be final and binding upon all
parties.

15.   Designation of Beneficiary.

(a)   A participant may designate a beneficiary who is to receive
any shares of Common Stock and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may designate a
beneficiary who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to exercise of the option.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

(b)   Such designation of beneficiary may be changed by the
participant at any time. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash to
the spouse or to any one or more dependents or

-8-

relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

(c)   All beneficiary designations under this Section 15 shall be
made in such form and manner as the Administrator may prescribe from time to
time.

16.   Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares of Common Stock under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 15) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw from an Offering Period in accordance with Section 10.

17.   Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions. Until
shares of Common Stock are issued under the Plan (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), a participant shall only have the rights of an unsecured
creditor with respect to such shares.

18.   Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares of Common Stock
purchased and the remaining cash balance, if any.

19.   Adjustments, Dissolution, Liquidation or Change of Control.

(a)   Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Common Stock, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the Company, or
other change in the corporate structure of the Company affecting the Common
Stock such that an adjustment is determined by the Administrator (in its sole
discretion) to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Administrator shall, in such manner as it may deem equitable, adjust
the number and class of Common Stock which may be delivered under the Plan, the
Purchase Price per share and the number of shares of Common Stock covered by
each option under the Plan which has not yet been exercised, and the numerical
limits of Sections 7 and 13.

(b)   Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New

-9-

Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10.

(c)   Change of Control. In the event of a Change of Control, each
outstanding option shall be assumed or an equivalent option substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
option, any Purchase Periods then in progress shall be shortened by setting a
new Exercise Date (the "New Exercise Date") and any Offering Periods then in
progress shall end on the New Exercise Date. The New Exercise Date shall be
before the date of the Company's proposed Change of Control. The Board shall
notify each participant in writing, at least ten (10) business days prior to the
New Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10.

20.   Amendment or Termination.

(a)   The Administrator may at any time and for any reason terminate
or amend the Plan. Except as provided in Section 19, no such termination can
affect options previously granted under the Plan, provided that an Offering
Period may be terminated by the Administrator on any Exercise Date if the
Administrator determines that the termination or suspension of the Plan is in
the best interests of the Company and its stockholders. Except as provided in
Section 19 and this Section 20, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any participant. To
the extent necessary to comply with Section 423 of the Code (or any successor
rule or provision or any other applicable law, regulation or stock exchange
rule), the Company shall obtain stockholder approval in such a manner and to
such a degree as required.

(b)   Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Administrator shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion advisable which are
consistent with the Plan.

(c)   In the event the Administrator determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the extent necessary or
desirable, modify or amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to:

(i)   altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;

-10-

(ii)  shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time
of the Board action; and

(iii) allocating shares.

Such modifications or amendments shall not require stockholder approval or the
consent of any Plan participants.

21.   Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

22.   Conditions Upon Issuance of Shares. Shares of Common Stock shall not
be issued with respect to an option under the Plan unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, including the rules
and regulations promulgated thereunder, the Exchange Act and the requirements of
any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23.   Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect until terminated under Section 20.

24.   Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period.

-11-

SAMPLE SUBSCRIPTION AGREEMENT

CYTOKINETICS, INCORPORATED

2004 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application                              Offering Date:__________

_____ Change in Payroll Deduction Rate

_____ Change of Beneficiary(ies)

1.    ____________________ hereby elects to participate in the Cytokinetics,
Incorporated 2004 Employee Stock Purchase Plan (the "Plan") and subscribes
to purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.

2.    I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (from [0 to 15%]) during the
Offering Period in accordance with the Plan. (Please note that no
fractional percentages are permitted.)

3.    I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Plan. I understand that if I do not
withdraw from an Offering Period, any accumulated payroll deductions will
be used to automatically exercise my option.

4.    I have received a copy of the complete Plan. I understand that my
participation in the Plan is in all respects subject to the terms of the
Plan. I understand that my ability to exercise the option under this
Subscription Agreement is subject to shareholder approval of the Plan.

5.    Shares of Common Stock purchased for me under the Plan should be issued in
the name(s) of Employee or Employee and Spouse only.

6.    I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for the
shares. I hereby agree to notify the Company in writing within 30 days
after the date of any disposition of my shares and I will make adequate
provision for Federal, state or other tax withholding obligations, if any,
which arise upon the disposition of the Common Stock. The Company may, but
will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions
or

benefits attributable to sale or early disposition of Common Stock by me.
If I dispose of such shares at any time after the expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time of
such disposition, and that such income will be taxed as ordinary income
only to the extent of an amount equal to the lesser of (1) the excess of
the fair market value of the shares at the time of such disposition over
the purchase price which I paid for the shares, or (2) 15% of the fair
market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be
taxed as capital gain.

7.    I hereby agree to be bound by the terms of the Plan. The effectiveness of
this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.

8.    In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and/or shares due me under the
Plan:

NAME:  (Please print)_____________________________________________________
(First)                 (Middle)          (Last)

_________________________     ____________________________________________
Relationship

_________________________     ____________________________________________
Percentage Benefit                  (Address)

NAME: (please print)______________________________________________________
(First)                 (Middle)          (Last)

_________________________     ____________________________________________
Relationship

_________________________     ____________________________________________
Percentage of Benefit               (Address)

-2-

Employee's Social
Security Number:              ____________________________________________

Employee's Address:           ____________________________________________

____________________________________________

____________________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:_________________________     ____________________________________________
Signature of Employee

____________________________________________
Spouse's Signature
(If beneficiary other than spouse)

-3-

SAMPLE WITHDRAWAL NOTICE

CYTOKINETICS, INCORPORATED

2004 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Cytokinetics,
Incorporated 2004 Employee Stock Purchase Plan which began on ____________,
______ (the "Offering Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.

Name and Address of Participant:

--------------------------------

--------------------------------

--------------------------------

Signature:

--------------------------------

Date:
----------------------------

Exhibit 10.5

BUILD-TO-SUIT LEASE

Landlord:        Britannia Poinic Grand Limited Partnership

Tenant:          MetaXen, LLC

Date:            May 27, 1997

TABLE OF CONTENTS

1. PREMISES .........................................    1
1.1   Lease of Premises ...........................    1
1.2   Landlord's Reserved Rights ..................    2
1.3   First Refusal Right .........................    2

2. TERM .............................................    3
2.1   Term ........................................    3
2.2   Early Possession ............................    3
2.3   Delay In Possession .........................    3
2.4   Acknowledgment Of Lease Commencement ........    4
2.5   Holding Over ................................    4
2.6   Option To Extend Term .......................    4

3. RENTAL ...........................................    5
3.1   Minimum Rental ..............................    5
3.2   Late Charge .................................    6

4. STOCK WARRANTS ...................................    7
4.1   Stock Warrants ..............................    7

5. CONSTRUCTION .....................................    7
5.1   Condition of Improvements ...................    7
5.2   Condition of Property .......................    8
5.3   Compliance with Law .........................    8

6. TAXES ............................................    8
6.1   Personal Property ...........................    8
6.2   Real Property ...............................    8
6.3   Challenges ..................................    9

7. OPERATING EXPENSES ...............................    9
7.1   Payment Of Operating Expenses ...............    9
7.2   Definition Of Operating Expenses ............   10
7.3   Determination Of Operating Expenses .........   12
7.4   Final Accounting For Lease Yew ..............   13
7.5   Proration ...................................   13

8. UTILITIES ........................................   13
8.1   Payment .....................................   13
8.2   Interruption ................................   14

9. ALTERATIONS; SIGNS ...............................   14
9.1   Right To Make Alterations ...................   14
9.2   Title To Alterations ........................   14
9.3   Tenanl Fixtures .............................   15
9.4   No Liens ....................................   15
9.5   Signs .......................................   15

10.  MAINTENANCE AND REPAIRS.........................   15
10.1  Landlord's Work ....... .....................   15
10.2  Tenant's Obligation For Maintenance..........   16
(a) Good Order. Condition And Repair.........   16
(b) Landlord's Remedy........................   16
(c) Condition Upon Surrender.................   16

11.

USE OF PREMISES.................................   16
11.1  Permitted Use................................   16
11.2  [Omitted]....................................   16
11.3  No Nuisance..................................   16
11.4  Compliance With Laws ........................   17
11.5  Liquidation Sales............................   17
11.6  Environmental Matters........................   17

12.INSURANCE AND INDEMNITY...........................   20
12.1  Insurance   .................................   20
12.2  Quality Of Policies And Certificates.........   21
12.3  Workers' Compensation........................   21
11.4  Waiver Of Subrogation........................   21
12.5  Increase In Premiums.........................   21
12.6  Indemnification..............................   21
12.7  Blanket Policy...............................   22

13.SUBLEASE AND ASSIGNMENT ..........................   22
13.1  Assignment And Sublease Of Property..........   22
13.2  Rights Of Landlord...........................   23

14.RIGHT OF ENTRY AND QUIET ENJOYMENT................   23
14.1  Right Of Entry...............................   23
14.2  Quiet Enjoyment..............................   23

15.CASUALTY AND TAKING...............................   23
15.1  Termination Or Reconstruction................   23
15.2  Tenant's Rights..............................   24
15.3  Lease To Remain In Effect....................   24
15.4  Reservation Of Compensation..................   24
15.5  Restoration Of Fixtures......................   24

16.DEFAULT...........................................   25
16.1  Events Of Default ...........................   25
(a) [Omitted]................................   25
(b) Nonpayment ..............................   25
(c) Other obligations........................   25
(d) General assignment.......................   25
(e) Bankruptcy ..............................   25
(f) Receivership ............................   25
(g) Attachment ..............................   25
(h) Insolvency ................. ............   25
16.2  Remedies Upon Tenant's Default...............   26
16.3     Remedies Cumulative.......................   26

17.SUBORDINATION, ATTORNMENT AND SALE................   26
17.1  Subordination To Mortgage....................   26
17.2  Sale Of Landlord's Interest .................   27
17.3  Estoppel Certificates........................   27
17.4  Subordination To CC&R'S......................   27
17.5  Mortgagee Protection.........................   28

18. SECURITY ........................................   28
18.1  DEPOSIT......................................   28

ii

19 MISCELLANEOUS.....................................   29
19.1  Notices .....................................   29
19.2  Successors And Assigns.......................   30
19.3  No Waiver   .................................   30
19.4  Scvcrability.................................   30
19.5  Litigation Between Panics....................   30
19.6  Surrender....................................   30
19.7  Interpretation ..............................   30
19.8  Entire Agreement.............................   30
19.9  Governing Law................................   31
19.10 No Partnership...............................   31
19.11 Financial Information .......................   31
19.12 [Omitted]....................................   31
19.13 Time.........................................   31
19.14 Rules And Regulations........................   31
19.15 Brokers......................................   31
19.16 Memorandum Of Lease .........................   31
19.17 Authority....................................   32
19.18 Execution and Delivery.......................   32
19.19 Survival.....................................   32

EXHIBITS

EXHIBIT A     Real Property Description (Center)

EXHIBIT B     Location of Premises (Site Plan)

EXHIBIT C     Construction

EXHIBIT D     Estimated Construction Schedule

EXHIBIT E     Acknowledgment of Lease Commencement

- iii -

BUILD-TO-SUIT LEASE

THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into is
of the 27th day of May 1997 by and between BRITANNIA POINTS GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership ("Landlord"), and METAXEN, LLC, a
Delaware limited liability company ("Tenant").

THE PARTIES AGREE AS FOLLOWS:

1. PREMISES

1.1      Lease of Premises.

(a)      Landlord leases to Tenant and Tenant hires and leases
from Landlord, on the terms, covenants and conditions hereinafter set forth, the
premises (the "Premises") designated in Exhibit B attached hereto and
incorporated herein by this reference, consisting of the entire second floor
(approximately 23.680 square feet) and a portion of the first floor
(preliminarily estimated, for working purposes to consist of at least 4,000
square feet, for an aggregate estimated area of approximately 27,680 square
feet) of a two-story building designated as Building H(the "Building") to be
constructed by Landlord pursuant to Article 5 hereof and Exhibit C attached
hereto in the Britannia Pointe Grand Business Park (the "Center") in the City of
South San Francisco, County of San Mateo, Slate of California, located on East
Grand Avenue on the real property described in Exhibit A attached hereto and
incorporated herein by this reference (the "Property"). The parties contemplate
that the plans for the first floor portion of the Premises will include an
exclusive entrance, a reception area, loading dock access, an and for
vibration-sensitive facilities, and both stair and elevator access to the second
floor, with the size of the first floor space and the details of such facilities
to be developed pursuant to the design process described in Article 5 hereof and
Exhibit C attached hereto. The Building and the other improvements to be
constructed pursuant to Article 5 hereof and Exhibit C attached hereto are
sometimes referred to collectively herein as the "Improvements. The parking
areas, driveways, sidewalks, landscaped areas and other portions of the Center
that lie outside the exterior walls of the buildings now existing or to be
constructed in the Center, as depicted oil the site plan attached hereto as
Exhibit B. are sometimes referred to herein as the "Common Areas."

(b)      As an appurtenance to Tenant's leasing of the
Premises pursuant to Section 1.1 (a). Landlord hereby grants to Tenant, for the
benefit of Tenant and its employees, agents, contractors, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, (i) those portions of the
Common Areas improved from time to lime for use as parking areas, driveways,
sidewalks, landscaped areas, or for other common purposes, and (ii) all access
easements and similar rights and privileges relating to or appurtenant to the
Property and created or existing from time to time under any access easement
agreements, declarations of covenants, conditions and restrictions, or other
written agreements now or hereafter of record with respect to the Property,
subject however to any limitations applicable to such rights and privilege,
under applicable law and/or under the written agreements creating such rights
and privileges Landlord represents that the Property shall include parking
spaces available for use (on a non-exclusive basis) by tenents of the Building
and their employees, agents and invitees at. the rate of 3.5 spaces per 1,000
square feet, and that Tenant shall be entitled to have five (5) parking spaces
marked as being reserved for exclusive use by Tenant, at a location to be
reasonably designated by Tenant.

(c)      Subject to all of the terms and conditions of this
paragraph (c). Tenant may by written notice to Landlord, elect to expand the
Premises to include all or any portion of the Building not included within the
initial Premises as described in Section l.l(a) (the "Option Space"). This
option may be exercised by Tenant at any time during the period from the date of
this Lease to the date which is four (4) months prior to the Commencement Date
(the "Option Period"): provided, however, that for purposes of this paragraph
(c), me Option Period shall be conclusively deemed to expire on the date
specified in a written notice from Landlord to Tenant, which notice shall (i)
specify the anticipated Commencement Date under this Lease (based on Landlord's
best reasonable, good faith estimate, (ii) specify the date on which the Option
Period will expire (which date shall be no less than ten (10) business days
after the date such notice is delivered to Tenant), and (iii) shall be given no
earlier then four and one-half months prior to the

Commencement Date as estimated reasonably and in good faith by Landlord in such
notice. If this option is duly and timely exercised by Tenant, then (I) Landlord
and Tenant shall proceed diligently to develop and agree upon a space plan and
detailed plans and specifications for the Option Space, (II) Landlord shall
proceed diligently to construct improvements to the Option Space in accordance
with such plans and specifications, at Landlord's sole cost and expense (subject
to the provisions of Section 3.1(c) hereof), (III) the Option Space shall be
added to the Premises and rent and other charges shall commence with respect
thereto upon the later to occur of (A) substantial completion of such
improvements or (B) the date on which rent and such other charges commence with
respect to the Premises, (IV) rent payable hereunder and Tenant's Operating Cost
Share shall be adjusted to reflect the addition of the Option Space to the
Premises, using the same rates and formulas pet square foot as are applicable to
the original Premises hereunder, and (V) Tenant shall occupy the Option Space
for the remaining term of this Lease upon and subject to all of the terms and
provisions of this Lease, to the same extent and in the same manner as such
terms and provisions are applicable to the original Premises hereunder.

1.2      Landlord's Reserved Rights. To the extent reasonably necessary
to permit Landlord to exercise any rights of Landlord and discharge any
obligations of Landlord under this Lease, Landlord shall have, in addition to
the right of entry set forth in Section 14.1 hereof, the following rights: (i)
to install, use, maintain, repair and replace pipes, ducts, conduits, wires and
appurtenant meters and equipment for service to other parts of the Building
above the ceiling. surfaces, below the floor surfaces, within the walls or
leading through the Premises in locations which will not materially interfere
with Tenant's use thereof, (ii) to relocate any pipes, ducts, conduits, wires
and appurtenant meters and equipment included in the Premises which are so
located or located elsewhere outside the Premises, (iii) to make changes,
alterations or additions to the portions of the Building not occupied by Tenant
and/or to the Common Areas, including, without limitation, changes in the
location, size or shape of any portion of the Common Areas, and to relocate
parking spaces on the Property (but not materially decrease the number of such
parking spaces in areas of the Property generally adjacent to the Building);
(iv) to close temporarily any of the Common Areas for maintenance or other
reasonable purposes, provided that reasonable parking and reasonable access to
the Building remain available; (v) to construct, alter or add to other buildings
or improvements on the Property (including, but not limited to, construction of
buildings in the areas designated as "New Building A," "New Building B" and "New
Building C" on the site plan attached hereto as Exhibit B, and construction of
related site improvements and common area improvements on the Property); (vi) to
build adjoining to the Property; (vii) to use the Common Areas while engaged in
making additional improvements, repairs or alterations to the Property or any
portion thereof; (viii) to lease any part of the Property for the construction
of improvements or buildings; and (ix) to do and perform such other acts with
respect to the Common Areas and the Property as may be necessary or appropriate;
provided, however, that notwithstanding anything to-the contrary in this Section
1.2, Landlord's exercise of its rights hereunder shall not cause any material
diminution or impairment of Tenant's rights, nor any material increase of
Tenant's obligations, under this Lease or with respect to the Improvements.

1.3      First Refusal Right.

(a)      Following expiration of Tenant's right to add part or
all of the Option Space to the Premises pursuant to Section l.l(c) hereof, if
Tenant has not elected to exercise such right in whole or in part. Landlord
shall not thereafter lease all or any part of the Option Space that has not
already been added to the Premises at any time during the term of this Lease,
except in compliance with this Section 1.3; provided, however, that the
foregoing restriction shall not apply during any period in which Tenant is in
material default, beyond say applicable cure periods, under this Lease (without
limitation, any "event of default," as that term is defined in Section 16.1,
will be considered a material default).

(b)      If Landlord during the term of this Lease (after
expiration of Tenant's rights under Section l.l(c) hereof) receives a bona fide
written offer from a prospective tenant to lease all or any portion of the
Option Space, and if Tenant is not then in default (beyond any applicable cure
periods) under this Lease, Landlord shall first give written notice of such
offer to Tenant, attaching a copy of the written offer and specifying (to the
extent not set forth in such offer) the material terms on which Landlord
proposes to lease the Option Space or portion thereof (the "Offered Space"), and
shall offer to Tenant the opportunity to lease the Offered Space on the terms
specified in Landlord's notice and in the written third-party offer. Tenant
shall have

- 2 -

five (5) business days after the date of giving of such notice by Landlord in
which to accept such offer by written notice to Landlord. Upon such acceptance
by Tenant, the Offered Space shall be leased to Tenant oh the terms set forth in
Landlord's notice and in the written third-party offer, and on the additional
terms and provisions set forth herein (except to the extent inconsistent with
the terms set forth in Landlord's said notice and in said written offer), and
the parties shall promptly execute an amendment to (this Lease adding the
Offered Space to the Premises and making any appropriate amendments to
provisions of this Lease to reflect different rent and other obligations
applicable to the Offered Space under the terms of Landlord's said notice and of
said written offer. If Tenant does not accept Landlord's offer within the
allotted time. Landlord shall thereafter have the right to lease the Offered
Space to the third parry which submitted the bona fide written offer at any time
within one hundred eighty (180) days after Tenant's failure to accept Landlord's
offer, at a minimum rental and on other tarns and conditions not more favorable
to the lessee than the minimum rental and other-terms offered to Tenant in
Landlord's said notice. If Tenant does not accept Landlord's offer and Landlord
does not lease the Offered Space to such third parry within one hundred eighty
(180) days, this First Right of Refusal shall reattach to that space. For
purposes of this Section 1.3(b), a "bona fide written offer" shall mean a terms
sheet, letter of intent or other written statement of proposed lease terms that
has been signed by the prospective lessee or by its authorized agent, even if
such terms sheet letter or statement is non-binding or is subject to preparation
of full documents, completion of due diligence or inspections, or other
customary and commercially reasonable contingencies.

2. TERM

2.1      Term. The term of this Lease shall commence on the earlier to
occur of (i) the date which is five (5) days after the date Landlord delivers to
Tenant written notice that Landlord's work pursuant to Article 5 and Exhibit C
on the Building and on the Premises is substantially complete, such work is in
fact substantially complete and the City of South San' Francisco has issued a
certificate of occupancy (or reasonable equivalent thereof) for the Premises, or
(ii) the date Tenant takes occupancy of the Premises (except as otherwise
provided in Section 2.2). the earlier of such dates being herein called the
"Commencement Date" and shall end on the day immediately preceding the date
fifteen (15) years thereafter, unless sooner terminated or extended as
hereinafter provided.

2.2      Early Possession. If Landlord permits Tenant to occupy, use,
take possession of or have access to the Premises or any portion thereof prior
to the Commencement Date determined under Section 2.1, such occupancy, use
possession or access shall be subject to and upon all of the terms and
conditions of this Lease, including the obligation to pay rent and other charges
unless Landlord and Tenant agree otherwise; provided however, that such early
possession shall not advance or otherwise affect the Commencement Date or
termination date determined under Section 2.1; provided further, that Tenant and
the contractor selected pursuant to Exhibit C attached hereto for construction
of the Tenant Improvements shall be entitled to have early access to the
Premises, promptly after completion of the roof metal decking for the Building
and thereafter at all appropriate times throughout the course of construction of
Landlord's work pursuant to Section 5.1 and Exhibit C, subject to the approval
of Landlord and the general contractor (which approval shall not be unreasonably
withheld), for the purposes of hanging electrical, mechanical and plumbing
services from the overhead structure and installing fixtures, furniture,
laboratory equipment, computer equipment, telephone, low voltage data wiring and
other personal property, and other similar work preparatory to the commencement
of Tenant's business on the Premises, and Tenant shall not be required to pay
minimum rental or Operating Expenses by reason of such early access until the
Commencement Date otherwise occurs; and provided further, that Tenant shall not
interfere with or delay Landlord's contractors by such early access or
possession and shall indemnify, defend and hold harmless Landlord and its agents
and employees from and against any and all claims, demands, liabilities,
actions, tosses, costs and expenses, including (but not limited to) reasonable
attorneys' fees, arising out of or in connection with Tenant's early entry upon
the Premises hereunder.

2.3      Delay In Possession. Landlord agrees to use its best
reasonable efforts to complete the work described in Section 5.1 and Exhibit C
promptly, diligently and within the respective time periods set forth in the
estimated construction schedule attached hereto as Exhibit D and incorporated
herein by this reference, as such schedule may be modified from time to time by
mutual agreement of Landlord and Tenant, and subject to the effects of any
delays caused by or

- 3-

attributable to Tenant or any other circumstances beyond Landlord's reasonable
control (excluding any financial inability); provided ,however, that except to
the extent caused by a material default by Landlord of its obligations set forth
in this Lease (including, but not limited to, its obligations set forth in this
Section 2.3 and in Section 5.1 and Exhibit C). Landlord shall not be liable for
any damages caused by any delay in the completion of such work nor shall any
such delay affect the validity of this Lease or the obligations of Tenant
hereunder. Notwithstanding any other provisions of this Lease, however, if
Landlord's construction of the Building Shell pursuant to Article 5 and Exhibit
C is not substantially complete by the later of (x) September 1, 1998 or (y)
thirteen (13) months after Landlord and Tenant have mutually approved detailed
plans and specifications for the interior tenant improvements within the
Premises, then Tenant shall be entitled to terminate this Lease by written
notice to Landlord at any time prior to substantial completion of Landlord's
construction of the Building Shell under Article 5 and Exhibit C; provided,
however, that the deadline described in this sentence for construction of the
Building Shell shall be extended, day for day, for a period of time equal to the
length of any actual delay in substantial completion of Landlord's construction
of the Building Shell that is caused by or attributable to (I) acts or omissions
of Tenant or its agents or employees or (II) any fire, earthquake or other
casualty, strike, shortage of labor or materials, or other circumstances beyond
Landlord's reasonable control (excluding any financial inability); and provided,
further, that any extensions pursuant to the foregoing clause (II) shall not
exceed nine (9) months in the aggregate.

2.4      Acknowledgment Of Lease Commencement. Upon commencement of the
term of this Lease, Landlord and Tenant shall execute a written acknowledgment
of the Commencement Date, date of termination and related matters, substantially
in the form attached hereto as Exhibit E (with appropriate insertions), which
acknowledgment shall be deemed to be incorporated herein by this reference.
Notwithstanding the foregoing requirement, the failure of one or both parties to
execute such a written acknowledgment shall not affect the determination of the
Commencement Date, date of termination and related matters in accordance with
the provisions of this Lease.

2.5      Holding Over. If Tenant holds possession of the Premises or
any portion thereof after the term of this Lease with Landlord's written
consent, then except as otherwise specified in such consent. Tenant shall become
a tenant from month to month at one hundred fifty percent (150%) of the rental
and otherwise upon the terms herein specified for the period immediately prior
to such holding over and shall continue in such status until the tenancy is
terminated by either party upon not less than thirty (30) days prior written
notice. If Tenant holds possession of the Premises or any portion thereof after
the term of this Lease without Landlord's written consent, then Landlord in its
sole discretion may elect (by written notice to Tenant) to have Tenant become a
tenant either from month to month or at will, at one hundred fifty percent
(150%) of the rental (prorated on a daily basis for an at-will tenancy, if
applicable) and otherwise upon the terms herein specified for the period
immediately prior to such holding over, or may elect to pursue any and all legal
remedies available to Landlord under applicable law with respect to such
unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord
harmless from any loss, damage, claim, liability, cost or expense (including
reasonable attorneys' fees) resulting from any delay by Tenant in surrendering
the Premises (except with Landlord's prior written consent), including but not
limited to any claims made by a succeeding tenant by reason of such delay.
Acceptance of rent by Landlord following expiration or termination of this Lease
shall not constitute a renewal of this Lease.

2.6      Option to Extend Term. Tenant shall have the option to extend
the term of this Lease, at the minimum rental set forth in Section 3.1 (c) and
(d) and otherwise upon all the terms and provisions set forth herein with
respect to the initial term of this Lease, for up to two (2) additional periods
of five (5) years each, commencing upon expiration of the initial term hereof.
Exercise of such option with respect to the first such extended term shall be by
written notice to Landlord at least twelve (12) months prior to the expiration
of the initial term hereof; exercise of such option with respect to the second
extended term, if the first extension option has been duly exercised, shall be
by like written notice to Landlord at least twelve (12) months prior to the
expiration of the first extended term hereof. If Tenant is in material default
hereunder, beyond any applicable cure periods, on the date of such notice or on
the date any extended term is to commence (without limitation, any "event of
default," as that term is defined in Section 16.1 will be considered a material
default), then the exercise of the option shall be of no force or effect, the
extended term shall not commence and this Lease shall expire at the end of the
then current term hereof (or at such earlier time as Landlord may elect pursuant
to the

-4-

default provisions of this Lease). If Tenant properly exercises one or more
extension options under this Section, then all references in this Lease (other
than in this Section 2.6) to the "term" of this Lease shall be construed to
include the extension term(s) thus elected by Tenant. Except as expressly set
forth in this Section 2.6, Tenant shall have no right to extend the term of this
Lease beyond its prescribed term.

3. RENTAL

3.1      Minimum Rental.

(a)      Tenant shall pay to Landlord as minimum rental for
the Building, in advance, without deduction, offset, notice or demand, on or
before the Commencement Date and on or before the first day of each subsequent
calendar month of the term of this Lease, the following amounts per month:

Months                   Monthly Minimum Rental
---------            --------------------------------

1 -  12            $ 68,370 ($2.47 per square foot)
13 -  24              70,030 ($2.53 per square foot)
25 -  36              71,691 ($2.59 per square foot)
37 -  48              73,352 ($2.65 per square foot)
49 -  60              75,013 ($2.71 per square foot)
61 -  72              76,950 ($2.78 per square foot)
73 -  84              78,888 ($2.85 per square foot)
85 -  96              70,584 ($2.55 per square foot)
97 - 108              72,798 ($2.63 per square foot)
109 - 120              74,736 ($2.70 per square foot)
121 - 132              66,986 ($2.42 pet square foot)
133 - 144              69,200 ($2.50 per square foot)
145 - 156              71,691 ($2.59 per square foot)
157 - 168              74,182 ($2.68 per square foot)
169 - 180              67,816 ($2.45 per square foot)

If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on other
than the last day of a calendar month, the minimum rental for such first or last
month of the term of this Lease, as the case may be, shall be prorated based on
the number of days the term of this Lease is in effect during such month. If an
increase in minimum rental becomes effective on a day other than the first day
of a calendar month, the minimum rental for that month shall be the sum of the
two applicable rates, each prorated for the portion of the month during which
such rate is in effect.

(b)      The minimum rental amounts specified in this Section
3.1 are based upon an estimated area of 27,680 square feet for the Premises. If
the actual area of the Premises, when completed, differs from such estimated
area (because of Tenant's election to take some or all of the Option Space or
for any other reason), then the minimum rentals specified in Section 3.1(a)
shall be adjusted for each rental period in strict proportion to the ratio
between the actual area of the Premises during the applicable period (which area
shall be determined on the basis of measurement from the centerline of interior
demising walls (if any), from the exterior faces of the exterior walls of the
Building and, in the case of overhangs, from the dripline thereof, but excluding
the exterior recessed areas of the second floor) and the assumed area of 27,680
square feet. Measurements of building area under this paragraph shall be made
initially by Landlord's architect, subject to review and approval by Tenant's
architect.

(c)      If Tenant properly exercises its right to extend the
term of this Lease pursuant to Section 2.6 hereof, the minimum rental during
the first extended term shall be equal to eighty-five percent (85%) of the fair
market rental value of the Premises in their then existing condition and state
of improvements (including all laboratory improvements, fixtures, equipment and
other installations that are affixed to and are part of the Building, but
specifically excluding from consideration any such improvements, fixtures and
equipment which Tenant is entitled to remove from the Premises, "under the
provisions of this Lease, upon expiration of this Lease),

- 5 -

including any cost-of-living adjustments or other rental increase provisions
then customary in the market for comparable office and research and development
space in South San Francisco, determined as of the commencement of such extended
term in accordance with this paragraph. Upon Landlord's receipt of a proper
notice of Tenant's exercise of its option to extend the term of this Lease, the
parties shall have sixty (60) days in which to agree on the fair market rental
(including any applicable rental increase provisions) for the Premises at the
commencement of the first extended term for the uses permitted hereunder. If the
parties agree on such fair market rental and rental increase provisions (if
any), they shall execute an amendment to this Lease stating the amount of the
applicable minimum monthly rental and any applicable rental increase provisions.
If the parties are unable to agree on such rental (including any applicable
rental increase provisions) within such sixty (60) day period, then within
fifteen (15) days after the expiration of such period each party, at its cost
and by giving notice to the other party, shall appoint a real estate appraiser
with at least five (5) years experience appraising similar commercial properties
in northeastern San Mateo County to appraise and set the fair market rental and
any applicable rental increase provisions for the Premises at the commencement
of the first extended term. If either party fails to appoint an appraiser within
the allotted time, the single appraiser appointed by the other party shall be
the sole appraiser. If an appraiser is appointed by each party and the two
appraisers so appointed are unable to agree upon a fair market rental (and any
appropriate rental increase provisions) within thirty (30) days after the
appointment of the second, they shall appoint a third qualified appraiser within
ten (10) days after expiration of such 30-day period; if they are unable to
agree upon a third appraiser, either party may, upon not less than five (5) days
notice to the other party, apply to the Presiding Judge of the San Mateo County
Superior Court for the appointment of a third qualified appraiser. Each party
shall bear its own legal fees in connection with appointment of the third
appraiser and shall bear one-half of any other costs of appointment of the third
appraiser and of such third appraiser's fee. The third appraiser, however
selected, shall be a person who has not previously acted for either party in any
capacity. Within thirty (30) days after the appointment of the third appraiser,
a majority of the three appraisers shall set the fair market rental and any
applicable rental increase provisions for the first extended term and shall so
notify the parties. If a majority are unable to agree within the allotted time,
(i) the three appraised fair market rentals shall be added together and divided
by three and the resulting quotient shall be the fair market rental for the
first extended term, and (ii) the applicable rental increase provision shall be
equal to the mathematical average (or the nearest reasonable approximation
thereto) of the two rental increase provisions that are most closely comparable,
which determinations shall be binding on the parties and shall be enforceable in
any further proceedings relating to this Lease. For purposes of this Section
3.1(c), the "fair market rental" of the Premises shall be determined with
reference to the then prevailing market rental rates for properties in South San
Francisco with shell, office, laboratory and research and development
improvements and site (common area) improvements comparable to those then
existing in the Premises and on the Property; provided, however, that no
equipment or laboratory improvements to the Premises constructed or installed by
Tenant at its own expense and which Tenant has a right to remove upon expiration
of this Lease shall be taken into account in determining such fait market
rental, but all other improvements to the Premises and Property (including, but
not limited to, the Improvements constructed by Landlord pursuant to Section 5.1
and Exhibit C and any and all other laboratory improvements, fixtures, equipment
and other installations that are affixed to and are part of the Building and are
not removable by Tenant upon expiration of this Lease) shall be taken into
account in such determination.

(d)      If Tenant properly exercises its right to a second
extended term of this Lease pursuant to Section 2.6 hereof, the minimum rental
during such second extended term shall be determined in the same manner provided
in the preceding paragraph for the first extended term, except that the
determination shall be made as of the commencement of the second extended term.

3.2      Late Charge. If Tenant fails to pay when due rental or other
amounts due Landlord hereunder, such unpaid amounts shall bear interest for the
benefit of Landlord at a rate equal to the lesser often percent (10%) per annum
or the maximum rate permitted by law, from the date due to the date of payment.
In addition to such interest, Tenant shall pay to Landlord a late charge in an
amount equal to five percent (5%) of any installment of minimum rental and any
other amounts due Landlord if not paid in full on or before the fifth (5th) day
after written notice from Landlord to Tenant that such rental or other amount is
past due; provided, however, that if at any time a payment of rent or other
amounts is more than five (5) days late and Landlord gives written notice of
delinquency to Tenant prior to Tenant's actual delivery of such

- 6 -

payment, then for the next twelve (12) calendar months after such written notice
was given, Tenant shall be liable for late charges on any further payment of
rent or other amounts that is not paid on or before the fifth (5th) day after
such rent or other amount is due, without any requirement of prior notice from
Landlord to Tenant of such default or delinquency. Tenant acknowledges that late
payment by Tenant to Landlord of rental or other amounts due hereunder will
cause Landlord to incur costs not contemplated by this Lease, including, without
limitation, processing and accounting charges and late charges which may be
imposed on Landlord by the terms of any loan relating to the Property. Tenant
further acknowledges that it is extremely difficult and impractical to fix the
exact amount of such costs and that the late charge set forth in this Section
3.2 represents a fair and reasonable estimate thereof. Acceptance of any late
charge by Landlord shall not constitute a waiver of Tenant's default with
respect to overdue rental or other amounts, nor shall such acceptance prevent
Landlord from exercising any other rights and remedies available to it.
Acceptance of rent or other payments by Landlord shall not constitute a waiver
of late charges or interest accrued with respect to such rent or other payments
or any prior installments thereof, nor of any other defaults by Tenant, whether
monetary or non-monetary in nature, remaining uncured at the time of such
acceptance of rent or other payments.

4. STOCK WARRANTS

4.1      Stock Warrants.

(a)      Within thirty (30) days after the execution of this
Lease and as a condition to Landlord's obligations hereunder, Tenant shall
deliver to Landlord or Landlord's nominees (which may be any partners,
shareholders or affiliates of Landlord or any affiliates of any such partners,
shareholders or affiliates of Landlord) warrants registered in the name of
Landlord or Landlord's nominees for the acquisition of an aggregate of one
hundred thousand (100,000) shares of Tenant's preferred stock or other
comparable membership interests (however denominated), which warrants shall be
in form and substance satisfactory to Landlord. The warrants shall have an
exercise price which is two dollars ($2.00) per share higher than the price at
which common shares of Xenova group plc are trading on the date of issuance of
the warrants, shall be exercisable from the date of issuance until five (5)
years thereafter, and shall be accompanied by reasonable and customary
registration rights or other comparable liquidity benefits in favor of the
warrantholders.

(b)      The warrants for 100,000 shares described in Section
4.1 (a) are to be issued in connection with Tenant's leasing of the second floor
of the Building. Once the area of the additional space to be taken by Tenant on
the first floor of the Building has been determined, and thereafter if Tenant
exercises its option under Section 1.1(c) to expand the Premises to include all
or any portion of the Option Space, then within thirty (30) days after the size
of each such additional first floor portion of the Premises is determined, as a
condition to Landlord's obligations hereunder, Tenant shall deliver to Landlord
or Landlord's nominees (which may be any partners, shareholders or affiliates of
Landlord or any affiliates of any such partners, shareholders or affiliates of
Landlord) additional warrants registered in the name of Landlord or Landlord's
nominees for the acquisition of an aggregate number of additional shares of
Tenant's preferred stock or other comparable membership interests (however
denominated) which bears the same ratio to 100,000 shares as the square footage
of the first floor space taken by Tenant bears to the area of the second floor
of the Building as measured under Section 3.1(b). Such warrants shall be in the
same form and shall have the same terms, exercise price and registration rights
as the warrants issued initially pursuant to Section 4.1(a).

5. CONSTRUCTION

5.1      Construction of Improvements. Landlord shall, at Landlord's
cost and expense (except as otherwise provided herein and in Exhibit C),
construct the Improvements in accordance with the terms and conditions of
Exhibit C attached hereto and incorporated herein by this reference and in
accordance with the plans and specifications attached thereto or listed or
described therein, subject to any changes implemented in such plans and
specifications in accordance with the procedures set forth in said Exhibit C.
Landlord and Tenant shall both use their respective best reasonable efforts to
perform in a timely manner their respective obligations

- 7 -

under, and to facilitate the completion of construction of the Improvements in
accordance with, the estimated construction schedule attached hereto as
Exhibit D, as the same may be modified or revised from time to time by mutual
agreement of Landlord and Tenant, subject to the effects of any delays caused by
or attributable to the other party or any other circumstances beyond the
performing party's reasonable control (excluding any financial inability), and
subject to the provisions of Section 2.3 above.

5.2      Condition of Property. Landlord shall deliver the Premises to
Tenant clean and free of debris on the Commencement Date, and Landlord warrants
to Tenant that (i) the Improvements shall be free from material structural
defects, (ii) the roof and the electrical, mechanical, plumbing, lighting and
HVAC systems and the loading doors, if any, on or in the Premises shall be in
good operating condition on the Commencement Date, and (iii) the Improvements
shall be constructed in compliance in all material respects with the plans and
specifications attached to or listed or described in Exhibit C, subject to any
changes implemented in such plus and specifications in accordance with the
procedures set forth in Exhibit C. If it is determined that this warranty has
been violated in any respect, then it shall be the obligation of Landlord, after
receipt of written notice from Tenant setting forth with specificity the nature
of the violation, to promptly, at Landlord's sole cost, correct the condition(s)
constituting such violation. Tenant's failure to give such written notice to
Landlord within one (1) year after the Commencement Date shall give rise to a
conclusive presumption that Landlord has complied with all Landlord's
obligations hereunder, except with respect to latent defects. TENANT
ACKNOWLEDGES THAT THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE IMPROVEMENTS
TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT
AS EXPRESSLY SET FORTH IN THIS LEASE.

5.3      Compliance with Law. Landlord warrants to Tenant that the
Improvements (when constructed), as they exist on the Commencement Date, but
without regard to the use for which Tenant will occupy the Premises, shall not
violate any covenants or restrictions of record or any applicable building code,
regulation or ordinance in effect on the Commencement Date, including (but not
limited to) the Americans with Disabilities Act. If it is determined that this
warranty has been violated, then it shall be the obligation of Landlord, after
written notice from Tenant, to correct the condition(s) constituting such
violation promptly, at Landlord's sole cost and expense. Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation or
warranty as to the present or future suitability of the Premises for the conduct
of Tenant's business or proposed business thereon.

6. TAXES

6.1      Personal Property. Tenant shall be responsible for and shall
pay prior to delinquency all taxes and assessments levied against or by reason
of (a) any and all alterations, additions and items installed or placed on the
Premises and taxed as personal property rather than as real property, and/or (b)
all personal property, trade fixtures and other property placed by Tenant on or
about the Property. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant's payment thereof. If at any time during the
term of this Lease any of said alterations, additions or personal property,
whether or not belonging to Tenant, shall be taxed or assessed as part of the
Property, then Landlord shall make a reasonable allocation of the larger
statement between personal property described in the first sentence of this
Section 6.1 and other personal property covered by the applicable statement and
the portion of such tax or assessment reasonably allocable to personal property
described in the first sentence of this Section 6.1 shall be paid by Tenant to
Landlord within ten (10) days following presentation by Landlord of copies of
the lax bills in which such taxes and assessments are included (together with a
description of the basis for Landlord's allocation of such taxes and
assessments) and shall for the purposes of this Lease, be deemed to be personal
property taxes or assessments under this Section 6.1.

6.2      Real Property. It is the intention and expectation of the
parties that real property taxes and assessments on the Premises, the Building
and the Property will be assessed to Landlord on an aggregate basis. To the
extent the real property taxes and assessments on the Premises are assessed
separately from the remainder of the Property. Tenant shall be responsible for
and shall

- 8 -

pay prior lo delinquency all such taxes and assessments levied against the
Premises. To the extent any real property taxes and assessments on the Property
(including, but not limited to, the Improvements) are assessed directly to
Tenant, Tenant shall be responsible for and shall pay prior to delinquency all
such taxes and assessments levied against the Property. Upon request by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant's
timely payment of any taxes and assessments that are Tenant's responsibility
under the preceding two sentences. In the event any such taxes and assessments
on the Premises or Property are paid directly by Tenant pursuant to this Section
6.2, an appropriate adjustment shall be made in the determination of Operating
Expenses to ensure that Tenant does not bear, in the aggregate, a
disproportionate share of the overall real property taxes and assessments on the
Center. To the extent the Property and/or Improvements are taxed or assessed to
Landlord following the Commencement Date, such real property taxes and
assessments shall constitute Operating Expenses (as that term is defined in
Section 7.2 of this Lease) and shall be paid in accordance with the provisions
of Article 7 of this Lease.

6.3      Challenges. Tenant at its cost may seek a reduction in the
assessed value of the Building, provided that (a) Landlord shall not be required
to join in any proceeding or contest brought by Tenant unless the provisions of
the applicable laws require that the proceeding contesting the assessed value of
the Building be brought in Landlord's name, in which event Landlord shall join
in the proceeding but shall not be required to bear any costs in connection
with such proceeding, and (b) Tenant shall hold Landlord and the Property
harmless from and against any liens, penalties and other adverse consequences
arising out of or in connection with the pendency of such proceeding.

7. OPERATING EXPENSES

7.1      Payment Of Operating Expenses.

(a)      Tenant shall pay to Landlord, at the time and in the
manner hereinafter set forth, as additional rental, an amount equal to twelve
and thirty-four hundredths percent (12.34%) ("Tenant's Operating Cost Share") of
the Operating Expenses defined in Section 7.2. Notwithstanding any other
provisions of this Section 7.1, however, Tenant's Operating Cost Share of the
costs of repairing and maintaining the non-structural portions of the roof of
the Building during any period when the Premises constitute less than the entire
Building (as contemplated in Section 10.1 (a) hereof) shall be equal to the
ratio, expressed as a percentage amount, between the area of the Premises as
they exist from time to time and the area of the Building, each measured in
accordance with Section 3.1(b) hereof.

(b)      Tenant's Operating Cost Share as specified in
paragraph (a) of this Section (other than for costs of repair and maintenance of
non-structural portions of the roof, to the extent a separate Tenant's Operating
Cost Share is specified for such costs under paragraph (a) of this Section) is
based upon an estimated area of 27,680 square feet for the Premises and upon an
aggregate area of 224253 square feet for the buildings owned by Landlord on the
Property (Buildings D, E, F, G and H). If the actual area of the Premises (when
completed) or of the buildings owned from time to time by Landlord on the
Property, as determined in good faith by Landlord's architect on a basis
consistent with that used in measuring other leased premises within the Center,
differs from the assumed numbers set forth above, then Tenant's Operating Cost
Share shall be adjusted to reflect the actual areas so determined.

(c)      If Landlord constructs additional buildings on the
Property or on any other adjacent property owned by Landlord and operated, for
common area purposes, on an integrated basis with the Property from time to
time, Tenant's Operating Cost Share shall, at Landlord's election, be adjusted
to be equal to the percentage determined by dividing the gross square footage of
the Premises as they then exist by the gross square footage of all buildings
located on the Property (or on any applicable adjacent property owned by
Landlord as described above). In determining said percentage, a building shall
be taken into account from and after the date on which a tenant first enters
into possession of the building or a portion thereof, and the good faith
determination of the gross square footage of any such building by Landlord's
architects shall be final and binding upon the parties.

- 9 -

7.2      Definition Of Operating Expenses.

(a)      Subject to the exclusions and provisions hereinafter 
contained, the term "Operating Expenses" shall mean the total costs and expenses
incurred by or allocable to Landlord for management, operation and maintenance
of the Improvements and the Property, including, without limitation, costs and
expenses of (i) insurance, property management, landscaping and operations,
repairs and maintenance of buildings and Common Areas, including, without
limitation, the repair and maintenance of the non-structural portions of the
roof of the Building during any period when the Premises constitute less than
the entire Building (but excluding costs of repair and maintenance of
non-structural portions of the roofs of other buildings in the Center); (ii) all
utilities and services; (iii) real and personal property taxes and assessments
or substitutes therefor levied or assessed against the Property or any part
thereof, including (but not limited to) any possessory interest, use, business,
license of other taxes or fees, any taxes imposed directly on rents or services,
any assessments or charges for police or fire protection, housing, transit, open
space, street or sidewalk construction or maintenance or other similar services
from time to time by any governmental or quasi-governmental entity, and any
other new taxes on landlords in addition to taxes now in effect; (iv) supplies,
equipment, utilities, and tools used exclusively in management, operation and
maintenance of the Property; (v) capital improvements to the Property or the
Improvements, amortized over a reasonable period, (aa) which reduce or will
cause future reduction of other items of Operating Expenses for which Tenant is
otherwise required to contribute or (bb) which are required by law, ordinance,
regulation or order of any governmental authority or (cc) of which Tenant has
use or which benefit Tenant; and (vi) any other costs (including, but not
limited to, any parking or utilities fees or surcharges) allocable to or paid by
Landlord, as owner of the Property or Improvements, pursuant to any applicable
laws, ordinances, regulations or orders of any governmental or
quasi-governmental authority or pursuant to the terms of any declarations of
covenants, conditions and restrictions now or hereafter affecting the Property
or over which Tenant has non-exclusive usage rights as contemplated in Section
1.1 (b) hereof. Operating Expenses shall not include any costs attributable to
the work for which Landlord is required to pay under Article 5 or Exhibit C; nor
any costs attributable to increasing the size of or otherwise expanding the
Building or the cost of constructing any additional buildings on the Property
from time to time. The distinction between items of ordinary operating
maintenance and repair and items of a capital nature shall be made in accordance
with generally accepted accounting principles applied on a consistent basis, or
in accordance with tax accounting principles, as determined in good faith by
Landlord's accountants.

(b)      Landlord agrees that since one of the purposes of
Operating Expenses is to allow Landlord to require Tenant to pay for the costs
attributable to the Common Areas, (i) Landlord will not collect or be entitled
to collect Operating Expenses from all of its tenants in an amount which is in
excess of 100% of the Operating Expenses actually paid by Landlord in
connection with the operation of the Building and (ii) Landlord shall make no
profit from Landlord's collections of Operating Expenses, including utilities
provided to the Premises, if any. All assessments which are not specifically
charged to Tenant which can be paid by Landlord in installments, shall be paid
by Landlord in the maximum number of installments permitted by law and shall not
be included as Operating Expenses except in the year in which the assessment or
premium installment is actually paid.

(c)      Each time Landlord provides Tenant with an actual
and/or estimated statement of Operating Expenses, such statement shall be
itemized on a line-item basis showing the expenses for the applicable year and
the immediately preceding year.

(d)      Notwithstanding anything to the contrary in the
definition of "Operating Expenses" in Section 7.2(a), Operating Expenses shall
not include any of the following:

(i)      any ground lease rentals;

(ii)     expenditures required by Landlord's failure
to comply with laws enacted on or before the date any Building's certificate of
occupancy (or equivalent) is validly issued;

(iii)    costs incurred by Landlord for the repair of
damage to, or maintenance of any building or other improvement to the extent
that Landlord is entitled to be

- 10 -

reimbursed by insurance proceeds, nor the costs of maintaining and repairing the
structural components of any building (or other improvement) consisting of
beams, columns, foundations, footings, structural slabs and structural parts of
the roof, except as to my structural changes made or components installed
specifically for Tenant;

(iv)     costs, including permit license and
inspection costs, incurred with respect to the installation of tenant
improvements for any tenant or occupant in the Center or incurred in renovating
or otherwise improving, decorating, painting or redecorating vacant space for
any tenant or occupant in the Center;

(v)      depreciation, amortization and interest
payments with respect to any building or other improvement or Common Area or any
equipment or machinery, except as provided herein and except on materials,
tools, supplies and vendor-type equipment purchased by Landlord to enable
Landlord to supply services Landlord might otherwise contract for with a third
party, all as determined in accordance with generally accepted accounting
principles, consistently applied, and when depreciation or amortization is
permitted or required, the item shall be amortized over its reasonably
anticipated useful life;

(vi)     marketing costs, including leasing
commissions and attorneys fees and other costs and expenses incurred in
connection with negotiation and preparation of letters, deal memos, assignments,
space planning costs and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Center;

(vii)    costs incurred by Landlord for alterations
which are considered capital repairs, improvements, replacements and equipment
under generally accepted accounting principles, consistently applied, or
otherwise ("Capital Items"); except for (x) those Capital Items acquired to
reduce Operating Expenses, amortized at an annual rate reasonably calculated to
equal the amount of Operating Expenses saved in each calendar year throughout
the Term as determined at the time Landlord elected to proceed with the capital
improvement or acquisition of the capital equipment lo reduce Operating
Expenses, together with interest at the actual interest rate incurred by
Landlord, and (y) costs of capital tools to the extent the amortized or
allocable portion of such costs included in Operating Expenses is not in excess
of Ten Thousand Dollars ($10.000.00) in any twelve (12) month period;

(viii)   interest, principal points and fees on debts
or amortization on any mortgage or mortgages or any other debt instrument
encumbering all or any portion of the Property;

(ix)     advertising and promotional expenditures,
and-costs of signs in or about the Center identifying the owner of the Center or
any tenant thereof;

(x)      tax penalties incurred as a result of
Landlord's inability to make tax payments when due except as a result of
Tenant's failure to pay the same when due, and costs, expenses and penalties
incurred by Landlord as a result of Landlord's violation of any laws, rules or
regulations, including, without limitation, those governing the use, storage,
removal or cleanup of any toxic or hazardous materials;

(xi)     costs incurred by Landlord for the repair
of damage to any improvements in the Building resulting from the negligence or
willful misconduct of Landlord or its agents, employees, invites or
contractors, other than costs of routine maintenance and repair and costs to
repair ordinary wear and tear;

(xii)    costs incurred by Landlord in connection
with negotiating the financing, mortgaging, hypothecating, syndicating, sale or
acquisition of all or any portion of the Center;

(xiii)   costs, except for costs of routine
maintenance and repair and costs to repair ordinary wear and tear, incurred in
furnishing items or services exclusively to Tenant or any other specific tenant,
or in repairing damage to the Building caused by Tenant or any other tenant or
its or their agents, employees, invitees or contractors, to the extent Landlord
is entitled 10 reimbursement therefor;

- 11 -

(xiv)    to the extent the managing agent of the
Center is an affiliate of Landlord, that portion of any management fees paid to
such affiliate that exceeds the management fees customarily charged for the
management of comparable building located in the geographical area where the
center is located;

(xv)     the cost of repair or replacement of any
item covered by a warranty in favour of Landlord, to the extent the benefit of
such warranty is received by Landlord;

(xvi)    cost incurred by Landlord in correcting
latent or patent defects in the improvements in the building;

(xvii)   attorney' fees and other costs and expenses
incurred due to the violation by Landlord or any tenant of any lease of premises
in the Center or under any ground lease;

(xviii)  costs of remediation of hazardous
substances, materials or wastes introduced, used, stored or disposed of by
Landlord or any tenant other than Tenant in, on or about the Center; and costs
of remediation of hazardous substances, materials or wastes introduced, used
stored or disposed of by unknown persons or persons other than Landlord, Tenant
or any tenant other than Tenant in, on or about the Center;

(xix)    Landlord's general and administrative
overhead expenses, to the extent not properly allocate to the Center;

(xx)     the cost of any development fees and any
one-time utility connection or "tap-in" fees for the Building;

(xxi)    electric power costs which any tenant
directly contracts with the local public utility company;

(xxii)   costs incurred in connection with upgrading
the Building to comply with handicap, life, fire and safety codes in effect
prior to or subsequent to the commencement Date and costs incurred in connection
with the Americans With Disabilities Act and all other laws, codes, ordinances
and regulations;

(xxiii)  any other expenses which, in accordance with
generally accepted consistently applied, would not normally be treated as
operating expenses by landlords of comparable buildings;

(xxiv)   costs arising from Landlord's charitable or
political contributions; 

(xxv) costs for sculpture, paintings or other objects
of art; and

(xxvi)   costs (including in connection therewith all
attorneys' fees and costs of settlement, judgments and payments in lieu
thereof) arising from claims, disputes or potential disputes in connection with
potential or actual claims, litigation or arbitrations with Tenant or other
tenants pertaining to Landlord and/or the Center, except to the extent Landlord
in such proceedings is asserting or defending rights or interests of general
benefit to the tenants and occupants of the Center as a group or class.

7.3      Determination Of Operating Expenses. On or before the
Commencement Date and during the last month of each calendar year of the term
of this Lease ("Lease Year"), or as soon thereafter as practical, Landlord
shall, provide Tenant notice of Landlord's estimate of the Operating Expenses
for the ensuing Lease Year or applicable portion thereof. On or before the first
day of each month during the ensuing Lease Year or applicable portion thereof,
beginning on the Commencement Date. Tenant shall pay to Landlord Tenant's
Operating Cost Share of the portion of such estimated Operating Expenses
allocable (on a prorata basis) to such month; provided, however, that if such
notice is not given in the last month; of a Lease Year. Tenant shall continue to
pay on the basis of the prior year's estimate, if any, until the month after
such notice is given. If at any time or times it appears to Landlord that the
actual Operating Expenses will vary from Landlord's estimate by more than five,
percent (5%). Landlord may, by notice to

- 12 -

Tenant, revise its estimate for such year and subsequent payments by Tenant for
such year shall be based upon such revised estimate.

7.4      Final Accounting For Lease Year.

(a)      Within ninety (90) days after the close of each
Lease Year, or as soon after such 90-day period as practicable. Landlord shall
deliver to Tenant a statement of Tenant's Operating Cost Share of the Operating
Expenses for such Lease Year prepared by Landlord from Landlord's books and
records, which statement shall be final and binding on Landlord and Tenant
(except as provided in Section 7.4(b)). If on the basis of such statement Tenant
owes an amount that is more or less than the estimated payments for such Lease
Year previously made by Tenant, Tenant or Landlord, as the case may be, shall
pay the deficiency to the other party within thirty (30) days after delivery of
the statement. Failure or inability of Landlord to deliver the annual statement
within such ninety (90) day period shall not impair or constitute a waiver of
Tenant's obligation to pay Operating Expenses, or cause Landlord to incur any
liability for damages.

(b)      Within six (6) months after receipt of Landlord's
annual statement of actual Operating Expenses as contemplated in Section 7.4(a),
Tenant shall be entitled, upon reasonable written notice to Landlord and during
normal business hours at Landlord's office or such other places as Landlord
shall designate, to inspect and examine those books and records of Landlord
relating to the determination of Operating Expenses for the immediately
preceding Lease Year covered by such annual statement. If, after inspection and
examination of such books and records. Tenant disputes the amount of Operating
Expenses charged by Landlord and the parties are not able to resolve such
dispute by good faith negotiations within thirty (30) days after Tenant notifies
Landlord in writing of the disputed items (which notice shall be in reasonable
detail and be accompanied by reasonable supporting information with respect to
the disputed items), then Tenant may, by written notice to Landlord, request an
independent audit of such books and records. The independent audit of the books
and records shall be conducted by a certified public accountant acceptable to
both Landlord and Tenant or, if the parties are unable to agree, by a "Big Six"
accounting firm designated by Landlord and not then employed by Landlord or
Tenant. The audit shall be limited to the determination of the amount of
Operating Expenses and of Tenant's share thereof for the subject Lease Year, and
shall 'be based on generally accepted accounting principles and tax accounting
principles consistently applied. If it is determined, by mutual agreement of
Landlord and Tenant or by independent audit, that the amount paid by Tenant for
Operating Expenses for the subject Lease Year was incorrect, then the
appropriate party shall pay to the other party the deficiency or overpayment, as
applicable, within thirty (30) days after die final determination of such
deficiency or overpayment. All costs and expenses of the audit shall be paid by
Tenant unless the audit shows that Landlord overstated Operating Expenses for
the subject Lease Year by more than five percent (5%), in which case Landlord
shall pay all costs and expenses of the audit Each party agrees to maintain the
confidentiality of the findings of any audit in accordance with the provisions
of this Section 7.4.

7.5      Proration. If the Commencement Date falls on a day other than
the first day of a Lease Year or if this Lease terminates on a day other than
the last day of a Lease Year, the amount of Operating Expenses payable by Tenant
with respect to such first or last partial Lease Year shall be prorated on the
basis which the number of days during such Lease Year in which this Lease is in
effect bears to 365. The termination of this Lease shall not affect the
obligations of Landlord and Tenant pursuant to Section 7.4 to be performed after
such termination.

8. UTILITIES

8.1      Payment. Commencing with the Commencement Date and thereafter
throughout the term of this Lease. Tenant shall pay, before delinquency, all
charges for water, gas, beat, light, electricity, power, sewer, telephone, alarm
system, janitorial and other services or utilities supplied to or consumed in or
upon the Property (other than any separately metered costs for water,
electricity or other services or utilities furnished with respect to the Common
Areas, which costs shall be paid by Landlord and shall constitute Operating
Expenses under Section 7.2 hereof), including any taxes on such services and
utilities. It is the intention of the parties that all such services shall be
separately metered to the Premises. In the event that any of such services
supplied to the Premises are not separately metered, then the amount thereof
shall be an item of Operating Expenses and shall be paid as provided in Article
7.

- 13 -

8.2      Interruption. There shall be no abatement of rent or other
charges required to be paid here under and Landlord shall not be liable in
damages or otherwise for interruption or failure of any service or utility
furnished to or used in the Premises because of accident, making of repairs,
alterations or improvements, severe weather, difficulty or inability in
obtaining servies or supplies, labor difficulties or any other cause.
Notwithstanding the foregoing provisions of this Section 8.2, however, in the
event of any interruption or failure of any service or utility to the Premises
that (i) is caused in whole or in material part by the active negligence or
willful misconduct of Landlord or its agents or employees and (ii) continues for
more than twenty-four (24) hours and (iii) materially impairs Tenant's ability
to use the Premises for their intended purposes hereunder, then, following such
twenty-four (24) hour period. Tenant's rental obligations under this Lease shall
be abated in proportion to the degree of impairment of Tenant's use of the
Premises, and such abatement shall continue until Tenant's use of the Premises
is no longer materially impaired thereby.

9. ALTERATIONS; SIGNS

9.1      Right To Make Alterations. Tenant shall make no alterations,
additions or improvements to the Premises, other than interior non-structural
alterations costing less than One Hundred Thousand Dollars ($100,000.00)
individually or in the aggregate during any twelve (12) month period, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld. All such alterations, additions and improvements shall be completed
with due diligence in a first-class workmanlike manner, in compliance with plans
and specifications approved in writing by Landlord and in compliance with all
applicable laws, ordinances, rules to maintain public liability and property
damage insurance, and other customary insurance, with such terms and in such
amounts as Landlord may reasonably require, naming as additional insureds
Landlord and any of its partners, shareholders and property managers designated
by Landlord for this purpose, and shall furnish Landlord with certificates of
insurance or other evidence that such coverage is in effect. In addition, Tenant
shall engage only union contractors for any alterations, additions or
improvements to the Premises (including, but not limited to, any construction or
installation of furnishings, fixtures or equipment), and shall require all such
contractors engaged by Tenant to use only union labor on or in connection with
such work. Notwithstanding any other provisions of this Section 9.1, under no
circumstances shall Tenant make any structural alterations or improvements, or
any substantial changes ot the roof or substantial equipment installations on
the roof, or any substantial changes or alterations to the building systems,
without Landlord's prior written consent (which consent shall not be
unreasonably withheld). If Tenant so requests in seeking Landlord's consent to
any alterations, additions or improvements, Landlord shall specify in granting
such consent whether Landlord intends to require that Tenant remove such
alterations, additions or improvements (or any specified portions thereof) upon
expiration or termination of this Lease. Landlord shall receive no fee for
supervision, profit, overhead or general conditions in connection with any
alterations, additions or improvements constructed or installed by Tenant under
this Lease.

9.2      Title To Alterations. All alterations, additions and
improvements installed in, on or about the Premises shall become part of the
Building and shall become the property of Landlord, unless Landlord elects to
require Tenant to remove the same upon the termination or expiration of this
Lease; provided, however, that the foregoing shall not apply (i) to Tenant's
movable furniture and equipment and trade fixtures not affixed to the Property,
or (ii) to any improvements installed by Tenant at its own expense (and not
installed by Landlord persuant to Section 5.1 or Exhibit C nor financed by
Landlord persuant to any applicable provision of this Lease) which are readily
movable, are not integral part of the Building's structure or interior
architectural improvements, and are not an integral part of the Building's HVAC,
plumbing or electrical systems or other standard operating systems. All of such
items described in clause (i) or (ii) of the preceding sentence may (and, at
Landlord's election, shall) be removed by Tenant upon the termination of this
Lease. Tenant shall promptly repair any damage caused by its removal of any such
improvements. Notwithstanding any other provisions of this Section 9.2 if Tenant
requests Landlord's written consent to any alterations, additions or
improvements under Section 9.1 hereof and in requesting such consent asks that
Landlord specify whether Landlord will require removal of such alterations,
additions or improvements upon such termination or expiration of this Lease,
then Landlord shall not be entitled to require such removal unless Landlord
specified its intention to do so at the time of granting of Landlord's consent
to the requested

- 14 -

alterations, additions or improvements. In addition, if Tenant so requests,
Landlord agrees to enter into a letter agreement listing, by mutual agreement
of Landlord and Tenant under the standards set forth in this Section 9.2,
specific alterations, additions and improvements that will or will not be
removable by Tenant at the expiration of the term of this Lease.

9.3      Tenant Fixtures. Notwithstanding the provisions of Sections
9.1 and 9.2, Tenant may install, remove and reinstall trade fixtures without
Landlord's prior written consent, except that installation and removal of any
fixtures which are affixed to the Premises or which affect the exterior or
structural portions of the Building or the building systems shall require
Landlord's written approval. The foregoing shall apply to Tenant's signs, logos
and insignia, all of which Tenant shall have the right to place and remove and
replace (a) only with Landlord's prior written consent as to location, size and
composition, which consent shall not be unreasonably withheld, and (b) only in
compliance with all restrictions and requirements of applicable law and of any
covenants, conditions and restrictions or other written agreements now or
hereafter' applicable to the Property. Tenant shall immediately repair any
damage caused by installation and removal of fixtures under this Section 9.3.

9.4      No Liens. Tenant shall at all times keep the Premises free
from all liens and claims of any contractors, subcontractors, materialmen,
suppliers or any other parties employed either directly or indirectly by Tenant
in construction work on the Premises. Tenant may contest any claim of lien, but
only if, prior to such contest, Tenant either (i) posts security in the amount
of the claim, plus estimated costs and interest, or (ii) records a bond of a
responsible corporate surety in such amount as may be required to release the
lien from the Premises, tenant shall indemnify, defend and hold Landlord
harmless against any and all liability, loss, damage, cost and other expenses,
including, without limitation, reasonable attorneys' fees, arising out of claims
of any lien for work performed or materials or supplies furnished at the request
of Tenant or persons claiming under Tenant.

9.5      Signs. Without limiting the generality of the provisions of
Section 9.3 hereof, Tenant shall have the right to display its corporate name
and logo on the Building only if (and for so long as) the Premises include the
entire Building. During any period in which the Premises include only a portion
of the Building, Tenant shall be entitled to have monument signage near Tenant's
entrance to the Building, subject to Landlord's prior approval as to location,
size and composition (which approval shall not be unreasonably withheld) and
subject to all restrictions and requirements of applicable law and of any
covenants, conditions and restrictions or other written agreements now or
hereafter applicable to the Property. Landlord is hereby deemed to have
approved, as to location, any signage the location of which is expressly
designated on the site plan attached hereto as Exhibit B or on any Approved Plan
listed in or developed pursuant to Exhibit C attached hereto.

10. MAINTENANCE AND REPAIRS

10.1     Landlord's Work. Landlord shall repair and maintain or cause
to be repaired and maintained the Common Areas of the Property, those portions
of the Building outside of the Premises, and the roof (both structural and
non-structural portions during any period when the Premises constitute less than
the entire Building, and structural roof portions only during any period when
the Premises do constitute the entire building), exterior walls and other
structural portions of the Building. The cost of all work performed by Landlord
under this Section 10.1 shall be an Operating Expense hereunder, except to the
extent such work (i) is required due to the negligence of Landlord or any other
tenant of the Building, (ii) is a service to a specific tenant or tenants,
other than Tenant, for which Landlord has received or has a right to receive
full reimbursement, (iii) is capital expense not includible as an Operating
Expense under Section 7.2 hereof, or (iii) is required due to the negligence or
willful misconduct of Tenant or its agents, employees or invitees (in which
event Tenant shall bear the full cost of such work pursuant to the
indemnification provided in Section 12.6 hereof). Tenant knowingly and
voluntarily waives the right to make repairs at Landlord's expense, or to offset
the cost thereof against rent under any law. statute, regulation or ordinance
now or hereafter in effect.

- 15 -

10.2     Tenant's Obligation For Maintenance.

(a)      Good Order, Condition And Repair. By accepting
possession of the Premises. Tenant acknowledges that the Premises are in good
and sanitary order, condition and repair, subject only to any "punch list"
procedures and any express warranties set forth in Article 5 and/or Exhibit C
hereof. Except as provided in Section 10.1 hereof, Tenant at its sole cost and
expense shall keep and maintain in good and sanitary order, condition and repair
the Premises and every part thereof, wherever located, including but not limited
to the roof (non-structural portions only, and only during any period when the
Premises constitute the entire Building), signs, interior, ceiling, telephone
and communications systems serving the Premises, the HVAC equipment and related
mechanical systems serving the Premises (for which equipment and systems Tenant
shall enter into a service contract with a person or entity designated or
approved by Landlord), all doors, door checks, windows, plate glass, door
fronts, exposed plumbing and sewage and other utility facilities, fixtures,
lighting, wall surfaces, floor surfaces and ceiling surfaces and all other
interior repairs, foreseen and unforeseen, as required.

(b)      Landlord's Remedy. If Tenant, after notice from
Landlord, fails to make or perform promptly any repairs or maintenance which are
the obligation of Tenant hereunder. Landlord shall have the right, but shall not
be required, to enter the Premises and make the repairs or perform the
maintenance necessary to restore the Premises to good and sanitary order,
condition and repair. Immediately on demand from Landlord, the cost of such
repairs shall be due and payable by Tenant to Landlord.

(c)      Condition Upon Surrender. At the expiration or sooner
termination of this Lease. Tenant shall surrender the Premises, including any
additions, alterations and improvements thereto, broom clean, in good and
sanitary order, condition and repair, ordinary wear and tear excepted. First,
however, removing all goods and effects of Tenant and all and fixtures and items
required to be removed or specified to be removed at Landlord's election
pursuant to this Lease, and repairing any damage caused by such removal. Tenant
shall not have the right to remove fixtures or equipment if Tenant is in default
hereunder unless Landlord specifically waives this provision in writing. Tenant
expressly waives any and all interest in any personal property and trade
fixtures not removed from the Premises by Tenant at the expiration or
termination of this Lease, agrees that any such personal property and trade
fixtures may, at Landlord's election, be deemed to have been abandoned by
Tenant, and authorizes Landlord (at its election and without prejudice to any
other remedies under this Lease or under applicable law) to remove and either
retain, store or dispose of such property at Tenant's cost and expense, and
Tenant waives all claims against Landlord for any damages resulting from any
such removal, storage, retention or disposal.

11. USE OF PREMISES

11.1     Permitted Use. Subject to Sections 11.3 and 11.4 hereof,
Tenant shall use the Premises solely for a laboratory research and development
facility, including (but not limited to) wet chemistry and biology labs, clean
rooms, pilot scale, clinical scale and GMP scale manufacturing, storage and use
of toxic and radioactive materials and laboratory animals, and other lawful
purposes reasonably related to or incidental to such specified uses (subject in
each case to receipt of all necessary approvals from the City of South San
Francisco and other governmental agencies having jurisdiction over the
Premises), and for no other purpose.

11.2.    [Omitted].

11.3     No Nuisance. Tenant shall not use the Premises for or carry on
or permit upon the Premises or any part thereof any offensive, noisy or
dangerous trade, business, manufacture, occupation, odor or fumes, or any
nuisance or anything against public policy, nor interfere with the rights or
business of any other tenants or of Landlord in the Building or the Property,
nor commit or allow to be committed any waste in, on or about the Premises, nor
make any other unreasonable use of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises, nor bring nor keep anything
therein, which will in any way cause the Premises to be uninsurable with respect
to the insurance required by this Lease or with respect to standard fire and
extended coverage insurance with vandalism, malicious mischief and riot
endorsements.

- 16 -

11.4     Compliance With Laws. Tenant shall not use the Premises or
permit the Premises to be used in whole or in part for any purpose or use that
is in violation of any applicable laws, ordinances, regulation or rules of any
governmental agency or public authority. Tenant shall keep the Premises equipped
with all safety appliances required by law, ordinance of insurance on the
Premises, or any order or regulation of any public authority because of Tenant's
particular use of the Premises. Tenant shall procure all licenses and permits
required for Tenant's use of the Premises. Tenant shall use the Premises in
strict accordance with all applicable ordinances, rules, laws and regulations
and shall comply with all requirements of all governmental authorities now in
force or which may hereafter be in force pertaining to the use of the Premises
by Tenant, including, without limitation, regulations applicable to noise,
water, soil and air pollution, and making such non structural alterations and
additions thereto as may be required from time to time by such laws,
ordinances, rules, regulations and requirements of governmental authorities or
insurers of the Premises (collectively, "Requirements") because of Tenant's
construction of improvements in or other particular use of the Premises. Any
structural alterations or additions required from time to time by applicable
Requirements because of Tenant's construction of improvements in or other
particular use of the Premises shall, at Landlord's election, either (i) be made
by Tenant, at Tenant's sole cost" and expense, in accordance with the procedures
and standards set forth in Section 9.1 for alterations by Tenant, or (ii) be
made by Landlord at Tenant's sole cost and expense, in which event Tenant shall
pay to Landlord as additional rent, within ten (10) days after demand by
Landlord, an amount equal to all costs incurred by Landlord in connection with
such alterations or additions. The judgment of any court, or the admission by
Tenant in any proceeding against Tenant, that Tenant has violated any law,
statute, ordinance or governmental rule, regulation or requirement shall be
conclusive of such violation as between Landlord and Tenant.

11.5     Liquidation Sales. Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in upon or about the Premises or the Property, whether said
auction or sale be voluntary, involuntary or pursuant to any assignment for the
benefit of creditors, or pursuant to any bankruptcy or other insolvency
proceeding.

11.6     Environmental Matters.

(a)      For purposes of this Section, "hazardous substance"
shall mean the substances included within the definitions of the term "hazardous
substance" under (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq., and the
regulations promulgated thereunder, as amended, (ii) the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health &
Safety Code Sections 25300 et seq., and regulations promulgated thereunder, as
amended, (iii) the Hazardous Materials Release Response Plans and Inventory Act,
California-Heath & Safety Code Sections 25500 et seq., and regulations
promulgated thereunder, as amended, and (iv) petroleum; "hazardous waste" shall
mean (i) any waste listed as or meeting the identified characteristics of a
"hazardous waste" under the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Sections 6901  et seq. 8 and regulations promulgated pursuant thereto, as
amended (collectively, "RCRA"), (ii) any waste meeting the identified
characteristics of "hazardous waste," "extremely hazardous waste" or "restricted
hazardous waste" under the California Hazardous Waste Control Law, California
Health & Safety Code Sections 25100 et seq., and regulations promulgated
pursuant thereto, as amended (collectively, the "CHWCL"), and/or (iii) any waste
meeting the identified characteristics of "medical waste" under California
Health & Safety Code Sections 25015-25027.8, and regulations promulgated
thereunder, as amended; and "hazardous waste facility* shall mean a hazardous
waste facility as defined under the CHWCL.

(b)      Without limiting the generality of Tenant's
obligations set forth in Section 11.4 of this Lease:

(i)      Tenant shall not cause or permit any
hazardous substance or hazardous waste to be brought upon, kept, stored or used
in or about the Property without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, except that Tenant, in connection
with its permitted use of the Premises, as provided in Section 11.1, may keep,
store and use materials that constitute hazardous substances which are customary
for such permitted use, provided such hazardous substances are kept, stored and
used in quantities which

- 17 -

are customary for such permitted use and are kept, stored and used in full
compliance with clauses (ii) and (iii) immediately below.

(ii)     Tenant shall comply with all applicable
laws, rules, regulations, orders, permits, licenses and operating plans of any
governmental authority with-respect to the receipt, use, handling, generation,
transportation, storage, treatment and/or disposal of hazardous substances or
wastes by Tenant or its agents or employees, and Tenant shall provide Landlord,
within thirty (30) days after written request by Landlord, with copies of all
permits, licenses, registrations and other similar documents that authorize
Tenant to conduct any such activities in connection with its authorized use of
the Premises from time to time.

(iii)    Tenant shall not (A) operate on or about the
Property any facility required to be permitted or licensed as a hazardous
waste facility or for which interim status as such is required, nor (B) store
any hazardous wastes on or about the Property for ninety (90) days or more, nor
(C) conduct any other activities on or about the Property that could result in
the Property being deemed to be a "hazardous waste facility" (including, but not
limited to, any storage or treatment of hazardous substances or hazardous wastes
which could have such a result).

(iv)     Tenant shall comply with all applicable
laws, rules, Regulations, orders and permits relating to underground storage
tanks installed by Tenant or its agents or employees or at the request of
Tenant, (including any installation, monitoring, maintenance, closure and/or
removal of such tanks) as such tanks are defined in California Health & Safety
Code Section 252281 (x). including, without limitation, complying with
California Health & Safety Code Sections 25280-25299,07 and the regulations
promulgated thereunder, as amended. Tenant shall furnish to Landlord copies of
all registrations and permits issued to or held by Tenant from time to time for
any and all underground storage tanks.

(v)      If applicable, Tenant shall provide Landlord
in writing the following information and/or documentation within thirty (30)
days after written request by Landlord from time to time (provided, however,
that in the case of the materials described in subparagraphs (B), (C) and (E)
below. Tenant shall not be required to deliver copies of such materials to
Landlord but shall maintain copies of such materials to such extent and for such
periods as may be required by applicable law and shall permit Landlord or its
representatives to inspect and copy such materials during normal business hours
at any time and from time to time upon reasonable notice to Tenant):

(A)      A list of all hazardous substances
and/or wastes that Tenant receives, uses, handles, generates, transports,
stores, treats or disposes of from time to time in connection with its
operations on the Premises.

(B)      All Material Safety Data Sheets
("MSDS's"), if any required to be completed with respect to operations of Tenant
at the Premises from time to time in accordance with Title 26, California Code
of Regulations Section 8-5194 or 42 U.S.C. Section 11021, or any amendments
thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS's.

(C)      All hazardous waste manifests (as
defined in Title 26, California Code of Regulations Section 22-66481), If any,
that Tenant is required to complete from time to time in connection with its
operations it the Premises.

(D)      A copy of any Hazardous Materials
Management Plan required from time to time with respect to Tenant's operations
at the Premises, pursuant to California Health & Safety Code Sections 25500 et
seq, and any regulations promulgated thereunder as amended.

(E)      Any Contingency Plans and Emergency
Procedures required of Tenant from time to time due to its operations in
accordance with Title 26, California Code of Regulations Sections 22-67140 et
seq., and any amendments thereto, and any Training Programs and Records required
under Title 26, California Code of Regulations, Section 22-67105, and any
amendments thereto.

(F)      Copies of any biennial reports to
be furnished to the California Department of Health Services from time to time
relating to hazardous substances or

- 18 -

wastes, pursuant to Title 26, California Code of Regulations, Section
22-66493, and any amendments thereto. 

(G)      Copies of all industrial wastewater
discharge permits issued to or held by Tenant from time to time in connection
with its operations on the Premises,

(H)      Copies of any other lists or
inventories of hazardous substances and/or wastes on or about the Property that
Tenant is otherwise required lo prepare and file from time to time with any
governmental or regulatory authority.

(vi)     Tenant shall secure Landlord's prior written
approval for any proposed receipt, storage, possession, use, transfer or
disposal of "radioactive materials" or "radiation," as such materials are
defined in Title 26, California Code of Regulations Section 17-30100, and/or any
other materials possessing the characteristics of the materials so defined,
which approval Landlord may withhold in its sole and absolute discretion;
provided, that such approval shall not be required for any radioactive materials
for which Tenant has secured prior written approval of the Nuclear Regulatory
Commission and delivered to Landlord a copy of such approval. Tenant, in
connection with any such authorized receipt, storage, possession, use, transfer
or disposal of radioactive materials or radiation, shall:

(A)      Comply with all federal, state and
local laws, rules, regulations, orders, licenses and permits issued to or
applicable to Tenant with respect to its business operations on the Premises;

(B)      Maintain, to such extent and for
such periods as may be required by applicable law and permit Landlord and its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant a list of all radioactive
materials or radiation received, stored, possessed, used, transferred or
disposed of by Tenant or in connection with the operation of Tenant's business
on the Premises from time to time, to the extent not already disclosed through
delivery of a copy of a Nuclear Regulatory Commission approval with respect
thereto as contemplated above; and

(C)      Maintain, to such extent and for
such periods as may be required by applicable law, and permit Landlord or its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, all licenses, registration
materials, inspection reports, governmental orders and permits in connection
with the receipt, storage, possession, use, transfer or disposal of radioactive
materials or radiation by Tenant or in connection with the operation of Tenant's
business on the Premises from time to time.

(vii)    Tenant shall comply with any and all
applicable laws, rules, regulations and orders of any governmental authority
with respect to the release into the environment of any hazardous wastes or
substances or radiation or radioactive materials by Tenant or its agents or
employees. Tenant shall give Landlord immediate verbal notice of any
unauthorized release of any such hazardous wastes or substances or radiation or
radioactive materials into the environment, and shall follow such verbal notice
with written notice lo Landlord of such release within twenty-four (24) hours of
the time at which Tenant became aware of such release.

(viii)   Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all claims, losses (including, but
not limited to loss of rental income and loss due to business interruption),
damages, liabilities, costs, legal fees and expenses of any sort arising out of
or relating to (A) any failure by Tenant to comply with any provisions of this
paragraph (b), or (B) any receipt, use handling, generation, transportation,
storage, treatment, release and/or disposal of any hazardous substance or waste
or any radioactive material or radiation on or about the Property in connection
with Tenant's use or occupancy of the Premises or as a result of any
intentional or negligent acts or omissions of Tenant or of any agent or employee
of Tenant.

(ix)     Tenant shall cooperate with Landlord in
furnishing Landlord with complete information regarding Tenant's receipt,
handling, use, storage, transportation, generation, treatment and/or disposal of
any hazardous substances or wastes or radiation or radioactive

- 19 -

materials. Upon request, Tenant shall grant Landlord reasonable access at
reasonable times to the Premises to inspect Tenant's receipt, handling, use,
storage, transportation, generation, treatment and/or disposal of hazardous
substances or wastes or radiation or radioactive materials, without being deemed
guilty of any disturbance of Tenant's use or possession and without being liable
to Tenant in any manner.

(x)      Not-withstanding Landlord's rights of
inspection and review under this paragraph (b). Landlord shall have no
obligation or duty to so inspect or review, and no third party shall be entitled
to rely on Landlord to conduct any sort of inspection or review by reason , of
the provisions of this paragraph (b).

(xi)     If Tenant receives, handles, uses, stores,
transports, generates, treats and/or disposes of any hazardous substances or
wastes or radiation or radioactive materials on or about the Property it any
lime during the term of this Lease, then within thirty (30) days after the
termination or expiration of this Lease, Tenant shall certify in writing to
Landlord that Tenant has in all respects complied with this Section 11.6 and
that Tenant has complied with any applicable federal, state, regional or local
closure requirements. If Landlord nevertheless believes that there may be
hazardous substances or wastes or radioactive materials on the Property, then.
Landlord may obtain, at Landlord's expense (except as otherwise provided
herein), within one (1) year after the termination or expiration of this Lease,
an environmental study performed by a qualified expert consultant, evaluating
the presence or absence of hazardous substances, hazardous wastes, radiation
and/or radioactive materials on or about the Premises and surrounding portions
of the Property. If such study reveals that any such substances, wastes or
materials are present in quantities reasonably requiring remediation and such
substances, wastes or materials are Tenant's responsibility under Section 11.4,
under this Section 11.6 or under any other applicable provision of this Lease,
(hen Tenant shall promptly reimburse Landlord for the cost of such study.
Liability for any remedial actions required or recommended on the basis of such
study shall be allocated in accordance with Sections 11.4, 11.6, 12.6 and other
applicable provisions of this Lease.

(c)      Landlord shall indemnify, defend and hold Tenant
harmless from and against any and all claims, losses, damages, liabilities,
costs, legal fees and expenses of any sort arising out of or relating to (i) the
presence on the Property of any hazardous substances or wastes or radiation or
radioactive materials present on the Property as of the Commencement Date (other
than as a result of any intentional or negligent acts or omissions of Tenant or
of any agent or employee of Tenant), and/or (ii) any unauthorized release into
the environment (including, but not limited to, the Property) of any hazardous
substances or wastes or radiation or radioactive materials to the extent such
release results from the negligence of or willful misconduct or omission by
Landlord or its agents or employees.

(d)      The provisions of this Section 11.6 shall survive the
termination of this Lease.

12. INSURANCE AND INDEMNITY

12.1     Insurance.

(a)      Tenant shall procure and maintain in full force and
effect at all times during the term of this Lease, at Tenant's cost and expense,
commercial general liability insurance to protect against any liability to the
public, or to any invitee of Tenant or Landlord, arising out of or related to
the use of or resulting from any accident occurring in, upon or about the
Premises, with limits of liability of not less than (i) Two Million Dollars
($2,000,000.00) for injury to or death of one person, (ii) Five Million Dollars
($5,000,000.00) for personal injury or death, per occurrence, and (iii) One
Million Dollars ($1,000,000.00) for property damage, or a combined single limit
of liability of not less than Five Million Dollars ($5,000,000.00). Such
insurance shall name Landlord and its general partners and Managing Agent
(Landlord's offsite property manager) as additional insureds thereunder. The
amount of such insurance shall not be construed to limit any liability or
obligation of Tenant under this Lease. To the extent Tenant's business includes
the manufacture and/or distribution of commercial or consumer products. Tenant
shall also procure and maintain in full force and effect at all times during the
term of this Lease, at Tenant's cost and expense, product liability insurance on
terms and in amounts

- 20 -

satisfactory to Landlord in its reasonable discretion, provided that the cost of
such insurance is commercially reasonable.

(b)      Landlord shall procure and maintain in full force and
effect at all times during the term of this Lease, at Landlord's sole cost and
expense (but reimbursable as an Operating Expense under Section 7.2 hereof),
fire and "all risk" extended coverage property damage insurance for the Building
on a full replacement cost basis. Such insurance may include earthquake coverage
to the extent Landlord in its discretion elects to carry such coverage, and
shall have such commercially reasonable deductibles and other terms as Landlord
in its discretion determines to be appropriate. Landlord shall have no
obligation to carry property damage insurance for any alterations, additions or
improvements installed by Tenant on or about the Premises. "

12.2     Quality Of Policies And Certificates. All policies of
insurance required hereunder shall be issued by responsible insurers and shall
be written is primary policies not contributing with and not in excess of any
coverage that Landlord may carry. Tenant shall deliver to Landlord copies of
policies or certificates of insurance showing that said policies are in effect.
The coverage provided by such policies shall include the clause or endorsement
referred to in Section 12.4. If Tenant fails to acquire, maintain or renew any
insurance requited to be maintained by it under this Article 12 or to pay the
premium therefor, then Landlord, at its option and in addition to its other
remedies, but without obligation so to do, may procure such insurance, and any
sums expended by it to procure any such insurance shall be repaid upon demand,
with interest as provided in Section 3.2 hereof. Tenant shall obtain written
undertakings from each insurer under policies required to be maintained by it
to notify all insureds thereunder at least thirty (30) days prior to
cancellation, amendment or revision of coverage.

12.3     Workers' Compensation. Tenant shall maintain in full force and
effect during the term of this Lease workers' compensation insurance in at least
the minimum amounts required by law covering all of Tenant's employees working
on the Premises.

12.4     Waiver Of Subrogation. To the extent permitted by law and
without affecting the coverage provided by insurance required to be maintained
hereunder. Landlord and Tenant each waive any right to recover against the other
with respect to (i) damage to property, (ii) damage to the Property or any part
thereof, or (iii) claims arising by reason of any of the foregoing, but only to
the extent that any of the foregoing damages and claims under clauses (i) and
(ii) hereof are covered, and only to the extent of such coverage, by casualty
insurance actually carried or required to be carried hereunder by either
Landlord, or Tenant. This provision is intended to waive fully, and for the
benefit of each party, any rights and claims which might give rise to a right of
subrogation in any insurance carrier. Each party shall procure a clause or
endorsement on any casualty insurance policy denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to the occurrence of injury or loss. Coverage provided by
insurance maintained by Tenant shall not be limited, reduced or diminished by
virtue of the subrogation waiver herein contained.

12.5     Increase In Premiums. Tenant shall do all acts and pay all
expenses necessary to insure (i) that the Premises are not used for purposes
that are prohibited by any applicable fire insurance and are not characteristic
of the biotechnology uses described in Section 11.1, and (ii) that Tenant's use
of the Premises complies with all requirements necessary to obtain any such
insurance. If Tenant uses or permits the Premises to be used in a manner that is
not characteristic of the biotechnology uses described in Section 11.1 and that
increases the existing rate of any insurance on the Property carried by
Landlord. Tenant shall pay the amount of the increase in premium caused thereby,
and Landlord's costs of obtaining other replacement insurance policies,
including any increase in premium, within ten (10) days after demand therefor by
Landlord.

12.6     Indemnification.

(a)      Tenant shall indemnify, defend and hold Landlord and
its partners, shareholders, officers, directors, affiliates, agents, employees
and contractors harmless from any and all liability for injury to or death of
any person, or loss of or damage to the property of any person, and all actions,
claims, demands, costs (including, without limitation, reasonable attorneys'
fees), damages or expenses of any kind arising therefrom which may be brought or
made against Landlord or which Landlord may pay or incur by reason of the use,
occupancy and

- 21 -

enjoyment of the Premises by Tenant or any invitees, sublessees, licensees,
assignees, employees, agents or contractors of Tenant or holding under Tenant
from any cause whatsoever other than negligence or willful misconduct or
omission by Landlord, its agents or employees. Landlord and its partners,
shareholders, officers, directors, affiliates, agents, employees and contractors
shall not be liable for, and Tenant hereby waives all claims against such
persons for, damages to goods, wares and merchandise in, upon or about the
Premises, or for injuries to Tenant, its agents or third persons in upon or
about the Premises, from any cause whatsoever other than negligence or willful
misconduct or omission by Landlord, its agents or employees. Tenant shall give
prompt notice to Landlord of any casualty or accident in, on or about the
Premises.

(b)      Landlord shall indemnify, defend and hold Tenant and
its partners, shareholders, officers, directors, affiliates, agents, employees
and contractors harmless from any and all liability for injury to or death of
any person, or loss of or damage to the property of any person, and all actions,
claims, demands, costs (including, without limitation, reasonable attorneys'
fees), damages or expenses of any kind arising therefrom which may be brought or
made against Tenant or which Tenant may pay or incur, to the extent such
liabilities or other matters arise by reason of any negligence or willful
misconduct or omission by Landlord, its agents or employees.

12.7     Blanket Policy. Any policy required to be maintained hereunder
may be maintained under a so-called "blanket policy insuring other parties and
other locations so long as the amount of insurance required to be provided
hereunder is not thereby diminished.

13. SUBLEASE AND ASSIGNMENT

13.1     Assignment And Sublease Of Property. Tenant shall not have the
right or power to assign its interest in this Lease, or make any sublease of the
Premises or any portion thereof, nor shall any interest of Tenant under this
Lease be assignable involuntarily or by operation of law, without on each
occasion obtaining the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Any purported sublease or assignment of Tenant's
interest in this Lease requiring but not having received Landlord's consent
thereto shall be void, at the election of Landlord. Without limiting the
generality of the foregoing, Landlord may withhold consent to any proposed
subletting or assignment solely on the ground, if applicable, that the use by
the proposed subtenant or assignee is reasonably likely to be incompatible with
Landlord's use of the remainder of the Building or Property or of any adjacent
property owned or operated by Landlord. If any dissolution, consolidation,
merger or other reorganization of Tenant, or my sale or transfer of the stock of
or other interest in Tenant, or any series of one or more of such events
occurring within an eighteen (18) consecutive month period, involving in the
aggregate a change of sixty-seven percent (67%) or more in the voting control of
all classes of ownership interests in Tenant then outstanding occurs, such
occurrence or series of occurrences shall be deemed to be an assignment
hereunder and, at the election of Landlord, shall be void unless Tenant has
obtained the prior written consent of Landlord, which consent shall not be
unreasonably withheld; provided, however, such occurrence or series of
occurrences shall not require Landlord's prior written consent if the transferee
of such voting control is an entity which controls, is controlled by or is under
common control with Tenant or Xenova group plc. When calculating the number of
shares or other ownership interests outstanding, shares or other ownership
interests issued to Landlord pursuant to Section 4.1 hereof shall be included,
but transfers of shares or other ownership interests so issued to Landlord or
issued to employees of either Tenant or Xenova group plc shall be excluded from
the calculation of shares or other ownership interests deemed to have been sold
or otherwise transferred. Notwithstanding the foregoing, (i) an initial-public
offering of the common stock of Tenant shall not be deemed to be an assignment
hereunder, and (ii) Tenant shall have the right to assign this Lease or sublet
the Premises, or any portion thereof, without Landlord's consent (but with prior
or concurrent written notice by Tenant to Landlord), to any parent, subsidiary
or other entity which controls, is controlled by or is under common control with
Tenant, or to any entity which results from a merger or consolidation with
Tenant, or to any entity which acquires all or substantially all of the stock or
assets of Tenant as a going concern (hereinafter each a "Permitted Transfer").
In addition, a sale or transfer of the capital stock of Tenant shall be deemed a
Permitted Transfer if (x) such sale or transfer occurs in connection with any
bona fide financing or capitalization for the benefit of Tenant, or (y) Tenant
becomes a publicly traded corporation. Except as expressly set forth in this
Section 13.1, however, the provisions of Section 13.2 shall remain applicable to
any Permitted Transfer and

- 22 -

the transferee under such Permitted Transfer shall be and remain subject to all
of the terms and provisions of this Lease.

13.2     Rights Of Landlord. Consent by Landlord to one or more
assignments of this Lease, or to one or more subletting of the Premises or any
portion thereof, or collection of rent by Landlord from any assignee or
sublessee, shall not operate to exhaust Landlord's rights under this Article 13,
nor constitute consent to any subsequent assignment or subletting. No assignment
of Tenant's interest in this Lease and no sublease shall relieve Tenant of its
obligations hereunder, notwithstanding any waiver or extension of time granted
by Landlord to any assignee or sublessee, or the failure of Landlord to assert
its rights against any assignee or sublessee, and regardless of whether
Landlord's consent thereto is given or required to be given hereunder. In the
event of a default by any assignee, sublessee or other successor of Tenant in
the performance of any of the terms or obligations of Tenant under this Lease,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against any such assignee, sublessee or other successor. In addition.
Tenant immediately and irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Premises as permitted under this Lease, and Landlord, as Tenant's assignee
and as attorney-in-fact for Tenant, or any receiver for Tenant appointed on
Landlord's application, may collect such rent and apply it toward Tenant's
obligations under this Lease, except that, until the occurrence of an act of
default by Tenant, Tenant shall have the right to collect such rent and to
retain all sublease profits.

14. RIGHT OF ENTRY AND QUIET ENJOYMENT

14.1     Right Of Entry. Landlord and its authorized representatives
shall have the right to enter the Premises at any time during the term of this
Lease during normal business hours and upon not less than forty-eight (48) hours
prior notice, except in the case of emergency (in which event no notice shall be
required and entry may be made at any time), for the purpose of inspecting and
determining the condition of the Premises or for any other proper purpose
including, without limitation, to make repairs, replacements or improvements
which Landlord may deem necessary, to show the Premises to prospective
purchasers, to show the Premises to prospective tenants (but only during the
final year of the term of this Lease), and to post notices of nonresponsibility.
Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of
business, quiet enjoyment or other damage or loss to Tenant by reason of making
any repairs or performing any work upon the Building or the Property or by
reason of erecting or maintaining any protective barricades in connection with
any such work, and the obligations of Tenant under this Lease shall not thereby
be affected in any manner whatsoever, provided. however. Landlord shall use
reasonable efforts to minimize the inconvenience to Tenant's normal business
operations caused thereby. If Landlord's entry to the Premises pursuant to this
Section 14.1 continues for more than forty-eight (48) hours and materially
impairs Tenant's ability to use the Premises for their intended purposes
hereunder, then, following such forty-eight (48) hour period. Tenant's rental
obligations under this Lease shall be abated in proportion to the degree of
impairment of Tenant's use of the Premises, and such abatement shall continue
until Tenant's use of the Premises is no longer materially impaired thereby.

14.2     Quiet Enjoyment Landlord covenants that Tenant upon paying the
rent and performing its obligations hereunder and subject to all the terms
and conditions of this Lease, shall peacefully and quietly have, hold and enjoy
the Premises throughout the term of this Lease, or until this Lease is
terminated as provided by this Lease.

15. CASUALTY AND TAKING

15.1     Termination Or Reconstruction. If during the term of this
Lease the Premises Of Building, or any substantial part of either, (i) is
damaged materially by fire or other casualty or by action of public or other
authority in consequence thereof, (ii) is taken by eminent domain or by reason
of any public improvement or condemnation proceeding, or in any manner by
exercise of the right of eminent domain (including any transfer in avoidance of
an exercise of the power of eminent domain), or (iii) receives irreparable
damage by reason of anything lawfully done under color of public or other
authority, this Lease shall terminate as to the entire Premises at Landlord's
election by written notice given to Tenant within sixty (60) days after the
damage or

- 23 -

taking has occurred. Notwithstanding anything in the preceding sentence to the
contrary, if the damage results from a casualty for which Landlord is obligated
to carry insurance under this Lease and the damage can reasonably be repaired
within one (1) year (or, in the case of a casualty during the last year of the
term of this Lease, within sixty (60) days) following the date of the casually,
then Landlord shall repair the damage, provided, however, the Landlord's repair
obligation shall not exceed the amount of insurance proceeds received by
Landlord from insurers by reason of such casualty, plus the amount of any
applicable deductible (provided that Landlord shall be obligated to use its best
efforts to recover any available proceeds from its then existing insurance),
and, if such proceeds are insufficient to repair the damage. Landlord may
terminate the Lease unless Tenant promptly elects and agrees, in writing, to
contribute the amount of the shortfall; provided further, however, if the
proceeds are insufficient because Landlord failed to maintain the insurance
required to be maintained by Landlord under this Lease, any shortfall shall be
contributed by Landlord; and provided further, however, if the casualty occurs
during the last year of the initial term or the first extended term (if
applicable), the 60-day limitation period on rebuilding shall be inapplicable if
Tenant properly exercises (or had previously properly exercised) its next option
to extend the term of this Lease. If Landlord does not elect to terminate this
Lease as hereinabove provided. Landlord shall promptly and diligently repair any
such damage and restore the Premises and the Building is nearly as reasonably
possible to the condition existing before the damage or taking; provided,
however, that Landlord shall have-no obligation to repair or restore any
improvements, alterations or additions originally installed or directly paid for
by Tenant under this Lease.

15.2     Tenant's Rights. If any portion of the Premises is so taken by
condemnation. Tenant may elect to terminate this Lease if the portion of the
Premises taken is of such extent and nature as substantially to handicap, impede
or permanently impair Tenant's use of the balance of the Premises. Tenant must
exercise its right to terminate by giving notice to Landlord within thirty (30)
days after the nature and extent of the taking have been finally determined. If
Tenant elects to terminate this Lease. Tenant shall also notify Landlord of the
date of termination, which date shall not be earlier than thirty (30) days nor
later than ninety (90) days after Tenant has notified Landlord of its election
to terminate, except that this Lease shall terminate on the date of taking if
the date of taking falls on any date before the date of termination designated
by Tenant.

15.3     Lease To Remain In Effect. If neither Landlord nor Tenant
terminates this Lease as hereinabove provided, this Lease shall continue in full
force and effect, except that minimum monthly rental and Tenant's Operating Cost
Share shall abate to the extent Tenant's use of the Premises is impaired for any
period that any portion of the Premises is unusable or inaccessible because of a
casualty or taking hereinabove described. Each party waives the provisions of
Code of Civil Procedure Section 1265.130, allowing either party to petition the
Superior Court to terminate this Lease in the event of a partial condemnation of
the Premises.

15.4     Reservation Of Compensation. Landlord reserves, and Tenant
waives and assigns to Landlord, all rights to any award or compensation for
damage to the Premises, the Building, the improvements, the Property and the
leasehold estate created hereby, accruing by reason of any taking in any public
improvement, condemnation or eminent domain proceeding or in any other manner by
exercise of the right of eminent domain or of anything lawfully done by public
authority, except that Tenant shall be entitled to any and all compensation or
damages paid for or on account of Tenant moving expenses, trade fixtures,
equipment and any leasehold improvements in the Premises installed by Tenant at
its own expense, but only to the extent of the then remaining unamortized value
of such improvement computed, on a straight-line basis over the term of this
Lease. Tenant covenants to driver such further assignments of the foregoing as
Landlord may from time to time request.

15.5     Restoration Of Fixtures. If Landlord repairs or causes repair
of the Premises after such damage or taking. Tenant at its sole expense shall
repair and replace promptly all fixtures, equipment and other property of Tenant
located at in or upon the Premises and all additions, alterations and
improvements and all other items installed or paid for by Tenant under this
Lease that were damaged or taken, so as to restore the same to a condition
substantially equal to that which existed immediately prior to the damage or
taking. Tenant shall have the right to make modifications to the Premises,
fixtures and improvements, subject to the prior written approval of Landlord. In
its review of Tenant's plans and specifications. Landlord may take into

- 24 -

consideration the effect of the proposed modifications on the exterior
appearance, the structural integrity and the mechanical and other operating
systems of the Building.

16. DEFAULT

16.1     Events Of Default. The occurrence of any of the following 
shall constitute an event of default on the part of Tenant:

(a)      [Omitted.]

(b)      Nonpayment. Failure to pay, when due, any amount
payable to Landlord hereunder, such failure continuing for a period of five (5)
days after written notice of such failure; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time
to time;

(c)      Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
subsection (b) hereof, such failure continuing for thirty (30) days after
written notice of such failure; provided, however, that if such failure is
curable in nature but cannot reasonably be cured within such 30-day period, then
Tenant shall not be in default if, and so long as, Tenant promptly (and in all
events within such 30-day period) commences such cure and thereafter diligently
pursues such cure to completion; and provided further, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 C seq., as amended from time to
time;

(d)      General Assignment. A general assignment by Tenant
for the benefit of creditors;

(e)      Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's
creditors, which involuntary petition remains undischarged for a period of
thirty (30) days. In the event that under applicable law the trustee in
bankruptcy or Tenant has the right to affirm this Lease and continue to perform
the obligations of Tenant hereunder, such trustee or Tenant shall in such time
period as may be permitted by the bankruptcy court having jurisdiction, cure all
defaults of Tenant hereunder outstanding as of the date of the affirmance of
this Lease and provide to Landlord such adequate assurances as may be necessary
to ensure Landlord of the continued performance of Tenant's obligations under
this Lease. Specifically, but without limiting the generality of the foregoing,
such adequate assurances must include assurances that the Premises continue to
be operated only for the use permitted hereunder. The provisions hereof are to
assure that the basic understandings between Landlord and Tenant with respect to
Tenant's use of the Premises and the benefits to Landlord therefrom are
preserved, consistent with the purpose and intent of applicable bankruptcy laws;

(f)      Receivership. The employment of a receiver appointed
by court order to take possession of substantially all of Tenant's assets or the
Premises, if such receivership remains undissolved for a period of thirty (30)
days;

(g)      Attachment. The attachment, execution or other
judicial seizure of all or substantially all of Tenant's assets or the Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of thirty (30) days after the levy thereof; or

(h)      Insolvency. The admission by Tenant in writing of its
inability to pay its debts as they become due, the filing by Tenant of a
petition seeking any reorganization or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, the filing by Tenant of in answer admitting or failing timely
to contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.

- 25 -

16.2     Remedies Upon Tenant's Default.

(a)      Upon the occurrence of any event of default described
in Section 16.1 hereof, Landlord, in addition to and without prejudice to any
other rights or remedies it may have, shall have the immediate right to re-enter
the Premises or any part thereof and repossess the same, expelling and removing
therefrom all persons and property (which property may be stored in a public
warehouse or elsewhere at the cost and risk of and for the account of Tenant),
using such force as may be necessary to do so (as to which Tenant hereby waives
any claim for loss or damage that may thereby occur). In addition to or in lieu
of such re-entry, and without prejudice to any other rights or remedies it may
have, Landlord shall have the right either (i) to terminate this Lease and
recover from Tenant all damages incurred by Landlord as a result of Tenant's
default, as hereinafter provided, or (ii) to continue this Lease in effect and
recover rent and other charges and amounts as they become due.

(b)      Even if Tenant has breached this Lease or abandoned
the Premises, this Lease shall continue in effect for so long as Landlord does
not terminate Tenant's right to possession under subsection (a) hereof and
Landlord may enforce all of its rights and remedies under this Lease, including
the right to recover rent as it becomes due, and Landlord, without terminating
this Lease, may exercise all of the rights and remedies of a lessor under
California Civil Code Section 1951.4 (lessor may continue lease in effect after
lessee's breach and abandonment and recover rent is it becomes due, if lessee
has right to sublet or assign, subject only to reasonable limitations), or any
successor Code section. Acts of maintenance, preservation or efforts to relet
the Premises or the appointment of a receiver upon application of Landlord to
protect Landlord's interests under this Lease shall not constitute a termination
of Tenant's right to possession.

(c)      If Landlord terminates this Lease pursuant to this
Section 16.2, Landlord shall have all of the rights and remedies of a landlord
provided by Section 1951.2 of the Civil Code of the State of California, or any
successor Code section, which remedies include Landlord's right to recover from
Tenant (i) the worth at the time of award of the unpaid rent and additional rent
which had been earned at the time of termination, (ii) the worth at the time of
award of the amount by which the unpaid rent and additional rent which would
have been earned after termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided, (iii)
the worth at the time of award of the amount by which the unpaid rent and
additional rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided, and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, the cost of recovering possession of
the Premises, expenses of reletting, including necessary repair, renovation and
alteration of the Premises, reasonable attorneys' fees, and other reasonable
costs. The "worth at the time of award" of the amounts referred to in clauses
(i) and (ii) above shall be computed by allowing interest at ten percent (10%)
per annum from the date such amounts accrued to Landlord. The "worth at the time
of award" of the amounts referred to in clause (iii) above shall be computed by
discounting such amount at one percentage point above the discount rate of the
Federal Reserve Bank of San Francisco at the time of award.

16.3     Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord contained in this Article 16 are cumulative and not
alternative to the extent permitted by law and except as otherwise provided
herein.

17. SUBORDINATION, ATTORNMENT AND SALE

17.1     Subordination To Mortgage. This Lease, and any sublease
entered into by Tenant under the provisions of this Lease, shall be subject and
subordinate to any ground lease, mortgage, deed of trust, sale/leaseback
transaction or any other hypothecation for security now or hereafter placed upon
the Building, the Property, or both, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, that (i) such subordination in the case
of any future ground lease, mortgage, deed of trust,

- 26 -

sale/leaseback transaction or any other hypothecation for security placed upon
the Building, the Property, or both shall be conditioned on Tenant's receipt
from the ground lessor, mortgagee, trustee, beneficiary or, leaseback lessor of
a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming
that so long is Tenant is not in default hereunder, Tenant's rights hereunder
shall not be disturbed by such person or entity, and (ii) with respect to the
existing deed of trust on the Property, Landlord shall deliver to Tenant within
sixty (60) days after the mutual execution of this Lease a Non-Disturbance
Agreement from the beneficiary under such existing deed of trust, SDK
Incorporated, in a form reasonably acceptable to Tenant confirming that so long
as Tenant is not in default hereunder, Tenant's rights hereunder shall not be
disturbed by SDK Incorporated. If any mortgagee, trustee, beneficiary, ground
lessor., sale/leaseback lessor or assignee elects to have this Lease be an
encumbrance upon the Property prior to the lien of its mortgage, deed of trust,
ground lease of leaseback lease or other security arrangement and gives notice
thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease
is dated prior or subsequent to the date thereof or the date of recording
thereof. Tenant, and any sublessee, shall execute such documents as may
reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor,
sale/Leaseback lessor or assignee to evidence the subordination herein set
forth, subject to the conditions set forth above, or to make this Lease prior to
the lien of any mortgage, deed of trust, ground lease, leaseback lease or other
security arrangement, as the case may be. Upon any default by Landlord in the
performance of its obligations under any mortgage, deed of trust, ground lease,
leaseback lease or assignment, Tenant (and any sublessee) shall, notwithstanding
any subordination hereunder, attorn to the mortgagee, trustee, beneficiary,
ground lessor, leaseback lessor or assignee thereunder upon demand and become
the tenant of the successor in interest to Landlord, at the option of such
successor in interest, and shall execute and deliver any instrument or
instruments confirming the attornment herein provided for.

17.2     Sale Of Landlord's Interest. Upon sale, transfer or assignment
of Landlord's entire interest in the Building and Property. Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment. Nothing contained in
this Section 17.2 shall be deemed, however, to relieve Landlord of liability for
any liability arising prior to such sale, transfer or assignment.

17.3     Estoppel Certificates. Each of Tenant and Landlord (as
applicable, the "certifying party") shall at any time and from time to time,
within ten (10) days after written request by the other (the "requesting
party"), execute, acknowledge and deliver to the requesting party a certificate
in writing stating: (i) that this Lease is unmodified and to full force and
effect, or if there have been any modifications, that this Lease is in full
force and effect as modified and stating the date and the nature of each
modification; (ii) the date to which rental and all other sums payable hereunder
have been paid; (iii) that the requesting party is not in default in the
performance of any of its obligations under this Lease, that the certifying
party has given no notice of default to the requesting party and that no event
has occurred which, but for the expiration of the applicable time period, would
constitute an event of default hereunder, or if the certifying party alleges
that any such default, notice or event has occurred, specifying the same in
reasonable detail; and (iv) such other matters as may reasonably be requested by
the requesting party or any institutional lender, mortgagee, trustee;
beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of
the Property. Any such certificate provided under this Section 17.3 may be
relied upon by any lender, mortgagee, trustee, beneficiary, assignee or
successor in interest to the requesting party, by any prospective purchaser, by
any purchaser on foreclosure or sale, by any grantee under a deed in lieu of
foreclosure of any mortgage or deed of trust on the Property or Building, or by
any other third party.

17.4     Subordination to CC&R's. This Lease, any permitted sublease
entered into by Tenant under the provisions of this Lease, and the interests in
real property conveyed hereby and thereby shall be subject and subordinate (a)
to any declarations of covenants, conditions and restrictions affecting the
Property from time to time, provided that the terms of such declarations are
reasonable and do not discriminate against Tenant relative to other similarly
situated tenants occupying portions of the Property, (b) to the Declaration of
Covenants, Conditions and Restrictions for Pointe Grand Business Park dated
November 4, 1991 and recorded on February 25, 1992 as Instrument No. 92025214.
Official Records of San Mateo County, as amended from time to time (the "Master
Declaration"), the provisions of which Master Declaration are an integral part
of this Lease, (c) to the Declaration of Covenants, Conditions and Restrictions
dated November 23, 1987 and recorded on November 24, 1987 as Instrument

- 27 -

No. 87177987, Official Records of San Mateo County, which declaration imposes
certain covenants, conditions and restrictions on the Property, and (d) to the
Environmental Restriction and Covenant dated April 16, 1997 and recorded on
April 16, 1997 as Instrument No. 97-043682. Official Records of San Mateo
County, which declaration imposes certain covenants, conditions and restrictions
on the Property. Tenant agrees to execute, upon request by Landlord, any
documents reasonably required from time to time to evidence such subordination.

17.5     Mortgagee Protection.

(a)      If, in connection with any future ground lease,
mortgage, deed of trust, sale/leaseback transaction or any other hypothecation
for security placed upon the Building, the Property, or both, the ground lessor,
mortgagee, trustee, beneficiary or leaseback lessor requests any changes in this
Lease as a condition to its willingness to enter into or accept the ground
lease, mortgage, deed of trust, sale/leaseback transaction or other
hypothecation for security, then Tenant shall not unreasonably withhold its
consent to any such requested changes and shall execute, at the request of
Landlord, an amendment to this Lease incorporating the changes thus reasonably
consented to by Tenant. Tenant's obligations under this Section 17.5(a) shall be
conditioned on Tenant's concurrent receipt, from the ground lessor, mortgagee,
trustee, beneficiary or leaseback lessor, of a Non-Disturbance Agreement in a
form reasonably acceptable to Tenant confirming that so long as Tenant is not in
default hereunder, Tenant's rights hereunder shall not be disturbed by such
person or entity.

(b)      If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Property, the Property  is acquired by the mortgagee,
beneficiary, master lessor or other secured party, or by any other successor
owner, pursuant to a foreclosure, trustee's sale, sheriff's sale, lease
termination or other similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Property shall not be:

(i)      liable for any act or omission of a prior
landlord or owner of the Property (including, but not limited to, Landlord);

(ii)     subject to any offsets or defenses that
Tenant may have against any prior landlord or owner of the Property (including,
but not limited to, Landlord);

(iii)    bound by any rent or additional rent that
Tenant may have paid in advance to any prior landlord or owner of the Property
(including, but not limited to, Landlord) for a period in excess of one month,
or by any security deposit, cleaning deposit or other prepaid charge that
Tenant may have paid in advance to any prior landlord or owner (including, but
not limited to, Landlord);

(iv)     liable for any warranties or representations
of any nature whatsoever, whether pursuant to this Lease or otherwise, by any
prior landlord or owner of the Property (including, but not limited to,
Landlord) with respect to the use, construction, zoning, compliance with laws,
title, habitability, fitness for purpose or possession, or physical condition
(including, without limitation, environmental matters) of the Property or
Improvements; or

(v)      liable to Tenant in any amount beyond the
interest of such mortgagee, beneficiary, master lessor or other secured party or
successor owner in the Property as it exists from time to time, it being the
intent of this provision that Tenant shall look sololy to the interest of any
such mortgagee, beneficiary, master lessor or other secured party or successor
owner in the Property for the payment and discharge of the landlord's
obligations under this Lease and that such mortgagee, beneficiary, master lessor
or other secured party or successor owner shall have no separate personal
liability for any such obligations.

18. SECURITY

18.1     Deposit. Concurrently with Tenant's execution of this Lease.
Tenant shall deposit with Landlord the sum of Fifty-Eight Thousand Forty-Five
and No/100 Dollars ($58,045,00), which sum (the "Security Deposit") shall be
held by Landlord as security for the faithful performance of all of the terms,
covenants, and conditions of this Lease to be kept and performed

- 28 -

by Tenant during the term hereof. The amount of said Security Deposit
represents one month's rent, as of the Commencement Date, at a rate of $2.47 per
square foot per month for an assumed size of 23,500 square feet for the
Premises, as reflected in Section 3.1(a) hereof; if the size of the Premises is
increased by Tenant's exercise of its expansion option under Section l.l(c)
hereof, then concurrently with such exercise Tenant shall increase the amount of
the Security Deposit to an amount equal to $2.47 per square foot times the
increased size of the Premises as determined under Section 3.1(b) hereof. If
Tenant defaults with respect to any provision of this Lease, including, without
limitation, the provisions relating to the payment of rental and other sums due
hereunder. Landlord shall have the right, but shall not be required, to use.
apply or retain all or any part of the Security Deposit for the payment of
rental or any other amount which Landlord may spend or become obligated to spend
by reason of Tenant's default or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant's default. If any portion
of the Security Deposit is so used or applied, Tenant shall, within ten (10)
days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the full amount required hereunder
and Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep any deposit under this Section separate from
Landlord's general funds, and Tenant shall not be entitled to interest thereon.
If Tenant fully and faithfully performs every provision of this Lease to be
performed by it, the Security Deposit, or any balance thereof, shall be returned
to Tenant or, at Landlord's option, to the last assignee of Tenant's interest
hereunder, at the expiration of the term of this Lease and after Tenant has
vacated the Premises. In the event of termination of Landlord's interest in this
Lease. Landlord shall transfer all deposits then held by Landlord under this
Section to Landlord's successor in interest, whereupon Tenant agrees to release
Landlord from all liability for the return of such deposit or the accounting
thereof.

19. MISCELLANEOUS

19.1     Notices. All notices, consents, waivers and other
communications which this Lease requires or permits either party to give to the
other shall be in writing and shall be deemed given when delivered personally
(including delivery by private courier or express delivery service), when
successfully transmitted by facsimile (as evidenced by a facsimile transmission
confirmation) or four (4) days after deposit in the United States mail,
registered or certified mail, postage prepaid, addressed to the parties at their
respective addresses as follows:

To Tenant:       (until Commencement Date)
MetaXen, LLC
3181 Porter Drive
Palo Alto, CA 94304
Attn: Michael J. Ross
Facsimile: (415)858-4931

(after Commencement Date)
MetaXen, LLC
____East Grand Avenue [to be determined]
South San Fracisco, CA 94080
Attn: Michael J. Ross
Facsimile: (415)_______

with copy to:    Laurance M. May. Esq.
Carr, McClellan, Ingersoll, Thompson & Horn
216 Park Road
Burlingame, CA 94010
Facsimile: (415)342-7685

To Landlord:     Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 412
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
Facsimile: (510)834-7133

- 29 -

with copy to:      Folger Levin & Kahn LLP
Embarcadero Center West
275 Battery Street, 23rd Floor
San Francisco. CA 94111
Attn: Donald E. Kelley. Jr.
Facsimile: (415) 986-2827

or to such other address as may be contained in a notice at least fifteen (15)
days prior to the address change from either party to the other given pursuant
to this Section. Rental payments and other sums required by this Lease to be
paid by Tenant shall be delivered to Landlord at Landlord's address provided in
this Section, or to such other address as Landlord may from time to time specify
in writing to Tenant, and shall be deemed to be paid only upon actual receipt.

19.2 Successors And Assigns. The obligations of this Lease shall run
with the land and this Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership
of the Property, said liability terminating upon termination of such ownership
and passing to the successor lessor.

19.3 No Waiver. The failure of Landlord to seek redress for violation,
or to insist upon the strict performance, of any covenant or condition of this
Lease shall not be deemed a waiver of such violation, or prevent a subsequent
act which would originally have constituted a violation from having all the
force and effect of an original violation.

19.4 Severability. If any provision of this Lease or the application
thereof is held to be invalid or unenforceable, the remainder of this Lease or
the application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable shall not be affected thereby, and
each of the provisions of this Lease shall be valid and enforceable, unless
enforcement of this Lease as so invalidated would be unreasonable or grossly
inequitable under all the circumstances or would materially frustrate the
purposes of this Lease. 

19.5 Litigation Between Parties. In the event of any litigation or 
other dispute resolution proceedings between the parties hereto arising out of
or in connection with this Lease, the prevailing party shall be reimbursed for
all reasonable costs, including, but not limited to, reasonable accountants'
fees and attorneys' fees, incurred in connection with such proceedings
(including, but not limited to, any appellate proceedings relating thereto) or
in connection with the enforcement of any judgment or award rendered in such
proceedings. "Prevailing party" within the meaning of this Section shall
include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the relief
sought in the action.

19.6 Surrender. A voluntary or other surrender of this Lease by Tenant,
or a mutual termination thereof between Landlord and Tenant, shall not result in
a merger but shall, at the option of Landlord, operate either as an assignment
to Landlord of any and all existing subleases and subtenancies, or a termination
of all or any existing subleases and subtenancies. This provision shall be
contained in any and all assignments or subleases made pursuant to this Lease.

19.7 Interpretation. The provisions of this Lease shall be construed as
a whole, according to their common meaning, and not strictly for or against
Landlord or Tenant. The captions preceding the text of each Section and
subsection hereof are included only for convenience of reference and shall be
disregarded in the construction or interpretation of this Lease.

19.8 Entire Agreement. This written Lease, together with the exhibits
hereto, contains all the representations and the entire understanding between
the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Lease and
the exhibits hereto. This Lease may be modified only by an agreement in writing
signed by each of the parties.

- 30 -

19.9 Governing Law. This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.

19.10 No Partnership. The relationship between Landlord and Tenant is
solely that of a lessor and lessee. Nothing contained in this Lease shall be
construed as creating any type Of manner of partnership, joint venture or joint
enterprise with or between Landlord and Tenant.

19.11 Financial Information. From time to time Tenant shall promptly
provide directly to prospective lenders and purchasers of the Property
designated by Landlord such financial information pertaining to the financial
status of Tenant is Landlord may reasonably request; provided. Tenant shall be
permitted to provide such financial information in a manner which Tenant deems
reasonably necessary to protect the confidentiality of such information. In
addition, from time to time. Tenant shall provide Landlord with such financial
information pertaining to the financial status of Tenant as Landlord may
reasonably request. Landlord agrees that all financial information supplied to
Landlord by Tenant shall be treated as confidential material, and shall not be
disseminated to any party or entity (including any entity affiliated with
Landlord without Tenant's prior written consent, except that Landlord shall be
entitled to provide such information, subject to reasonable precautions to
protect the confidential nature thereof, (i) to Landlord's partners and
professional advisors, solely to use in connection with Landlord's execution and
enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of
the Property, solely for use in connection with their bona fide consideration
of a proposed financing or purchase of the Property, provided that such
prospective lenders and/or purchasers are not engaged in businesses directly
competitive with the business then being conducted by Tenant. For purposes of
this Section, without limiting the generality of the obligations provided
herein, it shall be deemed reasonable for Landlord to request copies of Tenant's
most recent audited annual financial statements, or, if audited statements have
not been prepared, unaudited financial statements for Tenant's most recent
fiscal year, accompanied by a certificate of Tenant's chief financial officer
that such financial statements fairly present Tenant's financial condition as of
the date(s) indicated. 

Landlord and Tenant recognize the need of Tenant to maintain the
confidentiality of information regarding its financial status and the need of
Landlord to be informed of, and to provide to its partners and to prospective
lenders and purchasers of the Property financial information pertaining to.
Tenant's financial status. Landlord and Tenant agree to cooperate with each
other in achieving these needs within the context of the obligations set forth
in this Section.

19.12 [Omitted.]

19.13 Time. Time is of the essence of this Lease, and of every term and
condition hereof.

19.14 Rules And Regulations. Tenant shall observe, comply with and
obey, and shall cause its employees, agents and, to the best of Tenant's
ability, invitees to observe, comply with and obey such rules and regulations as
Landlord may promulgate from time to time for the safety, care, cleanliness,
order and use of the Premises, the Building and the Property, provided that such
rules and regulations are not discriminatory against Tenant.

19.15 Brokers. Landlord agrees to pay a brokerage commission to
Catalyst Real Estate Group and to Cornish & Carey Commercial in connection
with the consummation of this Lease in accordance with a separate agreement.
Tenant represents and warrants that no other broker participated in the
consummation of this Lease and agrees to indemnify, defend and hold Landlord
harmless against any liability, cost or expense, including, without limitation,
reasonable attorneys' fees, arising out of any claims for brokerage commissions
or other similar compensation in connection with any conversations, prior
negotiations or other dealings by Tenant with any other broker.

19.16 Memorandum Of Lease. At any time during the term of this Lease,
either party, at its sole expense, shall be entitled to record a memorandum of
this Lease and, if either party so elects, both parties agree to cooperate in
the preparation, execution, acknowledgement and recordation of such document in
reasonable form.

- 31 -

19.17 Authority. The person signing this Lease on behalf of Tenant
warrants that he or she is fully authorized to do so and, by so doing, to bind
Tenant, As evidence of such authority. Tenant shall deliver to Landlord, upon or
prior to execution of this Lease, a certified copy of a resolution of Tenant's
board of directors or other governing body authorizing the execution of this
Lease and naming the officer that is authorized to execute this Lease on behalf
of Tenant. The person signing this Lease on behalf of Landlord warrants that he
or she is fully authorized to do so and, by so doing, to bind Landlord.

19.18 Execution and Delivery. This Lease may be executed in one or more
counterparts and by separate parties on separate counterparts, but each such
counterpart shall constitute an original and all such counterparts together
shall constitute one and the same instrument.

19.19 Survival. Without limiting survival provisions which would
otherwise be implied or construed under applicable law, the provisions of
Sections 2.6, 5.2, 5.3, 7.4, 9.2, 9.3, 9.4, 11.6, 12.6, 16.2, 19.5 and 19.11
hereof shall survive the termination of this Lease with respect to matters
occurring prior to the expiration of this Lease.

IN WITNESS WHEREOF, the parties hereto have executed this
Lease as of the day and year first set forth above.

"Landlord"                               "Tenant"

BRITANNIA POINTE GRAND LIMITED           METAXEN, LLC. a Delaware limited
PARTNERSHIP, a Delaware limited          liability company
partnership

By:   BRITANNIA POINTE GRAND,             By:    /s/ Michael J. Ross
LLC. a California limited              -----------------------------------
liability company. General              Michael J. Ross
Partner                                 President & CEO

By: /s/ T. J. Bristow
-----------------------------
T. J. Bristow
President & Manager

- 32 -

EXHIBITS

EXHIBIT A       Real Property Description (Center)

EXHIBIT B       Location of Premises (Site Plan)

EXHIBIT C       Construction

EXHIBIT D       Estimated Construction Schedule

EXHIBIT E       Acknowledgment of Lease Commencement

EXHIBIT A

REAL PROPERTY DESCRIPTION(CENTER)

AN that certain real property in the City of South San Francisco, County of San
Mateo, State of California, more particularly described as follows:

Lots 1, 2, 3 and 4, inclusive, is shown on Parcel Map No. 91-284, "Being a
resubdivision of the parcels described in the deeds to Metal and Thermit
Corporation, recorded in Book 293, at Page 394 of Deeds; in Book 49, at Page
490, Official Records; in Book 77, at Page 415, Official Records; and, except
that parcel described in Book 1352, at Page 373, Official Records," filed on
February 25, 1992, in Book 65 of Parcel Maps, in the Office of the Recorder of
the County of San Mateo, California.

EXHIBIT B

LOCATION OF PREMISES(SITE PLAN)

[MAP]

EXHIBIT B

CONSTRUCTION

Landlord, at its sole cost and expense (except as otherwise expressly
provided in this Lease or as may otherwise be expressly agreed in writing
between Landlord and Tenant at any time hereafter), shall undertake and
diligently complete, subject to delays for causes beyond its reasonable control.
construction of (a) a Building Shell as described in Schedule 1 attached hereto.
(b) common area improvements (parking, landscaping, lighting, etc.) in the areas
of the Property adjacent to the Building, and (c) Tenant Improvements to the
Premises in accordance with the Approved Plans and Specifications (as defined
below and as modified from time to time in accordance with this Exhibit C). Such
work shall be performed in a neat and workmanlike manner and shall conform to
all applicable governmental codes, laws and regulations in force at the time
such work is completed. Landlord and Tenant shall both use their best endeavors
to develop, review and approve all space plans, working drawings, final
drawings, specifications, changes (if applicable) and other matters promptly,
diligently and within time periods set forth in Exhibit D attached to the Lease
(as the same may be updated or amended from time to time by mutual agreement of
Landlord and Tenant) or within such other time periods as may be reasonably
requested by the other party or by the architects, contractors and other
professionals engaged in the design and construction of the work.

The Building Shell shall be a professionally engineered building shell
incorporating the elements described in Schedule I attached hereto. As of the
date of execution of this Lease, Landlord and Tenant have reviewed and are
mutually satisfied with a proposed footprint and column spacing for the Building
Shell. Landlord shall cause its architect, Chamorro Design Group ("Architect").
to prepare detailed plans, specifications and working drawings for the Building
Shell and to make such plans, specifications and working drawings available for
review by Tenant and its advisors. Landlord agrees to consult with Tenant and to
give reasonable consideration to Tenant's views regarding functional
characteristics of the Building Shell, but the final approval of the plans,
specifications and working drawings for the Building Shell (including any
changes from the preliminary drawings reviewed by Landlord and Tenant) shall
rest solely with Landlord in its sole discretion.

The Building Shell shall be designed and constructed at Landlord's sole
cost and expense, except that a prorata share (based on the ratio between the
square footage of the Premises and the total square footage of the Building) of
the roof screens, elevator pit, 2,000 amp service and service yard, and any
shell upgrades required to accommodate Tenant's special use needs and/or special
design requirements for the Tenant Improvements shall be charged against the
Tenant Improvement Allowance for the Tenant Improvements.

Landlord has agreed to make available for laboratory improvements and
other tenant improvements over and above the Building Shell (the "Tenant
Improvements") a tenant improvement allowance of One Hundred Dollars ($100.00)
per square foot (the "Tenant Improvement Allowance"). Landlord's total direct
costs of design and construction of the Tenant Improvements (including, but not
limited to, payments to contractors or subcontractors for labor and materials,
permit fees and charges, sales and use taxes, testing and inspection costs,
architects', engineers' and other consulting and professional fees, costs of
power, water and other utilities and of collection and removal of debris, and
all other related costs incurred in connection with the design and construction
of the work, but excluding any project or construction management fees,
supervision, profit, overhead or general conditions by Landlord in connection
with the construction of the tenant improvements) shall be chargeable against
the Tenant Improvement Allowance. Any such costs in excess of the Tenant
Improvement Allowance shall be payable solely by Tenant, within thirty (30) days
after written request by Landlord accompanied by evidence reasonably
satisfactory to Tenant of the nature and amount of the expense or work for which
such payment is requested.

Fifty percent (50%) of the cost of the demising wall(s) between the
Premises and the remainder of the Building shall be part of the Tenant
Improvements and chargeable against the Tenant Improvement Allowance.

The general contractor for the Building Shell shall be Concrete Shell
Structures. Inc., or any other licensed and qualified general contractor
selected by Landlord in its sole discretion.

EXHIBIT C (Page 1 of 3)

The architect for the Building Shell shall be Architect, or any other licensed
and qualified architect selected by Landlord in its sole discretion.

The general contractor for the Tenant Improvements shall be Concrete
Shell Structures, Inc., or any other licensed and qualified general contractor
selected by mutual agreement of Landlord and Tenant, which agreement shall not
be unreasonably withheld by either party. Landlord shall contract with such
general contractor for construction of the Tenant Improvements. The architect
for the Tenant Improvements (the "TI Architect") shall be selected by mutual
agreement of Landlord and Tenant, which agreement shall not be unreasonably
withheld by either party, and Tenant shall contract with the TI Architect for
its services relating to the design and construction of the Tenant Improvements.
The costs and fees of the TI Architect shall be chargeable against the Tenant
Improvement Allowance and shall be payable by Landlord, either directly to the
TI Architect or to Tenant (in reimbursement of amounts paid by Tenant to the TI
Architect), as Tenant may direct from tune to time, within thirty (30) days
after Landlord's receipt of a request for payment accompanied by reasonable
supporting documentation relating to the services and amounts for which payment
is requested.

Landlord and Tenant shall engage only union contractors for
construction of the Improvements and, in the case of Tenant, for the
construction and installation of Tenant's furnishings, fixture and equipment in
the Premises, and shall require all such contractors, and all of their
subcontractors, to use only union labor on or in connection with such work.

Tenant shall cause the TI Architect to prepare a space plan and initial
plans and specifications for the Tenant Improvements, in consultation with
Landlord and Architect, which plans and specifications shall be mutually
approved (such approval not to be unreasonably withheld or delayed) by Landlord
and Tenant (the "Approved Plans and Specifications"). Tenant shall then cause
the TI Architect to produce detailed working drawings, based on the Approved
Plans and Specifications, for submission to the City of South San Francisco for
building permit approval. Any material changes from the Approved Plans and
Specifications shall be subject to mutual approval (not unreasonably withheld or
delayed) by Landlord and Tenant, provided, however, that any changes required
from time to time in the Approved Plans and Specifications, working drawings
and/or final plans and specifications as a result of applicable law or
governmental requirements, or at the insistence of any other third party whose
approval may be required with respect to such improvements, or as a result of
unanticipated conditions encountered in the course of construction, may be
implemented by Landlord after prior notice to Tenant, but shall not require
Tenant's approval or consent.

All material subcontracts for the Tenant Improvements shall be
competitively bid. Tenant shall have the right to submit names of specific
subcontractors from which it would like bids to be invited in particular areas
or trades, but such subcontractors shall be subject to approval (prior to
requests for bids) by Landlord and the general contractor, such approval not to
be unreasonably withheld, and Landlord shall in all events have the right to
solicit bids from additional subcontractors. Tenant shall also have a right to
approve or disapprove all subcontractors involved in any aspect of construction
of the Tenant Improvements, which approval shall not be unreasonably withheld or
delayed. Tenant shall at all times have access to the details of all bids and
estimates, and to all other construction cost information, for both the Tenant
Improvements and the Building Shell (provided, however, that Tenant shall have
no right to approve or disapprove bids or cost information relating to the 
Building Shell, nor shall the cost of construction of the Building Shell,
whether greater or less than budgets or estimates, have any effect on the rent
or other economic terms under the Lease); the cost aspects of all subcontractor
bids for the Tenant Improvements shall be jointly reviewed by Landlord and
Tenant. Cost aspects of any changes requested by Tenant from time to time in the
Approved Plans and Specifications, working drawings and/or final plans and
specifications shall be subject to mutual approval by Landlord and Tenant; cost
aspects of any changes required from time to time in the Approved Plans and
Specifications, working drawings and/or final plans and specifications as a
result of applicable law or governmental requirements, or at the insistence of
any other third party whose approval may be required with respect to such
improvements, or as a result of unanticipated conditions encountered in the
course of construction, shall not require Tenant's approval or consent, but
Tenant shall at all times have access to the details of the cost aspects of such
changes (including estimates and actual expenses) for information purposes.

EXHIBIT C (Page 2 of 3)

At any time up to thirty (30) days after the Commencement Date, Tenant
shall be entitled to submit one or more lists to Landlord specifying any
corrections of construction or decoration details, mechanical adjustments and
other corrections that are required in order to cause the Improvements as
constructed to conform to the Approved Plans in all material respects. Upon
receipt of such list(s). Landlord shall promptly and diligently complete the
corrective work described therein at Landlord's sole cost
and expense.

In or about the forty-eighth (48th) month of the initial term of the
Lease, Landlord shall make available to Tenant an additional improvement
allowance of $75,000.00, which allowance shall be used by Tenant only for design
and construction costs, of modifications and improvements in the Premises as
Tenant may deem necessary or appropriate. Tenant shall construct any such
modifications and improvements in accordance with the provisions of Article 9 of
the Lease, and shall be entitled to be reimbursed by Landlord for the direct
costs thereof up to a maximum aggregate reimbursement of $75,000.00. Such
reimbursement shall, at Tenant's direction, be payable either directly to the
person or entity providing services or materials in connection with the
improvements or to Tenant (in which event Tenant shall be responsible for making
full payment to the person or entity providing services or materials), shall be
conditional upon Landlord's receipt of reasonable supporting documentation
relating to the services or materials provided and the amounts claimed therefor,
and, subject to the foregoing conditions, shall be paid by Landlord within
thirty (30) days after receipt of the appropriate supporting information from
Tenant.

EXHIBIT C (Page 3 of 3)

Schedule I to Acknowledgment of Lease Commencement

Revised rent schedule under Section 3.1(a) of Lease (based on _______square
feet in Premises):

Months               Monthly Minimum Rental
------               ----------------------

1 -  12      $   --    ($2.47 per square foot)
13 -  24          --    ($2.53 per square foot)
15 -  36          --    ($2.59 per square foot)
37 -  48          --    ($2.65 per square foot)
49 -  60          --    ($2.71 per square foot)
61 -  72          --    ($2.78 per square foot)
73 -  84          --    ($2.85 per square foot)
85 -  96          --    ($2.55 per square foot)
97 - 108          --    ($2.63 per square foot)
109 - 120          --    ($2.70 per square foot)
121 - 132          --    ($2.42 per square foot)
133 - 144          --    ($2.50 per square foot)
145 - 156          --    ($2.59 per square foot)
157 - 168          --    ($2.68 per square foot)
169 - 180          --    ($2.45 per square foot)

[STAMP]

EXHIBIT E

ACKNOWLEDGEMENT OF LEASE COMMENCEMENT

This Acknowledgment is executed as of December 1, 1998, by BRITANNIA
POINTE GRAND LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord"),
and METAXEN, LLC, a Delaware limited liability company ("Tenant"), pursuant to
Section 2.4 of the Build-to Suit Lease dated May 27, 1997 between Landlord and
Tenant (the "Lease") and as amended by the First Amendment to Lease dated April
13, 1998, covering premises located at 280 East Grand Avenue. South San
Francisco, CA 94080 (the "Premises").

Landlord and Tenant hereby acknowledge and agree as follows:

1.       The Commencement Date under the Lease is September 1, 1998.

2.       The termination date under the Lease shall be August 31,2013
subject to any applicable provisions of the Lease for
extension or early termination thereof.

3.       Based on the final cost of the Improvements and on any change
orders, delays and other factors reflected in that cost, the
amount due from Tenant to Landlord pursuant to the terms of
the Lease and Exhibit C attached thereto is to be determined
upon final receipt of Contractor invoices.

4.       The square footage of the Premises and of the Building,
measured in accordance with Section 3.1(b) of the Lease, is
50.195 square feet. Based on this square footage for the
Premises, the rent schedule Under Section 3 of the First Lease
Amendment is revised to read as set forth on Schedule 1
attached hereto.

5.       Tenant accepts the Premises and acknowledges the satisfactory
completion of all Improvements therein required to be made by
Landlord, subject only to any applicable "punch list" or
similar procedures specifically provided under the Lease or
Under Exhibit C attached thereto.

EXECUTED as of the date first act forth above.

"Landlord"                               "Tenant"

BRITANNIA POINTE GRAND LIMITED           METAXEN, LLC, a Delaware limited
PARTNERSHIP, a Delaware limited          liability company
partnership

By:   BRITANNIA POINTE GRAND,             By:    /s/ Michael J. Ross
LLC, a California limited              -----------------------------------
liability company, General              Michael J. Ross
Partner                                 President & CEO

By: /s/ T. J. Bristow
-----------------------------
T. J. Bristow
President & Manager

Schedule 1 to Acknowledgement of Lease Commencement Revised 
rent schedule under Section 3.1(a) of Lease (based on 50,195 square feet in 
Premises):

Months               Monthly Minimum Rental
------               ----------------------

1 -  12      141,113.00      ($2.81 per square foot)
13 -  24      144,124.00      ($2.87 per square foot)
15 -  36      147,136.00      ($2.93 per square foot)
37 -  48      150,148.00      ($2.99 per square foot)
49 -  60      153,159.00      ($3.05 per square foot)
61 -  72      139,542.00      ($2.78 per square foot)
73 -  84      143,056.00      ($2.85 per square foot)
85 -  96      127,997.00      ($2.55 per square foot)
97 - 108      132,013.00      ($2.63 per square foot)
109 - 120      135.527.00      ($2.70 per square foot)
121 - 132      121,472.00      ($2.42 per square foot)
133 - 144      125,488.00      ($2.50 per square foot)
145 - 156      130.005.00      ($2.59 per square foot)
157 - 168      134,523.00      ($2.68 per square foot)
169 - 180      122,978.00      ($2.45 per square foot)

Exhibit 10.6

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE ("Amendment"), dated (for reference
purposes) as of April 13, 1998, is entered into by BRITANNIA POINTE GRAND
LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and METAXEN,
LLC, a Delaware limited liability company ("Tenant"), with reference to the
following facts:

A.       Landlord and Tenant are parties to a Build-in-Suit Lease dated

May 27, 1997 (the "lease"), covering certain premises consisting of
approximately 27,680 square feet of space (the "Premises") in Building H (the
"Building") presently under construction in the Britannia Pointe Grand Business
Park, South San Francisco, California (the "Center").

B.       Tenant wishes to exercise its option under Section 1.1(c) of
the Lease to expand the Premises to include the entire Building (approximately
50,195 square feet) and, in connection therewith, wish to amend certain
provisions of the Lease to reflect such expansion of the Premises.

C.       Terms used herein as defined terms but not specifically
defined herein shall have the meanings assigned to such terms in the Lease.

NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:

1.       Expansion of Premises. The Premises are hereby expanded to
include the entire Building of approximately 50,195 square feet, and Exhibit B
to the Lease is hereby deemed to be amended to show the Premises as consisting
of the entire Building, for purposes of this Amendment, the area added to the
Premises by this Amendment is hereinafter referred to as the "Option Space." As
part of the design process for the original Premises under the Lease, Landlord
and Tenant have already agreed upon a space plan and detailed plans and
specifications for improvements in the Option Space. As contemplated in Section
1.1(c) of the Lease, (a) Landlord shall proceed diligently to construct
improvements to the Option Space in accordance with such plans and
specifications, at Landlord's sole cost and expense (subject to the provisions
of Section 3.1(c) of the Lease), (b) rent and other charges shall commence with
respect to the Option Space upon the later to occur of (i)substantial completion
of the improvements in the Option Space or (ii) the date on which rent and other
charges commence with respect to the original Premises under the Lease, (c) as
hereinafter set forth, rent payable under the Lease and Tenant's Operating Cost
Share shall be adjusted to reflect the addition of the Option Space to the
Premises, using the same rates and formulas per square foot as are applicable to
the original Premises under the Lease, and (d) Tenant shall occupy the Option
Space during the term of the Lease upon and subject to all of the terms and
provisions of the Lease, to the same extent and in the same manner is such terms
and provisions are applicable to the original Premises under the Lease.

2.       Minimum Rental. The table of monthly minimum rental contained
in Section 3.1(a) of the Lease is amended to read as follows:

[rest of page intentionally left blank]

Months          Monthly Minimum Rental
------          ----------------------

001-012        $123,982    ($2.47/sq ft)
013-024         126,993    ($2.53/sq ft)
025-036         130,005    ($2.59/sq ft)
037-048         133,017    ($2.65/sq ft)
049-060         136,028    ($2.71/sq ft)
061-072         139,542    ($2.78/sq ft)
073-084         143,056    ($2.85/sq ft)
085-096         127,997    ($2.55/sq ft)
097-108         132,013    ($2.63/sq ft)
109-120         135,527    ($2.70/sq ft)
121-132         121,472    ($2.42/sq ft)
133-144         125,488    ($2.50/sq ft)
145-156         130,005    ($2.59/sq ft)
157-168         134,523    ($2.68/sq ft)
169-180         122,978    ($2.45/sq ft)

The foregoing minimum rental amounts are based upon an estimated area of 50,195
square feet for the Building and Premises, measured in accordance with Section
3.l(b) of the Lease. If the actual area of the Building and Premises, when
completed, differs from such estimated area, then such minimum rental amounts
shall be adjusted in accordance with such Section 3.1(b), which is hereby
amended to reflect the foregoing change in the estimated area of the Building 
and Premises.

3.       Additional Tenant Improvement Allowance: Additional Minimum
Rent. Landlord agrees to increase the Tenant Improvement Allowance for the
entire Building (presently set at $ 100 per square foot under Exhibit C to the
Lease) by an additional $15.00 per square foot, for an aggregate increase of
Seven Hundred Fifty-Two Thousand Nine Hundred Twenty-five Dollars ($752,925),
assuming a total estimated area of 50,195 square feet for the Building. As part
of the consideration for such Increased Tenant Improvement Allowance. Tenant
agrees to pay to Landlord as additional minimum rent, for each of the first
sixty (60) months of the term of the Lease, the sum of Seventeen Thousand One
Hundred Thirty-One Dollars ($17,131) per month, representing the equivalent of
an amortization of such Increased Tenant Improvement Allowance over five (5)
years with an imputed return factor of thirteen percent (13%) per annum. 

4.       Additional Warrants. In accordance with Section 4.1(b) of the
Lease, Tenant shall issue to Landlord's nominees (as hereinafter identified),
within thirty (30) days after execution of this Amendment, additional warrants
registered in the name of such nominees for the acquisition of 100,000 shares of
Tenant's Class D Preferred Shares, which warrants shall be identical in form to,
and shall have the same terms, exercise price and registration tights as, the
warrants issued or issuable by Tenant pursuant to Section 4.1(a) of the Lease
with respect to the original Premises. Landlord's nominees, and the allocation
of the additional warrants among them, are as follows:

Slough Estates USA Inc.                      90,000 shares
Bristow Investments, L.P.                     8,000 shares
Laurence S. Shushan and Magdalena Shushan,
Trustees of The Laurence and Magdalena
Shushan Family Trust, under agreement
dated October 8, 1997                       2,000 shares

5.       Tenant's Operating Cost Share. Tenant's Operating Cost Share
under Section 7.1(a) of the Lease is amended to twenty-two and one-tenth percent
(22.1%), based  upon an estimated area of 50,195 square feet for the Building
and Premises and an estimated area of 227,068 square feet for the buildings
owned by Landlord on die Property (Buildings D, E, F, G and H). If the actual
area of the Building and Premises (when completed) or of the buildings owned
from time to time by Landlord on the Property differ from these estimated

- 2 -

numbers, then Tenant's Operating Cost Share shall be adjusted in accordance
with Section 7.1(b) of the Lease, which is hereby amended to reflect the
foregoing changes in the estimated or assumed areas of the Building and Premises
and of the buildings owned by Landlord on the Property.

6.       Landlord's Notice Address. Effective immediately, the notice
address for Landlord under Section 19.1 of the Lease is changed to the 
following:

Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 715
Park Plan Building
Oakland, CA 94612
Attn: T. J. Bristow
Facsimile: (510) 834-7133

7.       Full Force and Effect. Except as expressly set forth herein,
the Lease has not been modified or amended and remains in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment as of the date first set forth above.

"Landlord"                                 "Tenant"

BRITANNIA POINTE GRAND LIMITED         METAXEN, LLC, a Delaware limited
PARTNERSHIP, a Delaware limited        liability company
partnership

By:   BRITANNIA POINTE GRAND,          By:  /s/ Michael J. Ross
LLC, a California limited            -----------------------------
liability company, General           Michael J. Ross
Partner                              President & CEO

By: /s/ T. J. Bristow            By: /s/ Marlene Mc New
------------------------         -------------------------------------
T. J. Bristow                Its: Director of Finance & Administration
President Chief
Financial Officer

- 3 -

Exhibit 10.7

SUBLEASE AGREEMENT

This Sublease Agreement (this "Sublease") dated May 1, 1998, for reference
purposes only, is entered into by and between METAXEN LLC, a Delaware limited
liability company ("Sublessor") and CYTOKINETICS, INC., a Delaware corporation
("Sublessee"), and is subject to the terms and conditions of that certain
Build-To-Suit Lease ("Master Lease") dated May 27, 1997 (as amended by that
certain First Amendment to Lease dated ________ , 1998 (the "First Amendment"))
entered into by BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a California limited
partnership ("Master Lessor"), as Landlord, and Sublessor as Tenant. A copy of
the Master Lease is attached hereto as Exhibit "A".

1.       Premises. Sublessor hereby leases to Sublessee, and Sublessee
hereby hires from Sublessor, on and subject to the terms and conditions
hereinafter set forth, the following premises (the "Sublease Premises"),
situated in the City of South San Francisco, County of San Mateo, State of
California, commonly known as a portion of the ground floor of Building H (the
"Building") in the Britannia Pointe Grand Business Park (the "Center") and
consisting of approximately thirteen thousand seven hundred fifty (13,750)
leasable square feet. The Sublease Premises are more particularly described in
Exhibit "B", attached hereto, and incorporated herein by this reference. The
Sublease Premises include the laboratory benches, water systems, fume hoods,
laminar flow hoods and other laboratory support space as specified in Exhibit
"B-l", attached hereto, and incorporated herein by this reference. Sublessee
shall have the right to use the Common Areas as described in the Master Lease,
subject to the rights of Master Lessor, Sublessor and other tenants of the
Center.

2.       Sublease Term; Delivery of Possession.

a.       Term. The term of this Sublease shall begin on the
later of (i) the date Sublessor delivers possession of the Sublease Premises to
Sublessee, or (ii) September 1, 1998 ("Commencement Date") and end on August 31,
2000 ("Expiration Date") unless sooner terminated pursuant to any provision
hereof or of the Master Lease (the "Term"). Subject to the provisions of section
2(b)(l) below, in the event that Sublessor fails to deliver possession of the
Sublease Premises to Sublessee prior to December 1, 1998, at Sublessee's
request, Sublessor shall return any payments made by Sublessee to Sublessor
within five (5) business days of such notification, and this Sublease shall
thereafter be null and void, and of no further force and effect. Any extension
beyond the Expiration Date must be in a writing signed by both parties on or
before one hundred twenty (120) days prior to the Expiration Date. In no event
shall the term of this Sublease extend beyond the expiration of the Master
Lease.

b.       Delivery of Possession.

(1)      Notwithstanding said Commencement Date, if
for any reason Sublessor cannot deliver possession of the Sublease Premises to
Sublessee on said date, Sublessor shall not be subject to any liability
therefore, nor shall such failure affect the validity

of this Sublease or the obligations of Sublessee hereunder or extend the term
hereof, but in such case Sublessee shall not be obligated to pay rent until
possession of the Sublease Premises is tendered to Sublessee; provided, however,
that if Sublessor shall not have delivered possession of the Sublease Premises
on or before December 1, 1998, Sublessee may, at Sublessee's option, by notice
in writing to Sublessor within ten (10) days thereafter, cancel this Sublease,
in which event the parties shall be discharged from all obligations hereunder.
In addition, if Sublessee shall fail to deliver to Sublessor a schedule of
improvements, along with plans and specifications thereto (including projected
costs) reasonably acceptable to Sublessor on or before sixty (60) days following
the execution of this Sublease, Sublessor, in its discretion, may terminate its
obligations under this Sublease at any time.

(2)      Sublessor will deliver the Sublease Premises
subject to all-applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Sublease Premises, and
Sublessee accepts the Sublease Premises subject thereto. Sublessee shall accept
the Sublease Premises in broom clean condition and otherwise "as is".
Notwithstanding the foregoing, Sublessor represents and warrants to Tenant that,
as of the Commencement Date, the Sublease Premises, including any improvements
made by Master Lessor shall be operational as designed and Building services
serving the Sublease Premises shall be operational as designed. If, during the
first sixty (60) days of the Term hereof, Sublessee notifies Sublessor of any
defects in the condition of the Sublease Premises, Sublessee shall have no
obligation to repair such defects upon the expiration or earlier termination of
this Sublease and Sublessor shall promptly notify Master Lessor, if it is the
responsibility of Master Lessor, or if the responsibility of Sublessor, shall
promptly commence the repair of any such defect. Sublessor shall assign its
rights or, alternatively, shall itself enforce such rights pursuant to any
manufacturer or other warranty covering the Sublease Premises.

(3)      Sublessor and Sublessee shall conduct a
walk-through inspection of the Sublease Premises prior to the Commencement Date,
and if the building systems in the Sublease Premises are found not to be in good
and working condition, a "punchlist" shall be developed identifying those areas
of repairs which are necessary to bring such building systems into good and
working condition and Sublessor shall immediately notify Master Lessor of the
need of such repairs, unless the repairs are the responsibility of Sublessor, in
which case Sublessor shall promptly commence such repair. Sublessor shall use
its reasonable efforts if necessary to compel Master Lessor to make such repairs
(if such repairs are the obligation of Master Lessor)

c.       Early Possession. In the event Sublessee, with
Sublessor's consent, takes possession of the Sublease Premises prior to the
Commencement Date, such occupancy shall be subject to all the provisions of this
Sublease, shall not advance the termination date of this Sublease, and Sublessee
shall pay Base Rent for the period prior to the Commencement Date at the Base
Rent prescribed for the initial month of the Sublease term, prorated at the rate
of 1/30th thereof per day. If Sublessor consents to entry by Sublessee for the
purpose of installing furniture, equipment, telephone and computer systems, and
the like and/or for temporary staging

or storage of Sublessee's property, such entry shall not trigger an obligation
to pay Base Rent prior to the Commencement Date.

3.       Rent. Sublessee shall pay to Sublessor no later than the first
day of each calendar month of the Term of this Sublease without deduction, set
off, prior notice or demand, as rent for the Sublease Premises, monthly rent
("Base Rent") as set forth in the rent schedule below, and subject to the terms
and provisions of section 3.2 of the Master Lease.

Rent Schedule

Time Period                         Base Rent Per Month
-----------                         -------------------

Months 1-12                 $3.80 per sq. ft./mo., or $52,250.00

Months 13-24                $3.90 per sq. ft./mo., or $53,625.00

Sublessor and Sublessee each hereby acknowledge and agree that the parties
hereto intend this Sublease to be on a "full-service" basis and Sublessee shall
only be responsible to pay Base Rent and no other operating costs or service
expenses.

4.       Security Deposit

a.       Letter of Credit. Contemporaneously with the
execution of this Sublease, Sublessee shall deliver to Sublessor an irrevocable
letter of credit (the "Letter of Credit") issued by a Bank containing the terms
and provisions set forth herein. "Bank" shall mean a financial institution
selected by Sublessee and reasonably and previously approved by Sublessor. The
Letter of Credit shall initially be in the amount of Three Hundred Thirteen
Thousand Five Hundred Dollars ($313,500.00) (the "LC Amount"), which is equal to
six (6) months rent under the Rent Schedule, above. The LC Amount shall be
reduced to One Hundred Fifty-Six Thousand Seven Hundred Fifty Dollars
($156,750.00) following the six (6) month anniversary of the Commencement Date.
The Letter of Credit shall be terminated following the one (1) year anniversary
of the Commencement Date and no further renewal shall be required. The term of
the original Letter of Credit shall expire (the "LC Expiration Date") one (1)
year prior to the Expiration Date. The Letter of Credit, or any replacement
thereof, shall be in a form and content reasonably acceptable to Sublessor.
Sublessor may reject the form and content of the original letter of Credit if
the form to be utilized would in any manner make it more difficult for Sublessor
to draw down upon the Letter of Credit, or if the credit rating of the issuing 
bank is not reasonably satisfactory to Sublessor. The proceeds of the cashing of
the Letter of Credit in the event of default, beyond any applicable cure period
(as hereinafter defined), shall be held by Sublessor as an additional security
deposit and shall be applied by Sublessor to the rent due and payable for the
last six (6) months of the Term. If Sublessee defaults with respect to any
provision of this Sublease, Sublessor may use, negotiate, draw down, apply or
retain all or any part of the Letter of Credit or Security Deposit for the
payment of any Rent or other sum in default, for the payment of any amount which
Sublessor may expend or become obligated to expend by reason of such Sublessee's

default, or to compensate Sublessor for any loss or damage which Sublessor may
suffer by reason of Sublessee's default. If any portion of the Letter of Credit
or Security Deposit is used or applied, Sublessee shall replenish the Letter of
Credit to an amount equal to the then applicable face amount, within five (5)
days after written demand therefor by Sublessor. Sublessor shall not be required
to keep the any cash portion of the Security Deposit separate from its general
funds, or to pay any interest thereon.

b.       Security Deposit. Concurrently herewith, Sublessee
shall deposit One Hundred Four Thousand Five Hundred Dollars and No/100
($104,500.00) with Sublessor as security for Sublessee's performance of its
obligations under the terms of this Sublease. Sublessor shall not be required to
keep the any cash portion of the Security Deposit separate from its general
funds, or to pay any interest thereon. The Security Deposit shall be held by
Sublessor and may be applied by Sublessor in accordance with the provisions of
Article 18 of the Master Lease.

5.       Use.

a.       Permitted Use. The Sublease Premises shall be used
and occupied only for office, biotechnology/pharmaceutical research and
development, manufacturing, warehousing related to such uses, and other
permitted uses under the Master Lease. Sublessee shall use and occupy the
Sublease Premises in accordance with the Master Lease, including, but not
limited to Section 11.6, thereof.

b.       No Representations or Warranties. Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Sublease Premises for
the conduct of Sublessee's business.

6.       Master Lease.

a.       Sublease is Subordinate to Master Lease. This
Sublease is subject and subordinate to the Master Lease. Sublessee shall not
commit or permit to be committed on the Sublease Premises any act or omission
which shall violate any terms or condition of the Master Lease. If the Master
Lease terminates, this Sublease shall terminate. Sublessor shall have no
liability to Sublessee, if the Master Lease terminates without fault of
Sublessor. Sublessor hereby represents and warrants to Sublessee that (i)
Sublessor knows of no claims or defenses or circumstances which, with the
passage of time, would lead to claims or defenses by Master Lessor against
Sublessor as tenant under the Master Lease; (ii) this Sublease, if consented to
by Master Lessor as provided for herein, does not violate any provision of the
Master Lease, and (iii) no provision of this Sublease is in violation of the
terms of the Master Lease. Sublessor hereby covenants and agrees that, without
the prior written consent of Sublessee, which consent shall not be unreasonably
withheld or delayed, Sublessor shall not (i) terminate the Master Lease, (ii)
amend or otherwise modify the terms of the Master Lease, unless such
modification would apply only to a matter that would take effect only after the
Expiration Date (or earlier termination of this Sublease), or (iii) willfully
breach the terms of the Sublease or the Master

Lease. Sublessor hereby agrees to perform its obligations as tenant under the
Master Lease if and to the extent those obligations are not assumed by Sublessee
pursuant to the terms of this Sublease.

b.       Application of Master Lease Provisions. Except as
otherwise expressly provided in this Sublease, Sublessee shall assume and
perform, with respect to the Sublease Premises, the obligations of the Sublessor
as Lessee under the Master Lease. Therefore, except as otherwise provided, for
the purpose of this Sublease, wherever in the Master Lease "Landlord" is used,
it shall be deemed to mean the Sublessor herein, and wherever in the Master
Lease "Tenant" is used, it shall be deemed to mean the Sublessee herein, and
wherever in the Master Lease "Lease" is used, it shall be deemed to mean this
Sublease.

c.       Incorporation of Master Lease Provisions.

(1)      All of the terms and conditions in the
Master Lease, as they relate to the Sublease Premises, are incorporated herein
except for: Sections 1.3 (First Refusal); 2.1 (Term); 2.6 (Option to Extend);
3.1 (Minimum Rent); 6.2 (Real Property Taxes); 7 (Operating Expenses); 8.1
(Payment of Utilities); Tenant's obligation for HVAC repair and entry into a
service contract under 10.2(a); 12.1(b); 19.1 (Notices), 19.16 (Memorandum of
Lease), Articles 4 (Stock Warrants), 5 (Construction) and Article 18 (Security
Deposit), the First Amendment to Lease as it pertains to warrants, and Exhibit
C.

(2)      Except as otherwise provided herein,
Sublessor is responsible for all financial obligations under the Master Lease.

d.       Indemnity. Except to the extent caused by
Sublessor's, or Sublessor's agents', employees' or invitees' negligence or
willful misconduct, Sublessee shall indemnify and hold Sublessor harmless
against and from all liability, judgments, costs, damages, claims or demands,
including reasonable attorney's fees, arising out of Sublessee's failure to
comply with or perform Sublessee's obligations under this Sublease, including,
but not limited to, Sublessee's obligation to immediately disclose any
violations of the warranty as set forth in section 6.f, below.

e.       Master Lease in Effect. Sublessor represents to
Sublessee that the Master Lease is in full force and effect and that, to
Sublessor's knowledge, no default exists on the part of any party to the Master
Lease. Subject to the terms and provisions of this Sublease, Sublessor agrees to
keep the Master Lease in full force and effect during the term of this Sublease,
subject, however, to any earlier termination of the Master Lease without the
default of Sublessor.

f.       Warranty. Section 5.2 of the Master Lease creates a
warranty in favor of Sublessor. Sublessee shall immediately provide Sublessor
with written notification of any violation of the warranty in Section 5.2.

g.       To the extent that any financial terms contained in
this Sublease that are applicable to Sublessor and Sublessee only conflict with
similar provisions in the Master Lease, this Sublease shall prevail.

7.       Operating Expenses. At no time prior to the Expiration Date,
is Sublessee required to pay as additional rent the amounts for which Sublessor
is liable to Master Lessor pursuant to Article 7 (Operating Expenses) of the
Master Lease. In addition, until the Expiration Date, Sublessee shall have no
liability for any utilities it consumes in the Premises. The parties hereto
hereby acknowledge that this Sublease is on a "full service" basis and Sublessee
shall not be responsible for any operating costs or expenses, insurance or
taxes.

8.       Alterations. Notwithstanding the provisions of Article 9 of
the Master Lease, any alteration, which requires Master Lessor's approval
pursuant to the Master Lease, shall not be commenced by Sublessee unless and
until such consent is obtained. At the time Sublessor and Master Lessor consent
to any alteration, additions or improvements, Sublessor and Master Lessor shall
inform Sublessee in writing whether Sublessee is responsible for the removal of
such alterations and improvements at the expiration or earlier termination of
the term of this Sublease, provided that Sublessee, in its request for consent
to the alteration, addition, or improvement, has expressly requested that
Sublessor and Master Lessor specify the nature and extent of any such removal
obligation. If such notification is not made, Sublessee shall have no
responsibility to remove any such alteration or improvement at the expiration or
earlier termination of this Sublease. Any alteration made by Sublessee shall
become a part of the Sublease Premises, and at Sublessor's election, shall be
surrendered to Sublessor at the end of the Sublease term. Any alteration made by
Sublessee shall, at Sublessor's election become Sublessor's property throughout
the Sublease term except for any specialized improvements installed by Sublessee
(which improvements shall be part of Sublessee's Equipment and Alterations, as
defined in Exhibit B-l), which improvements shall remain the property of
Sublessee and which improvements shall be removed by Sublessee at the expiration
or earlier termination hereof. In the event Sublessor is (or becomes) obligated
under the Master Lease to remove any of Sublessee's alterations, Sublessee shall
be obligated to remove same at Sublessee's sole cost and expense and to restore
the Sublease Premises to its condition prior to the alteration but only to the
extent required by Sublessor or Master Lessor in their written consent to any
such alteration. In the event that Sublessee removes any items it is permitted
to remove under Exhibit B-l, Sublessee, at its sole cost and expense, shall
restore the Sublease Premises to its condition prior to alteration.

9.       Repairs. Pursuant to the Master Lease, Master Lessor is
responsible to repair and maintain the roof (structural portions only), exterior
walls and other structural portions of the Building and the Common Areas. As to
such matters, Sublessor's sole obligation to Sublessee shall be to request
performance of such obligations by Master Lessor. In the event Master Lessor
breaches its obligations, Sublessor will assign to Sublessee its right to
enforce such obligation and shall otherwise cooperate with Sublessee in
connection therewith, provided, however, Sublessee, at its sole cost and
expense, shall be responsible for enforcement thereof without reimbursement from
Sublessor. Sublessee, not Master Lessor, shall be responsible for the repair

of the roof and structural portions of the Building to the extent the need for
maintenance or repair is caused by the negligence or willful misconduct of
Sublessee, in which case Sublessee shall pay to Sublessor the cost of (including
reasonable overhead expense of Sublessor) the maintenance and repairs caused by
Sublessee (except (i) to the extent the damage is covered by any insurance
maintained by Master Lessor or Sublessor, or, (ii) if Master Lessor fails to
maintain the insurance required to be maintained by Master Lessor pursuant to
the terms of the Master Lease, to the extent the damage would have been covered
by insurance, if Master Lessor had maintained the required insurance). There
shall be no abatement of Base Rent and no liability of Master Lessor or
Sublessor by reason of any injury to or interference with Sublessee's business
arising from the making of any repairs, alterations or improvements in or to the
fixtures, appurtenances and equipment therein, provided that Sublessor shall
request Master Lessor to use reasonable efforts to minimize the interruption of
Sublessee's use and occupancy of the Sublease Premises in connection with its
performance of the repairs and maintenance (although nothing contained herein
shall be deemed to obligate Master Lessor to pay any overtime costs in order to
minimize such interference, or otherwise to perform the repairs or maintenance
during hours other than normal business hours). As to all matters that neither
Master Lessor nor Sublessee is required to maintain or repair under the Master
Lease or this Sublease, as the case may be, Sublessor shall be responsible
therefore, and shall promptly and regularly maintain and repair the Sublease
Premises. Notwithstanding anything to foregoing, any damage caused by the
negligence or willful misconduct of Sublessee, shall promptly be repaired by
Sublessee, at Sublessee's own cost and expense, and in a manner reasonably
acceptable to Master Lessor and Sublessor.

10.      Insurance.

a.       Sublessee shall maintain commercial general liability
insurance coverage as required by section 12.1 (a) of the Master Lease (but
prorated based upon the Sublease Premises to the Premises under the Master
Lease) which has been incorporated into this Sublease by reference. Each policy
of insurance, which Sublessee is required to maintain pursuant to this Lease,
shall name both Sublessor and Master Lessor (as well as Master Lessor's general
partners and Managing Agent) as additional insureds (including cross-liability
endorsements). Sublessee's insurance coverage shall be primary and
non-contributory as respects any insurance maintained by Sublessor and/or Master
Lessor. Sublessee shall deliver evidence of the coverage required hereunder (i)
thirty (30) days prior to occupancy and (ii) within ten (10) days of the renewal
date for each policy of insurance required hereunder.

b.       Pursuant to the terms of the Master Lease as provided
in Section 12.1(b) thereof, Master Lessor is obligated to maintain certain
insurance coverage with respect to certain perils. Sublessor's sole obligation
to Sublessee with respect to Master Lessor's obligations pursuant to said
Section 12.1(b) shall be to request performance of such obligations by Master
Lessor. In the event Master Lessor breaches its obligations, Sublessor will
assign to Sublessee its right to enforce such obligation and shall otherwise
cooperate with Sublessee in connection therewith, provided, however, Sublessee,
at its sole cost and expense, shall be responsible for

enforcement thereof without reimbursement from Sublessor. In the event Sublessor
cannot assign such rights, Sublessor shall diligently enforce its rights as
Tenant under the Master Lease,

11.      Damage or Destruction.

a.       Master Lessor Has Obligation to Restore. If the
Sublease Premises are damaged or destroyed, Master Lessor has the obligation
pursuant to Article 15 of the Master Lease to repair the Sublease Premises
unless Master Lessor has the right to terminate. If Master Lessor fails to
perform its obligations pursuant to Article 15 of the Master Lease, Sublessor's
sole obligation to Sublessee shall be to request performance of such obligations
by Master Lessor. In the event Master Lessor breaches its obligations, Sublessor
will assign to Sublessee its right to enforce such obligation, provided,
however, Sublessee, at its sole cost and expense, shall be responsible for
enforcement thereof without reimbursement from Sublessor. In the event'
Sublessor cannot assign its rights, Sublessor shall diligently enforce its
rights under the Master Lease.

b.       Termination of Master Lease. If the Master Lease
terminates pursuant to Article 15 of the Master Lease, this Sublease shall
terminate concurrently with the termination of the Master Lease.

c.       Sublessee Notice; Right to Terminate. Within twenty
(20) days following written request from Sublessor, Sublessee shall give notice
to Sublessor in writing whether Sublessee agrees to continue this Sublease in
effect if Master Lessor reasonably determines that the repair of the Sublease
Premises or the Building cannot be completed within three hundred sixty five
(365) days after the casualty. If Sublessee does not so agree to continue this
Sublease in effect then this Sublease shall terminate. If Sublessee agrees to
continue this Sublease in effect as aforesaid, then Sublessor shall have no
right to exercise its right (if any) to terminate the Master Lease or this
Sublease. If (i) Master Lessor reasonably determines that the repair of the
Sublease Premises or the Building cannot be completed within three hundred sixty
five (365) days after the casualty, (ii) neither Master Lessor nor Sublessor
have elected to terminate the Master Lease, and (iii) Sublessee agrees to
continue this Sublease in effect notwithstanding the time to reconstruct, then
this Sublease shall continue in effect, and Sublessee shall fulfill all of the
obligations of Sublessor pursuant to the provisions of Article 15 of the Master
Lease, as it pertains to the Sublease Premises.

d.       Limited Obligation to Repair. Master Lessor's
obligation, should Master Lessor elect or be obligated to repair or rebuild,
shall be limited to the terms and conditions of the Master Lease. Master Lessor
shall have no obligation to replace or restore the Sublessee Equipment and
Alterations (as described in Exhibit B-l) or any other alterations installed by
Sublessor or Sublessee, unless specifically required by the Master Lease.

e.       Abatement of Rent. Rent under this Sublease shall
abate to the same extent as the Rent owing by Sublessor under the Master Lease
abates during any casualty repair period.

f.       Damage Near End of Term. In addition to the rights to
terminate specified in subsection 11.c of this Sublease, either Sublessor or
Sublessee shall have the right to cancel and terminate this Sublease as of the
date of the occurrence of destruction or damage if the Sublease Premises or the
Building is substantially destroyed or damaged (i.e., there is damage or
destruction which Sublessor reasonably determines would require more than sixty
(60) days to repair) and made untenantable during the last twelve (12) months of
the term of the Master Lease. Sublessor or Sublessee, as applicable, shall give
written notice of its election to terminate this Sublease under this subsection
f. within thirty (30) days after Master Lessor or Sublessor determines that the
damage or destruction would require more than sixty (60) days to repair. If
either Master Lessor or Sublessor elects to terminate the Master Lease pursuant
to Article 15 of the Master Lease, this Sublease shall terminate concurrently
with the termination of the Master Lease. If neither Master Lessor nor Sublessor
terminates the Master Lease and if neither Sublessor nor Sublessee elects to
terminate this Sublease, the repair of the damage shall be governed by Article
15 of the Master Lease.

g.       Insurance Proceeds. If this Sublease is terminated,
Master Lessor and Sublessor may each keep all their respective insurance
proceeds resulting from the damage except for those proceeds, if any, which
specifically insured Sublessee's personal property and trade fixtures which
Sublessee has a right or obligation to remove upon the expiration of the
Sublease term. Sublessor shall be entitled to receive from Sublessee the
proceeds of insurance carried by Sublessee with respect to Sublessee
Improvements or other alterations installed in the Sublease Premises by
Sublessor or at Sublessor's expense. To the extent that Sublessee has paid for
any alterations regardless of whether the alterations may become the property of
Sublessor upon termination of this Sublease, Sublessee shall receive any portion
of the insurance proceeds payable with respect to the then unamortized cost
(based on a 2 year life of the alteration on a straight line amortization
schedule) for the applicable alterations, reduced by the amounts necessary to
pay off any equipment lease or other lien against the applicable alteration, and
the balance of the proceeds, if any, will be payable to Sublessor. With respect
to those Alterations, which Sublessee is obligated to remove at the end of the
Sublease term which are the property of Sublessee, all proceeds of any
insurance, carried by Sublessor or Sublessee shall be paid to Sublessee.

h.       Uninsured Casualty. If the Master Lease terminates
pursuant to the provisions of Article 15 of the Master Lease, this Sublease
shall terminate.

12.      Eminent Domain. If all or any part of the Sublease Premises is
taken for public or quasi-public use by a governmental authority under the power
of eminent domain or is conveyed to a governmental authority in lieu of such
taking, and if the taking or conveyance causes the remaining part of the
Sublease Premises to be untenantable and inadequate for use by Sublessee for the
purpose for which they were leased, then Sublessee, at its option and by giving
notice within fifteen (15) days after the taking, may terminate this Sublease as
of the date Sublessee is required to surrender possession of the Sublease
Premises. If a part of the Sublease Premises is taken or conveyed but the
remaining part is tenantable and adequate for Sublessee's use in

Sublessee's reasonable determination, then this Sublease shall be terminated as
to the part taken or conveyed as of the date Sublessee surrenders possession.
All compensation awarded for the taking or conveyance shall be the property of
Master Lessor and Sublessor, as their interests may appear, and Sublessee hereby
assigns to Sublessor all its right, title and interest in and to the award,
unless the governmental authority makes only one (1) award, and the award
contains compensation for the value of moving expenses, Sublessee's personal
property, trade fixtures and alterations (including the Sublessee Improvements),
Sublessee's Equipment and Alterations, in which case, subject to the rights of
any mortgagee or beneficiary of a deed of trust holding a lien on the Property
and to Master Lessor's rights under the Master Lease, Sublessee shall be
entitled to the compensation paid for Sublessee's moving expenses, trade
fixtures, personal property, Sublessee's Equipment and Alterations, and the
portion of the award attributable to the then unamortized cost of alterations
and improvements constructed at Sublessee's expense (which are to be amortized
on a straight line basis over the initial term of this Sublease). Sublessee
shall have the right, however, to recover from the governmental authority,
but not from Sublessor or Master Lessor, except as provided in the preceding
sentence, such compensation as may be awarded to Sublessee on account of the
interruption of Sublessee's business, moving and relocation expenses and removal
of Sublessee's trade fixtures and personal property.

13.      Assignment and Subletting. Notwithstanding any pro vision of
this Sublease to the contrary, if Sublessor consents to a sublet, Sublessee
shall pay to Sublessor on a monthly basis as additional Rent, on the date Base
Rent is due, an amount equal to fifty percent (50%) of the amount by which the
rent payable to Sublessee ("Subrent") under the sublease exceeds the rent due
for the applicable portion of the Sublease Premises after deducting from the
Subrent (A) the actual out-of pocket costs incurred by Sublessee for brokerage
commissions and tenant concessions (which concessions are not reflected in the
reduced Subrent) and (B) the costs of any additional improvements constructed by
Sublessee in connection with the sublease (amortized on a straight line basis
over the term of the sublease). Notwithstanding the foregoing, Sublessee may
assign this Sublease or sublet any portion of the Sublease Premises without
Sublessor's or Master Lessor's consent to any of the following (i) any
corporation which controls, is controlled by or under common control with
Sublessee; (ii) any corporation resulting from the merger or consolidation of
Sublessee; and (iii) any person or entity which acquires all of the assets of
Sublessee as a going concern of the business that is being conducted on the
Sublease Premises (collectively, "Sublessee Affiliate"), provided that such
assignee assumes in full the obligations of Sublessee under the Sublease. Any
right of Sublessor or Master Lessor to terminate the Sublease OF the Master
Lease in response to a requested assignment or subletting shall not apply to an
assignment of the Sublease or a subletting of the Sublease Premises to a
Sublessee Affiliate. Sublessee shall have the same assignment and sublease
rights and limitations as provided in section 13.1 of the Master Lease.

14.      Access to Premises. Master Lessor shall have the same right of
access to the Sublease Premises as Sublessor which right of access is described
in Section 14 of the Master Lease.

15.      Surrender at End of Term. Upon expiration or termination of
this Sublease, Sublessee shall surrender the Sublease Premises to Sublessor in
good and sanitary order, except for any alterations Sublessee is not required to
remove, normal wear and tear, acts of God, damage, destruction (except to the
extent Sublessee is obligated to restore the same under this Sublease) and
eminent domain covered by the provisions of this Sublease. Sublessee shall
remove from the Sublease Premises all of Sublessee's personal property and trade
fixtures, Sublessee's Equipment and Alterations, and any alterations and
improvements Sublessee is required to remove pursuant to Sublessor's or Master
Lessor's written consent to such alterations and improvements, and shall repair
all damage caused by the removal. Except to the extent caused by Sublessor's or
Master Lessor's or their agents', employees' or invitees', negligence or willful
misconduct, Sublessee shall indemnify Sublessor against all loss or liability
resulting from delay by Sublessee in so surrendering the Sublease Premises,
including without limitation, any claims made by any succeeding tenant, losses
to Sublessor due to lost opportunities to lease to a succeeding tenant, and
reasonable attorneys' fees and costs. Sublessee shall have no obligation to
remove any fixtures, alterations, or personal property placed or installed in
the Sublease Premises prior to the Commencement Date hereof.

16.      Sublessor Indemnity re: Hazardous Materials.

a.       Sublessor will provide to Sublessee copies of the
documents referred to in section 17.4 of the Master Lease.

b.       Sublessee shall indemnify, defend and hold Sublessor
harmless from and against any claim, damage, loss, liability, cost or expense
(including reasonable attorneys' fees) arising out of any spill or release of
any Hazardous Substance (as defined in Section 11.6 of the Master Lease which
has been incorporated by reference into this Sublease) on or about the Sublease
Premises by Sublessee, its employees, agents or contractors during the period of
time Sublessee has occupied the Sublease Premises.

c.       Sublessor is entitled to indemnification from the
Master Lessor under certain circumstances as provided in Section 11.6 of the
Master Lease. To the extent such indemnification may apply to the benefit of
Sublessee, Sublessor agrees to cooperate with Sublessee to enforce such
indemnity obligation against Master Lessor; provided, however, Sublessee shall
pay any and all costs incurred by Sublessor or Sublessee in connection with the
enforcement thereof for the benefit of Sublessee.

17.      Signs. Master Lessor shall have the same approval rights with
respect to signs as Sublessor; Sublessor shall use its best efforts to obtain
Master Lessor's approval of signage rights reasonably satisfactory to Sublessee,
so long as such rights do not unreasonably interfere with the rights of
Sublessor under the Master Lease.

18.      Holding Over. This Sublease shall terminate without further
notice at the expiration of the Sublease term. Any holding over by Sublessee
after expiration or sooner

termination of this Sublease without the consent of Sublessor shall be construed
to be a tenancy at sufferance. Base Rent for the Sublease Premises during any
tenancy at sufferance, or if Sublessor shall have consented to Sublessee's
holding over, shall be at a rate equal to 150% of the Base Rent for the last
month of the term, and shall otherwise be on the terms and conditions herein
specified insofar as applicable.

19.      Brokers. For purposes of Section 19.15 of the Master Lease as
incorporated into this Sublease, Vertex Real Estate Group ("Broker") is the only
broker to whom a commission is owing, which commission shall be paid by
Sublessor, as follows: 3% of the total rental for the first 12 months in which
rent is to be paid, which shall be paid on the Commencement Date, and then 3% of
the total rental for the second 12 months in which Base Rent is to be paid, and
shall be payable on or before January 5, 1999. Sublessor and Sublessee each
warrants and represents for the benefit of the other that it has had no dealings
with any real estate broker or agent other than Broker in connection with the
negotiation of this Sublease, and that it knows of no real estate broker or
agent other than Broker who is or might be entitled to a real estate brokerage
commission or finder's fee in connection with this Sublease. Sublessor and
Sublessee warrant and represent that they have dealt with no real estate broker
in connection with this Sublease other than Broker.

a.       Broker Disclaimer. Sublessor and Sublessee agree and
accept that, except as otherwise expressly stated herein, Broker has not made
any investigation, determination, warranty or representation with respect to any
of the following: (a) the legality of the present or any possible future use of
the Sublease Premises under any federal, state or local law; (b) the physical
condition or square footage of the Sublease Premises; (c) the terms of the
Master Lease or any other relevant legal document or agreement; or (d) the
presence or location of any hazardous materials on or about the property in
which the Sublease Premises are located (including, but not limited to,
asbestos, PCB's, other toxic, hazardous or contaminated substances, and
underground storage tanks).

b.       Acknowledgement: The parties acknowledge that they
are not relying on information from Broker relating to the field of toxic
materials, hazardous waste, underground tanks, and asbestos contamination,
location of the property within or outside a specific flood zone or special
studies seismic area, nor the property's compliance with the guidelines as set
forth in the Americans with Disabilities Act (ADA) regarding the determination
of the condition of the subject Premises, but rather from their own
independently initiated investigations.

20.      Notices. All notices or demands of any kind required to be
given by Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered forty-eight (48) hours after depositing the notice or demand in
the United States Mail, certified or registered, postage prepaid, addressed to
the Sublessor or Sublessee respectively at the addresses set forth after their
signatures at the end of this Sublease. Either party may change its address by
written notice to the other party in accordance with this Section 20, All Base
Rent shall be paid by Sublessee to Sublessor at the same address.

21.      Condition To Effectiveness of This Sublease. This Sublease is
contingent upon Sublessor obtaining the written consent of the Master Lessor to
this Sublease within 15 days of the date hereof. Sublessor and Sublessee
acknowledge and agree that in granting such consent, notwithstanding any other
provisions contained in or implied in this Sublease, Master Lessor shall not be
deemed or construed (a) to have released Sublessor from any responsibility for
the full and timely performance of all obligations of Sublessor as Tenant under
the Master Lease as it pertains to the Sublease Premises, nor (b) to have
authorized Sublessor to act on Master Lessor's behalf in exercising or waiving
any rights, remedies or privileges of Master Lessor as Landlord under the Master
Lease as it pertains to the Sublease Premises, nor (c) to have assumed, incurred
or undertaken any obligations or liabilities running directly to Sublessee with
respect to the Sublease Premises, it being the explicit intention and
understanding of the parties that notwithstanding the incorporation by reference
of substantially all of the Master Lease into this Sublease, Master Lessor and
Sublessor shall look solely to one another for the performance of their
respective obligations with respect to the Sublease Premises as Landlord and
Tenant under the Master Lease, and that Sublessor and Sublessee shall look
solely to one another for the performance of their respective obligations with
respect to the Sublease Premises under this Sublease. Nothing in this Section 21
is intended, however, to preclude Sublessee from enforcing, by direct action
against Master Lessor, any rights of Sublessor under the Master Lease to the
extent such rights are expressly assigned by Sublessor to Sublessee pursuant to
this Sublease.

22.      Sublessee Improvements. Sublessor, at Sublessor's sole cost
and expense and not later than December 1, 1998, shall cause to be performed the
work (the "Sublessee Improvements"), as shown on Exhibit B, attached hereto.

23.      Authority. Each person executing this Sublease on behalf of a
party hereto represents and warrants that he or she is authorized and empowered
to do so and to thereby bind the party on whose behalf he or she is signing.

24.      Attorneys' Fees. In the event either party shall bring any
action or proceeding for damages or for an alleged breach of any provision of
this Sublease to recover rents, or to enforce, protect or establish any right or
remedy hereunder, the prevailing party shall be entitled to recover reasonable
attorneys' fees and court costs as part of such action or proceeding.

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of
the dates set forth below.

SUBLESSOR:

METAXEN LLC,
a Delaware limited liability company

By:  /s/ Michael J. Ross, Ph.D.
---------------------------------
Michael J. Ross, Ph.D.
Its: President and CEO                          Date May 5, 1998
-----------
3910 Trust Way
Hayward, CA 94545

SUBLESSEE:

CYTOKINETICS, INC.,
a Delaware corporation

By: /s/ James Sabry                      Date May 4/98
-------------------------
James Sabry, MD, Ph.D.
President and CEO

2800 Sand Hill Road, Suite 250
Menlo Park, California 94025

EXHIBIT "B"

[MAP]

EXHIBIT "B"

[FLOOR PLAN]

[ILLEGIBLE TEXT]

EXHIBIT "B-1"

Subject, to the provisions of Article 9 of the Master Lease, the following
fixtures and equipment shall remain with the Sublease Premises and shall be
surrendered by Sublessee at the expiration or earlier termination of the
Sublease:

Subject to the provisions of Article 9 of the Master Lease, the following
fixtures and equipment shall be removed from the Sublease Premises at the
expiration or earlier termination of the Sublease (the "Sublessee Equipment and
Alterations"):

[NEED TO COMPLETE]

Exhibits B-1

The following fixtures and equipment shall be retained by the Sublessee and
shall be removed by the Sublessee from the Sublease Premises at the expiration
or earlier termination of the Sublease:

Centrifuges
Tissue Culture Incubators
Tissue Culture Hoods
All Robotic and Automated Devices purchased by the Sublessee including Robotic
Plate, Liquid Handling
and Imaging Devices
Vibration isolation Tables
Freezers
Refrigerator/Freezers
Microscopes
Free standing Shelving

Exhibit 10.8

SUBLEASE AGREEMENT

This Sublease Agreement (this "Sublease") dated March 1, 1999, for reference
purposes only, is entered into by and between METAXEN LLC, a Delaware limited
liability company ("Sublessor") and EXELIXIS PHARMACEUTICALS, INC., a Delaware
corporation ("Sublessee"), and is subject to the terms and conditions of that
certain Build-To-Suit Lease ("Master Lease") dated May 27, 1997 (as amended by
that certain First Amendment to Lease dated as of April 13, 1998 (the "First
Amendment")) entered into by BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a
California limited partnership ("Master Lessor"), as Landlord, and Sublessor as
Tenant. A copy of the Master Lease is attached hereto as Exhibit "A".

1.       Premises. Sublessor hereby leases to Sublessee, and Sublessee
hereby hires from Sublessor, on and subject to the terms and conditions
hereinafter set forth, the following premises (the "Sublease Premises"),
situated in the City of South San Francisco, County of San Mateo, State of
California, commonly known as a portion of the ground floor of Building H (the
"Building") in the Britannia Pointe Grand Business Park (the "Center") and
consisting of the following: (i) approximately three thousand forty (3,040)
leasable square feet backward lined in Exhibit "B", attached hereto, and
incorporated herein by this reference (the "Ground Floor Leased Area"); (ii)
approximately fifty percent (50%) of four thousand nine hundred sixty eight
(4,968) leasable square feet dotted in the above referenced Exhibit B (the
"Ground Floor Shared Area"); (iii) approximately three thousand nineteen (3,019)
leasable square feet backward lined in Exhibit "B-1", attached hereto and
incorporated herein by this reference (the "Second Floor Leased Area"); and (iv)
approximately twenty five percent (25%) of five thousand six hundred seventy
seven (5,677) leasable square feet forward dotted in the above referenced
Exhibit B-1 (the "Second Floor Shared Area"). The Sublease Premises include the
laboratory benches, water systems, fume hoods, laminar flow hoods and other
laboratory support space as specified in Exhibit "B-2", attached hereto, and
incorporated herein by this reference. Sublessee shall have the right to use the
Common Areas as described in the Master Lease, subject to the rights of Master
Lessor, Sublessor and other tenants of the Center. The right of Sublessee to use
the Ground Floor Shared Area and the Second Floor Shared Area is non-exclusive
and shall be subject to reasonable rules and requirements of Sublessor.
Sublessor shall have the primary right to use both the Ground Floor Shared Area
and the Second Floor Shared Area. Sublessee shall have the right to use no more
than fifty percent (50%) of the Ground Floor Shared Area. Furthermore, Sublessee
shall have the right to use no more than twenty five percent (25%) the Second
Floor Shared Area.

2.       Master Lease.

a.       Sublease is Subordinate to Master Lease. This
Sublease is subject and subordinate to the Master Lease. Sublessee shall not
commit or permit to be committed on the Sublease Premises any act or omission
which shall violate any terms or condition of the Master Lease. If the Master
Lease terminates, this Sublease shall terminate. Sublessor shall have no
liability to Sublessee, if the Master Lease terminates without fault of
Sublessor. Sublessor hereby represents and warrants to Sublessee that (i)
Sublessor knows of no claims or defenses or circumstances which, with the
passage of time, would lead to claims or defenses by Master

Lessor against Sublessor as tenant under the Master Lease; (ii) this Sublease,
if consented to by Master Lessor as provided for herein, does not violate any
provision of the Master Lease, and (iii) no provision of this Sublease is in
violation of the terms of the Master Lease. Sublessor hereby covenants and
agrees that, without the prior written consent of Sublessee, which consent shall
not be unreasonably withheld or delayed, Sublessor shall not (i) terminate the
Master Lease, (ii) amend or otherwise modify the terms of the Master Lease,
unless such modification would apply only to a matter that would take effect
only after the Expiration Date (or earlier termination of this Sublease), or
(iii) willfully breach the terms of the Sublease or the Master Lease. Sublessor
hereby agrees to perform its obligations as tenant under the Master Lease if and
to the extent those obligations are not assumed by Sublessee pursuant to the
terms of this Sublease.

b.       Application of Master Lease Provisions. Except as
otherwise expressly provided in this Sublease, Sublessee shall assume and
perform, with respect to the Sublease Premises, the obligations of the Sublessor
as Lessee under the Master Lease arising after the date of this Sublease.
Therefore, except as otherwise provided, for the purpose of this Sublease;
wherever in the Master Lease "Landlord" is used, it shall be deemed to mean the
Sublessor herein, and wherever in the Master Lease "Tenant" is used, it shall be
deemed to mean the Sublessee herein, and wherever in the Master Lease "Lease" is
used, it shall be deemed to mean this Sublease.

c.       Incorporation of Master Lease Provisions.

(1)      All of the terms and conditions in the
Master Lease, as they relate to the Sublease Premises, are incorporated herein
except for: 1.1 (Premises); 1.2 (Landlord's Reserved Rights); Sections 1.3
(First Refusal); 2,1 (Term); 2.2 (Early Possession); 2.3 (Delay in Possession);
2.6 (Option to Extend); 3.1 (Minimum Rent); 4.1 (Stock Warrants); 6,2 (Real
Property Taxes); 7 (Operating Expenses); 8.1 (Payment of Utilities); Tenant's
obligation for HVAC repair and entry into a service contract under 10.2(a);
12.1(b); 19.1 (Notices), 19.11 (Financial Information); Financial Information);
19.15 (Brokers); 19.16 (Memorandum of Lease), Articles 4 (Stock Warrants), 5
(Construction) and Article 18 (Security Deposit), the First Amendment to Lease
as it pertains to warrants, and Exhibit C.

(2)      Except as otherwise provided herein,
Sublessor is responsible for all financial obligations under the Master Lease.

(3)      As between Sublessor and Sublessee only, it
is hereby agreed that any breach or default under that certain AGREEMENT BETWEEN
METAXEN AND EXELEXSIS REGARDING PROPRIETARY INFORMATION AND NON SOLICITATION
(the "Non-Solicitation Agreement") dated as of even date herewith shall
constitute an additional default under section 16.1 of the Master Lease and
shall not require any additional notice to either Sublessor or Sublessee except
as expressly provided in said Non-Solicitation Agreement. Any such breach or
default shall entitle the party to the remedies provided in the Master Lease, in
addition to the remedies provided in the Non-Solicitation Agreement.

2

d.       Indemnity. Except to the extent caused by Sublessor,
or Sublessor's agents', employees' or invitees' negligence or willful
misconduct, Sublessee shall indemnify and hold Sublessor harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessee's failure to comply with or
perform Sublessee's obligations under this Sublease, including, but not limited
to, Sublessee's obligation to immediately disclose any violations of the
warranty as set forth in section 2.f, below. Except to the extent caused by
Sublessee, or Sublessee's agents', employees' or invitees' negligence or willful
misconduct, Sublessor shall indemnify and hold Sublessee harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessor's failure to comply with or
perform Sublessor's obligations under this Sublease.

e.       Master Lease in Effect. Sublessor represents to
Sublessee that the Master Lease is in full force and effect and that, to
Sublessor's knowledge, no default exists on the part of any party to the Master
Lease; furthermore Sublessor represents and warrants that it has not received
any notification from Master Lessor of any default under the Master Lease or
notice of any potential default under the Master Lease. Subject to the terms and
provisions of this Sublease, Sublessor agrees to keep the Master Lease in full
force and effect during the term of this Sublease, subject, however, to any
earlier termination of the Master Lease without the default of Sublessor.

f.       Warranty. Section 6.2 of the Master Lease creates a
warranty in favor of Sublessor. Sublessee shall provide Sublessor with written
notification of any violation of the warranty in Section 6.2, promptly following
the discovery by Sublessee of such violation.

g.       To the extent that any financial terms contained in
this Sublease that are applicable to Sublessor and Sublessee only conflict with
similar provisions in the Master Lease, this Sublease shall prevail.

3.       Sublease Term; Delivery of Possession.

a.       Term. The term of this Sublease shall begin on March
1, 1999 ("Commencement Date") and end no earlier than May 31,2000 and no later
than September 30 2000 ("Expiration Date") unless sooner terminated pursuant to
any provision hereof or of the Master Lease (the "Term"). Any extension beyond
the Expiration Date must be in a writing signed by both parties on or before one
hundred twenty (120) days prior to the Expiration Date. In no event shall the
term of this Sublease extend beyond the expiration of the Master Lease. The
actual Expiration Date shall be that date set forth in a written notice to
Sublessor delivered by Sublessee no earlier than May 1, 2000, and shall be
effective at the completion of the 30th day thereafter, so long as the actual
Expiration Date is no earlier than May 31, 2000 and no later than September 30,
2000.

b.       Delivery of Possession.

(1)      If Sublessee is to seek to have any
improvements performed in either the Ground Floor Leased Area or the Second
Floor Leased Areas (Sublessee shall have no

3

right to modify or otherwise alter the Ground Floor Shared Area and/or the
Second Floor Shared Area) and if Sublessee shall fail to deliver to Sublessor a
schedule of improvements, along with plans and specifications thereto (including
projected costs) reasonably acceptable to Sublessor on or before sixty (60) days
following the execution of this Sublease, Sublessor, in its discretion, may
terminate its obligations under this Sublease at any time.

(2)      Sublessor will deliver the Sublease Premises
subject to all- applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Sublease Premises, and
Sublessee accepts the Sublease Premises subject thereto. Sublessee shall accept
the Sublease Premises in broom clean condition and otherwise "as is".
Notwithstanding the foregoing, Sublessor represents and warrants to Tenant that,
as of the Commencement Date, the Sublease Premises, including any improvements
made by Master Lessor shall be operational as designed and Building services
serving the Sublease Premises shall be operational as designed. If, during the
first sixty (60) days of the Term hereof, Sublessee notifies Sublessor of any
defects in the condition of the Sublease Premises, Sublessee shall have no
obligation to repair such defects upon the expiration or earlier termination of
this Sublease and Sublessor shall promptly notify Master Lessor, if it is the
responsibility of Master Lessor, or if the responsibility of Sublessor, shall
promptly commence the repair of any such defect. Sublessor shall assign its
rights or, alternatively, shall itself enforce such rights pursuant to any
manufacturer or other warranty covering the Sublease Premises.

(3)      Sublessor and Sublessee shall conduct a
walk-through inspection of the Sublease Premises prior to the Commencement Date,
and if the building systems in the Sublease Premises are found not to be in good
and working condition, a "punchlist" shall be developed identifying those areas
of repairs which are necessary to bring such building systems into good and
working condition and Sublessor shall immediately notify Master Lessor of the
need of such repairs, unless the repairs are the responsibility of Sublessor, in
which case Sublessor shall promptly commence such repair. Sublessor shall use
its reasonable efforts if necessary to compel Master Lessor to make such repairs
(if such repairs are the obligation of Master Lessor)

c.       Early Possession. In the event Sublessee, with
Sublessor's consent, takes possession of the Sublease Premises prior to the
Commencement Date, such occupancy shall be subject to all the provisions of this
Sublease, shall not advance the termination date of this Sublease, and Sublessee
shall pay Base Rent for the period prior to the Commencement Date at the Base
Rent prescribed for the initial month of the Sublease term, prorated at the rate
of l/30th thereof per day. If Sublessor consents to entry by Sublessee for the
purpose of installing furniture, equipment, telephone and computer systems, and
the like and/or for temporary staging or storage of Sublessee's property, such
entry shall not trigger an obligation to pay Base Rent prior to the
Commencement Date. It is contemplated that Sublessee shall have access to the
Premises on March 1, 1999, pursuant to the terms of this section relating to
early possession.

4.       Rent. Sublessee shall pay to Sublessor no later than the first
day of each calendar month of the Term of this Sublease without deduction, set
off, prior notice or demand, as rent for the Sublease Premises, monthly rent
("Base Rent") as set forth in the rent schedule below, and

4

subject to the terms and provisions of section 3.2 of the Master Lease. Base
Rent shall commence on March 1, 1999 (the "Rent Commencement Date").

Rent Schedule

Leased Premises             Base Rent/Month   Rent/Sq.ft/month  Approx. Sq. Feet
---------------             ---------------   ----------------  ----------------

Ground Floor Leased Area      $ 5,472.00            $1.80          3,040
Ground Floor Shared Area(1)   $ 4,471.20            $1.80          2,484 (2)
Second Floor Leased Area      $10,566.50            $3.50          3,019
Second Floor Shared Area(3)   $ 4,967.38            $3.50          1,419.25 (4)
----------

Total                         $25,477.00

Sublessor and Sublessee each hereby acknowledge and agree that the parties
hereto intend this Sublease to be on a "full-service" basis and Sublessee shall
only be responsible to pay Base Rent and no other operating costs or service
expenses.

5.       Security Deposit. Concurrently herewith, Sublessee shall
deposit Fifty Thousand Nine Hundred Fifty Four Dollars ($50,944.00) with
Sublessor as security for Sublessee's performance of its obligations under the
terms of this Sublease. Sublessor shall not be required to keep the any cash
portion of the Security Deposit separate from its general funds, or to pay any
interest thereon. The Security Deposit shall be held by Sublessor and may be
applied by Sublessor in accordance with the provisions of Article 18 of the
Master Lease.

6.       Use.

a.       Permitted Use. The Sublease Premises shall be used
and occupied only for office, biotechnology/pharmaceutical research and
development, manufacturing, warehousing related to such uses, and other
permitted uses under the Master Lease. Sublessee shall use and occupy the
Sublease Premises in accordance with the Master Lease, including, but not
limited to Section 11.6, thereof.

b.       No Representations or Warranties. Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Sublease Premises for
the conduct of Sublessee's business.

7.       Operating Expenses. At no time prior to the Expiration Date,
is Sublessee required to pay as additional rent the amounts for which Sublessor
is liable to.Master Lessor pursuant to Article 7 (Operating Expenses) of the
Master Lease. In addition, until the Expiration

-------------------------

(1) Gross Ground Floor Shared Area equal to 4,968 square feet divided by 2, or
2,484x1.80.

(2) See footnote 1, above.

(3) Gross Second Floor Shared Area equal to 5,677 square feet divided by 4, or
1,419.25x3.50

(4) See footnote 3, above.

5

Date, Sublessee shall have no liability for any utilities it consumes in the
Premises, The parties hereto hereby acknowledge that this Sublease is on a "full
service" basis and Sublessee shall not be responsible for any operating costs or
expenses, insurance or taxes.

8.       Alterations. Notwithstanding the provisions of Article 9 of
the Master Lease, any alteration, which requires Master Lessor's approval
pursuant to the Master Lease, shall not be commenced by Sublessee unless and
until such consent is obtained. At the time Sublessor and Master Lessor consent
to any alteration, additions or improvements, Sublessor and Master Lessor shall
inform Sublessee in writing whether Sublessee is responsible for the removal of
such alterations and improvements at the expiration or earlier termination of
the term of this Sublease, provided that Sublessee, in its request for consent
to the alteration, addition, or improvement, has expressly requested that
Sublessor and Master Lessor specify the nature and extent of any such removal
obligation. If such notification is not made, Sublessee shall have no
responsibility to remove any such alteration or improvement at the expiration or
earlier termination of this Sublease. Any alteration made by Sublessee shall
become a part of the Sublease Premises, and at Sublessor's election (and to the
extent required, the consent of the Master Lessor), shall be surrendered to
Sublessor at the end of the Sublease term. Any alteration made by Sublessee
shall, at Sublessor's election become Sublessor's property throughout the
Sublease term except for any specialized improvements installed by Sublessee
(which improvements shall be part of Sublessee's Equipment and Alterations, as
defined in Exhibit B-2), which improvements shall remain the property of
Sublessee and which improvements shall be . removed by Sublessee at the
expiration or earlier termination hereof. In the event Sublessor is (or becomes)
obligated under the Master Lease to remove any of Sublessee's alterations,
Sublessee shall be obligated to remove same at Sublessee's sole cost and expense
and to restore the Sublease Premises to its condition prior to the alteration
but only to the extent required by Sublessor or Master Lessor in their written
consent to any such alteration. In the event that Sublessee removes any items it
is permitted to remove under Exhibit B-2, Sublessee, subject to the provisions
of the second sentence of this section 8, at its sole cost and expense, shall
restore the Sublease Premises to its condition prior to alteration.

9.       Repairs. Pursuant to the Master Lease, Master Lessor is
responsible to repair and maintain the roof (structural portions only), exterior
walls and other structural portions of the Building and the Common Areas. As to
such matters, Sublessor's sole obligation to Sublessee shall be to request
performance of such obligations by Master Lessor. In the event Master Lessor
breaches its obligations, Sublessor will assign to Sublessee its right to
enforce such obligation and shall otherwise cooperate with Sublessee in
connection therewith, provided, however, Sublessee, at its sole cost and
expense, shall be responsible for enforcement thereof without reimbursement from
Sublessor. Sublessee, not Master Lessor, shall be responsible for the repair of
the roof and structural portions of the Building to the extent the need for
maintenance or repair is caused by the gross negligence or willful misconduct
of Sublessee, in which case Sublessee shall pay to Sublessor the cost of
(including reasonable overhead expense of Sublessor) the maintenance and repairs
caused by Sublessee (except (i) to the extent the damage is covered by any
insurance maintained by Master Lessor or Sublessor, or, (ii) if Master Lessor
fails to maintain the insurance required to be maintained by Master Lessor
pursuant to the terms of the Master Lease, to the extent the damage would have
been covered by insurance, if Master Lessor

6

had maintained the required insurance). There shall be no abatement of Base Rent
and no liability of Master Lessor or Sublessor by reason of any injury to or
interference with Sublessee's business arising from the making of any repairs,
alterations or improvements in or to the fixtures, appurtenances and equipment
therein, provided that Sublessor shall request Master Lessor to use reasonable
efforts to minimize the interruption of Sublessee's use and occupancy of the
Sublease Premises in connection with its performance of the repairs and
maintenance (although nothing contained herein shall be deemed to obligate
Master Lessor to pay any overtime costs in order to minimize such interference,
or otherwise to perform the repairs or maintenance during hours other than
normal business hours). As to all matters that neither Master Lessor nor
Sublessee is required to maintain or repair under the Master Lease or this
Sublease, as the case may be, Sublessor shall be responsible therefore, and
shall promptly and regularly maintain and repair the Sublease Premises.
Notwithstanding anything to foregoing, any damage caused by the negligence or
willful misconduct of Sublessee, shall promptly be repaired by Sublessee, at
Sublessee's own cost and expense, and in a manner reasonably acceptable to
Master Lessor and Sublessor.

10.      Insurance.

a.       Sublessee shall maintain commercial general liability
insurance coverage as required by section 12. l(a) of the Master Lease (but
prorated based upon the Sublease Premises to the Premises under the Master
Lease) which has been incorporated into this Sublease by reference. Each policy
of insurance, which Sublessee is required to maintain pursuant to this Lease,
shall name both Sublessor and Master Lessor (as well as Master Lessor's general
partners and Managing Agent) as additional insureds (including cross-liability
endorsements). Sublessee's insurance coverage shall be primary and
non-contributory as respects any insurance maintained by Sublessor and/or Master
Lessor. Sublessee shall deliver evidence of the coverage required hereunder (i)
thirty (30) days prior to occupancy and (ii) within ten (10) days of the renewal
date for each policy of insurance required hereunder.

b.       Pursuant to the terms of the Master Lease as provided
in Section 12. l(b) thereof, Master Lessor is obligated to maintain certain
insurance coverage with respect to certain perils. Sublessor's sole obligation
to Sublessee with respect to Master Lessor's obligations pursuant to said
Section 12.1(b) shall be to request performance of such obligations by Master
Lessor. In the event Master Lessor breaches its obligations, Sublessor will
assign to Sublessee its right to enforce such obligation and shall otherwise
cooperate with Sublessee in connection therewith, provided, however, Sublessee,
at its sole cost and expense, shall be responsible for enforcement thereof
without reimbursement from Sublessor. In the event Sublessor cannot assign such
rights, Sublessor shall diligently enforce its rights as Tenant under the Master
Lease.

11.      Damage or Destruction.

a.       Master Lessor Has Obligation to Restore. If the
Sublease Premises are damaged or destroyed, Master Lessor has the obligation
pursuant to Article 15 of the Master Lease to repair the Sublease Premises
unless Master Lessor has the right to terminate. If Master Lessor fails to
perform its obligations pursuant to Article 15 of the Master Lease, Sublessor's
sole obligation to Sublessee shall be to request performance of such obligations
by Master Lessor. In

7

the event Master Lessor breaches its obligations, Sublessor will assign to
Sublessee its right to enforce such obligation, provided, however, Sublessee, at
its sole cost and expense, shall be responsible for enforcement thereof without
reimbursement from Sublessor. In the event Sublessor cannot assign its rights,
Sublessor shall diligently enforce its rights under the Master Lease.

b.       Termination of Master Lease. If the Master Lease
terminates pursuant to Article 15 of the Master Lease, this Sublease shall
terminate concurrently with the termination of the Master Lease.

c.       Sublessee Notice; Right to Terminate. Within twenty
(20) days following written request from Sublessor, Sublessee shall give notice
to Sublessor in writing whether Sublessee agrees to continue this Sublease in
effect if Master Lessor reasonably determines that the repair of the Sublease
Premises or the Building cannot be completed within three hundred sixty five
(365) days after the casualty. If Sublessee does not so agree to continue this
Sublease in effect then this Sublease shall terminate. If Sublessee agrees to
continue this Sublease in effect as aforesaid, then Sublessor shall have no
right to exercise its right (if any) to terminate the Master Lease or this
Sublease. If (i) Master Lessor reasonably determines that the repair of the
Sublease Premises or the Building cannot be completed within three hundred sixty
five (365) days after the casualty, (ii) neither Master Lessor nor Sublessor
have elected to terminate the Master Lease, and (iii) Sublessee agrees to
continue this Sublease in effect notwithstanding the time to reconstruct, then
this Sublease shall continue in effect, and Sublessee shall fulfill all of the
obligations of Sublessor pursuant to the provisions of Article 15 of the Master
Lease, as it pertains to the Sublease Premises.

d.       Limited Obligation to Repair. Master Lessor's
obligation, should Master Lessor elect or be obligated to repair or rebuild,
shall be limited to the terms and conditions of the Master Lease. Master Lessor
shall have no obligation to replace or restore the Sublessee Equipment and
Alterations (as described in Exhibit B-2) or any other alterations installed by
Sublessor or Sublessee, unless specifically required by the Master Lease.

e.       Abatement of Rent. Rent under this Sublease shall
abate to the same extent as the Rent owing by Sublessor under the Master Lease
abates during any casualty repair period.

f.       Damage Near End of Term. In addition to the rights to
terminate specified in subsection 11. c of this Sublease, either Sublessor or
Sublessee shall have the right to cancel and terminate this Sublease as of the
date of the occurrence of destruction or damage if the Sublease Premises or the
Building is substantially destroyed or damaged (i.e., there is damage or
destruction which Sublessor reasonably determines would require more than sixty
(60) days to repair) and made untenantable during the last twelve (12) months of
the term of the Master Lease. Sublessor or Sublessee, as applicable, shall give
written notice of its election to terminate this Sublease under this subsection
f. within thirty (30) days after Master Lessor or Sublessor determines that the
damage or destruction would require more than sixty (60) days to repair. If
either Master Lessor or Sublessor elects to terminate the Master Lease pursuant
to Article 15 of

8

the Master Lease, this Sublease shall terminate concurrently with the
termination of the Master Lease. If neither Master Lessor nor Sublessor
terminates the Master Lease and if neither Sublessor nor Sublessee elects to
terminate this Sublease, the repair of the damage shall be governed by Article
15 of the Master Lease.

g.       Insurance Proceeds. If this Sublease is terminated,
Master Lessor and Sublessor may each keep all their respective insurance
proceeds resulting from the damage except for those proceeds, if any, which
specifically insured Sublessee's personal property and trade fixtures which
Sublessee has a right or obligation to remove upon the expiration of the
Sublease term. Sublessor shall be entitled to receive from Sublessee the
proceeds of insurance carried by Sublessee with respect to Sublessee
Improvements or other alterations installed in the Sublease Premises by
Sublessor or at Sublessor's expense. To the extent that Sublessee has paid for
any alterations regardless of whether the alterations may become the property of
Sublessor upon termination of this Sublease, Sublessee shall receive any portion
of the insurance proceeds payable with respect to the then unamortized cost
(based on a 2 year life of the alteration on a straight line amortization
schedule) for the applicable alterations, reduced by the amounts necessary to
pay off any equipment lease or other lien against the applicable alteration, and
the balance of the proceeds, if any, will be payable to Sublessor. With respect
to those Alterations, which Sublessee is obligated to remove at the end of the
Sublease term which are the property of Sublessee, all proceeds of any
insurance, carried by Sublessor or Sublessee shall be paid to Sublessee.

h.       Uninsured Casualty. If the Master Lease terminates
pursuant to the provisions of Article 15 of the Master Lease, this Sublease
shall terminate.

12.      Eminent Domain. If all or any part of the Sublease Premises is
taken for public or quasi-public use by a governmental authority under the power
of eminent domain or is conveyed to a governmental authority in lieu of such
taking, and if the taking or conveyance causes the remaining part of the
Sublease Premises to be untenantable and inadequate for use by Sublessee for the
purpose for which they were leased, then Sublessee, at its option and by giving
notice within fifteen (15) days after the taking, may terminate this Sublease as
of the date Sublessee is required to surrender possession of the Sublease
Premises. If a part of the Sublease Premises is taken or conveyed but the
remaining part is tenantable and adequate for Sublessee's use in Sublessee's
reasonable determination, then this Sublease shall be terminated as to the part
taken or conveyed as of the date Sublessee surrenders possession. All
compensation awarded for the taking or conveyance shall be the property of
Master Lessor and Sublessor, as their interests may appear, and Sublessee hereby
assigns to Sublessor all its right, title and interest in and to the award,
unless the governmental authority makes only one (1) award, and the award
contains compensation for the value of moving expenses, Sublessee's personal
property, trade fixtures and alterations (including the Sublessee Improvements),
Sublessee's Equipment and Alterations, in which case, subject to the rights of
any mortgagee or beneficiary of a deed of trust holding a lien on the Property
and to Master Lessor's rights under the Master Lease, Sublessee shall be
entitled to the compensation paid for Sublessee's moving expenses, trade
fixtures, personal property, Sublessee's Equipment and Alterations, and the
portion of the award attributable to the then unamortized cost of alterations
and improvements constructed at Sublessee's expense (which are

9

to be amortized on a straight line basis over the initial term of this
Sublease). Sublessee shall have the right, however, to recover from the
governmental authority, but not from Sublessor or Master Lessor, except as
provided in the preceding sentence, such compensation as may be awarded to
Sublessee on account of the interruption of Sublessee's business, moving and
relocation expenses and removal of Sublessee's trade fixtures and personal
property.

13.      Assignment and Subletting. Notwithstanding any provision of
this Sublease to the contrary, if Sublessor consents to a sublet, Sublessee
shall pay to Sublessor on a monthly basis as additional Rent, on the date Base
Rent is due, an amount equal to fifty percent (50%) of the amount by which the
rent payable to Sublessee ("Subrent") under the sublease exceeds the rent due
for the applicable portion of the Sublease Premises after deducting from the
Subrent (A) the actual out-of pocket costs incurred by Sublessee for brokerage
commissions and tenant concessions (which concessions are not reflected in the
reduced Subrent) and (B) the costs of any additional improvements constructed by
Sublessee in connection with the sublease (amortized on a straight line basis
over the term of the sublease). Notwithstanding the foregoing, Sublessee may
assign this Sublease or sublet any portion of the Sublease Premises without
Sublessor's or Master Lessor's consent to any of the following (i) any
corporation which controls, is controlled by or under common control with
Sublessee; (ii) any corporation resulting from the merger or consolidation of
Sublessee; and (iii) any person or entity which acquires all of the assets of
Sublessee as a going concern of the business that is being conducted on the
Sublease Premises (collectively, "Sublessee Affiliate"), provided that such
assignee assumes in full the obligations of Sublessee under the Sublease. Any
right of Sublessor or Master Lessor to terminate the Sublease or the Master
Lease in response to a requested assignment or subletting shall not apply to an
assignment of the Sublease or a subletting of the Sublease Premises to a
Sublessee Affiliate. Sublessee shall have the same assignment and sublease
rights and limitations as provided in section 13.1 of the Master Lease.

14.      Access to Premises. Master Lessor shall have the same right of
access to the Sublease Premises as Sublessor which right of access is described
in Section 14 of the Master Lease.

15.      Surrender at End of Term. Upon expiration or termination of
this Sublease, Sublessee shall surrender the Sublease Premises to Sublessor in
good and sanitary order, except for any alterations Sublessee is not required to
remove, normal wear and tear, acts of God, damage, destruction (except to the
extent Sublessee is obligated to restore the same under this Sublease) and
eminent domain covered by the provisions of this Sublease. Sublessee shall
remove from the Sublease Premises all of Sublessee's personal property and trade
fixtures, Sublessee's Equipment and Alterations, and any alterations and
improvements Sublessee is required to remove pursuant to Sublessor's or Master
Lessor's written consent to such alterations and improvements, and shall repair
all damage caused by the removal. Except to the extent caused by Sublessor's or
Master Lessor's or their agents', employees' or invitees', negligence or willful
misconduct, Sublessee shall indemnify Sublessor against all loss or liability
resulting from delay by Sublessee in so surrendering the Sublease Premises,
including without limitation, any claims made by any succeeding tenant, losses
to Sublessor due to lost opportunities to lease to a succeeding tenant, and
reasonable attorneys' fees and costs. Sublessee shall have no

10

obligation to remove any fixtures, alterations, or personal property placed or
installed in the Sublease Premises prior to the Commencement Date hereof.

16.      Sublessor Indemnity re: Hazardous Materials.

a.       Sublessor will provide to Sublessee copies of the
documents referred to in section 17.4 of the Master Lease.

b.       Sublessee shall indemnify, defend and hold Sublessor
harmless from and against any claim, damage, loss, liability, cost or expense
(including reasonable attorneys' fees) arising out of any spill or release of
any Hazardous Substance (as defined in Section 11.6 of the Master Lease which
has been incorporated by reference into this Sublease) on or about the Sublease
Premises by Sublessee, its employees, agents or contractors during the period of
time Sublessee has occupied the Sublease Premises. Sublessor shall indemnify,
defend and hold Sublessee harmless from and against any claim, damage, loss,
liability, cost or expense (including reasonable attorneys' fees) arising out of
any spill or release of any Hazardous Substance (as defined in Section 11.6 of
the Master Lease which has been incorporated by reference into this Sublease) on
or about the Sublease Premises by Sublessor, its employees, agents or
contractors during the period of time Sublessee occupies the Sublease Premises.

c.       Sublessor is entitled to indemnification from the
Master Lessor under certain circumstances as provided in Section 11.6 of the
Master Lease. To the extent such indemnification may apply to the benefit of
Sublessee, Sublessor agrees to cooperate with Sublessee to enforce such
indemnity obligation against Master Lessor; provided, however, Sublessee shall
pay any and all costs incurred by Sublessor or Sublessee in connection with the
enforcement thereof for the benefit of Sublessee.

17.      Signs. Master Lessor shall have the same approval rights with
respect to signs as Sublessor; Sublessor shall use its best efforts to obtain
Master Lessor's approval of signage rights reasonably satisfactory to Sublessee,
so long as such rights do not unreasonably interfere with the rights of
Sublessor under the Master Lease.

18.      Holding Over. This Sublease shall terminate without further
notice at the expiration of the Sublease term. Any holding over by Sublessee
after expiration or sooner termination of this Sublease without the consent of
Sublessor shall be construed to be a tenancy at sufferance. Base Rent for the
Sublease Premises during any tenancy at sufferance, or if Sublessor shall have
consented to Sublessee's holding over, shall be at a rate equal to 150% of the
Base Rent for the last month of the term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.

19.      Brokers. Sublessor and Sublessee each warrants and represents
for the benefit of the other that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Sublease, and that it
knows of no real estate broker or agent who is or might be entitled to a real
estate brokerage commission or finder's fee in connection with this Sublease.

11

Sublessor and Sublessee warrant and represent that they have dealt with no real
estate broker in connection with this Sublease.

a.       Broker Disclaimer. Sublessor and Sublessee agree and
accept that, except as otherwise expressly stated herein, no broker or agent has
made or conducted any investigation, determination, warranty or representation
with respect to any of the following: (a) the legality of the present or any
possible future use of the Sublease Premises under any federal, state or local
law; (b) the physical condition or square footage of the Sublease Premises; (c)
the terms of the Master Lease or any other relevant legal document or agreement;
or (d) the presence or location of any hazardous materials on or about the
property in which the Sublease Premises are located (including, but not limited
to, asbestos, PCB's, other toxic, hazardous or contaminated substances, and
underground storage tanks).

b.       Acknowledgement: The parties acknowledge that they
are not relying on information from any real estate licensee relating to the
field of toxic materials, hazardous waste, underground tanks, and asbestos
contamination, location of the property within or outside a specific flood zone
or special studies seismic area, nor the property's compliance with the
guidelines as set forth in the Americans with Disabilities Act (ADA) regarding
the determination of the condition of the subject Premises, but rather from
their own independently initiated investigations.

20.      Notices. All notices or demands of any kind required to be
given by Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered forty-eight (48) hours after depositing the notice or demand in
the United States Mail, certified or registered, postage prepaid, addressed to
the Sublessor or Sublessee respectively at the addresses set forth after their
signatures at the end of this Sublease. Either party may change its address by
written notice to the other party in accordance with this Section 20. All Base
Rent shall be paid by Sublessee to Sublessor at the same address.

21.      Condition To Effectiveness of This Sublease. This sublease is
contingent upon Sublessor obtaining the written consent of the Master Lessor to
this Sublease within 15 days of the date hereof. Sublessor and Sublessee
acknowledge and agree that in granting such consent, notwithstanding any other
provisions contained in or implied in this Sublease, Master Lessor shall not be
deemed or construed (a) to have released Sublessor from any responsibility for
the full and timely performance of all obligations of Sublessor as Tenant under
the Master Lease as it pertains to the Sublease Premises, nor (b) to have
authorized Sublessor to act on Master Lessor's behalf in exercising or waiving
any rights, remedies or privileges of Master Lessor as Landlord under the Master
Lease as it pertains to the Sublease Premises, nor (c) to have assumed; incurred
or undertaken any obligations or liabilities running directly to Sublessee with
respect to the Sublease Premises, it being the explicit intention and
understanding of the parties that notwithstanding the incorporation by reference
of the Master Lease into this Sublease (except as specifically excluded by
section 2 above, and as otherwise specifically excluded in this Sublease),
Master Lessor and Sublessor shall look solely to one another for the performance
of their respective obligations with respect to the Sublease Premises as
Landlord and Tenant under the Master Lease, and that Sublessor and Sublessee
shall look solely to one another for the

12

performance of their respective obligations with respect to the Sublease
Premises under this Sublease. Nothing in this Section 21 is intended, however,
to preclude Sublessee from enforcing, by direct action against Master Lessor,
any rights of Sublessor under the Master Lease to the extent such rights are
expressly assigned by Sublessor to Sublessee pursuant to this Sublease.

22.      Authority. Each person executing this Sublease on behalf of a
party hereto represents and warrants that he or she is authorized and empowered
to do so and to thereby bind the party on whose behalf he or she is signing.

23.      Attorneys' Fees. In the event either party shall bring any
action or proceeding for damages or for an alleged breach of any provision of
this Sublease to recover rents, or to enforce, protect or establish any right or
remedy hereunder, the prevailing party shall be entitled to recover reasonable
attorneys' fees and court costs as part of such action or proceeding.

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of
the dates set forth below.

Sublessor:

METAXEN LLC,
a Delaware limited liability company

By:   /s/ Michael J. Ross
-----------------------------
Michael J. Ross, Ph.D.
Its:  President and CEO                      Date 3/25/99

280 East Grand Avenue
South San Francisco, CA 94080

Sublessee:

EXELIXIS PHARMACEUTICALS, INC.,
a Delaware corporation

By:    /s/ George Scangos                           Date____________
-----------------------
George Scangos, Ph.D
President and CEO
260 Littlefield Avenue
South San Francisco, CA 94080

13

EXHIBIT "B-2"

Subject to the provisions of Article 9 of the Master Lease, the following
fixtures and equipment shall remain with_the Sublease Premises and shall be
surrendered by Sublessee at the expiration or earlier termination of the
Sublease:

ALL FIXED PARTITIONS
ALL CASE WORK AND BENCHES, SCREWED DOWN OR HARD WIRED TO THE
BUILDING

Subject to the provisions of Article 9 of the Master Lease, the following
fixtures and equipment shall be removed from the Ground Floor Leased Area and
the Second Floor Leased Area at the expiration or earlier termination of the
Sublease (the "Sublessee Equipment and Alterations"):

Centrifuges
Tissue Culture Incubators
Tissue Culture Hoods
All robotic and automated devices purchased by the Sublessee
including Robotic Plate, Liquid Handling and Imaging Devices
Vibration Isolation Tables
Freezers
Refrigerator/Freezers
Microscopes
Free Standing shelving
Water treatment systems which are not part of the "house"
system

14

Subleases

Cytokinetics              8/1/98 - 8/31/00 ($52,250/mo first year, $53,625/mo second year)
first year: $3.80/sq ft; second year: $3.80/sq ft
13 750 square feet

Exelixis                  3/1/99-5/31/00 (9/30/00) ($25,477/mo)
ground floor: $1.80/sq ft                 3,040 Exe only, 4,986 (50%) shared
second floor: $3.50/sq ft                 3,019 Exe only, 5,677 (25%) shared

MetaXen
Who occupies how much space          MelaXen  Cytokinetics   Exelixis    M/E shared     %age
---------------------------------------------------------

Ground     4,757     13,750        3040          4968         50%
Second    14,984          -        3019          5677         75%

19,741     13,750       6,059        10,645     50,195

Exhibit 10.9

ASSIGNMENT AND ASSUMPTION AGREEMENT AND CONSENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT AND CONSENT (this "Agreement")
is made as of July 11, 1999, by and among EXELIXIS PHARMACEUTICALS, INC.
("Exelixis"), METAXEN, LLC ("MetaXen"), XENOVA GROUP PLC ("Xenova") and
BRITANNIA POINTE GRAND LIMITED PARTNERSHIP ("Landlord").

RECITALS

WHEREAS, pursuant to the Build-to-Suit Lease dated May 27, 1997, as
amended by the First Amendment to Lease dated as of April 13, 1998 (collectively
the "MetaXen Lease"), MetaXen leased the premises described therein as Building
H in Britannia Pointe Grand Business Park, South San Francisco, California
containing approximately 50,195 square feet, and the nonexclusive use of the
Common Areas of the Britannia Pointe Grand Business Park, from Landlord.

WHEREAS, MetaXen is in default in its obligation to reimburse Landlord
an amount deemed by the parties to equal $750,000 (the "Outstanding Tenant
Improvement Amount") for MetaXen' s share of the excess costs incurred by
Landlord in constructing tenant improvements in the Premises.

WHEREAS, pursuant to the Sublease Agreement dated March 1, 1999 (the
"Exelixis Sublease"), MetaXen subleased a portion of Building H to Exelixis (the
"Exelixis Premises").

WHEREAS, pursuant to the Sublease Agreement dated May 1, 1998 (the
"Cytokinetics Sublease"), MetaXen subleased a portion of Building H to
Cytokinetics, Inc. ("Cytokinetics").

WHEREAS, in connection with the purchase by Exelixis of certain assets
of MetaXen pursuant to the Asset Purchase Agreement dated July 11, 1999 (the
"Asset Purchase" and the "Asset Purchase Agreement", respectively), and
conditioned upon the closing thereof, the parties wish to provide for the
repayment of the Outstanding Tenant Improvement Amount to Landlord, the
assignment of the MetaXen Lease to Exelixis, followed by the subsequent
assignment of the MetaXen Lease to a new tenant, to be selected by Exelixis and
approved by Landlord (which approval shall not be unreasonably withheld) and the
release of Exelixis.

WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned to them in the MetaXen Lease.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

1.       ASSIGNMENT AND ASSUMPTION OF METAXEN LEASE BY EXELIXIS.
Conditioned upon, and effective as of, the closing of the Asset Purchase (the
"Effective Date"), MetaXen hereby assigns to Exelixis all of its right, title
and interest in the Premises, including, without

1.

limitation, its entire leasehold interest under the MetaXen Lease (subject to
the Cytokinetics Sublease) and the $104,500.00 security deposit deposited with
MetaXen by Cytokinetics, but excluding the MetaXen security deposit in the
amount of $58,045.00, which shall be refunded to MetaXen by Landlord. Exelixis
will deposit the sum of $58,045.00 with Landlord to serve as a substitute
security deposit under Section 18.1 of the MetaXen Lease as assumed by Exelixis.
Conditioned upon, and effective as of, the closing of the Asset Purchase,
Exelixis hereby assumes and agrees to perform all of the obligations of the
Tenant under the MetaXen Lease which arise subsequent to the Effective Date.
Exelixis shall defend, indemnify and hold MetaXen harmless from (i) all claims,
damages, liabilities, indebtedness and obligations arising under the MetaXen
Lease following the Effective Date, and (ii) any further obligation of MetaXen
or Xenova with respect to the Outstanding Tenant Improvement Amount. MetaXen and
Xenova shall defend, indemnify and hold Exelixis harmless against all claims,
damages, liabilities, indebtedness and obligations arising under the MetaXen
Lease prior to the Effective Date.

(a)      CONSENT TO ASSIGNMENT TO AND ASSUMPTION BY EXELIXIS.
Effective as of the closing of the Asset Purchase, Landlord hereby consents to
the foregoing assignment and assumption between MetaXen and Exelixis conditioned
upon (1) Landlord's receipt of the Outstanding Tenant Improvement Amount as
described in Section 2, below, (2) the closing of the Asset Purchase, and (3)
Landlord's receipt of the approval of its Lender, Northwestern Mutual Life, no
later than 15 days following the Effective Date. Landlord hereby releases each
of MetaXen and Xenova from any and all further liabilities of either of them to
Landlord in connection with the leased premises, such release to become
effective upon the closing of the Asset Purchase, but Exelixis acknowledges that
such release shall not affect the liabilities and obligations of Exelixis under
the MetaXen Lease as assumed by Exelixis herein, except as expressly set forth
herein.

(b)      SUBSEQUENT ASSIGNMENT BY AND RELEASE OF EXELIXIS.
Conditioned upon its receipt of warrants to purchase a satisfactory number of
the common shares of a prospective assignee ("Proposed Assignee"), a fully
executed assignment and assumption agreement between Exelixis and such Proposed
Assignee, in form and substance satisfactory to Landlord, approval by Landlord
and its lender, Northwestern Mutual Life, of the Proposed Assignee and its
financial statements (such approval not to be unreasonably withheld by
Landlord), and evidence that such Proposed Assignee meets any other applicable
requirements under Section 13 of the MetaXen Lease, Landlord agrees to consent
to the assignment and assumption between Exelixis and the Proposed Assignee and
agrees that upon execution and delivery of such assignment and assumption
agreement and satisfaction of the other conditions set forth in this sentence,
Exelixis shall be fully released from all obligations of Tenant arising under
the MetaXen Lease after the effective date of such assignment and assumption
agreement. The warrants described in the preceding sentence shall be issued to
Landlord or its designees (who may include any of Landlord's partners and any
persons or entities directly or indirectly controlling, controlled by or under
common control with Landlord or any of its partners), shall provide in the
aggregate for the purchase of a satisfactory number of shares of common stock of
the Proposed Assignee at an exercise price equal to the price reflected in the
most recent issuance of the Proposed Assignee's stock prior to or substantially
concurrently with this Agreement, shall be issued within thirty (30) days after
the date of the assignment and assumption agreement with the Proposed Assignee,
shall be exercisable throughout the period from the date of issuance until five
(5) years after an

2.

initial public offering of the Proposed Assignee's stock and shall contain other
reasonable and customary provisions (including but not limited to, a net
exercise or "cashless" exercise provision). Landlord agrees, in connection with
the receipt of such warrants, to return for cancellation any and all warrants to
purchase shares of MetaXen currently held by Landlord.

2.       PAYMENT OF OUTSTANDING TENANT IMPROVEMENT AMOUNT. Conditioned
upon the closing of the Asset Purchase, and concurrently therewith, (a) Xenova
shall pay to Exelixis in cash the amount of $375,000 (which, subject to
compliance with the terms and conditions of this Agreement shall constitute
payment in full of MetaXen's and Xenova's obligations with respect to the
Outstanding Tenant Improvement Amount, but shall not satisfy obligations of
Exelixis with respect to the Outstanding Tenant Improvement Amount, which
obligations are set forth herein and shall be satisfied in accordance with the
remainder of this Section); (b) Exelixis shall pay to Landlord in cash the
amount of $550,000; and (c) Landlord and Exelixis shall execute a second
amendment to the MetaXen Lease, in the form attached hereto as Exhibit A, which
shall provide for an increase in the Monthly Minimum Rental, in order to
amortize the remaining $200,000 of the Outstanding Tenant Improvement Amount
over seven years at a rate of thirteen percent per annum. Landlord agrees that
its receipt of such amounts and the execution of the second amendment shall
constitute payment in full of all amounts due to Landlord under the MetaXen
Lease in connection with the construction of tenant improvements.

3.       STATUS OF METAXEN LEASE AND CYTOKINETICS SUBLEASE. Landlord,
MetaXen and Xenova each represent and warrant: a) that the copy of the MetaXen
Lease and of the amendments to the MetaXen Lease attached hereto as Exhibit B
constitute the entire MetaXen Lease; b) that the MetaXen Lease has not
previously been amended or modified except as reflected in Exhibit B; and c)
that neither Landlord nor MetaXen is in breach of or in default under any
provision of the MetaXen Lease, except for MetaXen's failure to reimburse
Landlord the Outstanding Tenant Improvement Amount. MetaXen and Xenova hereby
represent a) that the copy of the Cytokinetics Sublease attached as Exhibit C
constitutes the entire Cytokinetics Sublease, b) that the Cytokinetics Sublease
has not been amended or modified except as reflected in Exhibit C, c) that
neither MetaXen nor Cytokinetics is in breach of or in default of any provisions
under the Cytokinetics Sublease, and d) that Cytokinetics' security deposit in
the amount of $104,500 has not been applied to any default by Cytokinetics.
Landlord represents that Landlord is the sole owner of the Landlord's interest
under the MetaXen Lease, subject to the rights of Landlord's Lender under an
assignment of the MetaXen Lease (and other leases at Britannia Pointe Grand
Business Park) for security, and has the power and authority to enter into this
Agreement and that any consent by any lender or other person required to enter
into this Agreement has been obtained (other than the consent of Landlord's
Lender to be obtained after the Effective Date as provided in Section l(a)
above).

4.       SUCCESSORS. All rights and liabilities under this Agreement
extend to and bind the successors and assigns of the parties.

5.       INTEGRATION. This Agreement, together with the MetaXen Lease,
sets forth all the covenants, promises, agreements, conditions and
understandings between Landlord and the other parties hereto with respect to the
Premises, and this Agreement, together with the Asset Purchase Agreement, sets
forth all the covenants, promises, agreements, conditions and understandings
between such other parties concerning the Premises. No alteration, amendment or
addition to

3.

this Agreement will be binding upon any party unless in writing and signed by
the party against whom enforcement is sought.

6.       GOVERNING LAW. This Agreement will be construed in accordance
with and governed by the laws of the State of California.

7.       ATTORNEYS' FEES. If any party brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the prevailing party in
any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment.

8.       COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and once at least one counterpart has been executed by each party,
shall be deemed fully executed. Each such counterpart shall be deemed an
original but all such counterparts shall be deemed one and the same agreement.

9.       BROKERAGE. The parties each hereby represent and warrant to
the other parties that they have dealt with no brokers in connection with this
Agreement, nor is there any broker or other person entitled to any commission or
other compensation as a result of such person's dealings with such party in
connection with this Agreement. Each party (the "Indemnifying Party") agrees to
indemnify, defend and hold the other parties (each an "Indemnified Party")
harmless from and against any and all losses, liabilities, damages, costs and/or
expenses incurred by the Indemnified Party as a result of the breach of such
representation and warranty by the Indemnifying Party.

10.      NO FURTHER TENANT IMPROVEMENTS. The parties hereby acknowledge
and agree that Landlord is under no obligation to construct or finance any
improvements to the Premises for any party, including, without limitation,
Exelixis or any Proposed Assignee or other person or entity to whom Exelixis may
assign the MetaXen Lease or sublet the Premises or any portion thereof.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first written above.

EXELIXIS PHARMACEUTICALS, INC.,
a Delaware corporation

By: /s/ [ILLEGIBLE]
------------------------------

Its: [ILLEGIBLE]
-----------------------------

And By: /s/ [ILLEGIBLE]
--------------------------

Its: SECRETARY, SENIOR DIR FIN
-----------------------------

4.

METAXEN, LLC, a Delaware limited liability
company

By: /s/ [ILLEGIBLE]
------------------------------

Its: Interim President
-----------------------------

And By: /s/ DANIEL ABRAMS
--------------------------

Its: DANIEL ABRAMS
-----------------------------

XENOVA GROUP PLC, a

By: /s/ Daniel Abrams
------------------------------

Its: Daniel Abrams
Finance Director
-----------------------------

And By: /s/ [ILLEGIBLE]
--------------------------

Its: CEO
-----------------------------

BRITANNIA POINTE GRAND LIMITED PARTNERSHIP,
a Delaware limited partnership

By: BRITANNIA POINTE GRAND, LLC, a
California limited liability company,

By:_____________________________
Name: T. J. Bristow
Its: Manager, President and
Chief Financial Officer

5.

METAXEN, LLC, a Delaware limited liability
company

By: /s/ [ILLEGIBLE]
------------------------------

Its: [ILLEGIBLE]
-----------------------------

And By: /s/ [ILLEGIBLE]
--------------------------

Its: DANIEL ABRAM
-----------------------------

XENOVA GROUP PLC, a

---------------------------------

By: /s/ Daniel Abrams
------------------------------

Its: Daniel Abrams
Finance Director
-----------------------------

And By: /s/ [ILLEGIBLE]
--------------------------

Its: CEO
-----------------------------

BRITANNIA POINTE GRAND LIMITED PARTNERSHIP,
a Delaware limited partnership

By: BRITANNIA POINTE GRAND, LLC, a
California limited liability company,

By:_____________________________
Name: T. J. Bristow
Its: Manager, President and
Chief Financial Officer

METAXEN, LLC, a Delaware limited liability
company

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

Its:
-----------------------------

And By:
--------------------------

Its:
-----------------------------

XENOVA GROUP PLC, a

---------------------------------

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

Its:
-----------------------------

And By:
--------------------------

Its:
-----------------------------

BRITANNIA POINTE GRAND LIMITED PARTNERSHIP,
a Delaware limited partnership

By: BRITANNIA POINTE GRAND, LLC, A
California limited liability company,

By: /s/ T. J. Bristow
--------------------------
Name: T. J. Bristow
Its: Manager, President and
Chief Financial Officer

EXHIBIT A

FORM OF SECOND AMENDMENT

1.

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE ("Second Amendment"), dated (for
reference purposes) as of July ___, 1999, is entered into by BRITANNIA POINTE
GRAND LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and
EXELIXIS PHARMACEUTICALS, INC., a'Delaware corporation ("Tenant"), with
reference to the following facts:

A.       Landlord and MetaXen, LLC, a Delaware limited liability
company ("MetaXen"), entered into a Build-to-Suit Lease dated May 27, 1997 and a
First Amendment to Lease dated as of April 13, 1998 (collectively, as amended,
the "Lease"), covering certain premises described therein as all of Building H
(the "Premises") in the Britannia Pointe Grand Business Park, South San
Francisco, California (the "Center"), consisting of approximately 50,195 square
feet, together with the nonexclusive right to use the Common Areas of the Center
as they exist from time to time.

B.       By an Assignment and Assumption Agreement and Consent dated as
of July___, 1999 among Tenant, MetaXen, Xenova Group plc and Landlord (the
"Assignment Agreement"), MetaXen assigned its entire leasehold interest under
the Lease to Tenant, with Landlord's consent, upon and subject to the terms and
conditions set forth in such Assignment Agreement.

C.       Among the terms and conditions set forth in the Assignment
Agreement is a requirement that Landlord and Tenant enter into this Second
Amendment, providing for an increase in the monthly minimum rental payable under
the Lease for a period of seven (7) years as set forth herein, as part of the
consideration to Landlord to discharge certain unpaid obligations of MetaXen
under the Lease in connection with excess costs incurred by Landlord in
constructing tenant improvements in the Premises.

D.       Terms used herein as defined terms but not specifically
defined herein shall have the meanings assigned to such terms in the Lease.

NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant
agree as follows:

1.       Monthly Minimum Rental. In addition to the monthly minimum
rental prescribed in Section 3.1 (a) of the Lease (as amended) and the
additional minimum rent prescribed in Paragraph 3 of the First Amendment to
Lease described above, Tenant agrees to pay to Landlord as additional minimum
rent, for each of the eighty-four (84) months of the term of the Lease beginning
with the month of August, 1999 and ending with the month of July, 2006,
inclusive, the sum of Three Thousand Six Hundred Thirty-Eight Dollars ($3,63
8.00) per month, representing the equivalent of an amortization of $200,000 of
excess tenant improvement costs over seven (7) years with an imputed return
factor of thirteen percent (13%) per annum.

EXHIBIT A

2.       Tenant's Notice Address. The notice address for Tenant under
Section 19.1 of the Lease is changed to the following:

Exelixis Pharmaceuticals, Inc.
260 Littlefield Avenue
South San Francisco, CA 94080
Attn: George A. Scangos
Facsimile: (650) 825-2202

3.       Union Labor. The fourth sentence of Section 9.1 of the Lease
(beginning "In addition, Tenant shall engage only union contractors...") is
deleted in its entirety.

4.       Effectiveness. This Second Amendment is being executed
substantially concurrently with the Assignment Agreement. The Assignment
Agreement contains certain conditions subsequent which must be satisfied before
the Assignment Agreement will become effective. The effectiveness of this Second
Amendment is expressly conditioned upon the Assignment Agreement becoming
effective in accordance with its terms, in which event this Second Amendment
shall be deemed to become effective immediately after the Assignment Agreement
becomes effective. Landlord and Tenant shall execute a written acknowledgment
of the effectiveness of this Second Amendment promptly following the date on
which the Assignment Agreement becomes effective, but such written
acknowledgment is intended solely for evidentiary purposes and the failure or
refusal of either or both parties to execute such a written acknowledgment shall
not impair the effectiveness of this Second Amendment when it has otherwise
become effective in accordance with its terms. If the Assignment Agreement has
not become effective by August 31, 1999, this Second Amendment shall be deemed
to be rescinded and to be of no further force or effect.

5.       Full Force and Effect. Except as expressly set forth herein,
the Lease has not been modified or amended and remains in full force and effect.

[rest of page intentionally left blank]

- 2 -

IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment as of the date first set forth above.

"Landlord"                                   "Tenant"

BRITANNIA POINTE GRAND LIMITED                 EXELIXIS PHARMACEUTICALS, INC., a
PARTNERSHIP, a Delaware limited                Delaware corporation
partnership

By: BRITANNIA POINTE GRAND,                    By:  ________________________
LLC, a California limited liability             George A. Scangos
company, General Partner                        President & CEO

By:  ______________________                By:  ________________________
T. J. Bristow                         Its: ________________________
Manager

- 3 -

Exhibit 10.10

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE ("Second Amendment"), dated (for
reference purposes) as of July 11, 1999, is entered into by BRITANNIA POINTE
GRAND LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord";) and
EXELIXIS PHARMACEUTICALS, INC., a Delaware corporation ("Tenant"), with
reference to the following facts:

A.       Landlord and MetaXen, LLC, a Delaware limited liability
company ("MetaXen"), entered into a Build-to-Suit Lease dated May 27,1997 and a
First Amendment to Lease dated as of April 13, 1998 (collectively, as amended,
the "Lease"), covering certain premises described therein as all of Building H
(the "Premises") in the Britannia Pointe Grand Business Park, South San
Francisco, California (the "Center"), consisting of approximately 50,195 square
feet, together with the nonexclusive right to use the Common Areas of the Center
as they exist from time to time.

B.       By an Assignment and Assumption Agreement and Consent dated as
of July 11, 1999 among Tenant, MetaXen, Xenova Group plc and Landlord (the
"Assignment Agreement"), MetaXen assigned its entire leasehold interest under
the Lease to Tenant, with Landlord's consent, upon and subject to the terms and
conditions set forth in such Assignment Agreement.

C.       Among the terms and conditions set forth in the Assignment
Agreement is a requirement that Landlord and Tenant enter into this Second
Amendment, providing for an increase in the monthly minimum rental payable under
the Lease for a period of seven (7) years as set forth herein, as part of the
consideration to Landlord to discharge certain unpaid obligations of MetaXen
under the Lease in connection with excess costs incurred by Landlord in
constructing tenant improvements in the Premises.

D.       Terms used herein as defined terms but not specifically
defined herein shall have the meanings assigned to such terms in the Lease.

NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant
agree as follows:

1.       Monthly Minimum Rental. In addition to the monthly minimum
rental prescribed in Section 3.1 (a) of the Lease (as amended) and the
additional minimum rent prescribed in Paragraph 3 of the First Amendment to
Lease described above, Tenant agrees to pay to Landlord as additional minimum
rent, for each of the eighty-four (84) months of the term of the Lease beginning
with the month of August, 1999 and ending with the month of July, 2006,
inclusive, the sum of Three Thousand Six Hundred Thirty-Eight Dollars
($3,638.00) per month, representing the equivalent of an amortization of
$200,000 of excess tenant improvement costs over seven (7) years with an imputed
return factor of thirteen percent (13%) per annum.

2.       Tenant's Notice Address. The notice address for Tenant under
Section 19.1 of the Lease is changed to the following:

Exelixis Pharmaceuticals, Inc.
260 Littlefield Avenue
South San Francisco, CA 94080
Attn: George A. Scangos
Facsimile: (650) 825-2202

3.       Union Labor. The fourth sentence of Section 9.1 of the Lease
(beginning "In addition, Tenant shall engage only union contractors...") is
deleted in its entirety.

4.       Effectiveness. This Second Amendment is being executed
substantially concurrently with the Assignment Agreement. The Assignment
Agreement contains certain conditions subsequent which must be satisfied before
the Assignment Agreement will become effective. The effectiveness of this Second
Amendment is expressly conditioned upon the Assignment Agreement becoming
effective in accordance with its terms, in which event this Second Amendment
shall be deemed to become effective immediately after the Assignment Agreement
becomes effective. Landlord and Tenant shall execute a written acknowledgment of
the effectiveness of this Second Amendment promptly following the date on which
the Assignment Agreement becomes effective, but such written acknowledgment is
intended solely for evidentiary purposes and the failure or refusal of either or
both parties to execute such a written acknowledgment shall not impair the
effectiveness of this Second Amendment when it has otherwise become effective in
accordance with its terms. If the Assignment Agreement has not become effective
by August 31, 1999, this Second Amendment shall be deemed to be rescinded and to
be of no further force or effect.

5.       Full Force and Effect. Except as expressly set forth herein,
the Lease has not been modified or amended and remains in full force and effect.

[rest of page intentionally left blank]

- 2 -

IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment as of the date first set forth above.

"Landlord"                                  "Tenant"

BRITANNIA POINTE GRAND LIMITED             EXELIXIS PHARMACEUTICALS, INC.,
PARTNERSHIP, a Delaware limited            a Delaware corporation
partnership

By:  BRITANNIA POINTE GRAND,               By:  /s/ George A. Scangos
LLC, a California limited                  -------------------
liability company, General                 George A. Scangos
Partner                                    President & CEO

By: /s/ T. J. Bristow                 By:  [ILLEGIBLE]
------------------------               ---------------
T.J. Bristow                      Its: SECRETARY, SR. DR. FIN.
Manager

- 3 -

Exhibit 10.11

FIRST AMENDMENT TO SUBLEASE AGREEMENT

This First Amendment to Sublease Agreement ("First Amendment") dated
July 20,1999, for reference purposes only, is entered into by and between
METAXEN LLC, a Delaware limited liability company ("Sublessor") and
CYTOKINETICS, INC. a Delaware corporation ("Sublessee"), and is subject to the
terms and conditions of that certain Build-To-Suit Lease ("Master Lease") dated
May 27,1997 (as amended) entered into by BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a California limited partnership ("Master Lessor"), as Landlord,
and Sublessor as Tenant, with reference to the following facts:

A.       Sublessor and Sublessee are parties to a sublease, dated
May 1, 1998 ("Sublease"), covering certain premises of approximately 13,750
leasable square feet located within Building H in the Britannia Pointe Grand
Business Park, South San Francisco, California;

B.       By an Assignment and Assumption Agreement and Consent dated as
of June 11,1999 among Sublessor, Master Lessor, Xenova Group plo and Exelixis
Pharmaceuticals, Inc, ("Exelixis"), Sublessor assigned its entire leasehold
interest under the Master Lease to Exelixis, with Master Lessor's consent, upon
terms and conditions set forth in such Assignment Agreement; .

C.       By an Agreement and Consent dated as of even date herewith,
among Sublessee, Exelixis, and Master Lessor, Exelixis agreed that, in exchange
for certain payments and other consideration and upon and subject to the terms
and conditions set forth in such Agreement and Consent, it will assign to
Sublessee its interests and rights under the Master Lease;

D.       Sublessee wishes to extend the Expiration Date of the
Sublease;

E.       Capitalized tarms used in this Amendment which are not
otherwise specifically defined herein shall have the meanings assigned to such
terms in the Sublease.

NOW THEREFORE, in consideration of the mutual agreements and promises
set forth herein, the parties agree as follows:

1.       Sublease Term. The parties agree that the Expiration Date is
amended to February 28, 2001.

2.       Full Force and Effect. Except as expressly set forth herein,
the Sublease has not been modified or amended and remains in full force and
effect.

1

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first set forth above.

"Sublesseor"                                     "Sublessee"

METAXEN, LLC a Delaware                         CYTOKINETICS, INC.,
limited liability company                       a Delaware corporation

By: /s/ [ILLEGIBLE]                                  By: /s/ James Sabry
------------------------                             --------------------
------------------                                  James Sabry
------------------                                  President & CEO

By: /s/ [ILLEGIBLE]                                  By: /s/ Robert Blum
------------------------                             --------------------
------------------                                  Robert Blum
------------------                                  Vice President

The undersigned hereby consent to the foregoing, effective of the date
first above written.

BRITANNIA POINTE GRAND LIMITED PARTNERSHIP,
a Delaware limited partnership

By: Britannia Pointe Grand LLC, a California limited liability company
General Partner

By: /s/ T.J. Bristow
-------------------------------------
T.J. Bristow
Manager, President and Chief Financial Officer

EXELIXIS PHARMACEUTICALS, INC.
a Delaware corporation

By:  /s/ [ILLEGIBLE]
-----------------------------------
Its: PRES & CEO
----------------------------------

By:  /s/ [ILLEGIBLE]
-----------------------------------
Its: SECRETARY

2

Exhibit 10.12

AGREEMENT AND CONSENT

THIS AGREEMENT AND CONSENT (this "Agreement") is made as of July 20,
1999, by and among Exelixis Pharmaceuticals, Inc. ("Exelixis"), Cytokinetics,'
Inc., a Delaware corporation ("Cytokinetics") and Britannia Pointe Grand Limited
Partnership ("Landlord").

RECITALS

WHEREAS, pursuant to the Build-to-Suit Lease dated May 27, 1997, as
amended by the First Amendment to Lease dated as of April 13, 1998 and the
Second Amendment to Lease dated concurrently herewith (collectively the "MetaXen
Lease"), MetaXen, LLC ("MetaXen") leased the premises described therein as
Building H in Britannia Pointe Grand Business Park, South San Francisco,
California containing approximately 50,195 square feet ("Building H" or the
"Premises"), and the nonexclusive use of the Common Areas of the Britannia
Pointe Grand Business Park, from Landlord.

WHEREAS, MetaXen is in default in its obligation to reimburse Landlord
the amount of $750,000 (the "Outstanding Tenant Improvement Amount") for
MetaXen's share of the excess costs incurred by Landlord in constructing tenant
improvements in the Premises.

WHEREAS, in connection with the purchase by Exelixis of certain assets
of MetaXen pursuant to the Asset Purchase Agreement dated July 11, 1999 (the
"Asset Purchase" and the "Asset Purchase Agreement", respectively) and in
consideration of Exelixis agreeing to pay a portion of such Outstanding Tenant
Improvement Amount, MetaXen will assign all its right, title and interest under
the MetaXen Lease to Exelixis.

WHEREAS, pursuant to the Sublease Agreement dated May 1, 1998 (the
"Cytokinetics Sublease"), MetaXen subleased approximately 13,750 square feet on
the ground floor of Building H to Cytokinetics (the "Cytokinetics Premises").

WHEREAS, pursuant to the Sublease Agreement dated March 1, 1999 (the
"Exelixis Sublease"), MetaXen subleased a portion of Building H to Exelixis (the
"Exelixis Premises").

"WHEREAS, conditioned upon the closing of the Asset Purchase, among
other things as more expressly set forth in this Agreement, the parties wish to
provide for the subsequent assignment of the MetaXen Lease to Cytokinetics and
the release of Exelixis.

WHEREAS, all capitalized terms used but not defined herein shall have
the meanings assigned to them in the MetaXen Lease.

AGREEMENT

Now, THEREFORE, the parties agree as follows:

1.       CONDITIONAL AGREEMENT TO ASSIGN THE METAXEN LEASE TO
CYTOKINETICS. Exelixis agrees to assign its interests and rights under the
MetaXen Lease to Cytokinetics effective as of the date of actual completion and
delivery of Building 1 (as defined in the Build-

1.

to-Suit Lease between Landlord and Exelixis dated May 12, 1999, referred to
herein as the "Exelixis Lease"), by executing an assignment and assumption
agreement in form and substance satisfactory to Exelixis, and Cytokinetics
conditioned upon: (i) actual completion and delivery to Exelixis of Building 1;
and (ii) the mutual agreement by Landlord and Exelixis on all material terms and
conditions applicable to Building 2, as defined in the Exelixis Lease, no later
than December 31, 1999. Cytokinetics hereby agrees to assume all rights and
obligations of Tenant under the MetaXen Lease which arise subsequent to the
effective date of such assignment and assumption.

(a)      CONSENT TO ASSIGNMENT AND ASSUMPTION; WARRANTS.
Conditioned upon its receipt of warrants to purchase Cytokinetics common stock
as described below and a fully executed assignment and assumption agreement
between Exelixis and Cytokinetics, in form and substance satisfactory to
Landlord and upon receipt of consent from Landlord's lender, Northwestern Mutual
Life, Landlord hereby consents to the assignment and assumption between Exelixis
and Cytokinetics and agrees that upon execution and delivery of such assignment
and assumption agreement and satisfaction of the other conditions set forth in
this sentence, Exelixis shall be fully released from all obligations of Tenant
arising under the MetaXen Lease after the effective date of such assignment and
assumption agreement. The warrants described in the preceding sentence shall be
issued to Landlord or its designees (who may include any of Landlord's partners
and any persons or entities directly or indirectly controlling, controlled by or
under common control with Landlord or any of its partners), shall provide in the
aggregate for the purchase of 200,000 shares of common stock of Cytokinetics at
an exercise price equal to the price reflected in the most recent issuance of
Cytokinetics stock prior to or substantially concurrently with this Agreement,
shall be issued within thirty (30) days after the date of this Agreement, shall
be exercisable throughout the period from the effective date of the assignment
and assumption of the MetaXen Lease to and by Cytokinetics until five (5) years
after an initial public offering of Cytokinetics stock and shall contain other
reasonable and customary provisions (including but not limited to, a net
exercise or "cashless" exercise provision). Such warrants shall also contain a
provision by which they would be deemed rescinded in the event that,
Cytokinetics' assumption of the MetaXen Lease shall have failed to occur by July
31,2000.

2.       POSSIBLE EXPANSION. Landlord and Cytokinetics have discussed
the possibility that Landlord may acquire all or substantially all of the
property identified in Exhibit A attached hereto and incorporated herein by this
reference (the "Expansion Property") for development purposes, although Landlord
is under no obligation to do so. Provided that Cytokinetics assumes the MetaXen
Lease, Landlord will keep Cytokinetics informed of Landlord's progress, if any,
from time to time toward acquisition of the Expansion Property. Provided that
Cytokinetics assumes the MetaXen Lease, if at any time prior to expiration of
the MetaXen Lease Landlord does acquire all or substantially all of the
Expansion Property for development purposes, then Landlord shall promptly give
Cytokinetics written notice thereof, specifying the size, location and general
layout of the building that Landlord proposes to develop on the Expansion
Property, the proposed timing for construction of such building, the proposed
lease term and the economic terms (including, but not limited to, rent schedule
and tenant improvement allowance) pursuant to which Landlord proposes to
construct and lease such building, and Cytokinetics shall have a period of
forty-five (45) days after the date Cytokinetics receives such written notice
(the "Expansion Option Period") in which either to accept Landlord's proposed
terms by written notice to Landlord or, at Cytokineties' election and risk, to
attempt to negotiate and agree upon

2.

with Landlord, in a letter of intent or other similar written statement of terms
mutually acceptable to Landlord and Cytokinetics in their respective discretion
and mutually executed by Landlord and Cytokinetics (a "Letter of Intent"), an
alternative set of terms for construction of a building on the Expansion
Property for Cytokinetics; provided, however, that the foregoing provisions
shall not apply, and Landlord shall have no obligation to Cytokinetics with
respect to the Expansion Property, during any period in which Cytokinetics is in
default under this Agreement or in which the assumption of the MetaXen Lease by
Cytokinetics has become effective and Cytokinetics is in default (beyond any
applicable cure period) under the MetaXen Lease. If within the Expansion Option
Period either Cytokinetics accepts Landlord's terms with respect to the
Expansion Property or Cytokinetics and Landlord enter into a Letter of Intent
with respect to the Expansion Property, then the agreed terms shall be mutually
binding upon Landlord and Cytokinetics and they shall promptly, diligently and
in good faith (a) prepare and execute a new lease or an amendment to the MetaXen
Lease, as Landlord may elect, providing for the construction of a building on
the Expansion Property and the leasing of such building to Cytokinetics on such
agreed terms and on other reasonable and customary additional terms and
provisions and (b) prepare and execute an amendment to the MetaXen Lease
extending the term of that Lease (on the same terms as if the extension were
from an exercise or partial exercise of the renewal option(s) contained in that
Lease) to make it coterminous with the lease of the Expansion Property. If
within the Expansion Option Period Cytokinetics neither accepts Landlord's
offered terms with respect to the Expansion Property nor enters into a Letter of
Intent with Landlord, or if the parties reach an agreement on terms during the
Expansion Option Period but thereafter fail to execute a new lease or an
amendment to the MetaXen Lease within forty-five (45) days after expiration of
the Expansion Option Period, then the parties' rights and obligations with
respect to the Expansion Property shall terminate and be of no further force or
effect and Landlord shall thereafter be free to develop and lease the Expansion
Property to any third party on any terms that Landlord deems acceptable, without
any further obligation to offer the same to Cytokinetics or to enter into any
further negotiations with Cytokinetics with respect thereto. Except as
specifically set forth in this Section, Landlord shall have no obligation to
Cytokinetics with respect to the Expansion Property.

3.       REIMBURSEMENT OF OUTSTANDING TENANT IMPROVEMENT AMOUNT TO
EXELIXIS. Conditioned upon the closing of the Asset Purchase (a) concurrently
with the closing of the Asset Purchase, Cytokinetics shall pay to Exelixis in
cash the amount of $175,000, and (b) in the event that Exelixis shall have
notified Cytokinetics in writing that Xenova shall have failed to pay $375,000
to Exelixis, Cytokinetics shall pay to Exelixis in cash an additional amount of
$375,000 concurrently with the execution of the assignment and assumption of the
MetaXen Lease to and by Cytokinetics. In the event that the assignment and
assumption of the MetaXen Lease to and by Cytokinetics shall have failed to
occur by July 31, 2000 for any reason other than a default by Cytokinetics in
any of its obligations hereunder, Exelixis shall refund all amounts paid by
Cytokinetics pursuant to this Section 3.

4.       CONTINUED EFFECTIVENESS OF CYTOKINETICS SUBLEASE. Following
the assumption of the MetaXen Lease by Exelixis, so long as Cytokinetics is not
in default thereunder, the Cytokinetics Sublease shall remain in full force and
effect, unless and until Exelixis assigns the MetaXen Lease to Cytokinetics or
the Cytokinetics Sublease expires or is terminated in accordance with its terms.

3.

5.       SUBLEASE OF A PORTION OF BUILDING H BY EXELIXIS FOLLOWING
ASSUMPTION OF THE METAXEN LEASE BY CYTOKINETICS. Cytokinetics hereby grants to
Exelixis the option to sublease the Exelixis Premises, and such other space as
may be agreed upon by Exelixis and Cytokinetics, from Cytokinetics following the
assumption of the MetaXen Lease by Cytokinetics, upon the same terms and
conditions set forth in the Exelixis Sublease, except for the term, which shall
be 3 years from the effective date of the assignment of the MetaXen Lease to
Cytokinetics, provided, that Exelixis may terminate such sublease at any time
upon 30 days notice. Exelixis may exercise such option by giving written notice
of its election to do so to Cytokinetics at any time up to 30 days following the
assumption of the MetaXen Lease by Cytokinetics.

6.       SUCCESSORS. All rights and liabilities under this Agreement
extend to and bind the successors and assigns of the parties.

7.       INTEGRATION. This Agreement, together with the MetaXen Lease,
sets forth all the covenants, promises, agreements, conditions and
understandings among the parties hereto with respect to the assumption of the
MetaXen Lease by Cytokinetics. No alteration, amendment or addition to this
Agreement will be binding upon any party unless in writing and signed by the
party against whom enforcement is sought.

8.       GOVERNING LAW. This Agreement will be construed in accordance
with and governed by the laws of the State of California.

9.       ATTORNEYS' FEES. If any party brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the prevailing party in
any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment.

10.      COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and once at least one counterpart has been executed by each party,
shall be deemed fully executed. Each such counterpart shall be deemed an
original but all such counterparts shall be deemed one and the same agreement.

11.      BROKERAGE. The parties each hereby represent and warrant to
the other parties that there is no broker or other person entitled to any
commission, finder's fee or other compensation in connection with this
Agreement. Each party (the "Indemnifying Party") agrees to indemnify, defend and
hold the other parties (each an "Indemnified Party") harmless from and against
any and all losses, liabilities, damages, costs and/or expenses incurred'by the
Indemnified Party as a result of any claim for such commission, finder's fee or
other compensation by a broker or other person claiming under or through the
Indemnifying Party.

12.      NO FURTHER TENANT IMPROVEMENTS. The parties hereby acknowledge
and agree that Landlord is under no obligation to construct or finance any
improvements to the Premises for any party, including, without limitation,
Cytokinetics or any other person or entity to whom the MetaXen Lease may be
assigned or the Premises or any portion thereof sublet.

13.      ESTOPPEL. Cytokinetics hereby represents and warrants as
follows: a) the copy of the Cytokinetics Sublease attached as Exhibit B
constitutes the entire Cytokinetics Sublease, b)

4.

the Cytokinetics Sublease has not been amended or modified except as reflected
in Exhibit B, c) neither MetaXen nor Cytokinetics is in breach of or in default
of any provisions under the Cytokinetics Sublease, and d) Cytokinetics' security
deposit in the amount of $104,500 has not been applied to any default by
Cytokinetics.

14.      NO AMENDMENT OF LEASE OR ALTERATION OF THE BUILDING; COVENANT
TO PERFORM. Exelixis and Landlord agree that, during the term of this Agreement
and prior to the assignment, if any, of the MetaXen Lease to Cytokinetics: (i)
the MetaXen Lease shall not be modified or amended and the Premises shall not be
materially and adversely altered, improved or modified, without the prior
written consent of Cytokinetics, which consent shall not be unreasonably
withheld, conditioned or delayed. Exelixis covenants, during the term of this
Agreement, to comply with the obligations of Tenant under the MetaXen Lease and
agrees not to voluntarily surrender the Premises to Landlord or terminate the
MetaXen Lease.

15.      MEMORANDUM OF AGREEMENT. Concurrently with the execution of
this Agreement and Consent, (a) Landlord and Cytokinetics shall sign and record
a Memorandum of Agreement in the form attached hereto as Exhibit C, and (b)
Landlord and Cytokinetics shall sign a Memorandum of Termination of Agreement in
the form attached hereto as Exhibit D. Landlord shall hold the signed Memorandum
of Termination of Agreement and is authorized to record it if either (i) this
Agreement is terminated prior to the assignment and assumption of the MetaXen
Lease to and by Cytokinetics becoming effective, or (ii) the assignment and
assumption of the MetaXen Lease to and by Cytokinetics fails to become effective
by July 31, 2000.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.

CYTOKINETICS, INC., a Delaware corporation

By: /s/ JAMES SABRY
---------------------------------

Its: PRESIDENT & CEO

And By:_____________________________

Its:________________________________

EXELIXIS PHARMACEUTICALS, INC.,
a Delaware corporation

By: /s/ [ILLEGIBLE]
---------------------------------

Its: PRESIDENT & CEO
--------------------------------

And By: /s/ [ILLEGIBLE]
-----------------------------

Its: SECRETARY, SENIOR DIR FIN

5.

BRITANNIA POINTE GRAND LIMITED PARTNERSHIP,
a Delaware limited partnership

By: BRITANNIA POINTE GRAND, LLC, a
California limited liability company,
Its: GENERAL PARTNER

By: /s/ T.J. Bristow
-----------------------------
Name: T.J. Bristow
Its: Manager, President and Chief Financial Officer

6.

EXHIBIT A

EXPANSION PROPERTY

7.

[MAP]

EXHIBIT A

EXHIBIT B

CYTOKINETICS SUBLEASE

8.

EXHIBIT C

MEMORANDUM OF AGREEMENT

9.

RECORDING REQUESTED BY:                )
)
)
)
WHEN RECORDED MAIL TO:                 )
)
Eric C. Starr, Esq.                    )
Starr Finley LLP                       )
One California Street, Suite 2200      )
San Francisco, CA 94111                )
)

(Space Above This Line for Recorder's Use Only)

NO DOCUMENTARY TRANSFER TAX DUE.
TERM OF AGREEMENT AND LEASE IS LESS THAN 35 YEARS.

MEMORANDUM OF AGREEMENT

This Memorandum of Agreement ("Memorandum") is entered into
this___________day of July, 1999, between BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership ("Landlord") and CYTOKINETICS, INC.,
a Delaware corporation ("Assignee"), with reference to the following facts:

A.       Landlord and MetaXen, LLC entered into a Build-to-Suit Lease
dated May 27, 1997, as amended by a First Amendment to Lease dated as of April
13, 1998, and as further amended by a Second Amendment to Lease dated
concurrently herewith between Landlord and Exelixis Pharmaceuticals, Inc., as
successor to MetaXen, LLC by assignment (collectively, as amended, the "MetaXen
Lease"), covering a building commonly known as 280 East Grand Avenue, South San
Francisco, California and located on a portion of the real property in the City
of South San Francisco, County of San Mateo, State of California (the
"Property") more particularly described as follows:

Lots 1, 2, 3 and 4, inclusive, as shown on Parcel Map No. 91-284,
"Being a resubdivision of the parcels described in the deeds to Metal
and Thermit Corporation, recorded in Book 293, at Page 394 of Deeds; in
Book 49, at Page 490, Official Records; in Book 77, at Page 415,
Official Records; and, except that parcel described in Book 1352, at
Page 373, Official Records," filed on February 25,1992, in Book 65 of
Parcel Maps, in the Office of the Recorder of the County of San Mateo,
California.

EXHIBIT C

B.       Landlord, Assignee and Exelixis Pharmaceuticals, Inc. are
parties to an Agreement and Consent dated concurrently herewith (such Agreement
and Consent, as it may be amended from time to time in accordance with its
terms, being hereinafter referred to as the "Agreement"), which Agreement
provides for, among other things, the future assignment of the MetaXen Lease to
Assignee, subject to the terms and conditions more specifically set forth in the
Agreement.

C.       Landlord and Assignee wish to evidence the Agreement and their
respective rights and obligations thereunder with respect to the MetaXen Lease
by executing and recording this Memorandum, and to make such respective rights
and obligations binding upon the Property and upon the respective successors and
assigns of Landlord and Assignee.

NOW, THEREFORE, in reliance upon the foregoing recitals and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Assignee hereby agree as follows:

1.       Landlord consents to the assignment of the Tenant's interest
in the MetaXen Lease to Assignee, at the time provided in and subject to the
terms and conditions set forth in the Agreement. Assignee shall accept such
assignment and assume and agree to perform the obligations of the Tenant under
the MetaXen Lease, effective as of the time provided in and subject to the terms
and conditions set forth in the Agreement.

2.       Landlord and Assignee agree, and hereby declare as a matter of
public record, that the rights and obligations of Landlord and Assignee with
respect to the MetaXen Lease shall be binding upon and run with the Property,
and shall be binding upon and inure to the benefit of the respective permitted
successors and assigns (if any) of Landlord and Assignee with respect to their
respective interests under the Agreement and the MetaXen Lease and with respect
to their respective interests in the Property.

3.       This Memorandum may be executed in two or more counterparts
and by separate parties on separate counterparts, and, when each party has so
executed at least one counterpart identical in form to the counterpart(s)
executed by the other party or parties, shall constitute a single agreement with
the same force and effect as though all signatures appeared on a single
document. Any signature page of this Memorandum may be detached from any
counterpart without impairing the legal effect of any signatures thereon, and
may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.

[rest of page intentionally left blank]

-2-

IN WITNESS WHEREOF, the parties hereto have executed this Memorandum as
of the date first set forth above.

LANDLORD:                                        ASSIGNEE:

BRITANNIA POINTE GRAND LIMITED                   CYTOKINETICS, INC., a Delaware,
PARTNERSHIP, a Delaware limited                  corporation
partnership

By: BRITANNIA POINTE GRAND,                      By:  _________________________
LLC, a California limited liability          Its: _________________________
company, General Partner

By:  _____________________________           By:  _________________________
Its: Manager, President and Chief            Its: _________________________
Financial Officer

-3-

State of______________________________   )
)
County of_____________________________   )

On July __, 1999, before me,____________________________, a Notary
Public in and for said county and state, personally appeared___________________
______________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

_____________________________
Notary Public

State of______________________________   )
)
County of______________________          )

On July_______, 1999, before me,________________________, a Notary 
Public In and for said county and state, personally appeared
_________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

_____________________________
Notary Public

EXHIBIT D

MEMORANDUM OF TERMINATION OF AGREEMENT

10.

RECORDING REQUESTED BY:                 )
)
)
)
WHEN RECORDED MAIL TO:                  )
)
Donald E. Kelley, Jr., Esq.             )
Folger Levin & Kahn LLP                 )
275 Battery Street, 23rd Floor          )
San Francisco, CA 94111                 )

(Space Above This Line For Recorder's Use Only)

NO DOCUMENTARY TRANSFER TAX DUE.
TERM OF AGREEMENT AND LEASE IS LESS THAN 35 YEARS.

MEMORANDUM OF TERMINATION OF AGREEMENT

This Memorandum of Termination of Agreement ("Termination Memorandum")
is entered into between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a Delaware
limited partnership ("Landlord") and CYTOKINETICS, INC., a Delaware corporation
("Assignee"), with reference to the following facts:

A. Landlord and MetaXen, LLC entered into a Build-to-Suit Lease dated
May 27, 1997, as amended by a First Amendment to Lease dated as of April 13,
1998, and as further amended by a Second Amendment to Lease dated as of
July________, 1999 between Landlord and Exelixis Pharmaceuticals, Inc. as
successor to MetaXen, LLC by assignment (collectively, as amended, the "MetaXen
Lease"), covering a building commonly known as 280 East Grand Avenue, South San
Francisco, California and located on a portion of the real property in the City
of South San Francisco, County of San Mateo, State of California (the 
"Property") more particularly described as follows:

Lots 1, 2, 3 and 4, inclusive, as shown on Parcel Map No. 91-284,
"Being a resubdivision of the parcels described in the deeds to Metal
and Thermit Corporation, recorded in Book 293, at Page 394 of Deeds; in
Book 49, at Page 490, Official Records; in Book 77, at Page 415,
Official Records; and, except that parcel described in Book 1352, at
Page 373, Official Records," filed on February 25, 1992, in Book 65 of
Parcel Maps, in the Office of the Recorder of the County of San Mateo,
California.

EXHIBIT D

B.       Landlord, Assignee and Exelixis Pharmaceuticals, Inc. entered
into an Agreement and Consent dated as of July_____, 1999 (such Agreement and
Consent, as it may have been amended from time to time in accordance with its
terms, being hereinafter referred to as the "Agreement"), which Agreement
provided for, among other things, the future assignment of the o MetaXen Lease
to Assignee, subject to the terms and conditions more specifically set forth in
the Agreement.

C.       Landlord and Assignee are parties to a Memorandum of Agreement
that was recorded on July_____, 1999 as Instrument No.____________________ in
the Official Records of San Mateo County, California (the "Memorandum") to
evidence the Agreement and their respective rights and obligations thereunder
with respect to the MetaXen Lease and to make such respective rights and
obligations binding upon the Property and upon the respective successors and
assigns of Landlord and Assignee.

D.       The Agreement has now terminated and Landlord and Assignee
wish to record this Termination Memorandum to evidence the termination of the
Agreement and of the Memorandum as previously recorded and to eliminate any
further force or effect of the Memorandum as a recorded document.

NOW, THEREFORE, in reliance upon the foregoing recitals and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Assignee hereby agree as follows:

1.       The Memorandum and the rights and obligations created or
described therein are terminated and of no further force or effect, and the
Memorandum shall no longer be considered to create or to provide notice or
evidence of any rights, obligations or interests with respect to the MetaXen
Lease or the Property.

2.       This Termination Memorandum may be executed in two or more
counterparts and by separate parties on separate counterparts, and, when each
party has so executed at least one counterpart identical in form to the
counterpart(s) executed by the other party or parties, shall constitute a single
agreement with the same force and effect as though all signatures appeared on a
single document. Any signature page of this Termination Memorandum may be
detached from any counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another counterpart identical in form
thereto but having attached to it one or more additional signature pages.

[rest of page intentionally left blank]

-2-

IN WITNESS WHEREOF, the parties hereto have executed this Termination
Memorandum as of the date first set forth above.

LANDLORD:                                        ASSIGNEE:

BRITANNIA POINTE GRAND LIMITED                   CYTOKINETICS, INC., a Delaware,
PARTNERSHIP, a Delaware limited                  corporation
partnership

By: BRITANNIA POINTE GRAND,                      By:  _________________________
LLC, a California limited liability          Its: _________________________
company, General Partner

By:  _____________________________           By:  _________________________
Its: Manager, President and Chief            Its: _________________________
Financial Officer

-3-

State of______________________________   )
)
County of_____________________________   )

On July,___, 1999, before me,_____________________, a Notary Public in
and for said county and state, personally appeared_____________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and official seal.

_____________________________
Notary Public

State of______________________________   )
)
County of_____________________________   )

On July____, 1999, before me, __________________, a Notary Public in
and for said county and state, personally appeared ____________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and official seal.

_____________________________
Notary Public

[MAP]

EXHIBIT A

Exhibit 10.13

AMENDMENT TO AGREEMENT AND CONSENT

This Amendment to Agreement and Consent (this "Amendment") is entered into as of
July 31, 2000, by and among CYTOKINETICS, INC., a Delaware corporation
("Cytokinetics"), EXELIXIS, INC., a Delaware corporation formerly known as
Exelixis Pharmaceuticals, Inc. ("Exelixis") and BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership ("Britannia")

RECITALS

A.       Britannia, as "Landlord", and MetaXen, LLC, a Delaware limited
liability company ("MetaXen") as "Tenant", entered into that certain
Build-to-Suit Lease dated May 27, 1997 as amended by the First Amendment to
Lease (the "First Amendment"), dated as of April 13, 1998 and the Second
Amendment to Lease (the "Second Amendment"), dated as of July 20, 1999
(collectively, the "Master Lease") for the following described premises (the
"Premises"):

Approximately 50,195 square feet in Building H located at
Britannia Pointe Grand Business Park and commonly known as 280
East Grand Avenue, South San Francisco, California 94080.

B.       Pursuant to that certain Sublease Agreement dated May 1, 1998
as amended by the First Amendment to Sublease Agreement dated July 20, 1999 by
and between Cytokinetics, as "Sublessee", and MetaXen, as "Sublessor" (the
"MetaXen-Cytokinetics Sublease"), MetaXen leased to Cytokinetics a portion of
the Premises consisting of approximately 13,750 leaseable square feet as more
particularly described in the MetaXen-Cytokinetics Sublease.

C.       Pursuant to that certain Sublease Agreement dated as of March
1, 1999 by and between MetaXen and Exelixis (the "MetaXen-Exelixis Sublease"),
MetaXen leased to Exelixis a portion of the Premises as described more
particularly in the MetaXen-Exelixis Sublease.

D.       Pursuant to that certain Assignment and Assumption Agreement
and Consent dated as of June 11, 1999 among Britannia, MetaXen, Exelixis and
Xenova Group, PLC (the "Assignment and Assumption Agreement"), MetaXen assigned
to Exelixis all of its right, title and interest in and to the Master Lease and
Exelixis assumed all of MetaXen's obligations under the Master Lease.

E.       Pursuant to that certain Agreement and Consent dated as of
July 20, 1999 by and among Britannia, Cytokinetics and Exelixis (the "Consent
Agreement"), Exelixis agreed to assign its interest as "Tenant" under the Master
Lease to Cytokinetics and Cytokinetics agreed to assume all obligations of
Exelixis as "Tenant" under the Master Lease on the terms and conditions
contained therein. The Consent Agreement provides that Britannia's consent to
the assignment and assumption as described above, is subject to, among other
matters, receipt by Britannia of warrants to purchase Cytokinetics' common
stock; provided, however, that such right is subject to recission in the event
the assignment and assumption fails to occur by July 31, 2000. In addition, the
Consent Agreement provides for the occurrence of certain other events in the
event the assignment and assumption fails to occur by July 31, 2000.

1

F.       The parties hereto desire to amend the Consent Agreement to
extend the time frame for completing the assignment and assumption of the Master
Lease.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

AGREEMENT

Section 1.        Amendment to Consent Agreement. The Consent
Agreement is hereby modified as follows:

1.1.     The last sentence of Paragraph l(a) of the Consent
Agreement is hereby amended to read in its entirety as follows:

Such warrants shall also contain a provision by which they
would be deemed rescinded in the event that Cytokinetics' assumption of the
MetaXen Lease shall have failed to occur by September 30, 2000.

1.2      The last sentence of Paragraph 3 of the Consent
Agreement is hereby amended to read in its entirety as follows:

In the event that the assignment and assumption of the MetaXen
lease to and by Cytokinetics shall have failed to occur by September 30, 2000
for any reason other than a default by Cytokinetics in any of its obligations
hereunder, Exelixis shall refund all amounts paid by Cytokinetics pursuant to
this Section 3.

1.3.     The last sentence of Paragraph 15 of the Consent
Agreement is hereby amended to read in its entirety as follows:

Landlord shall hold the signed Memorandum of Termination of
Agreement and is authorized to record it if either (i) this Agreement is
terminated prior to the assignment and assumption of the MetaXen Lease to and by
Cytokinetics becoming effective, or (ii) the assignment and assumption of the
MetaXen Lease to and by Cytokinetics fails to become effective by September 30,
2000.

Section 2.        Ratification of Consent Agreement. Except as
specifically amended hereby, all of the provisions of the Consent Agreement
shall remain unamended and in full force and effect.

Section 3.        Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of California.

Section 4.        Severability. If any term, provision, covenant or
condition of this Amendment or any application thereof should be held by a court
of competent jurisdiction to be

2

invalid, void or unenforceable, all terms, provisions, covenants and conditions
hereof and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.

Section 5.        Successor and Assigns. The provisions of this
Amendment shall be binding upon and inure solely to the benefit of the parties
hereto, and their respective heirs, legal representatives, successors and
assigns.

Section 6.        Counterparts. This Amendment may be executed in any
number of counterparts each of which shall be an original but all of which
together shall constitute one agreement.

Section 7.        Incorporation of Recitals. The recitals set forth
above are incorporated herein and made a part hereof.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date set forth above.

CYTOKINETICS:

CYTOKINETICS, INC
a Delaware corporation

By: /s/ James Sabry
-------------------------
Name: James Sabry
Its: CEO

By: /s/ Robert Blum
-------------------------
Name: Robert Blum
Its: V.P., Business Development

EXELIXIS:

EXELIXIS, INC.
a Delaware corporation

By: /s/ George A. Scangos                    7-31-00
---------------------------------
Name: George A. Scangos, Ph.D.
Its: President and CEO

By: /s/ Glen Y. Sato                         7-31-00
-----------------------------
Name: Glen Y. Sato
Its: CFO and VP, Legal Affairs

3

BRITANNIA:

BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership

By:  Britannia Pointe Grand, LLC, a California
limited liability company, its General partner

By: /s/ T. J. Bristow
-------------------------
Name: T. J. Bristow
Its:  Manager

4

Exhibit 10.14

ASSIGNMENT AND ASSUMPTION OF LEASE

THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") is made as
of September 28, 2000, by and between EXELIXIS, INC., a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc. ("Assignor"), and CYTOKINETICS,
INC., a Delaware corporation ("Assignee").

RECITALS

A. Britannia Pointe Grand Limited Partnership, a Delaware limited
partnership as "Landlord", and MetaXen, LLC, a Delaware limited liability
company ("MetaXen") as "Tenant", entered into that Build-to-Suit Lease dated May
27,1997 as amended by the First Amendment to Lease (the "First Amendment"),
dated as of April 13, 1998 and the Second Amendment to Lease (the "Second
Amendment"), dated as of July 11, 1999 (collectively, the "Lease") for the
following described premises (the "Premises"):

Approximately 50,195 square feet in Building H located at
Britannia Pointe Grand Business Park and commonly known as 280
East Grand Avenue, South San Francisco, California 94080.

B. Pursuant to that certain Assignment and Assumption Agreement and
Consent (the "Assignment and Assumption"), dated as of July 11, 1999 among
Landlord, MetaXen, Assignor and Xenova Group, PLC ("Xenova"), MetaXen assigned
to Assignor all of its right, title and interest in and to the Lease and
Assignor assumed all of MetaXen's obligations under the Lease.

C. Pursuant to that certain Sublease Agreement dated May 1, 1998 as
amended by the First Amendment to Sublease Agreement dated July 20, 1999 by and
between Assignee, as "Sublessee" and MetaXen, as "Sublessor" (the "Sublease"),
MetaXen leased to Assignee a portion of the Premises consisting of approximately
13,750 leaseable square feet as more particularly described in the Sublease.

D. Pursuant to the terms and conditions of that certain Agreement and
Consent dated as of July 20, 1999 by and among Landlord, Assignor and Assignee
(the "Consent Agreement"), Assignor agreed to assign its interest as "Tenant"
under the Lease to Assignee and Assignee agreed to assume all obligations of
Assignor as "Tenant" under the Lease on the terms and conditions contained,
therein.

ASSIGNMENT AND ASSUMPTION

NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows.

1. Assignment of Lease. Assignor hereby sells, transfers, assigns and
sets over all of Assignor's right, title and interest in and to the Lease to
Assignee.

1

2. Assumption of Lease. Assignee hereby agrees to assume the Lease and
to faithfully perform all of the covenants, duties and obligations of Assignor,
as "Tenant" under the Lease.

3. Release of Assignor. Pursuant to the terms of the Consent Agreement,
Landlord agreed, effective upon the execution and delivery of this Assignment
and the satisfaction of certain other conditions set forth therein, to release
Assignor from all covenants, duties and obligations of the "Tenant" under the
Lease arising after the date of this Assignment.

4. Assignor's Representations and Warranties. Assignor represents and
warrants to Assignee that it has not assigned, transferred or conveyed its
interest in the Lease to any other person, firm or entity, that it has full
power and authority to make this Assignment, that the Lease is not in default
and has been performed by Assignor according to its terms, that Assignor knows
of no claims or defenses or circumstances which, with the passage of time, would
lead to claims or defenses by Landlord under the Lease and that the Sublease (as
hereinafter defined), when consented to by Landlord, does not violate any
provision of the Lease.

5. Assignee's Representations and Warranties. Assignee represents and
warrants to Assignor that it has full power and authority to enter into this
Assignment, to assume the Lease as provided above and to perform its obligations
thereunder.

6. Assignor's Option to Sublease. Assignee acknowledges and agrees
that, pursuant to the terms of the Consent Agreement, Assignor has the option to
sublease a portion of the Premises from Assignee. Assignee further acknowledges
and agrees that Assignor has exercised such option by giving written notice
thereof to Assignee. As a condition precedent to the effectiveness of this
Assignment, Assignor and Assignee shall execute and deliver that certain
Sublease Agreement in the form attached hereto as Exhibit A (the
"Cytokinetics-Exelixis Sublease").

7. Return of Security Deposit. Concurrently with the execution and
delivery of this Assignment, Assignor shall return to Assignee the security
deposit deposited by Assignee with Assignor pursuant to the Sublease, which
security deposit is in the amount of $104,500.00

8. Brokers. Assignor and Assignee each warrants and represents for the
benefit of the other that it has had no dealings with any real estate broker or
agent in connection with the negotiation of this Assignment and that it knows of
no real estate broker or agent who is or might be entitled to a real estate
brokerage, commission or finder's fee in connection with this Assignment.

9. Full Force and Effect Assignor and Assignee hereby agree that this
Assignment will in no way change or modify the terms of the Lease, and Assignor
and Assignee hereby ratify and agree that the terms of the Lease remain in full
force and effect.

10. Memorandum: If requested by either party hereto, a mutually
satisfactory memorandum of this Agreement shall be executed and recorded in the
official records of San Mateo County, California.

2

11. Successors and Assigns. This Assignment shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective heirs,
representatives, successors and assigns.

12. Governing Law. This Assignment shall be governed by and construed
in accordance with the laws of the State of California.

13. Counterparts. This Assignment may be executed in multiple
counterparts, which taken together, shall constitute one and the same
instrument.

[There is no further text on this page.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly
executed as of the date first set forth above.

ASSIGNOR:

EXELIXIS, INC.,
a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc.

By: /s/ Glen Sato
------------------------------
Name: Glen Sato
Title: CFO

By: /s/ [ILLEGIBLE]
------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]

ASSIGNEE:

CYTOKINETICS, INC.,
a Delaware corporation

By: /s/ James Sabry
------------------------------
Name: James Sabry
Title: CEO

By: /s/ Robert Blum
------------------------------
Name: Robert Blum
Title: VP Business Development

4

CONSENT BY LANDLORD

Britannia Pointe Grand Limited Partnership ("Landlord") is the owner of
the interest of the "Landlord" under the Lease Landlord hereby consents to the
assignment of the Lease by Assignor to Assignee, the assumption of the Lease by
Assignee as provided above, and releases Assignor from all of its obligations as
Tenant arising under the Lease after the date hereof. Landlord acknowledges and
agrees that the obligation of Assignee to deliver warrants to Landlord is
governed solely by the terms of Paragraph l(a) of the Consent Agreement and that
Assignee shall have no additional obligation to deliver additional warrants to
Landlord whether pursuant to the Lease, the First Amendment or otherwise.
Landlord further acknowledges and agrees that Assignee has fully discharged its
obligation to Landlord with respect to such warrants prior to the date hereof
and has fulfilled all other conditions precedent to Landlord's consent to the
assignment and assumption of the Lease as set forth in Paragraph l(a) or
elsewhere in the Consent Agreement. Landlord represents and warrants to Assignee
that (i) Landlord knows of no claims or defenses or circumstances, which with
the passage of time, would lead to claims or defenses by Landlord against
Assignee as tenant under the Lease; (ii) the Sublease does not violate any
provision of the Lease; (iii) no provision of the Sublease is in violation of
the terms of the Lease; and (iv) all rent and other charges due under the Lease
have been paid through and including September 30, 2000.

LANDLORD:

BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership

By: Britannia Pointe Grand, LLC,
a California limited liability company,
its general partner

By: /s/ T.J. Bristow
---------------------------
Name: T.J. Bristow
Title: Manager

September 29, 2000

4

EXHIBIT A

Sublease Agreement

SUBLEASE AGREEMENT

This Sublease Agreement (this "Sublease,") dated September 28, 2000, for
reference purposes only, is entered into by and between CYTOKINETICS, INC., a
Delaware corporation ("Sublessor") and EXELIXIS, INC., a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc. ("Sublessee").

RECITALS

A.       Britannia Pointe Grand Limited Partnership, a Delaware limited
partnership ("Master Lessor"), as "Landlord", and MetaXen, LLC, a Delaware
limited liability company ("MetaXen") as "Tenant", entered into that certain
Build-to-Suit Lease dated May 27, 1997 as amended by the First Amendment to
Lease (the "First Amendment"), dated as of April 13, 1998 and the Second
Amendment to Lease (the "Second Amendment"), dated as of July 11, 1999, copies
of which are attached hereto as Exhibit A (collectively, the "Master Lease") for
the following described premises (the "Premises"):

Approximately 50,195 square feet in Building H located at
Britannia Pointe Grand Business Park and commonly known as 280
East Grand Avenue, South San Francisco, California 94080.

B.       Pursuant to that certain Sublease Agreement dated May 1, 1998
as amended by the First Amendment to Sublease Agreement dated July 20, 1999 by
and between Sublessor, as "Sublessee", and MetaXen, as "Sublessor" (the
"MetaXen-Cytokinetics Sublease"), MetaXen leased to Sublessor a portion of the
Premises consisting of approximately 13,750 leaseable square feet as more
particularly described in the MetaXen-Cytokinetics Sublease.

C.       Pursuant to that certain Sublease Agreement dated as of March
1, 1999 by and between MetaXen and Sublessee (the "MetaXen-Exelixis Sublease"),
MetaXen leased to Sublessee a portion of the Premises as described more
particularly in the MetaXen-Exelixis Sublease.

D.       Pursuant to that certain Assignment and Assumption Agreement
and Consent dated as of July 11, 1999 among Master Lessor, MetaXen, Sublessee
and Xenova Group, PLC (the "Assignment and Assumption Agreement"), MetaXen
assigned to Sublessee all of its right, title and interest in and to the Master
Lease and Sublessee assumed all of MetaXen's obligations under the Master Lease.
Concurrently, with its execution and delivery of the Assignment and Assumption
Agreement, by operation of law, Sublessee's estate as sublessee under the
MetaXen-Exelixis Sublease merged into its estate as sublessor under the
MetaXen-Exelixis Sublease thereby rendering the MetaXen-Exelixis Sublease null,
void and of no further force and effect.

E.       Pursuant to that certain Agreement and Consent dated as of
July 20, 1999 by and among Master Lessor, Sublessor and Sublessee (the "Consent
Agreement"), Sublessee agreed to assign its interest as "Tenant" under the
Master Lease to Sublessor and Sublessor agreed to assume all obligations of
Sublessee as "Tenant" under the Master Lease on the terms and conditions
contained therein. Concurrently herewith, Sublessee, as "Assignor," and
Sublessor, as

1

"Assignee", have executed and delivered that certain Assignment and Assumption
of Lease (the "Assignment and Assumption") pursuant to which Sublessee has
assigned to Sublessor all of Sublessee's interest as "Tenant" under the Master
Lease, and Sublessor has assumed from Sublessee, subject to certain limitations
and exceptions set forth therein, all of Sublessee's obligations as "Tenant"
under the Master Lease on the terms and conditions contained therein. Sublessee
has timely exercised its option to sublease a portion of the Premises from
Sublessor, which portion is defined in Paragraph 1 of this Sublease as the
"Sublease Premises". Sublessor and Sublessee desire to enter into this Sublease
to set forth the terms and conditions pursuant to which Sublessor shall sublease
the Sublease Premises to Sublessee.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

AGREEMENT

1.       Premises. Sublessor hereby leases to Sublessee, and Sublessee
hereby hires from Sublessor, on and subject to the terms and conditions
hereinafter set forth, the following premises (the "Sublease Premises"),
situated in the City of South San Francisco, County of San Mateo, State of
California, commonly known as a portion of Building H (the "Building") in the
Britannia Pointe Grand Business Park (the "Center") and consisting of the
following: (i) approximately eight hundred sixty-two (862) leasable square feet
labeled "Exelixis Space" on Exhibit B, attached hereto, and incorporated herein
by this reference (the "Ground Floor Leased Area"); (ii) approximately four
thousand three hundred forty-six (4,346) leasable square feet labeled "Shared
Space" on the above referenced Exhibit B on a non-exclusive basis (the "Ground
Floor Shared Area"); and (iii) approximately twenty-three thousand six hundred
eighty (23,680) leaseable square feet comprising all of the leaseable square
feet of the second floor of the Building as shown on Exhibit B-1, attached
hereto and incorporated herein by this reference (the "Second Floor Leased
Area"). The Sublease Premises include the laboratory benches, water systems,
fume hoods, laminar flow hoods and other laboratory support space as specified
in Exhibit B-2, attached hereto, and incorporated herein by this reference.
Sublessee shall have the right to use the Common Areas as described in the
Master Lease, subject to the rights of Master Lessor, Sublessor and other
tenants of the Center. The right of Sublessee to use the Ground Floor Shared
Area is non-exclusive and shall be subject to reasonable rules and requirements
of Sublessor. Sublessor and Sublessee shall each have equal access to the Ground
Floor Shared Area and shall devise a mutually satisfactory system of sharing the
Ground Floor Shared Area, but in the case of a conflict Sublessor shall have the
primary right to use the Ground Floor Shared Area. Sublessee acknowledges that
it has occupied the Sublease Premises pursuant to the terms of the
MetaXen-Exelixis Sublease and the Master Lease through and including the date
hereof.

2.       Master Lease.

a.       Sublease is Subordinate to Master Lease. This
Sublease is subject and subordinate to the Master Lease. Sublessee shall not
commit or permit to be committed on the Sublease Premises any act or omission
which shall violate any terms or condition of the Master

2

\
Lease. If the Master Lease terminates, this Sublease shall terminate. Sublessor
shall have no liability to Sublessee, if the Master Lease terminates without
fault of Sublessor. Sublessor hereby covenants and agrees that, without the
prior written consent of Sublessee, which consent shall not be unreasonably
withheld or delayed, Sublessor shall not (i) terminate the Master Lease, (ii)
amend or otherwise modify the terms of the Master Lease, unless such
modification would apply only to a matter that would take effect only after the
Expiration Date (or earlier termination of this Sublease), or (iii) willfully
breach the terms of the Sublease or the Master Lease. Sublessor hereby agrees to
perform its obligations as tenant under the Master Lease if and to the extent
those obligations are not assumed by Sublessee pursuant to the terms of this
Sublease.

b.       Application of Master Lease Provisions. Except as
otherwise expressly provided in this Sublease, Sublessee shall assume and
perform, with respect to the Sublease Premises, the obligations of the Sublessor
as Lessee under the Master Lease arising after the date of this Sublease.
Therefore, except as otherwise provided, for the purpose of this Sublease,
wherever in the Master Lease (as incorporated herein) "Landlord" is used, it
shall be deemed to mean the Sublessor herein, and wherever in the Master Lease
(as incorporated herein) "Tenant" is used, it shall be deemed to mean the
Sublessee herein, and wherever in the Master Lease (as incorporated herein)
"Lease" is used, it shall be deemed to mean this Sublease.

c.       Incorporation of Master Lease, Provisions.

(1)      All of the terms and conditions in the
Master Lease, as they relate to the Sublease Premises, are incorporated herein
except for: Section 1.1 (Premises); Section 1.2 (Landlord's Reserved Rights);
Sections 1.3 (First Refusal); 2.1 (Term); 2.2 (Early Possession); 2.3 (Delay in
Possession); 2.6 (Option to Extend); 3.1 (Minimum Rent); 4.1 (Stock Warrants);
6.2 (Real Property Taxes); 7 (Operating Expenses); 8.1 (Payment of Utilities);
Tenant's obligation for HVAC repair and entry into a service contract under
10.2(a); 12.1(b); 19.1 (Notices), 19.11 (Financial Information); 19.15
(Brokers); 19.16 (Memorandum of Lease), Articles 4 (Stock Warrants), 5
(Construction) and Article 18 (Security Deposit), the First Amendment to Lease
as it pertains to warrants, and Exhibit C.

(2)      Except as otherwise provided herein,
Sublessor is responsible for all financial obligations under the Master Lease.

d.       Indemnity. Except to the extent caused by Sublessor,
or Sublessor's agents', employees' or invitees' negligence or willful
misconduct, Sublessee, shall indemnify and hold Sublessor harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessee's failure to comply with or
perform Sublessee's obligations under this Sublease, including, but not limited
to, Sublessee's obligation to immediately disclose any violations of the
warranty as set forth in section 2.f, below. Except to the extent caused by
Sublessee, or Sublessee's agents', employees' or invitees' negligence or willful
misconduct, Sublessor shall indemnify and hold Sublessee harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessor's failure to comply with or
perform Sublessor's obligations under this Sublease.

3

e.       Master Lease in Effect. Sublessee represents to
Sublessor that the Master Lease is in full force and effect and that, to
Sublessee's knowledge, no default exists on the part of any party to the Master
Lease; furthermore Sublessee represents and warrants that it has not received
any notification from Master Lessor of any default under the Master Lease or
notice of any potential default under the Master Lease. Subject to the terms and
provisions of this Sublease, Sublessor agrees to keep the Master Lease in full
force and effect during the term of this Sublease, subject, however, to any
earlier termination of the Master Lease without the default of Sublessor.

f.       Warranty. Section 6.2 of the Master Lease creates a
warranty in favor of Sublessor. Sublessee shall provide Sublessor with written
notification of any violation of the warranty in Section 6.2, promptly following
the discovery by Sublessee of such violation.

g.       To the extent that any financial terms contained in
this Sublease that are applicable to Sublessor and Sublessee only conflict with
similar provisions in the Master Lease, this Sublease shall prevail.

3.       Sublease Term; Delivery of Possession.

a.       Term. The term of this Sublease shall begin on the
date the Assignment and Assumption shall become effective ("Commencement Date")
and end on April 15, 2001.

b.       Delivery of Possession.

(1)      If Sublessee desires to make any
improvements performed in either the Ground Floor Leased Area or the Second
Floor Leased Area (Sublessee shall have no right to modify or otherwise alter
the Ground Floor Shared Area) and if Sublessee shall fail to deliver to
Sublessor a schedule of improvements, along with plans and specifications
thereto (including projected costs) reasonably acceptable to Sublessor on or
before sixty (60) days following the execution of this Sublease, Sublessor shall
be deemed to have disapproved such improvements and Sublessee shall not make any
such improvements until such plans and specifications shall have been delivered
to and approved by Sublessor.

(2)      Sublessor will deliver the Sublease Premises
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Sublease Premises, and
Sublessee accepts the Sublease Premises subject thereto. Other than as set forth
herein, Sublessee shall accept the Sublease Premises "as is". Sublessor shall
assign its rights or, alternatively, shall itself enforce such rights pursuant
to any manufacturer or other warranty covering the Sublease Premises.

4.       Rent. Sublessee shall pay to Sublessor no later than the first
day of each calendar month of the Term of this Sublease without deduction, set
off, prior notice or demand, as rent for the Sublease Premises, monthly rent
("Base Rent") as set forth in the rent schedule below, and subject to the terms
and provisions of section 3.2 of the Master Lease. Base Rent shall commence on
the date hereof (the "Rent Commencement Date"); provided, however, for the
period from the

4

date hereof through September 30, 2000, Sublessee shall pay Base Rent, prorated
for the number of days in such period, on the date hereof.

Rent Schedule
-------------
Leased Premises                  Base Rent/Month       Rent/Sq.ft./month   Approx. Sq. Feet    
---------------                  ---------------       -----------------   ----------------    

Ground Floor Leased Area           $   3,361.80              $3.90                 862
Ground Floor Shared Area           $   8,474.70              $1.95               4,346
Second Floor Leased Area           $  92,352.00              $3.90              23,680
Total                      $ 104,188.50

Sublessor and Sublessee each hereby acknowledge and agree that the parties
hereto intend this Sublease to be on a "full-service" basis and Sublessee shall
only be responsible to pay. Base Rent and no other operating costs or service
expenses.

5.       Security Deposit. Concurrently herewith, Sublessee shall
deposit One Hundred Four Thousand One Hundred Eighty-eight Dollars and Fifty
Cents ($104,188.50) with Sublessor as security for Sublessee's performance of
its obligations under the terms of this Sublease. Sublessor shall not be
required to keep any cash portion of the Security Deposit separate from its
general funds, or to pay any interest thereon. The Security Deposit shall be
held by Sublessor and may be applied by Sublessor in accordance with the
provisions of Article 18 of the Master Lease. If Sublessee defaults with respect
to any provision of this Sublease, including, without limitation, the provisions
relating to the payment of rental and other sums due hereunder, Sublessor shall
have the right, but shall not be required, to use, apply or retain all or any
part of the Security Deposit for the payment of rental or any other amount which
Sublessor may spend or become obligated to spend by reason of Sublessee's
default or to compensate Sublessor for any other loss or damage which Sublessor
may suffer by reason of Sublessee's default. If any portion of the Security
Deposit is so used or applied, Sublessee shall, within ten (10) days after
written demand therefor, deposit cash with Sublessor in an amount sufficient to
restore the Security Deposit to the full amount required hereunder and
Sublessee's failure to do so shall be a material breach of this Sublease. If
Sublessee fully and faithfully performs every provision of this Sublease to be
performed by it, the Security Deposit, or any balance thereof, shall be returned
to Sublessee or, at Sublessor's option, to the last assignee of Sublessee's
interest hereunder, at the expiration of the term of this Sublease and after
Sublessee has vacated the Premises. In the event of termination of Sublessor's
interest in this Sublease, Sublessor's shall transfer all deposits then held by
Sublessor under this Section to Sublessor's successor in interest, whereupon
Sublessee agrees to release Sublessor from all liability for the return of such
deposit or the accounting thereof.

6.       Use.

a.       Permitted Use. The Sublease Premises shall be used
and occupied only for office, biotechnology/pharmaceutical research and
development, manufacturing, warehousing related to such uses, and other
permitted uses under the Master Lease. Sublessee shall use and

5

occupy the Sublease Premises in accordance with the Master Lease, including, but
not limited to Section 11.6, thereof.

b.       No Representations or Warranties, Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Sublease Premises for
the conduct of Sublessee's business.

7.       Operating Expenses; HVAC Repair. At no time prior to the
Expiration Date is Sublessee required to pay as additional rent the amounts for
which Sublessor is liable to Master Lessor pursuant to Article 7 (Operating
Expenses) of the Master Lease. In addition, until the Expiration Date,
Sublessee, shall have no liability for any utilities it consumes in the
Premises. In addition, until the Expiration Date, Sublessee, shall have no
obligation to maintain or repair the HVAC equipment and related mechanical
systems. The parties hereto hereby acknowledge that this Sublease is on a "full
service" basis and Sublessee shall not be responsible for any operating costs or
expenses, insurance or taxes.

8.       Alterations. Notwithstanding the provisions of Article 9 of
the Master Lease, any alteration, which requires Master Lessor's approval
pursuant to the Master Lease, shall not be commenced by Sublessee unless and
until such consent is obtained. Any such alteration shall be at Sublessee's sole
cost and expense. At the time Sublessor and Master Lessor consent to any
alteration, additions or improvements, Sublessor and Master Lessor shall inform
Sublessee in writing whether Sublessee is responsible for the removal of such
alterations and improvements at the expiration or earlier termination of the
term of this Sublease, provided that Sublessee, in its request for consent to
the alteration, addition, or improvement, has expressly requested that Sublessor
and Master Lessor specify the nature and extent of any such removal obligation.
If such notification is not made, Sublessee shall have no responsibility to
remove any such alteration or improvement at the expiration or earlier
termination of this Sublease. Any alteration made by Sublessee shall become a
part of the Sublease Premises, and at Sublessor's election (and to the extent
required, the consent of the Master Lessor), shall be surrendered to Sublessor
at the end of the Sublease term. Any alteration made by Sublessee shall, at
Sublessor's election, become Sublessor's property throughout the Sublease term
except for any specialized improvements installed by Sublessee (which
improvements shall be part of Sublessee's Equipment and Alterations, as defined
in Exhibit B-2), which improvements shall remain the property of Sublessee and
which improvements shall be removed by Sublessee at the expiration or earlier
termination hereof. In the event Sublessor is (or becomes) obligated under the
Master Lease to remove any of Sublessee's alterations, Sublessee shall be
obligated to remove same at Sublessee's sole cost and expense and to restore the
Sublease Premises to its condition prior to the alteration but only to the
extent required by Sublessor or Master Lessor in their written consent to any
such alteration. In the event that Sublessee removes any items it is permitted
to remove under Exhibit B-2, Sublessee, subject to the provisions of the second
sentence of this Section 8, at its sole cost and expense, shall restore the
Sublease Premises to its condition prior to alteration. Sublessee's obligation
to remove any alteration made to any portion of the Sublease Premises prior to
the Commencement Date as Tenant under the Master Lease shall be governed by the
terms of the Master Lease.

6

9.       Repairs. Pursuant to the Master Lease, Master Lessor is
responsible to repair and maintain the roof (structural portions only), exterior
walls and other structural portions of the Building and the Common Areas. As to
such matters, subject to the terms of the following sentence, Sublessor's sole
obligation to Sublessee shall be to request performance of such obligations by
Master Lessor. In the event Master Lessor breaches its obligations, Sublessor
will assign to Sublessee its right to enforce such obligation and shall
otherwise cooperate with Sublessee in connection therewith, provided, however,
Sublessee, at its sole cost and expense, shall be responsible for enforcement
thereof without reimbursement from Sublessor; provided, further, that if the
nature of Sublessor's repair and maintenance obligation is such that both
Sublessor and Sublessee shall be benefited by the enforcement thereof, Sublessor
and Sublessee shall jointly participate in the enforcement thereof and Sublessor
and Sublessee shall share in the cost and expense incurred therewith in the same
proportion that their respective premises bears to the total premises.
Sublessee, not Master Lessor, shall be responsible for the repair of the roof
and structural portions of the Building to the extent the need for maintenance
or repair is caused by the gross negligence or willful misconduct of Sublessee,
in which case Sublessee shall pay to Sublessor the cost of (including reasonable
overhead expense of Sublessor) the maintenance and repairs caused by Sublessee
(except (i) to the extent the damage is covered by any insurance maintained by
Master Lessor or Sublessor, or, (ii) if Master Lessor fails to maintain the
insurance required to be maintained by Master Lessor pursuant to the terms of
the Master Lease, to the extent the damage would have been covered by insurance,
if Master Lessor had maintained the required insurance). There shall be no
abatement of Base Rent and no liability of Master Lessor or Sublessor by reason
of any injury to or interference with Sublessee's business arising from the
making of any repairs, alterations or improvements in or to the fixtures,
appurtenances and equipment therein, provided that Sublessor shall request
Master Lessor to use reasonable efforts to minimize the interruption of
Sublessee's use and occupancy of the Sublease Premises in connection with its
performance of the repairs and maintenance (although nothing contained herein
shall be deemed to obligate Master Lessor to pay any overtime costs in order to
minimize such interference, or otherwise to perform the repairs or maintenance
during hours other than normal business hours). As to all matters that neither
Master Lessor nor Sublessee is required to maintain or repair under the Master
Lease or this Sublease, as the case may be, Sublessor shall be responsible
therefor, and shall promptly and regularly maintain and repair the Sublease
Premises. Notwithstanding the foregoing, any damage caused by the negligence or
willful misconduct of Sublessee, shall promptly be repaired by Sublessee, at
Sublessee's own cost and expense, and in a manner reasonably acceptable to
Master Lessor and Sublessor.

10.      Insurance.

a.       Sublessee shall maintain commercial general liability
insurance coverage as required by section 12.1 (a) of the Master Lease which has
been incorporated into this Sublease by reference. Each policy of insurance,
which Sublessee is required to maintain pursuant to this Lease, shall name both
Sublessor and Master Lessor (as well as Master Lessor's general partners and
Managing Agent) as additional insureds (including cross-liability endorsements).
Sublessee's insurance coverage shall be primary and non-contributory as respects
any insurance maintained by Sublessor and/or Master Lessor. Sublessee shall
deliver evidence of the coverage

7

required hereunder (i) on the date hereof and (ii) within ten (10) days of the
renewal date for each policy of insurance required hereunder.

b.       Pursuant to the terms of the Master Lease as provided
in Section 12.1 (b) thereof, Master Lessor is obligated to maintain certain
insurance coverage with respect to certain perils. Subject to the terms of the
following sentence, Sublessor's sole obligation to Sublessee with respect to
Master Lessor's obligations pursuant to said Section 12.1(b) shall be to request
performance of such obligations by Master Lessor. In the event Master Lessor
breaches its obligations, Sublessor will assign to Sublessee its right to
enforce such obligation and shall otherwise cooperate with Sublessee in
connection therewith, provided, however, Sublessee, at its sole cost and
expense, shall be responsible for enforcement thereof without reimbursement from
Sublessor; provided, further, that if the nature of Sublessor's insurance
obligation is such that both Sublessor and Sublessee shall be benefited by the
enforcement thereof, Sublessor and Sublessee shall jointly participate in the
enforcement thereof and Sublessor and Sublessee shall share in the cost and
expense incurred therewith in the same proportion that their respective premises
bears to the total premises.. In the event Sublessor cannot assign such rights,
Sublessor shall diligently enforce its rights as Tenant under the Master Lease.

c.       Sublessor shall maintain insurance in the amounts and
of the types required pursuant to Section 12 of the Master Lease.

11.      Damage or Destruction.

a.       Master Lessor Has Obligation to Restore. If the
Sublease Premises are damaged or destroyed, Master Lessor has the obligation
pursuant to Article 15 of the Master Lease to repair the Sublease Premises
unless Master Lessor has the right to terminate. If Master Lessor fails to
perform its obligations pursuant to Article 15 of the Master Lease, Sublessor's
sole obligation, to Sublessee shall be to request performance of such
obligations by Master Lessor. In the event Master Lessor breaches its
obligations, Sublessor will assign to Sublessee, its right to enforce such
obligation, provided, however, Sublessee, at its sole cost and expense, shall be
responsible for enforcement thereof without reimbursement from Sublessor. In the
event Sublessor cannot assign its rights, Sublessor shall diligently enforce
its rights under the Master Lease.

b.       Termination of Master Lease. If the Master Lease
terminates pursuant to Article 15 of the Master Lease, this Sublease shall
terminate concurrently with the termination of the Master Lease.

c.       Sublessee Notice; Right to terminate. Within twenty
(20) days following written request from Sublessor, Sublessee shall give notice
to Sublessor in writing whether Sublessee agrees to continue this Sublease in
effect if Master Lessor reasonably determines that the repair of the Sublease
Premises or the Building cannot be completed within three hundred sixty five
(365) days after the casualty. If Sublessee does not so agree to continue this
Sublease in effect then this Sublease shall terminate. If Sublessee agrees to
continue this Sublease in effect as aforesaid, then Sublessor shall have no
right to exercise its right (if any) to terminate the

8

Master Lease or this Sublease. If (i) Master Lessor reasonably determines that
the repair of the Sublease Premises or the Building cannot be completed within
three hundred sixty five (365) days after the casualty, (ii) neither Master
Lessor nor Sublessor has elected to terminate the Master Lease, and (iii)
Sublessee agrees to continue this Sublease in effect notwithstanding the time to
reconstruct, then this Sublease shall continue in effect, and Sublessee shall
fulfill all of the obligations of Sublessor pursuant to the provisions of
Article 15 of the Master Lease, as it pertains to the Sublease Premises.

d.       Limited Obligation to Repair. Master Lessor's
obligation, should Master Lessor elect or be obligated to repair or rebuild,
shall be limited to the terms and conditions of the Master Lease. Master Lessor
shall have no obligation to replace or restore the Sublessee Equipment and
Alterations (as described in Exhibit B-2) or any other alterations installed by
Sublessor or Sublessee, unless specifically required by the Master Lease.

e.       Abatement of Rent. Rent under this Sublease shall
abate to the same extent as the Rent owing by Sublessor under the Master Lease
abates during any casualty repair period.

f.       Damage Near End of Term. In addition to the rights to
terminate specified in subsection 11.c of this Sublease, either Sublessor or
Sublessee shall have the right to cancel and terminate this Sublease as of the
date of the occurrence of destruction or damage if the Sublease Premises or the
Building is substantially destroyed or damaged (i.e., there is damage or
destruction which Sublessor reasonably determines would require more than sixty
(60) days to repair) and made untenantable during the last twelve (12) months of
the term of the Master Lease. Sublessor or Sublessee, as applicable, shall give
written notice of its election to terminate this Sublease under this subsection
f. within thirty (30) days after Master Lessor or Sublessor determines that
the damage or destruction would require more than sixty (60) days to repair. If
either Master Lessor or Sublessor elects to terminate the Master Lease pursuant
to Article 15 of the Master Lease, this Sublease shall terminate concurrently
with the termination of the Master Lease. If neither Master Lessor nor Sublessor
terminates the Master Lease and if neither Sublessor nor Sublessee elects to
terminate this Sublease, the repair of the damage shall be governed by Article
15 of the Master Lease.

g.       Insurance Proceeds. If this Sublease is terminated,
Master Lessor and Sublessor may each keep all their respective insurance
proceeds resulting from the damage except for those proceeds, if any, which
specifically insured Sublessee's personal property and trade fixtures which
Sublessee has a right or obligation to remove upon the expiration of the
Sublease term. Sublessor shall be entitled to receive from Sublessee the
proceeds of insurance carried by Sublessee with respect to Sublessee
Improvements or other alterations installed in the Sublease Premises by
Sublessor or at Sublessor's expense. To the extent that Sublessee has paid for
any alterations regardless of whether the alterations may become the property of
Sublessor upon termination of this Sublease, Sublessee shall receive any portion
of the insurance proceeds payable with respect to the then unamortized cost
(based on a 2 year life of the alteration on a straight line amortization
schedule) for the applicable alterations, reduced by the amounts necessary to
pay off any equipment lease or other lien against the applicable alteration, and
the balance of the proceeds, if any, will be payable to Sublessor. With respect
to those Alterations,

9

which Sublessee is obligated to remove at the end of the Sublease term which are
the property of Sublessee, all proceeds of any insurance, carried by Sublessor
or Sublessee shall be paid to Sublessee.

h.       Uninsured Casualty. If the Master Lease terminates
pursuant to the provisions of Article 15 of the Master Lease, this Sublease
shall terminate.

12.      Eminent Domain. If all or any part of the Sublease Premises is
taken for public or quasi-public use by a governmental authority under the power
of eminent domain or is conveyed to a governmental authority in lieu of such
taking, and if the taking or conveyance causes the remaining part of the
Sublease Premises to be untenantable and inadequate for use by Sublessee for the
purpose for which they were leased, then Sublessee, at its option and by giving
notice within fifteen (15) days after the taking, may terminate this Sublease as
of the date Sublessee is required to surrender possession of the Sublease
Premises. If a part of the Sublease Premises is taken or conveyed but the
remaining part is tenantable and adequate for Sublessee's use in Sublessee's
reasonable determination, then this Sublease shall be terminated as to the part
taken or conveyed as of the date Sublessee surrenders possession. All
compensation awarded for the taking or conveyance shall be the property of
Master Lessor and Sublessor, as their interests may appear, and Sublessee hereby
assigns to Sublessor all its right, title and interest in and to the award,
unless the governmental authority makes only one (1) award, and the award
contains compensation for the value of moving expenses, Sublessee's personal
property, trade fixtures and alterations (including the Sublessee Improvements),
Sublessee's Equipment and Alterations, in which case, subject to the rights of
any mortgagee or beneficiary of a deed of trust holding a lien on the Property
and to Master Lessor's rights under the Master Lease, Sublessee shall be
entitled to the compensation paid for Sublessee's moving expenses, trade
fixtures, personal property, Sublessee's Equipment and Alterations, and the
portion of the award attributable to the then unamortized cost of alterations
and improvements constructed at Sublessee's expense (which are to be amortized
on a straight line basis over the initial term of this Sublease). Sublessee
shall have the right, however, to recover from the governmental authority, but
not from Sublessor or Master Lessor, except as provided in the preceding
sentence, such compensation as may be awarded to Sublessee on account of the
interruption of Sublessee's business, moving and relocation expenses and removal
of Sublessee's trade fixtures and personal property.

13.      Assignment and Subletting. Notwithstanding any provision of
this Sublease to the contrary, if Sublessor consents to a sublet, Sublessee
shall pay to Sublessor on a monthly basis as additional Rent, on the date Base
Rent is due, an amount equal to fifty percent (50%) of the amount by which the
rent payable to Sublessee ("Subrent") under the sublesses exceeds the rent due
for the applicable portion of the Sublease Premises after deducting from the
Subrent (A) the actual out-of-pocket costs incurred by Sublessee for brokerage
commissions and tenant concessions (which concessions are not reflected in the
reduced Subrent) and (B) the costs of any additional improvements constructed by
Sublessee in connection with the sublease (amortized on a straight line basis
over the term of the sublease). Notwithstanding the foregoing, Sublessee may
assign this Sublease or sublet any portion of the Sublease Premises without
Sublessor's or Master Lessor's consent (but with prior or concurrent notice
thereof to Master Lessor and Sublessor) to any of the following (i) any
corporation which controls, is controlled by or under

10

common control with Sublessee; (ii) any corporation resulting from the merger or
consolidation of Sublessee; and (iii) any person or entity which acquires all of
the assets of Sublessee as a going concern (collectively, "Sublessee
Affiliate"), provided that such assignee assumes in full the obligations of
Sublessee under the Sublease. Any right of Sublessor or Master Lessor to
terminate the Sublease or the Master Lease in response to a requested assignment
or subletting shall not apply to an assignment of the Sublease or a subletting
of the Sublease Premises to a Sublessee Affiliate. Sublessee shall have the same
assignment and sublease rights and limitations as provided in section 13.1 of
the Master Lease.

14.      Access to Premises. Master Lessor shall have the same right of
access to the Sublease Premises as Sublessor which right of access is described
in Section 14 of the Master Lease.

15.      Surrender at End of Term. Upon expiration or termination of
this Sublease, Sublessee shall surrender the Sublease Premises to Sublessor in
good and sanitary order, except for any alterations Sublessee is not required to
remove, normal wear and tear, acts of God, damage, destruction (except to the
extent Sublessee is obligated to restore the same under this Sublease) and
eminent domain covered by the provisions of this Sublease. Sublessee shall
remove from the Sublease Premises all of Sublessee's personal property and trade
fixtures, Sublessee's Equipment and Alterations, and any alterations and
improvements Sublessee is required to remove pursuant to Sublessor's or Master
Lessor's written consent to such alterations and improvements, and shall repair
all damage caused by the removal. Except to the extent caused by Sublessor's or
Master Lessor's or their agents', employees' or invitees', negligence or willful
misconduct, Sublessee shall indemnify Sublessor against all loss or liability
resulting from delay by Sublessee in so surrendering the Sublease Premises,
including without limitation, any claims made by any succeeding tenant, losses
to Sublessor due to lost opportunities to lease to a succeeding tenant, and
reasonable attorneys' fees and costs.

16.      Sublessor Indemnity re: Hazardous Materials.

a.       [INTENTIONALLY OMITTED.]

b.       Sublessee shall indemnify, defend and hold Sublessor
harmless from and against any claim, damage, loss, liability, cost or expense
(including reasonable attorneys' fees) arising out of any spill or release of
any Hazardous Substance (as defined in Section 11.6 of the Master Lease which
has been incorporated by reference into this Sublease) on or about the Sublease
Premises or any other portion of the Premises occupied by Sublessee pursuant to
the MetaXen-Exelixis Sublease or the Master Lease by Sublessee, its employees,
agents or contractors during the period of time Sublessee has occupied the
Sublease Premises or such other portion of the Premises. Sublessor shall
indemnify, defend and hold Sublessee harmless from and against any claim,
damage, loss, liability, cost or expense (including reasonable attorneys' fees)
arising out of any spill or release of any Hazardous Substance (as defined in
Section 11.6 of the Master Lease which has been incorporated by reference into
this Sublease) on or about the Sublease Premises by Sublessor, its employees,
agents or contractors during the period of time Sublessee occupies the Sublease
Premises.

11

c.       Sublessor is entitled to indemnification from the
Master Lessor under certain circumstances as provided in Section 11.6 of the
Master Lease. To the extent such indemnification may apply to the benefit of
Sublessee, Sublessor agrees to cooperate with Sublessee to enforce such
indemnity obligation against Master Lessor; provided, however, Sublessee shall
pay any and all costs incurred by Sublessor or Sublessee in connection with the
enforcement thereof for the benefit of Sublessee.

17.      Signs. Master Lessor shall have the same approval rights with
respect to signs as Sublessor; Sublessor shall use its best efforts to obtain
Master Lessor's approval of signage rights reasonably satisfactory to Sublessee,
so long as such rights do not unreasonably interfere with the rights of
Sublessor under the Master Lease.

18.      Holding Over. This Sublease shall terminate without further
notice at the expiration of the Sublease term. Any holding over by Sublessee
after expiration or sooner termination of this Sublease without the consent of
Sublessor shall be construed to be a tenancy at sufferance. Base Rent for the
Sublease Premises during any tenancy at sufferance, or if Sublessor shall have
consented to Sublessee's holding over, shall be at a rate equal to 150% of the
Base Rent for the last month of the term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.

19.      Brokers. Sublessor and Sublessee each warrants and represents
for the benefit of the other that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Sublease, and that it
knows of no real estate broker or agent who is or might be entitled to a real
estate brokerage, commission or finder's fee in connection with this Sublease.
Sublessor and Sublessee warrant and represent that they have dealt with no real
estate broker in connection with this Sublease.

a.       Broker Disclaimer. Sublessor and Sublessee agree and
accept that, except as otherwise expressly stated herein, no broker or agent has
made or conducted any investigation, determination, warranty or representation
with respect to any of the following: (a) the legality of the present or any
possible future use of the Sublease Premises under any federal, state or local
law, (b) the physical condition or square footage of the Sublease Premises; (c)
the terms of the Master Lease or any other relevant legal document or agreement;
or (d) the presence or location of any hazardous materials on or about the
property in which the Sublease Premises are located (including, but not limited
to, asbestos, PCB's, other toxic, hazardous or contaminated substances, and
underground storage tanks).

b.       Acknowledgement. The parties acknowledge that they 
are not relying on information from any real estate licensee relating to the
field of toxic materials, hazardous waste, underground tanks, and asbestos
contamination, location of the property within or outside a specific flood zone
or special studies seismic area, nor the property's compliance with the
guidelines as set forth in the Americans with Disabilities Act (ADA) regarding
the determination of the condition of the subject Premises, but rather from
their own independently initiated investigations.

12

20.      Notices. All notices or demands of any kind required to be
given by Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered forty-eight (48) hours after depositing the notice or demand in
the United States Mail, certified or registered, postage prepaid, or on the next
business day after delivering the same with a reputable overnight courier
service, in each case addressed to the Sublessor or Sublessee respectively at
the addresses set forth after their signatures at the end of this Sublease.
Either party may change its address by written notice to the other party in
accordance with this Section 20. All Base Rent shall be paid by Sublessee to
Sublessor at the same address.

21.      Condition To Effectiveness of This Sublease. This Sublease is
contingent upon Sublessor obtaining the written consent of the Master Lessor to
this Sublease concurrently with the execution of this Sublease, pursuant to the
terms of the Consent Agreement. Sublessor and Sublessee acknowledge and agree,
that in granting such consent, notwithstanding any other provisions contained in
or implied in this Sublease, Master Lessor shall not be deemed or construed (a)
to have released Sublessor from any responsibility for the full and timely
performance of all obligations of Sublessor as Tenant under the Master Lease
accruing from and after the date hereof, nor (b) to have authorized Sublessor to
act on Master Lessor's behalf in exercising or waiving any rights, remedies or
privileges of Master Lessor as Landlord under the Master Lease as it pertains to
the Sublease Premises, nor (c) to have assumed, incurred or undertaken any
obligations or liabilities running directly to Sublessee with respect to the
Sublease Premises, it being the explicit intention and understanding of the
parties that notwithstanding the incorporation by reference of the Master Lease
into this Sublease (except as specifically excluded by Section 2 above, and as
otherwise specifically excluded in this Sublease), Master Lessor and Sublessor
shall look solely to one another for the performance of their respective
obligations with respect to the Sublease Premises as Landlord and Tenant under
the Master Lease (except to the extent that such obligation arose prior to the
date hereof pursuant to the Master Lease, as to which Master Lessor and
Sublessee shall look solely to one another for the performance of their
respective obligations with respect to the Sublease Premises as Landlord and
Tenant under the Master Lease), and that Sublessor and Sublessee shall look
solely to one another for the performance of their respective obligations with
respect to the Sublease Premises under this Sublease. Nothing in this Section 21
is intended, however, to preclude Sublessee from enforcing, by direct action
against Master Lessor, any rights of Sublessor under the Master Lease to the
extent such rights are expressly assigned by Sublessor to Sublessee pursuant to
this Sublease.

22.      Authority. Each person executing this Sublease on behalf of a
party hereto represents and warrants that he or she is authorized and empowered
to do so and to thereby bind the party on whose behalf he or she is signing.

23.      Attorneys Fees. In the event either party shall bring any
action or proceeding for damages or for an alleged breach of any provision of
this Sublease to recover rents, or to enforce, protect or establish any right or
remedy hereunder, the prevailing party shall be entitled to recover reasonable
attorneys' fees and court costs as part of such action or proceeding.

13

24.      Incorporation of Recitals. The recitals set forth above are
incorporated herein and made a part hereof.

25.      Entire Agreement. This written Sublease, together with the
exhibits hereto, contains all the representations and the entire understanding
between the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Sublease
and the exhibits hereto. This Sublease may be modified only by an agreement in
writing signed by each of the parties.

14

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of
the dates set forth below.

SUBLESSOR:

CYTOKINETICS, INC
a Delaware corporation

By:   __________________________
Name: __________________________
Its:  __________________________                      Date September______, 2000

By:   __________________________
Name: __________________________
Its:  __________________________                      Date September______, 2000

280 East Grand Avenue
South San Francisco, CA 94080

SUBLESSEE;

EXELIXIS, INC.
a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc.

By:   __________________________
Name: __________________________
Its:  __________________________                      Date: September_____, 2000

By:   __________________________
Name: __________________________
Its:  __________________________                      Date: September_____, 2000

170 Harbor Way
South San Francisco, CA 94083

CONSENT BY MASTER LESSOR

Master Lessor hereby consents to the sublease of the Sublease Premises
by Sublessor to Sublessee pursuant to the terms of this Sublease. Master Lessor
acknowledges and agrees that the obligation of Sublessor to deliver warrants to
Master Lessor is governed solely by the terms of Paragraph 1(a) of the Consent
Agreement and that Sublessor shall have no additional obligation to deliver
additional warrants to Master Lessor whether pursuant to the Master Lease, the
First Amendment or otherwise. Master Lessor further acknowledges and agrees that
Sublessor has fully discharged its obligation to Master Lessor with respect to
such warrants prior to the date hereof and has fulfilled all other conditions
precedent to Master Lessor's consent to the assignment and assumption of the
Master Lease as set forth in Paragraph 1(a) or elsewhere in the Consent
Agreement Master Lessor represents and warrants to Sublessor that (i) Master
Lessor knows of no claims or defenses or circumstances, which with the passage
of time, would lead to claims or defenses by Master Lessor against Sublessor as
tenant under the Master Lease; (ii) this Sublease does not violate any provision
of the Master Lease; (iii) no provision of this Sublease is in violation of the
terms of the Master Lease; and (iv) all rent and other charges due under the
Master Lease have been paid through and including September 30, 2000.

MASTER LESSOR:

BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership

By: Britannia Pointe Grand, LLC,
a California limited liability company,
its general partner

By: ______________________________
Name: T.J.Bristow
Title: Manager

September___, 2000

EXHIBIT A

[attach copies of master Lease and First and Second Amendments to Master Lease]

Exhibit 10.15

SUBLEASE AGREEMENT

This Sublease Agreement (this "Sublease,") dated September 28, 2000, for
reference purposes only, is entered into by and between CYTOKINETICS, INC., a
Delaware corporation ("Sublessor") and EXELIXIS, INC., a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc. ("Sublessee").

RECITALS

A.       Britannia Pointe Grand Limited Partnership, a Delaware limited
partnership ("Master Lessor"), as "Landlord", and MetaXen, LLC, a Delaware
limited liability company ("MetaXen") as "Tenant", entered into that certain
Build-to-Suit Lease dated May 27,1997 as amended by the First Amendment to Lease
(the "First Amendment"), dated as of April 13, 1998 and the Second Amendment to
Lease (the "Second Amendment"), dated as of July 11, 1999, copies of which are
attached hereto as Exhibit A (collectively, the "Master Lease") for the
following described premises (the "Premises"):

Approximately 50,195 square feet in Building H located at
Britannia Pointe Grand Business Park and commonly known as 280
East Grand Avenue, South San Francisco, California 94080.

B.       Pursuant to that certain Sublease Agreement dated May 1, 1998
as amended by the First Amendment to Sublease Agreement dated July 20, 1999 by
and between Sublessor, as "Sublessee", and MetaXen, as "Sublessor" (the
"MetaXen-Cytokinetics Sublease"), MetaXen leased to Sublessor a portion of the
Premises consisting of approximately 13,750 leaseable square feet as more
particularly described in the MetaXen-Cytokinetics Sublease.

C.       Pursuant to that certain Sublease Agreement dated as of March
1, 1999 by and between MetaXen and Sublessee (the "MetaXen-Exelixis Sublease"),
MetaXen leased to Sublessee a portion of the Premises as described more
particularly in the MetaXen-Exelixis Sublease.

D.       Pursuant to that certain Assignment and Assumption Agreement
and Consent dated as of July 11, 1999 among Master Lessor, MetaXen, Sublessee
and Xenova Group, PLC (the "Assignment and Assumption Agreement"), MetaXen
assigned to Sublessee all of its right, title and interest in and to the Master
Lease and Sublessee assumed all of MetaXen's obligations under the Master Lease.
Concurrently, with its execution and delivery of the Assignment and Assumption
Agreement, by operation of law, Sublessee's estate as sublessee under the
MetaXen-Exelixis Sublease merged into its estate as sublessor under the
MetaXen-Exelixis Sublease thereby rendering the MetaXen-Exelixis Sublease null,
void and of no further force and effect.

E.       Pursuant to that certain Agreement and Consent dated as of
July 20, 1999 by and among Master Lessor, Sublessor and Sublessee (the "Consent
Agreement"), Sublessee agreed to assign its interest as "Tenant" under the
Master Lease to Sublessor and Sublessor agreed to assume all obligations of
Sublessee as "Tenant" under the Master Lease on the terms and conditions
contained therein. Concurrently herewith, Sublessee, as "Assignor," and
Sublessor, as

1

"Assignee", have executed and delivered that certain Assignment and Assumption
of Lease (the "Assignment and Assumption") pursuant to which Sublessee has
assigned to Sublessor all of Sublessee's interest as "Tenant" under the Master
Lease, and Sublessor has assumed from Sublessee, subject to certain limitations
and exceptions set forth therein, all of Sublessee's obligations as "Tenant"
under the Master Lease on the terms and conditions contained therein. Sublessee
has timely exercised its option to sublease a portion of the Premises from
Sublessor, which portion is defined in Paragraph 1 of this Sublease as the
"Sublease Premises". Sublessor and Sublessee desire to enter into this Sublease
to set forth the terms and conditions pursuant to which Sublessor shall sublease
the Sublease Premises to Sublessee.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

AGREEMENT

1.       Premises. Sublessor hereby leases to Sublessee, and Sublessee
hereby hires from Sublessor, on and subject to the terms and conditions
hereinafter set forth, the following premises (the "Sublease Premises"),
situated in the City of South San Francisco, County of San Mateo, State of
California, commonly known as a portion of Building H (the "Building") in the
Britannia Pointe Grand Business Park (the "Center") and consisting of the
following: (i) approximately eight hundred sixty-two (862) leasable square feet
labeled "Exelixis Space" on Exhibit B, attached hereto, and incorporated herein
by this reference (the "Ground Floor Leased Area"); (ii) approximately four
thousand three hundred forty-six (4,346) leasable square feet labeled "Shared
Space" on the above referenced Exhibit B on a non-exclusive basis (the "Ground
Floor Shared Area"); and (iii) approximately twenty-three thousand six hundred
eighty (23,680) leaseable square feet comprising all of the leaseable square
feet of the second floor of the Building as shown on Exhibit B-l, attached
hereto and incorporated herein by this reference (the "Second Floor Leased
Area"). The Sublease Premises include the laboratory benches, water systems,
fume hoods, laminar flow hoods and other laboratory support space as specified
in Exhibit B-2, attached hereto, and incorporated herein by this reference.
Sublessee shall have the right to use the Common Areas as described in the
Master Lease, subject to the rights of Master Lessor, Sublessor and other
tenants of the Center. The right of Sublessee to use the Ground Floor Shared
Area is non-exclusive and shall be subject to reasonable rules and requirements
of Sublessor. Sublessor and Sublessee shall each have equal access to the Ground
Floor Shared Area and shall devise a mutually satisfactory system of sharing the
Ground Floor Shared Area, but in the case of a conflict Sublessor shall have the
primary right to use the Ground Floor Shared Area. Sublessee acknowledges that
it has occupied the Sublease Premises pursuant to the terms of the
MetaXen-Exelixis Sublease and the Master Lease through and including the date
hereof.

2.       Master Lease.

a.       Sublease is Subordinate to Master Lease. This
Sublease is subject and subordinate to the Master Lease. Sublessee shall not
commit or permit to be committed, on the Sublease Premises any act or omission
which shall violate any terms or condition of the Master

2

Lease. If the Master Lease terminates, this Sublease shall terminate. Sublessor
shall have no liability to Sublessee, if the Master Lease terminates without
fault of Sublessor. Sublessor hereby covenants and agrees that, without the
prior written consent of Sublessee, which consent shall not be unreasonably
withheld or delayed, Sublessor shall not (i) terminate the Master Lease, (ii)
amend or otherwise modify the terms of the Master Lease, unless such
modification would apply only to a matter that would take effect only after the
Expiration Date (or earlier termination of this Sublease), or (iii) willfully
breach the terms of the Sublease or the Master Lease. Sublessor hereby agrees to
perform its obligations as tenant under the Master Lease if and to the extent
those obligations are not assumed by Sublessee pursuant to the terms of this
Sublease.

b.       Application of Master Lease Provisions. Except as
otherwise expressly provided in this Sublease, Sublessee shall assume and
perform, with respect to the Sublease Premises, the obligations of the Sublessor
as Lessee under the Master Lease arising after the date of this Sublease.
Therefore, except as otherwise provided, for the purpose of this Sublease,
wherever in the Master Lease (as incorporated herein) "Landlord" is used, it
shall be deemed to mean the Sublessor herein, and wherever in the Master Lease
(as incorporated herein) "Tenant" is used, it shall be deemed to mean the
Sublessee herein, and wherever in the Master Lease (as incorporated herein)
"Lease" is used, it shall be deemed to mean this Sublease.

c.       Incorporation of Master Lease, Provisions.

(1)      All of the terms and conditions in the
Master Lease, as they relate to the Sublease Premises, are incorporated herein
except for: Section 1.1 (Premises); Section 1.2 (Landlord's Reserved Rights);
Sections 1.3 (First Refusal); 2.1 (Term); 2.2 (Early Possession); 2.3 (Delay in
Possession); 2.6 (Option to Extend); 3.1 (Minimum Rent); 4.1 (Stock Warrants);
6.2 (Real Property Taxes); 7 (Operating Expenses); 8.1 (Payment of Utilities);
Tenant's obligation for HVAC repair and entry into a service contract under
10.2(a); 12.1(b); 19.1 (Notices), 19.11 (Financial Information); 19.15
(Brokers); 19.16 (Memorandum of Lease), Articles 4 (Stock Warrants), 5
(Construction) and Article 18 (Security Deposit), the First Amendment to Lease
as it pertains to warrants, and Exhibit C.

(2)      Except as otherwise provided herein,
Sublessor is responsible for all financial obligations under the Master Lease.

d.       Indemnity. Except to the extent caused by Sublessor,
or Sublessor's agents', employees' or invitees' negligence or willful
misconduct, Sublessee, shall indemnify and hold Sublessor harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessee's failure to comply with or
perform Sublessee's obligations under this Sublease, including, but not limited
to, Sublessee's obligation to immediately disclose any violations of the
warranty as set forth in section 2.f, below. Except to the extent caused by
Sublessee, or Sublessee's agents', employees' or invitees' negligence or willful
misconduct, Sublessor shall indemnify and hold Sublessee harmless against and
from all liability, judgments, costs, damages, claims or demands, including
reasonable attorney's fees, arising out of Sublessor's failure to comply with or
perform Sublessor's obligations under this Sublease.

3

e.       Master Lease in Effect. Sublessee represents to
Sublessor that the Master Lease is in full force and effect and that, to
Sublessee's knowledge, no default exists on the part of any party to the Master
Lease; furthermore Sublessee represents and warrants that it has not received
any notification from Master Lessor of any default under the Master Lease or
notice of any potential default under the Master Lease. Subject to the terms and
provisions of this Sublease, Sublessor agrees to keep the Master Lease in full
force and effect during the term of this Sublease, subject, however, to any
earlier termination of the Master Lease without the default of Sublessor.

f.       Warranty. Section 6.2 of the Master Lease creates a
warranty in favor of Sublessor. Sublessee shall provide Sublessor with written
notification of any violation of the warranty in Section 6.2, promptly following
the discovery by Sublessee of such violation.

g.       To the extent that any financial terms contained in
this Sublease that are applicable to Sublessor and Sublessee only conflict with
similar provisions in the Master Lease, this Sublease shall prevail.

3.       Sublease Term; Delivery of Possession.

a.       Term. The term of this Sublease shall begin on the
date the Assignment and Assumption shall become effective ("Commencement Date")
and end on April 15, 2001.

b.       Delivery of Possession.

(1)      If Sublessee desires to make any
improvements performed in either the Ground Floor Leased Area or the Second
Floor Leased Area (Sublessee shall have no right to modify or otherwise alter
the Ground Floor Shared Area) and if Sublessee shall fail to deliver to
Sublessor a schedule of improvements, along with plans and specifications
thereto (including projected costs) reasonably acceptable to Sublessor on or
before sixty (60) days following the execution of this Sublease, Sublessor shall
be deemed to have disapproved such improvements and Sublessee shall not make any
such improvements until such plans and specifications shall have been delivered
to and approved by Sublessor.

(2)      Sublessor will deliver the Sublease Premises
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Sublease Premises, and
Sublessee accepts the Sublease Premises subject thereto. Other than as set forth
herein, Sublessee shall accept the Sublease Premises "as is". Sublessor shall
assign its rights or, alternatively, shall itself enforce such rights pursuant
to any manufacturer or other warranty covering the Sublease Premises.

4.       Rent. Sublessee shall pay to Sublessor no later than the first
day of each calendar month of the Term of this Sublease without deduction, set
off, prior notice or demand, as rent for the Sublease Premises, monthly rent
("Base Rent") as set forth in the rent schedule below, and subject to the terms
and provisions of section 3.2 of the Master Lease. Base Rent shall commence on
the date hereof (the "Rent Commencement Date"); provided, however, for the
period from the

4

date hereof through September 30, 2000, Sublessee shall pay Base Rent, prorated
for the number of days in such period, on the date hereof.

Rent Schedule

Leased Premises                 Base Rent/Month        Rent/Sq.ft./month    Approx. Sq. Feet
---------------                 ---------------        -----------------    ----------------

Ground Floor Leased Area          $   3,361.80               $3.90                  862
Ground Floor Shared Area          $   8,474.70               $1.95                4,346
Second Floor Leased Area          $  92,352.00               $3.90               23,680
Total                      $ 104,188.50

Sublessor and Sublessee each hereby acknowledge and agree that the parties
hereto intend this Sublease to be on a "full-service" basis and Sublessee shall
only be responsible to pay. Base Rent and no other operating costs or service
expenses.

5.       Security Deposit. Concurrently herewith, Sublessee shall
deposit One Hundred Four Thousand One Hundred Eighty-eight Dollars and Fifty
Cents ($104,188.50) with Sublessor as security for Sublessee's performance of
its obligations under the terms of this Sublease. Sublessor shall not be
required to keep any cash portion of the Security Deposit separate from its
general funds, or to pay any interest thereon. The Security Deposit shall be
held by Sublessor and may be applied by Sublessor in accordance with the
provisions of Article 18 of the Master Lease. If Sublessee defaults with respect
to any provision of this Sublease, including, without limitation, the provisions
relating to the payment of rental and other sums due hereunder, Sublessor shall
have the right, but shall not be required, to use, apply or retain all or any
part of the Security Deposit for the payment of rental or any other amount which
Sublessor may spend or become obligated to spend by reason of Sublessee's
default or to compensate Sublessor for any other loss or damage which Sublessor
may suffer by reason of Sublessee's default. If any portion of the Security
Deposit is so used or applied, Sublessee shall, within ten (10) days after
written demand therefor, deposit cash with Sublessor in an amount sufficient to
restore the Security Deposit to the full amount required hereunder and
Sublessee's failure to do so shall be a material breach of this Sublease. If
Sublessee fully and faithfully performs every provision of this Sublease to be
performed by it, the Security Deposit, or any balance thereof, shall be returned
to Sublessee or, at Sublessor's option, to the last assignee of Sublessee's
interest hereunder, at the expiration of the term of this Sublease and after
Sublessee has vacated the Premises. In the event of termination of Sublessor's
interest in this Sublease, Sublessor shall transfer all deposits then held by
Sublessor under this Section to Sublessor's successor in interest, whereupon
Sublessee agrees to release Sublessor from all liability for the return of such
deposit or the accounting thereof.

6.       Use.

a.       Permitted Use. The Sublease Premises shall be used
and occupied only for office, biotechnology/pharmaceutical research and
development, manufacturing, warehousing related to such uses, and other
permitted uses under the Master Lease. Sublessee shall use and

5

occupy the Sublease Premises in accordance with the Master Lease, including, but
not limited to Section 11.6, thereof.

b.       No Representations or Warranties, Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Sublease Premises for
the conduct of Sublessee's business.

7.       Operating Expenses; HVAC Repair. At no time prior to the
Expiration Date is Sublessee required to pay as additional rent the amounts for
which Sublessor is liable to Master Lessor pursuant to Article 7 (Operating
Expenses) of the Master Lease. In addition, until the Expiration Date,
Sublessee, shall have no liability for any utilities it consumes in the
Premises. In addition, until the Expiration Date, Sublessee, shall have no
obligation to maintain or repair the HVAC equipment and related mechanical
systems. The parties hereto hereby acknowledge that this Sublease is on a "full
service" basis and Sublessee shall not be responsible for any operating costs or
expenses, insurance or taxes.

8.       Alterations. Notwithstanding the provisions of Article 9 of
the Master Lease, any alteration, which requires Master Lessor's approval
pursuant to the Master Lease, shall not be commenced by Sublessee unless and
until such consent is obtained. Any such alteration shall be at Sublessee's sole
cost and expense. At the time Sublessor and Master Lessor consent to any
alteration, additions or improvements, Sublessor and Master Lessor shall inform
Sublessee in writing whether Sublessee is responsible for the removal of such
alterations and improvements at the expiration or earlier termination of the
term of this Sublease, provided that Sublessee, in its request for consent to
the alteration, addition, or improvement, has expressly requested that Sublessor
and Master Lessor specify the nature and extent of any such removal obligation.
If such notification is not made, Sublessee shall have no responsibility to
remove any such alteration or improvement at the expiration or earlier
termination of this Sublease. Any alteration made by Sublessee shall become
a part of the Sublease Premises, and at Sublessor's election (and to the extent
required, the consent of the Master Lessor), shall be surrendered to Sublessor
at the end of the Sublease term. Any alteration made by Sublessee shall, at
Sublessor's election, become Sublessor's property throughout the Sublease term
except for any specialized improvements installed by Sublessee (which
improvements shall be part of Sublessee's Equipment and Alterations, as defined
in Exhibit B-2), which improvements shall remain the property of Sublessee and
which improvements shall be removed by Sublessee at the expiration or earlier
termination hereof. In the event Sublessor is (or becomes) obligated under the
Master Lease to remove any of Sublessee's alterations, Sublessee shall be
obligated to remove same at Sublessee's sole cost and expense and to restore the
Sublease Premises to its condition prior to the alteration but only to the
extent required by Sublessor or Master Lessor in their written consent to any
such alteration. In the event that Sublessee removes any items it is permitted
to remove under Exhibit B-2, Sublessee, subject to the provisions of the second
sentence of this Section 8, at its sole cost and expense, shall restore the
Sublease Premises to its condition prior to alteration. Sublessee's obligation
to remove any alteration made to any portion of the Sublease Premises prior to
the Commencement Date as Tenant under the Master Lease shall be governed by the
terms of the Master Lease.

6

9.       Repairs. Pursuant to the Master Lease, Master Lessor is
responsible to repair and maintain the roof (structural portions only), exterior
walls and other structural portions of the Building and the Common Areas. As to
such matters, subject to the terms of the following sentence, Sublessor's sole
obligation to Sublessee shall be to request performance of such obligations by
Master Lessor. In the event Master Lessor breaches its obligations, Sublessor
will assign to Sublessee its right to enforce such obligation and shall
otherwise cooperate with Sublessee in connection therewith, provided, however,
Sublessee, at its sole cost and expense, shall be responsible for enforcement
thereof without reimbursement from Sublessor; provided, further, that if the
nature of Sublessor's repair and maintenance obligation is such that both
Sublessor and Sublessee shall be benefited by the enforcement thereof, Sublessor
and Sublessee shall jointly participate in the enforcement thereof and Sublessor
and Sublessee shall share in the cost and expense incurred therewith in the same
proportion that their respective premises bears to the total premises.
Sublessee, not Master Lessor, shall be responsible for the repair of the roof
and structural portions of the Building to the extent the need for maintenance
or repair is caused by the gross negligence or willful misconduct of Sublessee,
in which case Sublessee shall pay to Sublessor the cost of (including reasonable
overhead expense of Sublessor) the maintenance and repairs caused by Sublessee
(except (i) to the extent the damage is covered by any insurance maintained by
Master Lessor or Sublessor, or, (ii) if Master Lessor fails to maintain the
insurance required to be maintained by Master Lessor pursuant to the terms of
the Master Lease, to the extent the damage would have been covered by insurance,
if Master Lessor had maintained the required insurance). There shall be no
abatement of Base Rent and no liability of Master Lessor or Sublessor by reason
of any injury to or interference with Sublessee's business arising from the
making of any repairs, alterations or improvements in or to the fixtures,
appurtenances and equipment therein, provided that Sublessor shall request
Master Lessor to use reasonable efforts to minimize the interruption of
Sublessee's use and occupancy of the Sublease Premises in connection with its
performance of the repairs and maintenance (although nothing contained herein
shall be deemed to obligate Master Lessor to pay any overtime costs in order to
minimize such interference, or otherwise to perform the repairs or maintenance
during hours other than normal business hours). As to all matters that neither
Master Lessor nor Sublessee is required to maintain or repair under the Master
Lease or this Sublease, as the case may be, Sublessor shall be responsible
therefor, and shall promptly and regularly maintain and repair the Sublease
Premises. Notwithstanding the foregoing, any damage caused by the negligence or
willful misconduct of Sublessee, shall promptly be repaired by Sublessee, at
Sublessee's own cost and expense, and in a manner reasonably acceptable to
Master Lessor and Sublessor.

10.      Insurance.

a.       Sublessee shall maintain commercial general liability
insurance coverage as required by section 12.1 (a) of the Master Lease which has
been incorporated into this Sublease by reference. Each policy of insurance,
which Sublessee is required to maintain pursuant to this Lease, shall name both
Sublessor and Master Lessor (as well as Master Lessor's general partners and
Managing Agent) as additional insureds (including cross-liability endorsements).
Sublessee's insurance coverage shall be primary and non-contributory as respects
any insurance maintained by Sublessor and/or Master Lessor. Sublessee shall
deliver evidence of the coverage

7

required hereunder (i) on the date hereof and (ii) within ten (10) days of the
renewal date for each policy of insurance required hereunder.

b.       Pursuant to the terms of the Master Lease as provided
in Section 12.1(b) thereof, Master Lessor is obligated to maintain certain
insurance coverage with respect to certain perils. Subject to the terms of the
following sentence, Sublessor's sole obligation to Sublessee with respect to
Master Lessor's obligations pursuant to said Section 12.1(b) shall be to request
performance of such obligations by Master Lessor. In the event Master Lessor
breaches its obligations, Sublessor will assign to Sublessee its right to
enforce such obligation and shall otherwise cooperate with Sublessee in
connection therewith, provided, however, Sublessee, at its sole cost and
expense, shall be responsible for enforcement thereof without reimbursement from
Sublessor; provided, further, that if the nature of Sublessor's insurance
obligation is such that both Sublessor and Sublessee shall be benefited by the
enforcement thereof, Sublessor and Sublessee shall jointly participate in the
enforcement thereof and Sublessor and Sublessee shall share in the cost and
expense incurred therewith in the same proportion that their respective premises
bears to the total premises. In the event Sublessor cannot assign such rights,
Sublessor shall diligently enforce its rights as Tenant under the Master Lease.

c.       Sublessor shall maintain insurance in the amounts and
of the types required pursuant to Section 12 of the Master Lease.

11.      Damage or Destruction.

a.       Master Lessor Has Obligation to Restore. If the
Sublease Premises are damaged or destroyed, Master Lessor has the obligation
pursuant to Article 15 of the Master Lease to repair the Sublease Premises
unless Master Lessor has the right to terminate. If Master Lessor fails to
perform its obligations pursuant to Article 15 of the Master Lease, Sublessor's
sole obligation to Sublessee shall be to request performance of such obligations
by Master Lessor. In the event Master Lessor breaches its obligations, Sublessor
will assign to Sublessee, its right to enforce such obligation, provided,
however, Sublessee, at its sole cost and expense, shall be responsible for
enforcement thereof without reimbursement from Sublessor. In the event Sublessor
cannot assign its rights, Sublessor shall diligently enforce its rights under
the Master Lease.

b.       Termination of Master Lease. If the Master Lease
terminates pursuant to Article 15 of the Master Lease, this Sublease shall
terminate concurrently with the termination of the Master Lease.

c.       Sublessee Notice; Right to Terminate. Within twenty
(20) days following written request from Sublessor, Sublessee shall give notice
to Sublessor in writing whether Sublessee agrees to continue this Sublease in
effect if Master Lessor reasonably determines that the repair of the Sublease
Premises or the Building cannot be completed within three hundred sixty five
(365) days after the casualty. If Sublessee does not so agree to continue this
Sublease in effect then this Sublease shall terminate. If Sublessee agrees to
continue this Sublease in effect as aforesaid, then Sublessor shall have no
right to exercise its right (if any) to terminate the

8

Master Lease or this Sublease. If (i) Master Lessor reasonably determines that
the repair of the Sublease Premises or the Building cannot be-completed within
three hundred sixty five (365) days after the casualty, (ii) neither Master
Lessor nor Sublessor has elected to terminate the Master Lease, and (iii)
Sublessee agrees to continue this Sublease in effect notwithstanding the time to
reconstruct, then this Sublease shall continue in effect, and Sublessee shall
fulfill all of the obligations of Sublessor pursuant to the provisions of
Article 15 of the Master Lease, as it pertains to the Sublease Premises.

d.       Limited Obligation to Repair. Master Lessor's
obligation, should Master Lessor elect or be obligated to repair or rebuild,
shall be limited to the terms and conditions of the Master Lease. Master Lessor
shall have no obligation to replace or restore the Sublessee Equipment and
Alterations (as described in Exhibit B-2) or any other alterations installed by
Sublessor or Sublessee, unless specifically required by the Master Lease.

e.       Abatement of Rent. Rent under this Sublease shall
abate to the same extent as the Rent owing by Sublessor under the Master Lease
abates during any casualty repair period.

f.       Damage Near End of Term. In addition to the rights to
terminate specified in subsection 1l.c of this Sublease, either Sublessor or
Sublessee shall have the right to cancel and terminate this Sublease as of the
date of the occurrence of destruction or damage if the Sublease Premises or the
Building is substantially destroyed or damaged (i.e., there is damage or
destruction which Sublessor reasonably determines would require more than sixty
(60) days to repair) and made untenantable during the last twelve (12) months of
the term of the Master Lease. Sublessor or Sublessee, as applicable, shall give
written notice of its election to terminate this Sublease under this subsection
f. within thirty (30) days after Master Lessor or Sublessor determines that the
damage or destruction would require more than sixty (60) days to repair. If
either Master Lessor or Sublessor elects to terminate the Master Lease pursuant
to Article 15 of the Master Lease, this Sublease shall terminate concurrently
with the termination of the Master Lease. If neither Master Lessor nor Sublessor
terminates the Master Lease and if neither Sublessor nor Sublessee elects to
terminate this Sublease, the repair of the damage shall be governed by Article
15 of the Master Lease.

g.       Insurance Proceeds. If this Sublease is terminated,
Master Lessor and Sublessor may each keep all their respective insurance
proceeds resulting from the damage except for those proceeds, if any, which
specifically insured Sublessee's personal property and trade fixtures which
Sublessee has a right or obligation to remove upon the expiration of the
Sublease term. Sublessor shall be entitled to receive from Sublessee the
proceeds of insurance carried by Sublessee with respect to Sublessee
Improvements or other alterations installed in the Sublease Premises by
Sublessor or at Sublessor's expense. To the extent that Sublessee has paid for
any alterations regardless of whether the alterations may become the property of
Sublessor upon termination of this Sublease, Sublessee shall receive any portion
of the insurance proceeds payable with respect to the then unamortized cost
(based on a 2 year life of the alteration on a straight line amortization
schedule) for the applicable alterations, reduced by the amounts necessary to
pay off any equipment lease or other lien against the applicable alteration, and
the balance of the proceeds, if any, will be payable to Sublessor. With respect
to those Alterations,

9

which Sublessee is obligated to remove at the end of the Sublease term which are
the property of Sublessee, all proceeds of any insurance, carried by Sublessor
or Sublessee shall be paid to Sublessee.

h.       Uninsured Casualty. If the Master Lease terminates
pursuant to the provisions of Article 15 of the Master Lease, this Sublease
shall terminate.

12.      Eminent Domain. If all or any part of the Sublease Premises is
taken for public or quasi-public use by a governmental authority under the power
of eminent domain or is conveyed to a governmental authority in lieu of such
taking, and if the taking or conveyance causes the remaining part of the
Sublease Premises to be untenantable and inadequate for use by Sublessee for the
purpose for which they were leased, then Sublessee, at its option and by giving
notice within fifteen (15) days after the taking, may terminate this Sublease as
of the date Sublessee is required to surrender possession of the Sublease
Premises. If a part of the Sublease Premises is taken or conveyed but the
remaining part is tenantable and adequate for Sublessee's use in Sublessee's
reasonable determination, then this Sublease shall be terminated as to the part
taken or conveyed as of the date Sublessee surrenders possession. All
compensation awarded for the taking or conveyance shall be the property of
Master Lessor and Sublessor, as their interests may appear, and Sublessee
hereby assigns to Sublessor all its right, title and interest in and to the
award, unless the governmental authority makes only one (1) award, and the award
contains compensation for the value of moving expenses, Sublessee's personal
property, trade fixtures and alterations (including the Sublessee Improvements),
Sublessee's Equipment and Alterations, in which case, subject to the rights of
any mortgagee or beneficiary of a deed of trust holding a lien on the Property
and to Master Lessor's rights under the Master Lease, Sublessee shall be
entitled to the compensation paid for Sublessee's moving expenses, trade
fixtures, personal property, Sublessee's Equipment and Alterations, and the
portion of the award attributable to the then unamortized cost of alterations
and improvements constructed at Sublessee's expense (which are to be amortized
on a straight line basis over the initial term of this Sublease). Sublessee
shall have the right, however, to recover from the governmental authority, but
not from Sublessor or Master Lessor, except as provided in the preceding
sentence, such compensation as may be awarded to Sublessee on account of the
interruption of Sublessee's business, moving and relocation expenses and removal
of Sublessee's trade fixtures and personal property.

13.      Assignment and Subletting. Notwithstanding any provision of
this Sublease to the contrary, if Sublessor consents to a sublet, Sublessee
shall pay to Sublessor on a monthly basis as additional Rent, on the date Base
Rent is due, an amount equal to fifty percent (50%) of the amount by which the
rent payable to Sublessee ("Subrent") under the sublease exceeds the rent due
for the applicable portion of the Sublease Premises after deducting from the
Subrent (A) the actual out-of-pocket costs incurred by Sublessee for brokerage
commissions and tenant concessions (which concessions are not reflected in the
reduced Subrent) and (B) the costs of any additional improvements constructed by
Sublessee in connection with the sublease (amortized on a straight line basis
over the term of the sublease). Notwithstanding the foregoing, Sublessee may
assign this Sublease or sublet any portion of the Sublease Premises without
Sublessor's or Master Lessor's consent (but with prior or concurrent notice
thereof to Master Lessor and Sublessor) to any of the following (i) any
corporation which controls, is controlled by or under

10

common control with Sublessee; (ii) any corporation resulting from the merger or
consolidation of Sublessee; and (iii) any person or entity which acquires all of
the assets of Sublessee as a going concern (collectively, "Sublessee
Affiliate"), provided that such assignee assumes in full the obligations of
Sublessee under the Sublease. Any right of Sublessor or Master Lessor to
terminate the Sublease or the Master Lease in response to a requested assignment
or subletting shall not apply to an assignment of the Sublease or a subletting
of the Sublease Premises to a Sublessee Affiliate. Sublessee shall have the same
assignment and sublease rights and limitations as provided in section 13.1 of
the Master Lease.

14.      Access to Premises. Master Lessor shall have the same right of
access to the Sublease Premises as Sublessor which right of access is described
in Section 14 of the Master Lease.

15.      Surrender at End of Term. Upon expiration or termination of
this Sublease, Sublessee shall surrender the Sublease Premises to Sublessor in
good and sanitary order, except for any alterations Sublessee is not required to
remove, normal wear and tear, acts of God, damage, destruction (except to the
extent Sublessee is obligated to restore the same under this Sublease) and
eminent domain covered by the provisions of this Sublease. Sublessee shall
remove from the Sublease Premises all of Sublessee's personal property and trade
fixtures, Sublessee's Equipment and Alterations, and any alterations and
improvements Sublessee is required to remove pursuant to Sublessor's or Master
Lessor's written consent to such alterations and improvements, and shall repair
all damage caused by the removal. Except to the extent caused by Sublessor's or
Master Lessor's or their agents', employees' or invitees', negligence or willful
misconduct, Sublessee shall indemnify Sublessor against all loss or liability
resulting from delay by Sublessee in so surrendering the Sublease Premises,
including without limitation, any claims made by any succeeding tenant, losses
to Sublessor due to lost opportunities to lease to a succeeding tenant, and
reasonable attorneys' fees and costs.

16.      Sublessor Indemnity re: Hazardous Materials.

a.       [INTENTIONALLY OMITTED.]

b.       Sublessee shall indemnify, defend and hold Sublessor
harmless from and against any claim, damage, loss, liability, cost or expense
(including reasonable attorneys' fees) arising out of any spill or release of
any Hazardous Substance (as defined in Section 11.6 of the Master Lease which
has been incorporated by reference into this Sublease) on or about the Sublease
Premises or any other portion of the Premises occupied by Sublessee pursuant to
the MetaXen-Exelixis Sublease or the Master Lease by Sublessee, its employees,
agents or contractors during the period of time Sublessee has occupied the
Sublease Premises or such other portion of the Premises. Sublessor shall
indemnify, defend and hold Sublessee harmless from and against any claim,
damage, loss, liability, cost or expense (including reasonable attorneys' fees)
arising out of any spill or release of any Hazardous Substance (as defined in
Section 11.6 of the Master Lease which has been incorporated by reference into
this Sublease) on or about the Sublease Premises by Sublessor, its employees,
agents or contractors during the period of time Sublessee occupies the Sublease
Premises.

11

c.       Sublessor is entitled to indemnification from the
Master Lessor under certain circumstances as provided in Section 11.6 of the
Master Lease. To the extent such indemnification may apply to the benefit of
Sublessee, Sublessor agrees to cooperate with Sublessee to enforce such
indemnity obligation against Master Lessor; provided, however, Sublessee shall
pay any and all costs incurred by Sublessor or Sublessee in connection with the
enforcement thereof for the benefit of Sublessee.

17.      Signs. Master Lessor shall have the same approval rights with
respect to signs as Sublessor; Sublessor shall use its best efforts to obtain
Master Lessor's approval of signage rights reasonably satisfactory to Sublessee,
so long as such rights do not unreasonably interfere with the rights of
Sublessor under the Master Lease.

18.      Holding Over. This Sublease shall terminate without further
notice at the expiration of the Sublease term. Any holding over by Sublessee
after expiration or sooner termination of this Sublease without the consent of
Sublessor shall be construed to be a tenancy at sufferance. Base Rent for the
Sublease Premises during any tenancy at sufferance, or if Sublessor shall have
consented to Sublessee's holding over, shall be at a rate equal to 150% of the
Base Rent for the last month of the term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.

19.      Brokers. Sublessor and Sublessee each warrants and represents
for the benefit of the other that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Sublease, and that it
knows of no real estate broker or agent who is or might be entitled to a real
estate brokerage, commission or finder's fee in connection with this Sublease.
Sublessor and Sublessee warrant and represent that they have dealt with no real
estate broker in connection with this Sublease.

a.       Broker Disclaimer. Sublessor and Sublessee agree and
accept that, except as otherwise expressly stated herein, no broker or agent has
made or conducted any investigation, determination, warranty or representation
with respect to any of the following: (a) the legality of the present or any
possible future use of the Sublease Premises under any federal, state or local
law; (b) the physical condition or square footage of the Sublease Premises; (c)
the terms of the Master Lease or any other relevant legal document or agreement;
or (d) the presence or location of any hazardous materials on or about the
property in which the Sublease Premises are located (including, but not limited
to, asbestos, PCB's, other toxic, hazardous or contaminated substances, and
underground storage tanks).

b.       Acknowledgement. The parties acknowledge that they
are not relying on information from any real estate licensee relating to the
field of toxic materials, hazardous waste, underground tanks, and asbestos
contamination, location of the property within or outside a specific flood zone
or special studies seismic area, nor the property's compliance with the
guidelines as set forth in the Americans with Disabilities Act (ADA) regarding
the determination of the condition of the subject Premises, but rather from
their own independently initiated investigations.

12

20.      Notices. All notices or demands of any kind required to be
given by Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered forty-eight (48) hours after depositing the notice or demand in
the United States Mail, certified or registered, postage prepaid, or on the next
business day after delivering the same with a reputable overnight courier
service, in each case addressed to the Sublessor or Sublessee respectively at
the addresses set forth after their signatures at the end of this Sublease.
Either party may change its address by written notice to the other party in
accordance with this Section 20. All Base Rent shall be paid by Sublessee to
Sublessor at the same address.

21.      Condition To Effectiveness of This Sublease. This Sublease is
contingent upon Sublessor obtaining the written consent of the Master Lessor to
this Sublease concurrently with the execution of this Sublease, pursuant to the
terms of the Consent Agreement. Sublessor and Sublessee acknowledge and agree,
that in granting such consent, notwithstanding any other provisions contained in
or implied in this Sublease, Master Lessor shall not be deemed or construed (a)
to have released Sublessor from any responsibility for the full and timely
performance of all obligations of Sublessor as Tenant under the Master Lease
accruing from and after the date hereof, nor (b) to have authorized Sublessor to
act on Master Lessor's behalf in exercising or waiving any rights, remedies or
privileges of Master Lessor as Landlord under the Master Lease as it pertains to
the Sublease Premises, nor (c) to have assumed, incurred or undertaken any
obligations or liabilities running directly to Sublessee with respect to the
Sublease Premises, it being the explicit intention and understanding of the
parties that notwithstanding the incorporation by reference of the Master Lease
into this Sublease (except as specifically excluded by Section 2 above, and as
otherwise specifically excluded in this Sublease), Master Lessor and Sublessor
shall look solely to one another for the performance of their respective
obligations with respect to the Sublease Premises as Landlord and Tenant under
the Master Lease (except to the extent that such obligation arose prior to the
date hereof pursuant to the Master Lease, as to which Master Lessor and
Sublessee shall look solely to one another for the performance of their
respective obligations with respect to the Sublease Premises as Landlord and
Tenant under the Master Lease), and that Sublessor and Sublessee shall look
solely to one another for the performance of their respective obligations with
respect to the Sublease Premises under this Sublease. Nothing in this Section 21
is intended, however, to preclude Sublessee from enforcing, by direct action
against Master Lessor, any rights of Sublessor under the Master Lease to the
extent such rights are expressly assigned by Sublessor to Sublessee pursuant to
this Sublease.

22.      Authority. Each person executing this Sublease on behalf of a
party hereto represents and warrants that he or she is authorized and empowered
to do so and to thereby bind the party on whose behalf he or she is signing.

23.      Attorneys Fees. In the event either party shall bring any
action or proceeding for damages or for an alleged breach of any provision of
this Sublease to recover rents, or to enforce, protect or establish any right or
remedy hereunder, the prevailing party shall be entitled to recover reasonable
attorneys' fees and court costs as part of such action or proceeding.

13

24.      Incorporation of Recitals. The recitals set forth above are
incorporated herein and made a part hereof.

25.      Entire Agreement. This written Sublease, together with the
exhibits hereto, contains all the representations and the entire understanding
between the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Sublease
and the exhibits hereto. This Sublease may be modified only by an agreement in
writing signed by each of the parties.

14

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of 
the dates set forth below.

SUBLESSOR:

CYTOKINETICS, INC
a Delaware corporation

By:   /s/ James Sabiy
--------------------
Name: JAMES SABIY                                       Date September 28, 2000
Its:  CEO

By:   /s/ Robert I Blum
--------------------
Name: ROBERT I BLUM                                      Date September 28, 2000
Its:  VP, BUSINESS DEVELOPMENT

280 East Grand Avenue
South San Francisco, CA 94080

SUBLESSEE:

EXELIXIS, INC.
a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc.

By:   --------------------
Name: --------------------                              Date: September --, 2000
Its:  --------------------

By:   --------------------
Name: --------------------                              Date: September --, 2000
Its:  --------------------

170 Harbor Way
South San Francisco, CA 94083

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of
the dates set forth below.

SUBLESSOR:

CYTOKINETICS, INC
a Delaware corporation

By:   --------------------
Name: --------------------                              Date: September --, 2000
Its:  --------------------

By:   --------------------
Name: --------------------                              Date: September --, 2000
Its:  --------------------

280 East Grand Avenue
South San Francisco, CA 94080

SUBLESSEE;

EXELIXIS, INC.
a Delaware corporation
formerly known as Exelixis Pharmaceuticals, Inc.

By:   /s/ Colen Sato
--------------------
Name: COLEN SATO                                         Date September 28, 2000
Its:  CFO

By:   /s/ [ILLEGIBLE]
--------------------
Name: [ILLEGIBLE]                                       Date September 28, 2000
Its:  [ILLEGIBLE]

170 Harbor Way
South San Francisco, CA 94083

CONSENT BY MASTER LESSOR

Master Lessor hereby consents to the sublease of the Sublease Premises
by Sublessor to Sublessee pursuant to the terms of this Sublease. Master Lessor
acknowledges and agrees that the obligation of Sublessor to deliver warrants to
Master Lessor is governed solely by the terms of Paragraph l(a) of the Consent
Agreement and that Sublessor shall have no additional obligation to deliver
additional warrants to Master Lessor whether pursuant to the Master Lease, the
First Amendment or otherwise. Master Lessor further acknowledges and agrees that
Sublessor has fully discharged its obligation to Master Lessor with respect to
such warrants prior to the date hereof and has fulfilled all other conditions
precedent to Master Lessor's consent to the assignment and assumption of the
Master Lease as set forth in Paragraph l(a) or elsewhere in the Consent
Agreement. Master Lessor represents and warrants to Sublessor that (i) Master
Lessor knows of no claims or defenses or circumstances, which with the passage
of time, would lead to claims or defenses by Master Lessor against Sublessor as
tenant under the Master Lease; (ii) this Sublease does not violate any provision
of the Master Lease; (iii) no provision of this Sublease is in violation of the
terms of the Master Lease; and (iv) all rent and other charges due under the
Master Lease have been paid through and including September 30, 2000.

MASTER LESSOR:

BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership

By: Britannia Pointe Grand, LLC,
a California limited liability company,
its general partner

By:    /s/ T.J. Bristow
----------------------
Name:  T.J. Bristow
Title: Manager

September 29, 2000

EXHIBIT A

[attach copies of master Lease and First and Second Amendments to Master Lease]

Exhibit 10.16

SUBLEASE
[CB RICHARD ELLIS LOGO]      CB RICHARD ELLIS, INC
BROKERAGE AND MANAGEMENT
LICENSED REAL ESTATE BROKER

1.       PARTIES.

This Sublease, dated December 29, 1999, 1999, is made between COR
Therapeutics, Inc., a Delaware Corporation ("Sublessor"). and
Cytokinetics (Sublessee").

2.       MASTER LEASE.

Sublessor is the lessee under a written lease dated September 23, 1988,
wherein Brittania Pointe Grand Limited Partnership, a Delaware limited
partnership ("Lessor") leased to Sublessor the real property located in
the City of South San Francisco, County of San Mateo, State of
California described as +/- 125,545 square feet of office and
laboratory space within the larger project of Brittania Pointe Grand.
("Master Premises"). Said lease has been amended by the following
amendments One through eleven; said lease and amendments are herein
collectively referred to as the "Master Lease" and are attached hereto
as Exhibit "A."

3.       PREMISES.

Sublessor hereby subleases to Sublessee on the terms and conditions set
forth in this Sublease the following portion of the Master Premises
("Premises"): Initial premises : +/- 3,213 sq. ft. as shown on Exhibit
A attached Additional premises: +/- 6,900 sq. ft. as shown in Exhibit A
attached.

4.       WARRANTY BY SUBLESSOR.

Sublessor warrants and represents to Sublessee that the Master Lease
has not been amended or modified except as expressly set forth herein,
that Sublessor is not now, and as of the commencement of the Term
hereof will not be, in default or breach of any of the provisions of
the Master Lease, and that Sublessor has no knowledge of any claim by
Lessor that Sublessor is in default or breach of any of the provisions
of the Master Lease.

5.       TERM.

The Term of this Sublease shall commence * for the initial premises on
January 1, 2000 * ("Commencement Date"), or when Lessor consents to
this Sublease (if such consent is required under the Master Lease),
whichever shall last occur, and end on December 31, 2000 ("Termination
Date"), unless otherwise sooner terminated in accordance with the
provisions of this Sublease. In the event the Term commences on a date
other than the Commencement Date, Sublessor and Sublessee shall execute
a memorandum setting forth the actual date of commencement of the Term.
Possession of the Premises ("Possession") shall be delivered to
Sublessee on the commencement of the Term. If for any reason Sublessor
does not deliver Possession to Sublessee on the commencement of the
Term, Sublessor shall not be subject to any liability for such failure,
the Termination Date shall not be extended by the delay, and the
validity of this Sublease shall not be impaired, but rent shall abate
until delivery of Possession. Notwithstanding the foregoing, if
Sublessor has not delivered Possession to Sublessee within thirty (30)
days after the Commencement Date, then at any time thereafter and
before delivery of Possession, Sublessee may give written notice to
Sublessor of Sublessee's intention to cancel this Sublease. Said notice
shall set forth an effective date for such cancellation which shall be
at least ten (10) days after delivery of said notice to Sublessor. If
Sublessor delivers Possession to Sublessee on or before such effective
date, this Sublease shall remain in full force and effect. If Sublessor
fails to deliver Possession to Sublessee on or before such effective
date, this Sublease shall be cancelled, in which case all consideration
previously paid by Sublessee to Sublessor on account of this Sublease
shall be returned to Sublessee, this Sublease shall thereafter be of no
further force or effect, and Sublessor shall have no further liability
to Sublessee on account of such delay or cancellation. If Sublessor
permits Sublessee to take Possession prior to the commencement of the
Term, such early Possession shall not advance the Termination Date and
shall be subject to the provisions of this Sublease, including without
limitation the payment of rent.

* and April 1, 2000 for the additional premises.

6.       RENT.

6.1      Minimum Rent.* Sublessee shall pay to Sublessor as minimum
rent, without deduction, setoff, notice, or demand, at 256 E.
Grand Avenue, South San Francisco, CA 94080 or at such other
place as Sublessor shall designate from time to time by notice
to Sublessee, the sum of _________ Dollars ($__________) per
month, in advance on the first day of each month of the Term.
Sublessee shall pay to Sublessor upon execution of this
Sublease the sum of Six thousand five hundred ninety-four and
55/100 Dollars ($ 6594.55) as rent for the first month of the
lease term. If the Term begins or ends on a day other than the
first or last day of a month, the rent for the partial months
shall be prorated on a per diem basis. Additional provisions:
See addendum attached.

6.2      Operating Costs. If the Master Lease requires Sublessor to pay
to Lessor all or a portion of the expenses of operating the
building and/or project of which the Premises are a part
("Operating Costs"), including but not limited to taxes,
utilities, or insurance, then Sublessee shall pay to Sublessor
as additional rent two and seven tenths percent ( 2.7 %) of
the amounts payable by Sublessor for Operating Costs incurred
during the Term. Such 

* based on the initial premises, and 8.1% (eight and one tenth
percent) beginning April 1, 2000 inclusive of the initial and
additional premises.

additional rent shall be payable as and when Operating Costs
are payable by Sublessor to Lessor. If the Master Lease
provides for the payment by Sublessor of Operating Costs on
the basis of an estimate thereof, then as and when adjustments
between estimated and actual Operating Costs are made under
the Master Lease, the obligations of Sublessor and Sublessee
hereunder shall be adjusted in a like manner; and if any such
adjustment shall occur after the expiration or earlier
termination of the Term, then the obligations of Sublessor and
Sublessee under this Subsection 6.2 shall survive such
expiration or termination. Sublessor shall, upon request by
Sublessee, furnish Sublessee with copies of all statements
submitted by Lessor of actual or estimated Operating Costs
during the Term.

7.       SECURITY DEPOSIT.

Sublessee shall deposit with Sublessor upon execution of this Sublease
the sum of twenty thousand and 00/100 dollars Dollars ($ 20,000,00) as
security for Sublessee's faithful performance of Sublessee's
obligations hereunder ("Security Deposit"). If Sublessee fails to pay
rent or other charges when due under this Sublease, or fails to perform
any of its other obligations hereunder, Sublessor may use or apply all
or any portion of the Security Deposit for the payment of any rent or
other amount then due hereunder and unpaid, for the payment of any
other sum for which Sublessor may become obligated by reason of
Sublessee's default or breach, or for any loss or damage sustained by
Sublessor as a result of Sublessee's default or breach. If Sublessor so
uses any portion of the Security Deposit, Sublessee shall, within ten
(10) days after written demand by Sublessor, restore the Security
Deposit to the full amount originally deposited, and Sublessee's
failure to do so shall constitute a default under this Sublease.
Sublessor shall not be required to keep the Security Deposit separate
from its general accounts, and shall have no obligation or liability
for payment of interest on the Security Deposit. In the event Sublessor
assigns its interest in this Sublease, Sublessor shall deliver to its
assignee so much of the Security Deposit as is then held by Sublessor.
Within ten (10) days after the Term has expired, or Sublessee has
vacated the Premises, or any final adjustment pursuant to Subsection
6.2 hereof has been made, whichever shall last occur, and provided
Sublessee is not then in default of any of its obligations hereunder,
the Security Deposit, or so much thereof as had not theretofore been
applied by Sublessor, shall be returned to Sublessee or to the last
assignee, if any, of Sublessee's interest hereunder.

8.       USE OF PREMISES.

The Premises shall be used and occupied only for general office,
administrative, and related legal uses., ______________and for no other
use or purpose.

9.       ASSIGNMENT AND SUBLETTING.

Sublessee shall not assign this Sublease or further sublet all or any
part of the Premises without the prior written consent of Sublessor
(and the consent of Lessor, if such is required under the terms of the
Master Lease).

10.      OTHER PROVISIONS OF SUBLEASE.

All applicable terms and conditions of the Master Lease are
incorporated into and made a part of this Sublease as if Sublessor were
the lessor thereunder, Sublessee the lessee thereunder, and the
Premises the Master Premises, except for the following:

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________.

Sublessee assumes and agrees to perform the lessee's obligations under
the Master Lease during the Term to the extent that such obligations
are applicable to the Premises, except that the obligation to pay rent
to Lessor under the Master Lease shall be considered performed by
Sublessee to the extent and in the amount rent is paid to Sublessor in
accordance with Section 6 of this Sublease. Sublessee shall not commit
or suffer any act or omission that will violate any of the provisions
of the Master Lease. Sublessor shall exercise due diligence in
attempting to cause Lessor to peform its obligations under the Master
Lease for the benefit of Sublessee. If the Master Lease terminates,
this Sublease shall terminate and the parties shall be relieved of any
further liability or obligation under this Sublease, provided however,
that if the Master Lease terminates as a result of a default or breach
by Sublessor or Sublessee under this Sublease and/or the Master Lease,
then the defaulting party shall be liable to the nondefaulting party
for the damage suffered as a result of such termination.
Notwithstanding the foregoing, if the Master Lease gives Sublessor any
right to terminate the Master Lease in the event of the partial or
total damage, destruction, or condemnation of the Master Premises or
the building or project of which the Master Premises are a part, the
exercise of such right by Sublessor shall not constitute a default or
breach hereunder.

11.      ATTORNEYS' FEES.

If Sublessor, Sublessee, or Broker shall commence an action against the
other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover its costs of suit and
reasonable attorney's fees.

14.      NOTICES.

All notices and demands which may or are to be required or permitted to
be given by either party on the other hereunder shall be in writing.
All notices and demands by the Sublessor to Sublessee shall be sent by
United States Mail, postage prepaid, addressed to the Sublessee at the
Premises, and to the address hereinbelow, or to such other place as
Sublessee may from

time to time designate in a notice to the Sublessor. All notices and
demands by the Sublessee to Sublessor shall be sent by United States
Mail, postage prepaid, addressed to the Sublessor at the address set
forth herein, and to such other person or place as the Sublessor may
from time to time designate in a notice to the Sublessee.

To Sublessor: 256 E. Grand Avenue, South San Francisco, CA 94080

To Sublessor: 280 E. Grand Avenue, South San Francisco, CA 94080

15.      CONSENT BY LESSOR.

THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY
LESSOR WITHIN 10 DAYS AFTER EXECUTION HEREOF, IF SUCH CONSENT IS
REQUIRED UNDER THE TERMS OF THE MASTER LEASE.

16.      COMPLIANCE.

The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the subject
matter of this Agreement, including, but not limited to, the 1964 Civil
Rights Act and all amendments thereto, the Foreign Investment In Real
Property Tax Act, the Comprehensive Environmental Response Compensation
and Liability Act, and The Americans With Disabilities Act.

Sublessor: COR Therapeutics, Inc.          Sublessee: Cytokinetics, Inc.
____________________________               __________________________

By:  /s/ Peter S. Roddy                    By:  /s/ Robert J. Blum
___________________________________        _________________________________

Title:  VP Finance                         Title: VP Business Development 
________________________________           ______________________________

By: ___________________________________    By: _________________________________

Title: ________________________________    Title: ______________________________

Date: _________________________________    Date: _______________________________

LESSOR'S CONSENT TO SUBLEASE

The undersigned ("Lessor"), lessor under the Master Lease, hereby consents to
the foregoing Sublease without waiver of any restriction in the Master Lease
concerning further assignment or subletting. Lessor certifies that, as of the
date of Lessor's execution hereof, Sublessor is not in default or breach of any
of the provisions of the Master Lease, and that the Master Lease has not been
amended or modified except as expressly set forth in the foregoing Sublease.

Lessor:____________________________________

By:________________________________________

Title: ____________________________________

By: _______________________________________

Title: ____________________________________

Date: _____________________________________

CONSULT YOUR ADVISORS - This document has been prepared for approval by
your attorney. No representation or recommendation is made by Broker as
to the legal sufficiency or tax consequences of this document or the
transaction to which it relates. These are questions for your attorney.

In any real estate transaction, it is recommended that you consult with
a professional, such as a civil engineer, industrial hygienist or other
person, with experience in evaluating the condition of the property,
including the possible presence of asbestos, hazardous materials and
underground storage tanks.

ADDENDUM TO SUBLEASE
BETWEEN COR THERAPEUTICS, INC., A DELAWARE CORPORATION AND
CYTOKINETICS, INC.
DATED DECEMBER 29, 1999

17.      MINIMUM RENT SCHEDULE:

January 1, 2000 to March 31, 2000:                $ 6594.55 per month
April 1, 2000 to October 31, 2000:                $ 17,979.55 per month
November 1, 2000 to December 30, 2000:            $ 18,698.73 per month

18.      EXTENSION OPTION

Sublessee shall have the right to extend the sublease term by an
additional six (6) months provided Sublessee has not been in default of
any of the terms and conditions of this Sublease. The extension option
shall be exercised in writing to Sublessor no later than September 30,
2000. Sublessee's occupancy of the premises after June 30, 2001 shall
be considered a month-to-month tenancy and subject to the right of
either party to terminate this Sublease with ninety (90) days written
notice.

19.      CONDITION OF PREMISES

Sublessee agrees to accept the premises in as-is condition. Sublessor
shall not be responsible for any maintenance, repairs, or improvements
to the premises.

Initials:
___________________
___________________

Exhibit 10.17

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is made
effective as of the 20th day of June, 2001 ("Effective Date") by and between
Cytokinetics, Inc., a Delaware corporation ("CK") and Glaxo Group Limited, a
GlaxoSmithKline company, a United Kingdom corporation ("GSK"). CK and GSK are
each referred to herein by name or as a "Party" or, collectively, as "Parties".

RECITALS

A.       CK has developed certain proprietary technology related to KSP
(as defined below) and other human mitotic kinesins, which are potential targets
for the discovery and development of pharmaceutical products for the treatment,
prophylaxis and diagnosis of cancer and other diseases and conditions in humans.
As a result of its on-going research, CK has established a leadership position
in the field of human mitotic kinesins.

B.       CK is the owner of all right, title and interest in, or
otherwise controls, certain CK Patents (as defined below) hereto, and CK
Know-How (as defined below) relating to KSP and certain novel targets and
compounds having activity against human mitotic kinesins.

C.       GSK possesses pharmaceutical research, development,
manufacturing and commercialization capabilities, as well as proprietary
technology in a broad range of therapeutic fields. GSK desires to engage in
collaborative research with CK to discover, develop, make, market and sell
worldwide pharmaceutical products directed to human mitotic kinesins.

D.       In addition, CK has identified certain novel, proprietary
compounds having activity against human mitotic kinesins, including that certain
compound designated as [*], which CK is pursuing as a development compound
for cancer and for which CK has commenced preclinical development activities.
GSK is interested, subject to Section 2.5 below, in developing certain of the
compounds identified by CK, and, subject to Section 3.1.1 below, intends to
consider [*] as a potential Development Compound (as defined below) after the
Effective Date.

E.       CK desires to grant to GSK, and GSK desires to obtain, an
exclusive license throughout the world under this Agreement to discover,
develop, make, have made, market and sell certain Licensed Products (as defined
below) throughout the world under the aforesaid CK Patents and CK Know-How.

F.       Contemporaneously with the execution of this Agreement, the
Parties have executed a Stock Purchase Agreement under which GSK shall purchase
preferred stock of CK at the Closing of the transactions (as defined below).

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Now, therefore, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

ARTICLE I - DEFINITIONS

The following terms shall have the following meanings as used in this
Agreement:

1.1      " [*] " shall have the meaning ascribed to it in
Section  [*] .

1.2      "AFFILIATE" shall mean any corporation or other entity which
is directly or indirectly controlling, controlled by or under common control of
a Party hereto for so long as such control exists. For the purposes of this
Section 1.2, "control" shall mean the direct or indirect ownership of at least
fifty percent (50%) of the outstanding shares or other voting rights of the
subject entity having the power to vote on or direct the affairs of the entity,
or if not meeting the preceding, the maximum voting right that may be held by
the particular Party under the laws of the country where such entity exists.

1.3      "CK" shall mean CK and any Affiliate of CK.

1.4      "CK EXISTING TECHNOLOGY" shall mean, subject to Sections
5.2.2(a) and 5.5 below, CK Patents and CK Know-How, other than Collaboration
Technology and Post-Collaboration Technology, Controlled by CK, and created,
prior to the Effective Date or prior to the end of the Exclusivity Period that
are [*] or [*] for the Parties to conduct their respective
activities under the Research Program and for GSK to develop, make, have made,
use, import, offer to sell and sell Compounds, Development Compounds or Licensed
Products in the Field. Notwithstanding the foregoing, a CK Library Compound and
CK Patents and CK Know-How with respect thereto shall be deemed to be CK
Existing Technology only to the extent provided in Section 5.2.2 below.

1.5      "CK COMPOUND" shall mean, except as otherwise provided herein,
a chemical entity that meets the Compound Criteria for a CK Target, which is
identified by CK using CK Existing Technology, GSK Existing Technology,
Collaboration Technology, and/or Post-Collaboration Technology prior to or
during the Exclusivity Period. Any such chemical entity shall not be subject to
development as a Compound in accordance with Section 2.7 of this Agreement, and
GSK is not obligated to conduct any research or development activities with
respect thereto. Notwithstanding the foregoing:

(a)      A chemical entity that meets the Compound Criteria
for a CK Target and which is identified by CK after the end of the Exclusivity
Period shall also be a CK Compound, if such chemical entity was derived from a
compound within the GSK Existing Technology, Collaboration Technology or
Post-Collaboration Technology or from a GSK Library Compound licensed to CK
under Section 5.3.2 below.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2-

(b)      Except as provided in Section 5.6, in the event 
that a Mitotic Kinesin Target becomes a CK Target (i.e., in the events provided
in this Agreement), any chemical entity that had been identified as a Compound
with respect to such Mitotic Kinesin Target prior to the time such Mitotic
Kinesin Target becomes a CK Target shall be deemed a CK Compound, except as
provided in Section 1.5(c) below.

(c)      A GSK Library Compound shall be deemed a CK
Compound only to the extent that it is GSK Existing Technology, as provided in
Section 5.3.2 below.

1.6      "CK KNOW-HOW" shall mean Information that (a) CK discloses to
GSK under this Agreement or under the Non-Disclosure Agreement executed by CK
and GSK dated [*] , as amended and (b) is within the Control of CK.
Notwithstanding anything herein to the contrary, CK Know-How excludes published
CK Patents.

1.7      "CK LIBRARY COMPOUND" shall mean a chemical entity (i) that is
Controlled by CK as of the Effective Date, but which CK has not identified as
meeting the Compound Criteria or criteria similar to the Compound Criteria for a
Mitotic Kinesin Target as of the Effective Date, or (ii) which is developed or
acquired by CK outside of the Research Program with no use of GSK Existing
Technology or GSK Library Compounds, Collaboration Technology or
Post-Collaboration Technology, and, during the Exclusivity Period or any
Extension Period, in activities not directed to the discovery, development,
manufacture or use of Mitotic Kinesin Targets or inhibitors of such Mitotic
Kinesin Targets. It is understood that the term CK Library Compound shall
include both chemical entities that have actually been synthesized as well as
those that have not been synthesized but that are claimed in a CK Patent, so
long as the conception and reduction to practice of such chemical entity were
made in the manner described in clause (ii) above.

1.8      "CK PATENTS" shall mean all Patents in the Territory owned or
Controlled by CK, including, without limitation, those provided to GSK under the
Non-Disclosure Agreement executed by CK and GSK dated [*] , as amended.
CK shall update GSK regarding any CK Patents within the Licensed Technology (i)
on an annual basis commencing after the Effective Date in accordance with
Section 2.4 below, and (ii) upon request by GSK after the end of the Research
Term, with respect to CK Patents to which GSK retains a license hereunder.

1.9      "CK PRODUCT" shall mean pharmaceutical preparations for human
use, incorporating a CK Compound as one of or its main active ingredient.

1.10     "CK TARGET" shall mean those Mitotic Kinesin Targets
designated as CK Targets in accordance with Section 2.7 or another provision of
this Agreement.

1.11     "CO-FUNDING OPTION" shall mean the option of CK to fund a
portion of the Later Stage Development Costs of a Licensed Product as provided
in Section 3.4.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-3-

1.12     "COLLABORATION TARGET" shall mean those Mitotic Kinesin
Targets that are selected as Collaboration Targets in accordance with Section
2.7 or Section 2.8, except as otherwise provided in this Agreement.

1.13     "COLLABORATION TECHNOLOGY" shall mean, subject to Sections
5.2.2, 5.3.2 and 5.5 below, all inventions and Information, invented, conceived
or created solely or jointly by employees, agents or consultants of GSK and/or
CK in the course of performing their respective activities in connection with
the Research Program, or their activities specifically directed to the research,
development, manufacture or use of Compounds, Development Compounds or Licensed
Products, in each case during the Research Term. Collaboration Technology shall
include all CK Patents and GSK Patents in and to any inventions described in
this Section 1.13.

1.14     "COMBINATION PRODUCT" shall mean a Licensed Product that is a
pharmaceutical preparation for human use incorporating two or more
therapeutically active ingredients, including a Development Compound, as its
main active ingredients. Notwithstanding the foregoing, drug delivery vehicles,
adjuvants, and excipients shall not be deemed to be "therapeutically active
ingredients," and their presence shall not be deemed to create a Combination
Product under this Section 1.14.

1.15     "COMPLETION OF SCREENING" shall mean the date on which the
screenings described in Section 2.7.1 have been completed, in accordance with
the criteria set forth in Section 2.7.4.

1.16     "COMPOUND" shall mean, except as otherwise provided herein, a
chemical entity that meets the Compound Criteria for a Mitotic Kinesin Target,
which chemical entity (i) is discovered, synthesized or identified by CK or GSK
using CK Existing Technology, GSK Existing Technology, Collaboration Technology,
and/or Post-Collaboration Technology prior to, during, or, in the case of GSK
(subject to (a) below), after the Exclusivity Period or any Extension Period,
and which, (ii) at GSK's discretion, may be subject to development as a
Development Compound under Section 2.5 of this Agreement. Notwithstanding the
foregoing:

(a)      A chemical entity that is first identified by GSK
after the end of the Exclusivity Period, or after any Extension Period under
Section 4.2.2 below (whichever is later), shall not be deemed a Compound unless
such chemical entity was discovered, synthesized or identified using CK Existing
Technology, Collaboration Technology or Post-Collaboration Technology.

(b)      Those chemical entities Controlled by a Party
prior to the Effective Date, which such Party identified as meeting the Compound
Criteria (or criteria substantially similar to the Compound Criteria) as of the
Effective Date, shall also be deemed Compounds for all purposes of this
Agreement. In the case of CK, these compounds shall include certain of those
compounds that are referred to by CK as the "Series [*] Compounds," as well as
certain other compounds, that CK has so identified as meeting the Compound
Criteria (or such substantially similar criteria) prior to the Effective Date.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-4-

(c)      Notwithstanding (b) above, at such time as a
chemical entity becomes a CK Compound, the same shall be deemed excluded from
the definition of Compounds under this Section 1.16 for all purposes (including,
without limitation, for purposes of Sections 1.21 and 1.44).

(d)      For purposes of clarity, a compound developed by
either Party outside the Research Plan and provided for screening or other use
under this Agreement shall not be deemed a Compound unless and until such
compound is shown to meet the Compound Criteria.

1.17     "COMPOUND CRITERIA" shall mean (i) those criteria set forth in
Exhibit 1.17, and (ii) such other criteria as are approved by the JRC and agreed
in writing by the Parties. No criteria shall be deemed Compound Criteria under
(ii) unless such criteria are formally approved by the JRC and agreed in writing
by the Parties, regardless of whether such criteria are used informally or
discussed by the Parties in the course of the Research Program.

1.18     "CONTRACT YEAR" shall mean a year of 365 days (or 366 days in
a leap year) beginning on the Effective Date and ending one (1) year thereafter
and so on year-by-year. "CONTRACT YEAR ONE" shall mean the first such year;
"CONTRACT YEAR TWO" shall mean the second such year, and so on, year-by-year.

1.19     "CONTROL," "CONTROLS," "CONTROLLED" or "CONTROLLING" shall
mean possession of the ability to grant the licenses or sublicenses as provided
herein without violating the terms of any agreement or other arrangements with
any Third Party.

1.20     "CYTOMETRIX(TM) TECHNOLOGY" shall mean that certain subject
matter as further described in CK publication "Cytometrix(TM) Cellular
Phenotyping Technologies Version 0.5 Development Partner Program" (publication
February 2001), and modifications, improvements, extensions or derivatives to
such automated cell biology platform.

1.21     "DEVELOPMENT COMPOUND" shall mean a Compound that is
designated for product development, in accordance with Section 2.5 below.

1.22     "DEVELOPMENT MILESTONE" shall mean a milestone described in
Section 6.4.

1.23     "DEVELOPMENT PLAN" shall mean the workplan with respect to the
development of a Development Compound as set forth in Section 3.2.

1.24     "EFFECTIVE DATE" shall mean the date first written above.

1.25     "EXCLUSIVITY PERIOD" shall mean the period of time commencing
with the Effective Date and ending upon the [*] anniversary of the end of the
Research Term and any extensions thereto under Section 2.8.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-5-

1.26     "EXTENSION PERIOD" shall mean a [*] period during which
GSK has extended its exclusivity with respect to a particular Collaboration
Target or Extendable Unselected Target, in accordance with Section 4.2.2.

1.27     "EXTENDED TARGET" and "EXTENDABLE UNSELECTED TARGET" shall
have the meanings set forth in 4.2.2.

1.28     "FDA" shall mean, with respect to the United States, the U.S.
Food and Drug Administration, any successor entity thereto, or any equivalent
foreign regulatory authority(ies) in the particular country of the Territory.

1.29     "FIELD" shall mean, subject to Section 2.6.4, (i) the [*] or
[*] treatment of cancer and other diseases and conditions in humans through the
use of a Licensed Product; and (ii) [*] of the [*] or [*] of a patient,
including the [*] of the [*] (e.g., [*] or [*] or [*] ) to [*] of a Licensed
Product, for the [*] of a Licensed Product(s) [*] for the [*] or [*] treatment
of cancer and other diseases and conditions in a human patient. All other uses
not specifically set forth in (i) or (ii) above are excluded from the Field.

1.30     "FTE" shall mean a full-time person employed by CK, or by a
Third Party pursuant to Section 6.2.2, dedicated full-time to the Research
Program, or in the case of less than a full-time dedicated person, a full-time,
equivalent person year, based upon a total of one thousand eight hundred eighty
(1,880) hours per year of work on the Research Program.

1.31     "GSK" shall mean GSK and any Affiliate of GSK.

1.32     "GSK EXISTING TECHNOLOGY" shall mean, subject to Section 5.3.2
below, GSK Patents and GSK Know-How, other than Collaboration Technology and
Post-Collaboration Technology, Controlled by GSK, and created, prior to the end
of the Exclusivity Period or any Extension Period under Section 4.2.2 below,
that: (i) are [*] for the discovery, development, manufacture, use or sale of
Compounds, Development Compounds, Licensed Products, or (ii) GSK has [*] or [*]
in connection with its activities under the Research Program or the development,
manufacture, use or sale of Compounds, Development Compounds or Licensed
Products. In addition, GSK Existing Technology shall be subject to the
following:

(a)      Notwithstanding (i) and (ii) above, a GSK Library
Compound and GSK Patents and GSK Know-How with respect thereto shall be deemed
GSK Existing Technology only to the extent provided in Section 5.3.2 below.

(b)      Notwithstanding (i) above, in the event a
Compound, Development Compound or Licensed Product becomes a CK Compound or CK
Product, or a Mitotic Kinesin Target is designated a CK Target, then with
respect to such CK Compound, CK Product or CK Target (and any other CK Compounds
and CK Products directed to such CK Target), the GSK Existing Technology within
(i) and (ii) above shall include only subject matter that was (x) identified

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-6-

as [*] for the discovery, development, manufacture, use or sale of such CK
Compound or CK Product, or (y) [*] or [*] at least in part to such CK Compound,
CK Product or CK Target, each prior to its being designated as such.
Accordingly, for example, a drug delivery technology that had not been [*] to a
Compound prior to its becoming a [*] shall not [*] become GSK Existing
Technology with respect to such [*] (or a [*] incorporating [*] ) regardless of
whether such GSK drug delivery technology is [*] to commercialize such CK
Compound.

1.33     "GSK KNOW-HOW" shall mean Information which (a) GSK discloses
to CK under this Agreement or under the Non-Disclosure Agreement executed by CK
and GSK dated [*] , as amended and (b) is within the Control of GSK.
Notwithstanding anything herein to the contrary, GSK Know-How excludes published
GSK Patents.

1.34     "GSK LIBRARY COMPOUND" shall mean a chemical entity (i) that
is Controlled by GSK as of the Effective Date, or (ii) which is developed or
acquired by GSK outside of the Research Program with no use of CK Existing
Technology or CK Library Compounds, Collaboration Technology or
Post-Collaboration Technology, and, during the Exclusivity Period or any
Extension Period, in activities not directed to the discovery, development,
manufacture or use of Mitotic Kinesin Targets or inhibitors of such Mitotic
Kinesin Targets. It is understood that the term "GSK Library Compound" shall
include both chemical entities that have actually been synthesized as well as
those that have not been synthesized but that are claimed in a GSK Patent, so
long as the conception and reduction to practice of such chemical entity were
made in the manner described in clause (ii) above.

1.35     "GSK PATENTS" shall mean all Patents in the Territory owned or
Controlled by GSK. GSK shall update CK regarding any GSK Patents within the
Licensed Technology (i) on an annual basis commencing after the Effective Date
in accordance with Section 2.4 below, and (ii) upon request by CK after the end
of the Research Term, with respect to GSK Patents to which CK retains a license
hereunder.

1.36     "IND" shall mean any investigational new drug application
filed with the FDA as more fully defined in 21 C.F.R. Section 312.3 or its
equivalent in any country.

1.37     "IND ENABLING STUDIES" shall mean studies which are
specifically required for an IND, including without limitation, ADME and GLP
toxicology studies, or studies required for the preparation of the CMC section
of an IND including studies relating to analytical methods and purity analysis,
and formulation and manufacturing development studies, all as necessary to
obtain the permission of regulatory authorities to begin human clinical testing.

1.38     "INFORMATION" shall mean information and materials relating to
the subject matter of this Agreement and including (i) techniques and data,
including, but not limited to, screens, models, inventions, methods, test data,
including but not limited to, pharmacological, lexicological and clinical test
data, analytical and quality control data, marketing, pricing, distribution,
costs, and sales data, manufacturing information, and patent and legal data or
descriptions (to the extent that

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-7-

disclosure thereof would not result in loss or waiver of privilege or similar
protection) and (ii) compositions of matter, including but not limited to
compounds, biological materials and assays. As used herein, "clinical test data"
shall be deemed to include all information related to the clinical or
preclinical testing of a Compound, Development Compound, CK Compound, Licensed
Product or CK Product, including without limitation, patient report forms,
investigators'reports, biostatistical, pharmaco-economic and other related
analyses, regulatory filings and communications, and the like.

1.39     "JOINT RESEARCH COMMITTEE" (or"JRC"), "JOINT DEVELOPMENT
COMMITTEE" (or "JDC"), "JOINT COMMERCIALIZATION COMMITTEE" (or "JCC") and "JOINT
STEERING COMMITTEE" (or "JSC") shall mean the committees established under
Sections 2.2, 3.5, 7.2 and 12.2, respectively.

1.40     "KSP" shall mean any protein expressed by the human gene
located at the locus [*] .

1.41     "LATER STAGE DEVELOPMENT" and "LATER STAGE DEVELOPMENT COSTS"
shall have the meanings defined in Sections 3.4.3(a) and 3.4.3(c), respectively.

1.42     "LEAD TARGET" shall mean a Mitotic Kinesin Target identified
in accordance with the procedures set forth in Section 2.7.

1.43     "LEAD TARGET SELECTION DATE" shall mean the date set forth in
Section 2.7.1.

1.44     "LICENSED PRODUCT" shall mean a pharmaceutical preparation for
human use incorporating a Development Compound as one of or its main active
ingredient or designated as such under Section 4.5.2.

1.45     "LICENSED TECHNOLOGY" shall mean CK Existing Technology; GSK
Existing Technology; Collaboration Technology; and Post-Collaboration
Technology.

1.46     "MAJOR EUROPEAN COUNTRY" shall mean France, Germany, Italy,
Spain, or the United Kingdom.

1.47     "MARKETING APPROVAL" shall mean all approvals, licenses,
registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other governmental entity, necessary for the
manufacturing, use, storage, import, transport and sale of Licensed Products in
a regulatory jurisdiction. Marketing Approval shall be deemed to occur upon
first receipt of notice from the FDA, EMEA or similar agency that sale of a
Licensed Product has been approved. For countries where governmental approval is
required for pricing or reimbursement for the Licensed Product to be reimbursed
by national health insurance (i.e., other than the United States), "Marketing
Approval" shall not be deemed to occur until such pricing or reimbursement
approval is obtained; provided, that if a Party has not accepted the pricing or
reimbursement offered by the governmental authority of a particular country
within eighteen (18) months after the date the first MAA is approved in such
country, then the Party shall continue to use diligent efforts to obtain such
pricing or reimbursement. Marketing Approval shall be deemed to have occurred in
such

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-8-

country where government approval of pricing has not been obtained if, at any
time, the Party begins the commercial sale of such Licensed Product in the
country without obtaining pricing approval, with the date of MAA approval to
occur on the date of the first commercial sale of the Licensed Product in the
country.

1.48     "MARKETING APPROVAL APPLICATION" or "MAA" shall mean a New
Drug Application (as defined in 21 C.F.R. Section 314.50 et. seq.), or a
comparable filing for Marketing Approval (not including pricing or reimbursement
approval) in a country, in each case with respect to a Licensed Product in the
Territory.

1.49     "MITOTIC KINESIN TARGET" shall mean (i) the human kinesin
motor proteins KSP [*] ; and (ii) those other human proteins which are
kinesin motor proteins which are discovered or acquired by either Party prior to
the [*] anniversary of the end of the Research Term, excluding any extension
thereof under Section 2.8, and which meet the criteria set forth in a separate
written memorandum signed by both Parties expressly referencing this Section
1.49.

1.50     "Net SALES" shall mean the gross invoice price by GSK or its
Affiliates or Sublicensees, as the case may be, for all Licensed Products sold
by GSK, its Affiliates or Sublicensees ("Selling Party"), in finished product
form, packaged and labeled for sale, under this Agreement in arm's length sales
to Third Parties less deductions allowed to the Third Party customer by the
Selling Party, to the extent actually taken by such Third Party customer, on
such sales for:

(a)      trade, quantity, and cash discounts;

(b)      credits, rebates and chargebacks (including those
to managed-care entities and government agencies), and allowances or credits to
customers on account of rejection or returns (including, but not limited to,
wholesaler and retailer returns) or on account of retroactive price reductions
affecting such Licensed Product;

(c)      freight, postage and duties, and transportation
charges relating to Licensed Product, including handling and insurance thereto;
and

(d)      sales (such as VAT or its equivalent) and excise
taxes, other consumption taxes, customs duties and compulsory payments to
governmental authorities and any other governmental charges imposed upon the
importation, use or sale of such Licensed Product to Third Parties.

Sales between GSK and its Affiliates or Sublicensees shall be excluded
from the computation of Net Sales and no payments will be payable on such sales
except where such Affiliates or Sublicensees are end users. In addition, the
Selling Party may exclude from Net Sales a reasonable provision for
uncollectible accounts, to the extent such reserve is determined in accordance
with U.S. generally accepted accounting standards, consistently applied across
all product lines of the particular Party, until such amounts are actually
collected.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-9-

In the event a Licensed Product is sold which is a Combination Product
under Section 1.14, for purposes of determining payments due CK under Section
4.5.2(b) and (d) or Section 6.6, Net Sales of Combination Products shall be
calculated by multiplying the Net Sales of the Combination Product by the
fraction A over A+B, in which A is the Gross Selling Price of the Licensed
Product when such Product is sold in substantial quantities comprising a
Development Compound as the sole therapeutically active ingredient during the
applicable accounting period in which the sales of the Licensed Product were
made, and B is the Gross Selling Price of the other therapeutically active
ingredients contained in the Combination Product sold separately in substantial
quantities during the accounting period in question. All Gross Selling Prices of
the therapeutically active ingredients of the Licensed and Combination Products
shall be calculated as the average Gross Selling Price of the therapeutically
active ingredients in such Products during the applicable accounting period for
which the Net Sales are being calculated. In the event that no separate sale of
either the Licensed Product comprising a single Development Compound as the sole
therapeutically active ingredient or the other therapeutically active
ingredients of the Combination Product are made during the accounting period in
which the sale was made or if the Gross Selling Price for a particular
therapeutically active ingredient cannot be determined for an accounting period,
Net Sales allocable to the Licensed Product and Combination Product shall be
determined by mutual agreement reached in good faith by the Parties prior to the
end of the accounting period in question based on an equitable method of
determining same that takes into account, in the Territory, variations in
potency, the relative contribution of each therapeutically active ingredient in
the Combination Product, and relative value to the end user of each
therapeutically active ingredient. For purposes of this Section 1.50, "Gross
Selling Price" shall mean the gross price at which an active ingredient is sold
to a Third Party, before discounts, deductions, credits, taxes or allowances.

1.51     "PATENT" shall mean (i) issued and unexpired Letters Patent,
including any extension, registration, confirmation, reissue, continuation, SPC,
divisional, continuation-in-part, re-examination or renewal thereof, (ii)
pending applications for Letters Patents, and (iii) foreign counterparts of any
of the foregoing; in each case to the extent the same has not been held, by a
court or governmental agency of competent jurisdiction, to be invalid or
unenforceable in a decision from which no appeal can be taken.

1.52     "PHASE I," "PHASE II," "PHASE III" and "PHASE IV" shall have
the following meanings:

(a)      "PHASE I" shall mean, subject to Section 6.4.3(c),
the first clinical trial in which a particular Licensed Product is administered
to either a patient or healthy volunteer.

(b)      "PHASE II" with respect to cancer indications
shall mean a clinical trial, the purpose of which is to investigate the activity
of a Licensed Product in cancer using a dose studied in a Phase I clinical trial
for such Licensed Product. "Phase II" with respect to non-cancer indications
shall mean a dose-ranging study or a study exploring efficacy in a disease other
than cancer.

-10-

(c)      "PHASE III" shall mean a pivotal efficacy trial
required to demonstrate substantial evidence of the efficacy and safety of a
Licensed Product for submission of an MAA.

(d)      "PHASE IV" shall mean a clinical trial conducted
for a Licensed Product under an IND in a particular country after the Licensed
Product has received Marketing Approval and has been marketed and commercially
sold in that country, which is conducted primarily to continue testing the
Licensed Product to collect information about its safety and/or efficacy in
broader or various populations, long-term safety and side effects associated
with long- term use, and its use in additional indications other than that for
which Marketing Approval was initially granted.

1.53     "POST-COLLABORATION TECHNOLOGY" shall mean, subject to
Sections 5.2.2, 5.3.2, 5.5 and 12.5.2 below, all inventions and Information
invented or created solely or jointly by employees, agents or consultants of GSK
and/or CK during the [*] ([*]) year period immediately following the end of the
Research Term or during any Extension Period, and which in each case are
invented or created in the course of performing activities specifically directed
to the research, discovery, characterization, optimization or development of
Compounds, Collaboration Targets or Unselected Targets, or to the development,
manufacture, use or sale of Compounds, Development Compounds or Licensed
Products. Notwithstanding the foregoing, Post-Collaboration Technology shall
also include all inventions and Information invented or created by or under
authority of GSK, which are created or invented in the course of performing such
activities after such period and during the term of this Agreement.
Post-Collaboration Technology shall include all CK Patents and GSK Patents in
and to any inventions described in this Section 1.53.

1.54     "PRE-PROGRAM FTEs" and "[*] PROGRAM FTEs" shall have
the meanings ascribed to them in Section 2.6.1 and 2.6.2.

1.55     "[*] PROGRAM" shall mean a formal research program established
in the discretion of [*] with respect to a particular Mitotic Kinesin Target for
the commitment of resources at GSK and at CK under the Research Program, which
program has undergone the detailed review of the [*] or [*]. At a minimum, a [*]
Program shall comprise those activities set forth in Exhibit 1.55.

1.56     "PROJECT TEAM" shall mean the team of [*] personnel and
[*]([*])[*] formed in accordance with Section 3.2 to manage the development of a
Development Compound.

1.57     "RESEARCH PERFORMANCE MILESTONE" shall mean the milestones set
forth in Section 6.3.1.

1.58     "RESEARCH PLAN" shall mean the written workplan for the
Research Program to be conducted under this Agreement established in accordance
with Section 2.3 hereof.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-11-

1.59     "RESEARCH PROGRAM" shall mean the research, discovery,
characterization, optimization and pre-clinical development of inhibitors of
Mitotic Kinesin Targets, and the discovery and characterization of Mitotic
Kinesin Targets, conducted by CK and/or GSK which are undertaken during the
Research Term; provided that the Research Program shall not include any such
activities performed by CK with respect to a CK Compound or CK Target after such
Compound or Target becomes a CK Compound or CK Target, respectively.

1.60     "RESEARCH TERM" shall mean the period commencing on the
Effective Date and ending on the first to occur of (i) termination of this
Agreement by either Party under Article XI below; or (ii) five (5) years after
the Effective Date, or if the Research Term is extended under Section 2.8 below,
the end of such extended Research Term.

1.61     "SALES AND MARKETING PLAN" shall mean the plan and budget for
the marketing, promotion, sale and distribution of a Licensed Product
established by the JCC in accordance with Section 7.2.

1.62     "SUBLICENSEE" shall mean, with respect to a particular
Licensed Product or CK Product, a Third Party to whom GSK or CK, respectively,
has granted a license or sublicense under any Licensed Technology to make and
sell such Licensed Product or CK Product. As used in this Agreement,
"Sublicensee" shall also include a Third Party to whom GSK or CK has granted the
right to distribute a Licensed Product or CK Product, respectively, provided
that such Third Party is responsible for marketing and promotion of such
Licensed Product or CK Product within its distribution territory.

1.63     "TERRITORY" shall mean the entire world.

1.64     "THIRD PARTY" shall mean any entity other than CK or GSK.

1.65     "TRACTABLE COMPOUND" shall mean a Compound that, in the
reasonable determination of the JRC during the Research Term, or, with respect
to Compounds directed to Extendable Unselected Targets identified during any
Extension Period, in the reasonable determination of GSK, meets the criteria in
Exhibit 1.65.

1.66     "UNSELECTED TARGET" shall mean any Mitotic Kinesin Target that
has not been identified as a Lead Target (i) by the end of Contract Year Five or
(ii) in the event GSK extends the Research Term in accordance with Section
2.8.2, by the end of the Research Term, subject in each case to Section 2.7.3
below.

1.67     "CLOSING" AND "CLOSING DATE" shall mean the date specified in
Section 13.1.

-12-

ARTICLE II - COLLABORATION RESEARCH PROGRAM

2.1      Research Program.

(a)      CK and GSK agree to conduct a research program on a
collaborative basis with the principal goal of identifying, developing, and
commercializing Compounds, Development Compounds and Licensed Products within
the Field, the mechanism of action of which is to inhibit Mitotic Kinesin
Targets. The Research Program shall be conducted solely in accordance with the
Research Plan, unless otherwise agreed by the Parties in writing. Each Party
agrees to keep the other Party informed of its progress and activities within
the Research Program.

(b)      Each Patty shall contribute to the Research Program
the Mitotic Kinesin Targets and Compounds identified by such Party prior to the
Effective Date, as well as those Mitotic Kinesin Targets, Compounds, Development
Compounds and Licensed Products identified during the Research Term. This
Section 2.1(b) shall not be deemed to limit CK's rights with respect to CK
Compounds, CK Targets or CK Products.

2.2      The JRC. Promptly after the Effective Date, the Parties shall
establish a Joint Research Committee ("JRC"). The JRC shall have responsibility
to (i) oversee, review and coordinate the Research Program and to expedite the
progress of work being done under the Research Plan, and (ii) to make such other
decisions as are expressly allocated to the JRC under this Agreement. The JRC
shall exist until the end of the Research Term. Each Party agrees to keep the
JRC informed of its progress and activities within the Research Program.

(a)      Membership. The JRC shall be comprised of an equal
number of representatives from each of GSK and CK. The exact number of such
representatives shall be three (3) for each of GSK and CK, or such other number
as the Parties may agree. The initial members of the JRC shall be [*] from GSK,
and [*] from CK. Either Party may replace its respective JRC representatives at
any time, with prior written notice to the other Party. Unless otherwise agreed,
the JRC shall at all times include the CK officer overseeing all research and
the following GSK representatives: the senior Center of Excellence for Drug
Discovery ("CEDD") representatives responsible for biology, chemistry and
clinical activities of the collaboration, any of whom may be replaced by the
head of the CEDD. From time to time, the JRC may establish subcommittees to
oversee particular projects or activities, and such subcommittees will be
constituted as the JRC approves.

(b)      Meetings, The JRC shall meet monthly, or as more or
less often as otherwise agreed by the Parties, at such locations as the Parties
agree. It is understood that such meetings shall be held at least quarterly in
person, otherwise by telephone.

(c)      Decision Making. Decisions of the JRC shall be made
by majority vote of the members present in person or by other means (e.g.,
teleconference) at any meeting; provided that, if there is not an equal number
of representatives of each Party present at such

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-13-

meeting, then only an equal number of representatives of each Party shall be
entitled to vote at such meeting. In the event that the votes required to
approve a decision cannot be reached, then either Party may, by written notice
to the other, have such issue referred to the Chief Executive Officer of CK and
the Chairman, Research and Development, Pharmaceuticals of GSK, for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received. Minutes of the JRC meetings shall be taken, and shall, at a
minimum, record all decisions made. Such minutes shall be approved by both
Parties.

(d)      Responsibilities. The JRC shall be responsible for
preparing the Research Plan for each Contract Year, other than the initial
Research Plan, monitoring and adapting the Research Plan based on the results
and progress of the Research Program, establishing objectives for the Research
Program and evaluating the progress of the Research Program, including without
limitation:

(i)      Deciding the direction and objectives of the
Research Program;

(ii) Approving FTE requirements (subject to Section
2.6);

(iii)    Recommending Mitotic Kinesin Targets to be
submitted for approval by [*] as [*] Programs;

(iv)     Recommending Compounds to be submitted for
[*] approval as Development Compounds in accordance with Section 2.5; and

(v)      Providing a forum for the exchange of
scientific information among the scientists participating in the Research
Program.

2.3      Research Plan.

2.3.1    Responsibilities. The Research Program shall be
carried out in accordance with the Research Plan. Each Party will be responsible
for conducting those activities within the Research Program as are allocated to
such Party under the Research Plan. The Research Plan shall be based on
priorities with respect to Compounds and Mitotic Kinesin Targets other than CK
Targets, taking into account GSK's and CK's views as to the feasibility of the
scope and timing of research activities and objectives.

2.3.2    Establishment of Research Plan. The initial Research
Plan shall be established by the mutual agreement of the Parties immediately
upon the execution of this Agreement (the "Initial Research Plan") and shall
cover the period from the Effective Date through December 31, 2001 in detail and
includes general plans for the following two (2) years. By December 1 of each
year during the Research Term, the JRC shall establish and approve the detailed
Research Plan for the next succeeding year, including a general plan for the
following two (2) years or the period remaining in the Research Term, whichever
is shorter. The JRC shall review the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-14-

Research Plan on an ongoing basis and may make changes thereto as the JRC
approves in writing or as reflected in agreed and approved minutes of JRC
meetings.

2.4      Information and Reports. GSK and CK will use diligent efforts
to make available and disclose to each other all Collaboration Technology and
Post-Collaboration Technology pertaining to Mitotic Kinesin Targets (other than
CK Targets, which are addressed in Section 4.4 below) including all Patents and
Information within such Technology regarding compounds synthesized or
discovered, initial leads, activities of leads, derivatives, and results of in
vitro and in vivo studies, assay techniques and new assays immediately after the
Effective Date and continuing throughout the Research Term, with significant
discoveries or advances being communicated as soon as reasonably practical after
such Information is obtained or its significance is appreciated; provided,
however, that with respect to tangible research material, the Parties shall
exchange such material as determined by the JRC. The Parties will exchange,
during the Research Term, at least once quarterly, a written summary of such
research and results. Within [*] ([*]) days after the [*] anniversary of the
expiration of the Research Term, and of the end of each Extension Period, each
Party shall provide to the other such a written report directed to results
obtained, and Post-Collaboration Technology developed, during the [*] period
following the end of the Research Term. Within [*] ([*]) days after the end of
each Extension Period under Section 4.2.2, each Party will provide the other
with raw data within the Collaboration Technology and Post-Collaboration
Technology to the extent reasonably requested by the other Party. Each Party
shall use diligent efforts to inform the other Party of any of its respective
Existing Technology used or incorporated in connection with the Research Program
or any Extended Target. In addition, each Party will disclose its respective
Existing Technology to the extent reasonably necessary for the other Party to
perform activities under the Research Plan.

2.5      Designation of Development Compounds. The Parties have
established guidelines, set forth in Exhibit 2.5, for the designation of
Compounds as Development Compounds. From time to time, either Party may suggest
that the JRC consider a particular Compound to be recommended to [*] for
consideration as a Development Compound. Based upon the guidelines and the
results of the Research Program, the JRC shall designate from time to time
Compounds for consideration by [*] as Development Compounds, and upon approval
by [*], the Compounds shall be deemed Development Compounds. [*] may approve, or
withhold its approval of, the designation of any Compound as a Development
Compound in [*], whether or not such Compound [*] the [*], and a Compound shall
not be deemed a Development Compound unless so approved by [*]. Unless the JRC
otherwise approves, however, [*] agrees not to undertake IND Enabling Studies
with respect to a particular Compound, until such Compound has been designated
as a Development Compound in accordance with this Section 2.5.

2.6      FTE Requirements; Funding. To advance the Research Program,
GSK agrees to fund CK FTEs performing research under the Research Plan in
accordance with Section 6.2 below and this Section 2.6. In addition:

2.6.1    Generally. Unless otherwise agreed by the Parties or
as otherwise provided in this Section 2.6, the Research Plan shall provide for,
and GSK agrees to fund, [*] ([*]) CK

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-15-

FTEs in Contract Year One; [*] ([*]) CK FTEs in Contract Year Two; [*] ([*]) CK
FTEs in Contract Year Three; [*] ([*]) CK FTEs in Contract Year Four; and [*]
([*]) CK FTEs in Contract Year Five (the "Pre-Program FTEs"). The Pre-Program
FTEs shall be funded at the rate set forth in Section 6.2.1. The Pre-Program
FTEs shall engage in research activities supporting Mitotic Kinesin Target
efforts that have not yet reached [*] Program status, in accordance with the
Research Plan. No activities funded by GSK under Section 6.2 shall be directed
to research on CK Targets, CK Compounds or CK Products once they have been
designated as such.

2.6.2    [*] Program Activities.

(a)      From time to time, [*] may establish a
formal [*] Program to be conducted on a collaborative basis by CK and GSK to
focus resources on a particular Mitotic Kinesin Target. Should [*] establish
such a [*] Program with respect to a Mitotic Kinesin Target, it shall notify the
JRC of the establishment of the [*] Program, and shall keep the JRC fully
informed of its activities under the [*] Program. In such event, the JRC will
decide upon the division between GSK and CK of responsibilities pertaining to
such [*] Program. Upon the establishment of such a [*] Program, the Research
Plan shall be modified to reflect such division, and the additional resources to
be added, which shall include additional FTEs at CK (i.e., in addition to the
Pre-Program FTEs) (such additional FTEs being referred to as "[*] Program
FTEs"); provided that, except as provided in Section 2.6.2(b) for KSP, the
additional [*] Program FTEs for any particular [*] Program shall not exceed [*]
([*]) FTEs unless otherwise agreed by GSK and CK. The decision of whether to
establish a [*] Program with respect to a particular Mitotic Kinesin Target
shall be in the [*] of [*] (except with respect to KSP in Contract Year One, as
described in Section 2.6.2(b) below); provided, however, if at any point in time
GSK assigns medicinal chemistry personnel (other than CK FTEs) at the rate
(i.e., a running rate) of [*] ([*]) full-time equivalents, to perform activities
relating to such Target, a [*] Program shall be deemed to have been established
with respect to such Target. It is anticipated that, if the Research Program is
successful and [*] establishes multiple [*] Programs, then the number of CK FTEs
will increase above the minimum CK FTEs required under 2.6.1 above.

(b)      Notwithstanding the foregoing, the Parties
agree that a [*] Program has been established with respect to KSP, which shall
continue through at least the end of Contract Year One. The Research Plan for
Contract Year One shall, unless otherwise agreed, provide for [*] ([*]) CK [*]
Program FTEs dedicated to KSP (i.e., in addition to the [*] CK FTEs described
above, for a total of [*] CK FTEs in Contract Year One). Following Contract Year
One, the JRC shall determine the appropriate level of [*] Program FTEs, not to
exceed [*] FTEs, to be dedicated to KSP in subsequent periods, based on the
activities remaining and the capabilities of CK to perform those activities.

2.6.3    Maximum FTEs. Notwithstanding Sections 2.6.2(a) and
(b) above, in no event will GSK's aggregate funding obligations for [*] Program
FTEs and Pre-Program FTEs at CK, added together, exceed [*] ([*]) FTEs at CK in
any year of the Research Term, unless mutually agreed. Notwithstanding any of
the foregoing, unless otherwise agreed by CK and

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-16-

GSK, the Research Plan may not at any time require more than [*] ([*]) CK FTEs
performing synthetic and analytical chemistry.

2.6.4    [*]; [*]. During Contract Year [*], CK and GSK shall
discuss a broadening of the Research Plan to include activities specifically
directed at the discovery and development of [*] and/or [*] as inhibitors of
Mitotic Kinesin Targets. The JRC shall include the broadening of the Research
Plan as a priority for discussions at its initial meetings after the Effective
Date. The Parties shall negotiate in good faith, using commercially reasonable
efforts to reach agreement on the terms of such broadening of the Research Plan.
The agreement between the Parties to broaden the Research Plan under this
Section shall take into consideration the research funding, milestones and
royalty payments already agreed to by the Parties under this Agreement. If the
Parties mutually agree in writing on such a modification of the Research Plan
prior to the [*] of the Effective Date, then the Research Plan shall be modified
as so agreed, [*] and [*] shall remain within the Field, and the Parties shall
negotiate additional collaboration terms for such area. Agreement on such an
expanded Research Plan and collaboration may be conditioned upon a commitment by
GSK to include, throughout the Research Term, sufficient resources to diligently
pursue such discovery and development activities. If by the [*] of the Effective
Date the Parties have not agreed in writing on such a modification of the
Research Plan and Agreement, then (notwithstanding Section 1.29 above) for all
purposes of this Agreement the Field shall exclude the use of [*] and [*] for
any therapeutic purpose, and shall also exclude any [*] for use in connection
with such [*] or [*].

(a)      If the parties fail to reach agreement on
such broadening of the Research Plan and Agreement by the end of Contract Year
[*], CK may enter into a collaboration and license or other agreement with one
or more Third Parties for [*] and/or [*], alone or in combination, after
Contract Year [*], subject to Section 2.6.4(b) below, but GSK shall receive a
royalty under Section 4.7 based on CK's use, or that of its licensees, if any,
of [*] generated under the Research Program.

(b)      At least [*] ([*]) days prior to CK's first
grant to a Third Party of a right to develop, manufacture, sell and distribute
(i) both at least [*] ([*]) [*] and at least [*] ([*]) [*], or (ii) at least [*]
([*]) [*], but no [*], or (iii) at least [*] ([*]) [*], but no [*], CK will
notify GSK in writing of its intent to grant such rights and a summary of the
terms upon which it then wishes to grant such rights ("Initial Notice"). A grant
described in (i) above is referred to as a "Combination License," and a grant
referred to in either (ii) or (iii) is referred to as a "Field-Specific
License." CK shall provide one (1) Initial Notice with respect to a proposed
Combination License or one (1) Initial Notice each for each of the two
categories of Field Specific License. It is understood and agreed that CK shall
not be required to submit more than one (1) Initial Notice to GSK with respect
to [*] collectively on the one hand, or more than one (1) Initial Notice to GSK
with respect to [*] collectively on the other hand.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-17-

(A)      Upon request by GSK within
[*]([*]) days after receiving an Initial Notice, CK and GSK will, during the
[*]([*]) day period following the date of the Initial Notice (the "Negotiation
Period"), negotiate the granting of rights to GSK under the Combination License
or Field Specific License, as applicable. It is understood that any such grant
of rights to GSK is subject to agreement between the Parties on the financial
terms and other conditions of such grant. If CK provides an Initial Notice to
GSK (x) with respect to a Field Specific License, GSK shall have the right to
negotiate with CK for a Combination License or (y) with respect to one product
within [*] or [*], as applicable, GSK shall have the right to negotiate with CK
for a Field-Specific License to [*] or [*], as applicable, or to a Combination
License. In the event GSK requests to negotiate a category of License as
described in (x) or (y), then the Initial Notice shall be deemed to have been
for that category of License (i.e., Combination License, Field-Specific License
for [*] or Field-Specific License for [*], as the case may be).

(B)      If for any reason the
Parties do not agree upon and enter into an agreement for the grant of rights to
GSK by the end of the Negotiation Period, CK shall have no further obligations
to GSK under this Section 2.6.4 to provide an Initial Notice (x) with respect to
any [*] or [*] in the case of an Initial Notice regarding a Combination License,
(y) with respect to any [*] in the case of a Field-Specific Licensed described
in Section 2.6.4(b)(ii) above, or (z) with respect to any [*] in the case of a
Field-Specific License described in Section 2.6.4(b)(iii) above; except in each
case for CK's royalty obligations under Section 4.7 (as they may apply to [*]
and [*] as if the resultant product were a CK Product).

(c)      At such time as (i) CK has delivered an
Initial Notice for either (y) one (1) Combination License or (z) one (1)
Field-Specific License for [*] and one (1) Field-Specific License for [*],
whichever occurs first, and (ii) the Negotiation Period, if any, corresponding
to each Initial Notice described above has expired (or the Parties have agreed
upon and entered into an agreement concerning the subject matter of such Initial
Notice), then all obligations of CK under this Section 2.6.4 shall terminate. It
is understood that the Parties' obligations under this Section 2.6.4 are limited
to those expressly stated herein, and neither GSK nor CK shall have any further
obligation, implied or otherwise, other than the obligations expressly stated
herein.

(d)      For such purposes, (i) "[*]" shall mean [*]
for the treatment or [*] of a disease [*], via [*] or [*] methods, of
compositions comprising a [*] that [*] and [*] a moiety, wherein such moiety
serves a material function in the treatment or [*] of such disease; and (ii)
"[*]" shall mean [*] for the treatment or [*] of a disease comprising [*] which
modulates [*] by [*]; in each of cases (i) and (ii) where such [*], as known by
CK at the time of the grant of rights subject to this Section 2.6.4, is to
inhibit the function of a Mitotic Kinesin Target.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-18-

2.7      Collaboration Targets. The Parties acknowledge that CK's
technology with respect to the Mitotic Kinesin Targets and the research
conducted under the Research Program could potentially provide a large number of
Mitotic Kinesin Targets and Compounds on which to focus further research and
development activities, and that, under the collaboration, the Parties will
focus their resources on particular Mitotic Kinesin Targets to be selected by
GSK as Collaboration Targets in accordance with this Section 2.7. Those Mitotic
Kinesin Targets designated as CK Targets in accordance with this Section may be
pursued independently by CK, subject to GSK's rights under Section 4.5 below, it
being understood that GSK will perform no additional research or development on
or commit additional resources to such CK Targets (unless GSK exercises its
right with respect to a CK Product under Section 4.5 below).

2.7.1    Initial Selection of Collaboration Targets. Upon the
later to occur of (i) the Completion of Screening for [*] ([*]) Mitotic Kinesin
Targets or (ii) [*] days after the end of Contract Year [*] (the "Lead Target
Selection Date"), the JRC will reasonably determine the number of Mitotic
Kinesin Targets, other than [*], for which at least one Tractable Compound has
been identified (a "Lead Target"); provided, however, if [*] establishes a [*]
Program with respect to a particular Mitotic Kinesin Target, such Target shall
be deemed a Lead Target. If the number of such Lead Targets is [*] or less, then
all such Lead Targets shall be Collaboration Targets. If the number of Lead
Targets is [*] or greater, then the Parties shall make the initial selection of
Collaboration Targets and CK Targets, as set forth in Sections 2.7.1(a) and (b)
below (with all of the Lead Targets that have been identified as of the Lead
Target Selection Date identified above being referred to as the "Initial Lead
Target Pool").

(a)      On the Lead Target Selection Date, the
Parties shall select as Collaboration Targets and CK Targets that number of Lead
Targets corresponding to the total number of Lead Targets in the Initial Lead
Target Pool as set forth in the following table, with such selection proceeding
in the manner described in Section 2.7.1(b) and (c) below.

Total Lead Targets      Collaboration Targets          CK Targets
------------------      ---------------------          ----------

[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]
[*]                      [*]                       [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-19-

(b)      In applying the foregoing table on the Lead
Target Selection Date, [*] shall be entitled to select the first [*] ([*]) [*].
After [*] has made such selection, [*] may select [*] ([*]) Lead Target as [*].
This initial selection shall progress sequentially through the table,
Lead-Target-by-Lead-Target, until all Lead Targets in the Initial Lead Target
Pool have been selected by GSK and CK based on the number of Collaboration
Targets and CK Targets assigned to each under the table. For example, if there
are [*] ([*]) Lead Targets in the Initial Lead Target Pool, [*] shall first
select [*] ([*]) [*], [*] shall then select [*] ([*]) [*], [*] shall then select
[*] ([*]) [*] more [*], and [*] shall then select [*] ([*]) additional [*].

(c)      [*] shall notify [*] of its first selection
no later than [*] ([*]) [*] days after the Lead Target Selection Date, and
thereafter each Party shall make its next selections sequentially, as described
in paragraph (b) above, within [*] ([*]) [*] business days after the other Party
completes its selection. In the event that a Party (the "Selecting Party") fails
to make such selection within such [*]-day or [*]-business day period, as
applicable, and again fails to make such selection within [*] ([*]) [*] business
days of a further written request to do so, the other Party shall have the right
to make such selection on behalf of the Selecting Party by so notifying the
Selecting Party of such selection, and such selection shall be deemed the
selection of the Selecting Party for purposes of this Section 2.7.

(d)      Upon each selection in accordance with this
Section 2.7, the particular Lead Target shall be deemed a Collaboration Target
or a CK Target, as the case may be.

(e)      [*]. For purposes of clarity, it is
understood that [*] shall not be included in the total Lead Targets or the
Initial Lead Target Pool, nor shall [*] be subject to the selection mechanism of
these Sections 2.7.1 and 2.7.2. [*] shall be deemed a Collaboration Target as of
the Effective Date, except to the extent otherwise provided in this Agreement.

(f)      If the total number of Lead Targets in the
Initial Lead Target Pool or thereafter exceeds [*] ([*]), then for all purposes
of this Section 2.7, the table above shall be deemed to be extended in the same
pattern as such table progressed from [*] ([*]) Lead Targets to [*] ([*]) Lead
Targets. For example, if there are [*]([*]) Lead Targets, [*] would be entitled
to [*] ([*]) [*] and [*] would be entitled to [*] ([*]) [*].

2.7.2    Subsequent Selections.

(a)      After all of the Lead Targets have been
selected from the Initial Lead Target Pool, then within [*] ([*]) days after
each subsequent point in time as the JRC has identified [*] ([*]) additional
Lead Targets (i.e., other than [*] and the Lead Targets previously selected in
accordance with this Section 2.7), and in any event at the end of Contract Year
Five, the Parties shall make further selections of Collaboration Targets and CK
Targets, with [*] selecting [*] ([*]) [*], and with the [*] being designated as
[*] (subject to paragraphs (b) and (c) below). For example, if [*] ([*]) Lead
Targets were in the Initial Lead Target

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-20-

Pool, when [*]([*]) additional Lead Targets are identified, [*] shall first
select [*]([*]) Lead Target as [*], and the [*] Lead Target shall be [*].

(b)      Notwithstanding the foregoing, until such
time as a total of at least [*]([*]) Lead Targets have been identified, then the
selection of such Lead Targets shall proceed in accordance with Section 2.7.1
above as if such Lead Targets had been in the Initial Lead Target Pool (i.e., so
that [*] will have the right to select the first [*] Lead Targets as [*], and
[*] shall have the right to select the [*] Lead Target as [*]).

(c)      If there is only one (1) unselected Lead
Target at the end of Contract Year Five, then that Lead Target shall be
designated as a Collaboration Target or a [*], depending on which Party is
then due a Lead Target, based on the table above.

2.7.3    Reversion of Unselected Targets; Selection during
Section 2.8.2 Extension.

(a)      It is understood that any Unselected Target
shall be deemed a CK Target at the end of Contract Year Five, unless the
Research Term is extended with respect to Unselected Targets under Section 2.8.2
below, or, if the Unselected Target is an Extendable Unselected Target and such
Target becomes an Extended Target under Section 4.2.2 below.

(b)      If the Research Term is extended with
respect to Unselected Targets in accordance with Section 2.8.2 below, and a
particular Unselected Target is identified as a Lead Target during the period of
such extension, such Lead Target shall be selected as a Collaboration Target or
CK Target in accordance with the table in Section 2.7.1 above, taking into
account all of the Lead Targets previously so selected under Section 2.7.1 or
2.7.2 above, or under this Section 2.7.3. Such selections shall be made in a
sequential fashion, progressing through the table Lead Target-by-Lead Target, as
each such Lead Target is identified (i.e., such selection shall not progress on
the basis of each [*] Lead Targets in the manner described in Section 2.7.2
above). Any Unselected Target that has not been identified as a Lead Target by
the end of the extended Research Term under Section 2.8.2 shall be deemed a CK
Target, unless such Unselected Target becomes an Extended Target under Section
4.2.2 below.

(c)      If an Extendable Unselected Target becomes
an Extended Target under Section 4.2.2 below, and such Extended Target is
identified as a Lead Target during the Extension Period for such Target, the
same shall automatically be deemed a Collaboration Target. Otherwise, such
Unselected Target shall become a CK Target as of the end of the last Extension
Period for such Target.

2.7.4    Completion of Screening. Promptly following the
Effective Date, CK shall disclose to GSK the number of screens against
particular Mitotic Kinesin Targets that it has conducted as of the Effective
Date, including those chemical entities so screened by CK prior to the Effective
Date. It is anticipated that, by the end of Contract Year [*], CK will generate
up to [*] Data Points with respect to each of [*]([*]) Mitotic Kinesin Targets,
unless the JRC determines and agrees that such Data Points are better allocated
otherwise. The JRC shall specify

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-21-

the number of chemical entities to be screened with respect to specific Mitotic
Kinesin Targets, on a Target-by-Target basis. GSK shall supply to CK such number
of chemical entities and in such quantities as required by the Initial Research
Plan (as defined in Section 2.3.2) in time for the scheduled screening against a
particular Mitotic Kinesin Target prior to the end of Contract Year [*]. CK
shall give priority to screening chemical entities provided by GSK rather than
to chemical entities provided by CK. The screening requirements outlined in the
Initial Research Plan shall be sufficient to satisfy the Completion of Screening
requirement under this Section 2.7 and screening of such Targets shall be deemed
complete for purposes of clause (i) of Section 2.7.1 above when CK has generated
that number of Data Points specified by the Initial Research Plan for Contract
Years [*] through [*], including those Data Points generated by CK prior to
the Effective Date, or such lesser number as the JRC may agree. It is understood
that the JRC may provide for further screening beyond that level of screening
required for Completion of Screening under this Section 2.7.4, but completion of
such further screening shall not be required to satisfy the requirements of
Section 2.7.1(i) above. For purposes of this Section 2.7.4, a "Data Point" shall
be deemed generated when CK has screened a single, unique chemical entity
against a single Mitotic Kinesin Target (it being understood that such chemical
entity may be used to generate a Data Point for each Mitotic Kinesin Target).

2.8      Extension of Research Term.

2.8.1    Collaboration Targets. GSK shall have the right to
extend the Research Term on an annual basis for up to [*]([*]) additional [*]
periods beyond Contract Year Five. To exercise such option, GSK shall so notify
CK in writing at least [*]([*]) months prior to the expiration of the Research
Term (including any extensions thereof in accordance with this Section 2.8.1).
During any extension of the Research Term under this Section 2.8.1, the Research
Plan shall provide for [*]([*]) CK FTEs, or a higher number if mutually agreed,
performing activities with respect to Collaboration Targets under the Research
Program, funded by GSK at the FTE rate established under Section 6.2.1 below. It
is understood that, during any extension under this Section 2.8, the Research
Program shall be limited to research and development activities directed to
Collaboration Targets, except as provided under Section 2.8.2 below. In the
event that the Research Term ends at any point in time, then from and after such
time GSK shall have no further right to extend the Research Term under this
Section 2.8.1.

2.8.2    Unselected Targets.

(a)      Except as provided in this Section 2.8.2, or
as provided in Section 4.2.2 below, all Mitotic Kinesin Targets that have not
been designated Collaboration Targets by the end of Contract Year Five shall at
that time become CK Targets.

(b)      Notwithstanding (a) above, if GSK has
extended the Research Term for a particular Contract Year in accordance with
Section 2.8.1 above, GSK may also extend the Research Term with respect to all
Unselected Targets for such Contract Year, to the extent provided in this
Section 2.8.2. GSK shall have the right to extend the Research Term under this
Section 2.8.2 for up to [*]([*]) additional [*] periods beyond Contract Year
Five, provided GSK has

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-22-

extended the Research Term under Section 2.8.1. To exercise such option, GSK
shall so notify CK in writing at least [*]([*]) months prior to the expiration
of the Research Term (including any extensions thereof in accordance with this
Section 2.8.2(b)). During any extension of the Research Term under this Section
2.8.2, the Research Plan shall provide for [*]([*]) CK FTEs, or a higher number
if mutually agreed, performing activities with respect to Unselected Targets
under the Research Program, funded by GSK at the FTE rate established under
Section 6.2.1 below (i.e., [*] additional FTEs beyond those required by Section
2.8.1 above, for a combined total of at least [*] CK FTEs being funded by GSK
under both Sections 2.8.1 and 2.8.2). In the event that GSK does not extend the
Research Term for any Contract Year with respect to all Unselected Targets in
accordance with this Section 2.8.2, then from and after such time GSK shall have
no further right to extend the Research Term under this Section 2.8.2.

(c)      In the event GSK extends the Research Term
in accordance with this Section 2.8.2, then any Unselected Targets that have not
been designated Collaboration Targets prior to the end of the last extension of
the Research Term under this Section 2.8.2 shall at that time become CK Targets,
unless GSK selects such Unselected Target as an Extended Target in accordance
with Section 4.2.2 below.

(d)      Once an Unselected Target is selected as
either a Collaboration Target or a CK Target, the same shall cease to be an
Unselected Target.

ARTICLE III - PRODUCT DEVELOPMENT

3.1 GSK's Right to Pursue Development.

(a)      Following the selection of a Development
Compound in accordance with Section 2.5 above, GSK shall be responsible for
undertaking a development program to obtain Marketing Approval for one or more
Licensed Products incorporating such Development Compound. The development
program undertaken by GSK shall include all preclinical, clinical, manufacturing
and other activities, beyond those to be undertaken pursuant to the Research
Program, as are [*] or [*] in [*] and [*] to bring such Licensed Products to
market. Except as provided in Section 3.1(b), and subject to any other
provisions of this Agreement (including without limitation Sections 3.2, 3.3,
4.2.1, 7.3 and 11.3.3), GSK shall have the right to make all decisions relating
to the development, marketing and commercialization activities with respect to
any particular Development Compound or Licensed Product, including whether to
continue with the development program with respect to any Development Compound
or Licensed Product or to seek Marketing Approval of a Licensed Product in a
particular country in the Territory.

(b)      Upon CK's exercise of its Co-Funding Option
or GSK's exercise of the CK Product Option, the JDC shall have the right to make
all decisions relating to the development, marketing and commercialization
activities with respect to any particular Development Compound or Licensed
Product as to which CK has exercised its Co-Funding Option, including whether to
continue with the development program with respect to the Development Compound
or Licensed

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-23-

Product or to seek Marketing Approval of the Licensed Product in a particular
country in the Territory. The JDC shall make decisions in accordance with the
Co-Development Plan and Budget (as described in Section 3.4.2), as such may be
modified by the JDC and all development of Co-Funded Products shall be performed
in accordance with such Co-Development Plan and Budget. All MAAs and Marketing
Approvals for the Licensed Products (other than those for which GSK acquires
rights under Section 4.5 below) [*], unless otherwise agreed or provided herein.

3.1.1    Review of [*] as Potential Development Compound. The
Parties acknowledge that CK has identified and developed certain Compounds, and
that the Compound referred to by CK as [*] may potentially meet the Development
Compound Criteria guidelines set forth in Exhibit 2.5. In addition, the Parties
acknowledge that CK has commenced and is continuing product development
activities with respect to [*], and the Parties have discussed CK's continuing
development program, including the costs thereof, for such Compound. Promptly
after the Effective Date, the JRC shall determine whether and when to recommend
[*] as a Development Compound, and, if the JRC so recommends, [*] shall
determine whether or not to approve [*] as a Development Compound in accordance
with Section 2.5 above, and will notify [*] of its decision, including the
reasons for such decision, it being understood that [*] retains the absolute
right to approve or not approve [*] as a Development Compound.

3.1.2    Cost of [*] Preclinical Development Prior to
Decision. It is understood that, prior to the Effective Date, CK has been
proceeding with development activities with respect to [*], including activities
directed to compiling data necessary for [*] to consider [*] as a potential
Development Compound. GSK shall have no obligation to reimburse CK for any costs
incurred by CK prior to the Effective Date relating to [*] or other research and
development activities of CK. Notwithstanding the foregoing, GSK agrees to
reimburse CK for the following costs related to [*]: (a) costs associated with
[*] incurred after the Effective Date as set forth in the Research Plan; (b)
costs incurred by CK in accordance with the termination of activities ongoing as
of the Effective Date with those Third Party vendors identified with an asterisk
in the Initial Research Plan, [*]; and (c) if [*] is not approved by [*] as a
Development Compound, [*] percent ([*]%) of costs incurred by CK in accordance
with the termination of activities with those Third Party vendors identified
with an asterisk in the Initial Research Plan. GSK shall have no obligation to
reimburse CK for costs associated with [*]or other research costs other than as
set forth above or as otherwise agreed by the JRC. In establishing the
objectives and activities in the Research Plan with respect to [*], the JRC
shall determine which Third Party agreements relating to [*] to continue or to
terminate. In the event that [*] approves [*] as a Development Compound, the
Parties shall cooperate to ensure a seamless and rapid transition of further
development of [*] in accordance with the general timelines set forth in the
Initial Research Plan.

3.2      Project Team. Promptly after approval of each Development
Compound, GSK shall form a project team comprised of GSK personnel that will
manage the conduct and progress of the further development and regulatory
affairs with respect to that Development Compound (each a

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-24-

"Project Team"). Such Project Team shall meet at least monthly. CK shall be
notified at least two weeks in advance of the date of each Project Team meeting
and shall have the opportunity to send, at CK's cost, [*] to such meeting, who
shall be designated as [*] of the Project Team. GSK shall provide such [*] with
schedules for all Project Team meetings and all other information distributed to
GSK members of the Project Team. The Project Team shall have the responsibility
for establishing the plan for the development of the subject Development
Compound (each, a "Development Plan"), and in so doing shall consider all
reasonable suggestions and comments of CK in formulating such Development Plan.
Such Development Plan shall be comprehensive and shall fully describe at least
the proposed activities related to ongoing preclinical studies, formulation,
process development, clinical studies and regulatory plans, and other activities
and timelines directed to obtaining Marketing Approval in each applicable
country. In any event, GSK agrees to keep CK fully informed as to the material
progress and activities relating to the further development and regulatory
matters pertaining to each Development Compound and Licensed Product. In
addition, GSK shall provide CK with such material information as CK may
reasonably request from time to time. It is understood that such information
will include, without limitation, copies of all proposed trial protocols and
material correspondence with regulatory authorities with respect to each
Licensed Product.

3.3      Manufacturing. Except as provided in Section 3.1.2, GSK shall
have the right and responsibility to arrange for manufacturing of the Licensed
Products, including both clinical materials and commercial product, consistent
with GSK's reasonable internal practices and industry standards. GSK shall make
reasonable commercial efforts to ensure adequate manufacturing capacity to meet
forecast demand for Licensed Products, including, if deemed necessary by GSK,
the establishment of an alternative supply source. GSK shall also make
reasonable commercial efforts to ensure an adequate clinical and commercial
supply of such Licensed Products. GSK will keep the Project Team, the JDC and
the JCC, as applicable, advised of its manufacturing plans and activities.

3.4      Co-Development Option. CK shall have the right, on a Licensed
Product-by- Licensed Product basis, to elect to fund a portion of the Later
Stage Development Costs of such Licensed Product, all in accordance with this
Section 3.4 (the "Co-Funding Option").

3.4.1    Election. GSK shall notify CK at least [*]([*]) months, but
not more than [*]([*]) months, prior to initiation of the first [*] for each
Licensed Product (each, a "[*]"). Such [*] shall include the date by which such
[*] will start (the "Projected Start Date"), and shall include a description in
detail of the indication for which such [*] will be directed, together with a
comprehensive, detailed plan and budget, prepared and provided in good faith,
for the conduct of the Later Stage Development of such Licensed Product, to the
extent such information is not included in or is at variance with the
Development Plan or otherwise has not been communicated previously to CK. At
least [*]([*]) days prior to the Projected Start Date, CK may elect, by so
notifying GSK in writing, to participate in the further development of such
Licensed Product, to the extent described in this Section 3.4 below (such
notice, the "Election Notice"). Following the [*], GSK shall cooperate

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-25-

fully with CK, and shall promptly provide CK with such material information
(including without limitation underlying clinical data), to the extent such
information is not included in the Development Plan or otherwise has not been
communicated previously to CK, as CK may reasonably request to enable CK to make
an informed decision whether to exercise its Co-Funding Option under this
Section 3.4 with respect to such Licensed Product. In the event CK exercises its
Co-Funding Option with respect to a particular Licensed Product (such Licensed
Product, a "Co-Funded Product"), the provisions of Sections 3.4.2 through 3.4.4
below shall apply with respect to such Co-Funded Product.

3.4.2    Co-Funding Obligation. In the event CK exercises its
Co-Funding Option with respect to a Licensed Product, CK shall specify in the
Election Notice whether CK elects to fund either [*] ([*]) or [*] ([*]) of the
Later Stage Development Costs for such Licensed Product. The percentage so
specified by CK is referred to as the "CK Percentage" for such Licensed Product.
Following such election, CK shall be obligated to reimburse GSK for the CK
Percentage of such Later Stage Development Costs for such Licensed Product,
subject to the provisions of this Section 3.4.

(a)      The comprehensive development plan and
budget provided with the [*], as modified in accordance with this Section
3.4.2(a), is referred to as the "Co-Development Plan and Budget." By October 1
of each year during the Later Stage Development for a particular Co-Funded
Product or such other date as is mutually agreed by the Parties (which will be
established under Section 3.5 below), the JDC shall update and amend the
Co-Development Plan and Budget for such Co-Funded Product for the next
succeeding year. Unless otherwise specified in the Co-Development Plan and
Budget, any amounts projected for a full year shall be considered budgeted in
four equal quarterly amounts.

(b)      Within sixty (60) days after CK exercises
its Co-Funding Option with respect to a Licensed Product, but in any event prior
to the initiation of the first [*] for such Licensed Product, CK and GSK shall
establish specific reasonable Later Stage Development Costs invoicing and
payment procedures. Such procedures shall include the form of invoice, overall
documentation requirements and accounting methodologies for Later Stage
Development Costs, and specific documentation of costs required with each
invoice. Within sixty (60) days after the end of each calendar [*], GSK shall
provide to CK a statement reflecting the total Later Stage Development Costs
incurred by GSK during such calendar [*] with respect to the particular
Co-Funded Product. Within sixty (60) days after CK's receipt of such statement,
CK shall reimburse GSK for the CK Percentage of Later Stage Development Costs
incurred by GSK during such [*] period in accordance with the Co-Development
Plan and Budget for such Co-Funded Product. CK may elect to defer payment, in
whole or in part, of any amount due under this Section 3.4.2(b) for up to an
additional [*] ([*]) months after such payment would otherwise have been due, by
providing notice to GSK of the amount for which payment is to be deferred and
the period of the deferment. Any payment amount so deferred shall bear interest
at a rate of [*] percent ([*]%) per annum, calculated on the number of days from
the end of the [*] day period after the calendar [*] in which such Later Stage
Development Costs were incurred, until

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-26-

the date paid by CK. GSK agrees to keep CK informed on an ongoing basis as to
the actual Later Stage Development Costs incurred to date as compared to the
Later Stage Development Costs reflected in the Co-Development Plan and Budget.

(c)      Notwithstanding the foregoing, CK shall not
be obligated to reimburse GSK for amounts [*] percent ([*]%) in excess of the
Later Stage Development Costs provided in (i) the then-current Co-Development
Plan and Budget, or (ii) the Development Plan and Budget provided with the [*],
whichever is lower (the CK Percentage of such excess amounts being referred to
as the "Deferred Excess Amount") in accordance with the time periods and
schedule set forth in Section 3.4.2(b). In the event that CK elects not to
reimburse such Deferred Excess Amount in accordance with the time periods and
schedule set forth in Section 3.4.2(b), then, at GSK's option either (i) CK
shall repay such Deferred Excess Amount on the [*] anniversary of the date such
Deferred Excess Amount would otherwise have been payable under paragraph (b)
above, together with interest thereon at the rate of [*] percent ([*]%) per
annum, calculated from the date such Deferred Excess Amount would have been so
due under paragraph (b); or (ii) GSK shall be entitled to credit such excess
costs, plus interest at a rate of [*] percent ([*]%) per annum, calculated from
the date such costs would have otherwise been due, against royalties payable
under Section 6.6.2 with respect to such Co-Funded Product. GSK shall make such
election with respect to all Deferred Excess Amounts for a particular Co-Funded
Product by so notifying CK within sixty (60) days after the date CK first elects
to defer a Deferred Excess Amount under this Section 3.4.2(c) for such Co-Funded
Product. In the event of (i), CK may repay such Deferred Excess Amount earlier
than the date it would be payable under (i) above, without penalty, and with
interest only accruing until the date so paid by CK.

(d)      In the event CK assigns this Agreement to
[*] US Dollars ($[*]), or in the event that CK merges or consolidates or
concludes a similar transaction with such a pharmaceutical or biotechnology
entity, in which such entity becomes an Affiliate of CK, CK's ability to defer
any payments due under Section 3.4.2(b) or (c) shall terminate, and CK shall
reimburse GSK for all past payments due, including applicable interest thereon,
within ninety (90) days after the closing of such acquisition, merger or
consolidation.

(e)      Upon [*]([*]) months written notice to GSK,
CK may terminate its Co-Funding Option for a particular Co-Funded Product. In
such event, CK's funding obligation under Section 3.4.2(b) above shall apply
only with respect to Later Stage Development Costs of activities conducted with
respect to such Co-Funded Product prior to the date of such termination. Should
CK terminate its Co-Funding Option under this Section, any royalties payable to
CK on the Licensed Product shall be paid in accordance with Section 6.6.2(c). If
CK terminates its Co-Funding Option under this Section, it shall relinquish any
right to its Co-Promotion Option under Section 7.4 with respect to such
Co-Funded Product.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-27-

3.4.3    Certain Terms. As used in this Section 3.4, the
following terms shall have the meaning set forth below:

(a)      "Later Stage Development" shall mean [*] and
[*] and other development activities described below, specifically directed to
the development of a Co-Funded Product, which are directed specifically towards
achieving [*] or maintaining [*] of a Co-Funded Product or achieving an [*] or
[*] for a Co-Funded Product, whether such studies are conducted by [*] or by an
[*]; provided, however, that [*] focusing on [*] not included in the [*] for the
Co-Funded Product and not used for submission of an [*] or [*] for the Co-Funded
Product shall also be included in Later Stage Development if the results of such
study are published in a peer-reviewed journal. Later Stage Development shall
also include (i) the [*] of [*] and [*] for such [*] and [*]; provided, however,
that if the amounts of [*] for [*] are used for [*] of the [*], [*] shall be [*]
for the cost of any amounts [*]; (ii) [*] and [*] development activities
commenced after the initiation of the [*] for the [*] specifically directed to
the Co-Funded Product, including [*] or clinical [*] or [*] studies, [*] and
other clinical testing, for such purpose; provided, however, that the costs of
activities described in this item (ii) to be included within Later Stage
Development Costs (other than [*] tests required to [*] a [*] clinical trial),
shall be limited to [*]% of the total Later Stage Development Costs for such
Co-Funded Product in a given [*] period; and (iii) that portion of [*]
development directed specifically towards achieving [*] of a Co-Funded Product
or achieving an [*] or [*] for a Co-Funded Product; and (iv) the preparation and
filing of [*] and all associated [*] activities to achieve [*], maintain [*] or
achieve an [*] or [*] for a Co-Funded Product, including the [*]. "Later Stage
Development" shall exclude (i) [*] development not included in (iii) above; and
(ii) any activities of the [*] and [*] of GSK and associated [*]. As used
herein, "[*]" shall mean the [*]- approved [*] required to [*] the Licensed
Product that contains [*].

(b)      "[*]" clinical trials shall mean any [*]
clinical trials of a Co-Funded Product conducted after [*] of such Co-Funded
Product, by GSK or a Third Party, to the extent GSK collects or receives the
data generated in such trials, performs statistical analysis with respect to
such data, with the intention of using the data to determine [*] or [*] for the
Co-Funded Product or supporting the [*] and [*] of such Co-Funded Product. [*]
clinical trials shall specifically exclude [*] programs sponsored by GSK, [*]
programs and grants (other than those grants extended by GSK to investigators to
support [*] clinical trials).

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-28-

(c)      "Later Stage Development Costs" with respect
to a particular Co-Funded Product shall mean, to the extent incurred in
accordance with the Co-Development Plan and Budget then in effect and to the
extent not reimbursed by a Third Party: (i) amounts paid to Third Parties for
their performance of Later Stage Development of the particular Co-Funded
Product; [*] (ii) [*] conducting such Later Stage Development, plus [*] for such
[*], [*] directly attributable to such Later Stage Development; and (iii) [*] to
the conduct of Later Stage Development, including [*] of [*] for [*] in Later
Stage Development; plus in each of cases (i), (ii) and (iii), a reasonable
allocation of [*] costs attributable to the particular Co-Funded Product
(subject to paragraph (d) below). [*] costs attributable to a Co-Funded Product
may include a reasonable allocation of [*] labor, a reasonable allocation of [*]
costs, and a reasonable allocation of [*] cost including [*] cost, [*], and [*]
over the [*] of [*] and [*], and such allocations shall be in accordance with
reasonable cost accounting methods, consistently applied by GSK for its own
internal accounting. [*] shall not include corporate [*] or [*] costs not
otherwise allocable to the [*] of the Co-Funded Product or costs associated with
[*] not incorporated into [*] costs, and [*] costs shall exclude costs
associated with [*] and [*]. It is understood that Later Stage Development Costs
shall not include any cost of activities undertaken prior to CK's exercise of
its Co-Funding Option, and shall not include any costs incurred with respect to
activities directed to [*] of a Co-Funded Product, or to [*], or to activities
not specifically directed to achieving [*], maintaining [*] or achieving an [*]
or [*] for a Co-Funded Product in an attempt to enhance Net Sales of the
Co-Funded Product and the resulting royalties to CK.

(d)      In no event, however, shall the total [*]
included within Later Stage Development Costs exceed [*] percent ([*]%) of the
costs described in (i), (ii) and (iii) of Section 3.4.3(c) above.

(e)      For purposes of this Section 3.4, a
particular "Co-Funded Product" shall include all dosages of any formulation of
the same active ingredient for all indications within the Field. Licensed
Products having a different or additional active ingredient shall be deemed a
separate Licensed Product (or a separate Co-Funded Product, as the case may be).

3.4.4    Certain Disputes. The Parties shall attempt to timely
resolve any dispute with respect to whether a cost or expense should be included
within Later Stage Development Costs for a particular Co-Funded Product or is
otherwise obligated to be reimbursed under this Section 3.4. If the Parties are
unable to resolve such dispute, the matter shall be referred to the Chairman,
GSK R&D, and President, CK, for resolution. If such individuals are unable to
resolve such dispute within thirty (30) days after the matter is referred to
them, the matter shall be subject to arbitration under Section 12.3.1 below.
Failure by CK to pay any disputed amount under this Section 3.4 shall not be
deemed a breach of this Agreement unless and until it has been determined in an
arbitration

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-29-

proceeding under Section 12.3.1 below that CK is obligated to pay such disputed
amount, provided that (i) CK makes such payment within thirty (30) days after
such determination or (ii) within such thirty (30) day period CK elects to
terminate its Co-Funding Option for the particular Co-Funded Product in
accordance with Section 3.4.2(e) above, in which case (notwithstanding Section
3.4.2(e)), CK shall have no obligation to reimburse any Later Stage Development
Costs not previously paid by CK.

3.5      Joint Development Committee. Promptly following CK's exercise
of its Co-Funding Option for a Co-Funded Product, or an exercise by GSK of the
CK Product Option with respect to a CK Product under Section 4.5 below, the
Parties shall establish a Joint Development Committee ("JDC") with respect to
such Licensed Product. It is understood that the Project Team for such Licensed
Product shall continue after establishment of a JDC and shall report thereto.
The JDC shall have responsibility to oversee the Later Stage Development of the
Co-Funded Product, and all further development of the Licensed Product for which
GSK exercises its CK Product Option under Section 4.5, and to make such
decisions as are expressly provided in this Article III. The JDC shall be
comprised of an equal number of representatives from each of GSK and CK; and
unless otherwise agreed, the JDC shall at all times include CK's head of
development and GSK's head of clinical operations for the CEDD or Therapeutic
Area Strategic Team ("TAST"), as appropriate, and GSK's CEDD head of biology,
unless otherwise agreed, and shall have at least one representative from each
Party at the level of Vice President or above. Either Party may replace its
respective JDC representatives at any time, with prior written notice to the
other Party. From time to time, the JDC may establish subcommittees to oversee
particular projects or activities, and such subcommittees will be constituted as
the JDC approves. The JDC shall meet at least quarterly according to an agreed
schedule, and the Parties shall keep the JDC fully informed as to all aspects of
the Later Stage Development and other ongoing activities pertaining to the
Co-Funded Product and all further development of the Licensed Product for which
GSK exercises its CK Product Option under Section 4.5. Decisions of the JDC
shall be by majority vote; provided that if there is not an equal number of
representatives of each Party present at such meeting, then only an equal number
of representatives of each Party shall be entitled to vote. In the event the
required vote to approve a particular action cannot be obtained, then either
Party may request that the issue be referred for resolution through good faith
negotiations between the Chief Executive Officer of CK and the Chairman,
Research and Development for GSK, who shall promptly meet to resolve the issue.
In the event they are unable to reach agreement on the matter, the [*] shall
have the right to [*] on the matter, which [*] shall become the decision of the
JDC. Notwithstanding the foregoing, [*] shall not have the right to [*] with
respect to matters relating to Licensed Products for which [*].

3.6      Regulatory Matters. Subject to Section 4.4.2, [*] shall file
and be the owner for all regulatory filings for Compounds and/or Licensed
Products developed pursuant to this Agreement, including all MAAs and Marketing
Approvals. Notwithstanding the foregoing, the parties shall agree on which Party
shall file and own regulatory filings for Licensed Products for which [*].

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-30-

ARTICLE IV - EXCLUSIVITY

4.1      Exclusivity of Efforts.

4.1.1    Compounds. Except as set forth herein or Exhibit
10.1, during the Exclusivity Period, neither Party shall conduct, participate
in, or fund, directly or indirectly, alone or with a Third Party, research or
development with respect to, or commercialize a product comprising, a
Development Compound, Compound or Licensed Product within the Field, except
pursuant to this Agreement. In addition, neither Party shall, during the
Exclusivity Period, without the consent of the JRC or the other Party, hold any
discussion with any Third Party relating to any of the foregoing activities,
regardless of whether such activities would take place during or after the
Exclusivity Period, except as permitted under this Agreement.

4.1.2    Activities Directed to Mitotic Kinesin Targets.
Except as set forth herein or Exhibit 10.1, during the Exclusivity Period,
neither Party shall conduct, participate in, or fund, directly or indirectly,
either alone or with a Third Party, any research, development, or
commercialization activities in the Field with respect to the Mitotic Kinesin
Targets, including Collaboration Targets, except pursuant to the Agreement. In
addition, during the Exclusivity Period, neither Party shall disclose to a Third
Party any CK Existing Technology, GSK Existing Technology, Collaboration
Technology or Post-Collaboration Technology relating to Mitotic Kinesin Targets
to the extent prohibited under Section 9.5. Subject to the foregoing and the
confidentiality obligations set forth in Article IX, (i) CK shall have the right
to use Mitotic Kinesin Targets, and information relating thereto other than
Compounds, for general technology development purposes, including but not
limited to the development of assay, informatics, and expression technologies,
and (ii) either Party shall have the right to use Mitotic Kinesin Targets,
including CK Targets and Collaboration Targets, and information relating
thereto, for the generation of negative control information outside the Research
Program.

4.1.3    Retention of Rights.

(a)      For avoidance of doubt, it is understood
that this Section 4.1 shall not limit CK's activities relating to CK Targets, CK
Compounds, and CK Products.

(b)      Notwithstanding Section 4.1.1, each Party
retains the right to conduct, participate in, or fund, directly or indirectly,
alone or with a Third Party, research or development with respect to, or to
commercialize a product comprising (i) with respect to GSK, a GSK Library
Compound, and (ii) with respect to CK, a CK Library Compound, in each case where
the primary mode of pharmacological action of such compound is not through
inhibition of one or more Mitotic Kinesin Targets, and without use of Licensed
Technology owned (or Controlled) solely by the other Party; provided, however,
that (1) if CK has progressed a GSK Library Compound to the equivalent stage to
a Development Compound hereunder prior to GSK progressing such GSK Library
Compound to a Development Compound-equivalent stage under this Section 4.1.3(b),
the retained right of GSK under this Section 4.1.3 with respect to such GSK
Library Compound will no longer apply; and (2) if GSK has progressed a CK
Library Compound to the equivalent stage to a

-31-

Development Compound prior to CK progressing such CK Library Compound to a
Development Compound-equivalent stage under this Section 4.1.3(b), the retained
right of CK under this Section 4.1.3 with respect to such CK Library Compound
will no longer apply. Each Party shall notify the other of their efforts with
respect to a GSK Library Compound or CK Library Compound upon the designation of
the compound as a Compound or as a Development Compound equivalent as described
in (i) and (ii) above. This Section 4.1.3 shall not be deemed to limit in any
way any license expressly granted under this Agreement.

(c)      GSK acknowledges that CK has ongoing
research programs related to non-human mitotic kinesins and the development of
pharmaceutical products for the treatment of human diseases, the mechanism of
action of which is to modulate such non-human proteins. GSK further acknowledges
that such ongoing research programs as well as similar future CK research
programs related to non-human mitotic kinesins are outside the scope of this
Agreement and such activities of CK are not prohibited by this Article IV.
Notwithstanding the foregoing, except for the licenses granted under Section
5.4.2, nothing in this Agreement shall be construed as a grant to CK of any
licenses from GSK under Licensed Technology for research, development or
commercialization of any products directed to non-human mitotic kinesins; and
provided further, that nothing in this Section shall be construed as a
limitation on CK's confidentiality obligations pursuant to Article IX of this
Agreement.

4.2      Exclusivity Extension.

4.2.1    [*] Programs. Subject to the provisions of this
Section 4.2, for those Collaboration Targets for which a [*] Program has been
designated during the Exclusivity Period or if such Collaboration Target was an
Extended Target (as defined in 4.2.2(a) below), prior to the end of the
Extension Period for such Target, CK's obligations under Section 4.2.3 below
with respect to each such Collaboration Target shall automatically extend with
respect to such Collaboration Target for so long as GSK is diligently pursuing
such [*] Program, Development Compound or Licensed Product directed to such
Collaboration Target; provided, however, if after the Exclusivity Period or any
Extension Period, as applicable (i) GSK ceases at any time diligent research,
development or marketing of all Compounds and Licensed Products for such
Collaboration Target, or (ii) GSK fails to identify a Compound meeting the
guidelines set forth in Exhibit 2.5 and designate such Compound as a Development
Compound for such Collaboration Target before the [*] anniversary of the
expiration of the Exclusivity Period, or in the case of a Collaboration Target
that was an Extended Target, before the [*] anniversary of the end of the
Extension Period for such Target, then CK's obligations under Section 4.2.3
shall terminate with respect to such Target. GSK shall keep CK informed of its
progress and activities pertaining to all Collaboration Targets, Extended
Targets and Extendable Unselected Targets, and any Compounds, Development
Compounds or Licensed Products directed thereto.

4.2.2    Option to Extend Exclusivity; Exercise.

(a)      Subject to paragraph (d) below, GSK has the
option to extend CK's obligations under Section 4.2.3 below with respect to a
particular Collaboration Target or

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-32-

Extendable Unselected Target (as described in paragraph (e) below), on a
Target-by-Target basis for up to an additional [*] ([*]) years, all to the
extent set forth in Section 4.2.3 below. The option fee shall be [*] U.S.
Dollars (U.S. $[*]) per annum per Collaboration Target or Extendable Unselected
Target, as applicable. To exercise such right:

(i)      with respect to a Collaboration
Target that was selected as a Collaboration Target prior to the end of the
initial five-year Research Term or any extension thereto under Section 2.8.1,
GSK shall so notify CK in writing at least ninety (90) days prior to the end of
the Exclusivity Period; and

(ii)     with respect to an Extendable
Unselected Target, GSK shall so notify CK in writing at least ninety (90) days
prior to the end of the initial five-year Research Term or any extension thereto
under Section 2.8.2. In the event that an Extendable Unselected Target becomes a
Collaboration Target during an Extension Period for such Target, it is
understood that clause (i) above shall not apply (i.e., because such Extendable
Unselected Target was not a Collaboration Target at the end of the Research
Term).

(iii)    Each such notice shall specify the
Collaboration Target(s) or Extendable Unselected Target(s) for which GSK elects
to exercise its right under this Section 4.2.2, and include payment in the
amount of [*] U.S. Dollars (U.S. $[*] ) for each Collaboration Target(s) or
Extendable Unselected Target(s) for which GSK exercises its rights under this
Section 4.2. Upon such exercise, such Collaboration Target(s) or Extendable
Unselected Target(s) shall be deemed an "Extended Target" for a period of [*]
from such anniversary date.

(b)      After the first [*] -year extension for a
particular Extended Target under (a) above, subject to paragraph (d) below, GSK
may maintain such Extended Target as an Extended Target for one additional [*]
([*]) year period beginning at the end of the first Extension Period, by so
notifying CK in writing, and paying to CK the amount of [*] U.S. Dollars (U.S.
$[*] ) for each Extended Target for which GSK seeks such a continued extension,
at least ninety (90) days prior to the end of the first Extension Period.

(c)      In the event that the Extension Period
lapses at any time with respect to a particular Collaboration Target or
Extendable Unselected Target, then GSK shall have no further rights, and CK
shall have no further obligations, under this Section 4.2 with respect to such
Collaboration Target or Extendable Unselected Target, and such Collaboration
Target or Unselected Target shall not be deemed an Extended Target for any
period thereafter and shall be deemed a CK Target. If GSK establishes, prior to
the end of the Extension Period for an Extended Target, a [*] Program, then
Section 4.2.1 shall apply; provided that, in the case of an Extended Target that
is an Extendable Unselected Target, such Extended Target has first been
designated as a Collaboration Target in accordance with Section 2.7.3 above.

(d)      Notwithstanding the foregoing provisions of
this Section 4.2.2, if GSK extends the Research Term for [*] ([*]) years under
Section 2.8.1 above, GSK may only extend its rights under Section 4.2.3 below
with respect to Collaboration Targets and Extendable Unselected

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-33-

Targets for a single [*] Extension Period under this Section 4.2.2 (i.e., so
that in such event GSK shall not have the right to an additional extension under
paragraph (b) above); and if GSK extends the Research Term for [*] ([*]) years
under Section 2.8.1 above, GSK shall not have any right to extend its rights
with respect to any Collaboration Target or Extendable Unselected Target.

(e)      The Unselected Targets for which GSK may
extend its rights under Section 4.2.3 below ("Extendable Unselected Targets"),
in accordance with this Section 4.2.2 shall be determined as follows: Prior to
the time specified in paragraph (a)(ii) above for GSK to so extend such rights,
GSK and CK shall allocate the Unselected Targets then remaining (the "Unselected
Target Pool") into Extendable Unselected Targets and CK Targets, in the same
manner as the Parties selected Collaboration Targets and CK Targets from Lead
Targets under Section 2.7.3 above, progressing sequentially through the table in
Section 2.7.1, as if such Extendable Unselected Targets were Collaboration
Targets and as if such Unselected Targets were Lead Targets. It is understood
that such selection shall begin at the point in the table where the last
selection of a Collaboration Target or CK Target, as the case may be, was made
under Section 2.7. For example, if there had been [*] ([*]) Lead Targets during
the Research Term (including any extension thereto), and there remain [*] ([*])
Unselected Targets in the Unselected Target Pool, then [*] shall have the right
to make the first selection of [*] from such Unselected Target Pool, then [*]
would have the right to select [*]([*])[*] as a [*] , [*] would then have the
right to select [*]([*]) additional [*] from the Unselected Target Pool, and [*]
would have the right to select the [*] and [*] Unselected Target as [*] . Upon
such selection by GSK the Unselected Target so selected by GSK shall become an
"Extendable Unselected Target," and upon such selection by CK the Unselected
Target shall become a CK Target.

(f)      GSK shall not be required to continue, but
upon mutual agreement of the Parties may elect, to [*] during the
Extension Period.

4.2.3    CK Obligations for Extended Targets. For so long as
GSK's exclusivity with respect to a particular Collaboration Target or Extended
Target is extended under Section 4.2.1 or Section 4.2.2 above, CK shall not
conduct, participate in, or fund, directly or indirectly, alone or with a Third
Party, any research, development, or commercialization activities in the Field
with respect to such Collaboration Target or Extended Target, as applicable.

4.3      Certain Other Matters Pertaining to Exclusivity.

4.3.1    Target Reversion. After the end of the Exclusivity
Period or Extension Period, as applicable, any Collaboration Target or Extended
Target with respect to which CK's activities are no longer restricted under
Section 4.2.3 shall cease to be a Collaboration Target, and shall cease to be an
Extended Target, for all purposes of this Agreement, and any such Target shall
be deemed a CK Target at the conclusion of such Period or such later time as
specified in Section 4.2.1, as applicable, except pursuant to the Agreement.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-34-

4.3.2    GSK Activities. Subject to Section 4.4.2 below, after
a Mitotic Kinesin Target becomes a CK Target, GSK shall not conduct, participate
in, or fund, directly or indirectly, alone or with a Third Party, any research,
development, or commercialization activities in the Field with respect to such
CK Target.

4.4      Commercialization of CK Targets and Compounds.

4.4.1    Generally. It is understood that, as provided in this
Agreement, [*] will have control over the selection, development and
commercialization of Development Compounds and Licensed Products. Accordingly,
GSK and CK have agreed that CK has the right to continue, on its own (outside
the Research Program) research, development and other activities relating to CK
Targets, including the identification of CK Compounds and development of CK
Products for commercialization, in accordance with a workplan established by CK.
During the Research Term, CK shall provide quarterly updates to the JRC of the
progress of its activities on CK Targets. Notwithstanding the foregoing, for so
long as GSK's CK Product Option under Section 4.5 below remains in effect with
respect to a CK Compound or CK Product, CK shall retain exclusive rights to such
CK Compound or CK Product sufficient to grant to GSK the rights that GSK is
entitled to receive under Section 4.5 upon GSK's exercise of such CK Product
Option with respect to such CK Compound or CK Product.

4.4.2    Transition.

(a)      At such time as a Mitotic Kinesin Target
becomes a CK Target, a compound becomes a CK Compound or a Licensed Product
becomes a CK Product, then from and after such time, GSK shall cooperate fully
with CK to provide CK with all Licensed Technology and Information to which CK
has a right or license under this Agreement and which is necessary or useful for
CK to further research, develop, produce or otherwise exploit such CK Target, CK
Compound or CK Product. Such cooperation shall include (i) the [*] disclosure of
all such Information, to the extent such information is not within the
possession or control of CK (including, without limitation: [*] with respect to
the CK Compound or CK Product and [*] with respect to CK Products, CK Compounds
or CK Targets, and (ii) [*] and [*] or [*] in connection with the CK Product, CK
Compound or CK Target, transfer of [*] all to the extent that such material is
not in the possession of CK, and such other [*] as are reasonably necessary or
useful for CK to exercise its full rights with respect to such CK Target, CK
Compound, or CK Product granted to CK under this Agreement. From and after such
time, all such Information specifically pertaining to the CK

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-35-

Compounds, CK Products and CK Targets shall be deemed Confidential Information
of CK for purposes (i.e., to the same extent as such information had been first
disclosed to GSK by CK under this Agreement), subject to the exceptions
described in Section 9.1(ii), (iii) or (iv) (but not subject to the exception in
Section 9.1(i)) below. Notwithstanding the foregoing, GSK shall not be
considered to be in breach of this Section 4.4.2 for failure to disclose
information, if, despite [*] efforts, the identification of such
information is impractical or such information is not material. Without limiting
the foregoing, GSK shall use [*] efforts with respect to those activities
for which it is responsible to ensure orderly transition and uninterrupted
research and development of CK Targets, CK Compounds or CK Products. CK shall
promptly reimburse [*] with respect to activities and
[*] under this Section 4.4.2.

(b)      In addition, GSK shall cooperate fully to
transition to CK upon CK's request any arrangement with any [*] from which GSK
had arranged to [*] of Compounds, Development Compounds or Licensed Products
that became a CK Compound or CK Product hereunder. In the event that such [*] ,
and the CK Compound has reached a stage equivalent to Development Compound at
the time of its transition, then GSK shall continue to provide CK [*] until the
conclusion of any [*] , and shall also [*] a final, reasonable [*] as ordered by
CK within [*] ([*]) days after the date of transition. GSK shall be obligated to
[*] ordered by CK, but only to the extent that GSK, prior to the date of
transition, was [*] at a [*] which would permit [*] run, consistent with GSK's
past practices with respect to such Compound, Development Compound or Licensed
Product that became a CK Compound or CK Product hereunder.

(c)      In the event that a Mitotic Kinesin Target
later becomes a CK Target, a Compound later becomes a CK Compound, or a
Development Compound or a Licensed Product later becomes a CK Product, for
clarity it is understood that:

(i)      Any subject matter that would have
been within the GSK Existing Technology, Collaboration Technology or
Post-Collaboration Technology at the time the Mitotic Kinesin Target becomes a
CK Target, the Compound becomes a CK Compound, or the Development Compound or a
Licensed Product becomes a CK Product, but for such event, shall nonetheless
continue to be within the Collaboration Technology, Post-Collaboration
Technology or GSK Existing Technology, respectively, for all purposes of this
Agreement. For example, if GSK makes an invention with respect to a
Collaboration Target after the Exclusivity Period, and then such Collaboration
Target becomes a CK Target, such invention shall continue to be within the
Post-Collaboration Technology, with respect to such CK Target, and with respect
to CK Compounds and CK Products directed to such CK Targets. It is understood
that this Section 4.4.2(c)(i) shall be subject in all respects to paragraph (b)
of Section 1.32 above.

(ii)     The licenses to GSK under Section
5.2 below shall terminate (A) with respect to any Compound, Development Compound
or Licensed Product that became a CK

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-36-

Compound or CK Product, and (B) with respect to any Collaboration Target that
became a CK Target.

4.5      GSK Option. For the period commencing on the Effective Date
and ending on the [*] anniversary thereof, for those CK Targets selected
by CK under Section 2.7.1 or 2.7.2, and for those CK Targets that become CK
Targets as a result of GSK's failure to designate a Development Compound for
such Targets within the time period specified in clause (ii) of Section 4.2.1,
GSK shall have an option to acquire a worldwide license to CK Compounds and CK
Products, all as described in this Section 4.5 below (the "CK Product Option").
Such Option shall be exercisable on a CK Product-by-CK Product basis as follows.

4.5.1    Exercise. At such time as CK has completed [*] ([*])
clinical trials of a particular CK Product, CK shall notify GSK of such event
(the "CK [*] Notice"), and shall provide to GSK a complete copy of the IND filed
with the FDA for such CK Product, the completed clinical trial report in the
form and including the information requested on Exhibit 4.5.1 hereto for the
clinical trials of such CK Product as of the date of the CK [*] Notice, and a
statement in detail of the research and development costs subject to
reimbursement under Section 4.5.2 below of the date of such [*] Notice. Within
[*] ([*]) days after receipt of the CK [*] Notice, GSK shall have the right to
exercise the CK Product Option with respect to such CK Product, by so notifying
CK in writing. For purposes of this Section 4.5.1, "completion" of a [*] trial
shall be deemed to have occurred upon the later to occur of (i) thirty (30) days
after the last patient to be treated in such trial has been dosed, and (ii)
receipt by CK of the completed clinical trial report for such clinical trial in
the form and including the information requested on Exhibit 4.5.1 hereto.
Following delivery of the CK [*] Notice to GSK, CK shall cooperate fully with
GSK, and shall promptly provide GSK with such material information (including
without limitation underlying clinical data), to the extent such information has
not been communicated previously to GSK, as GSK may reasonably request to enable
GSK to make an informed decision whether to exercise its CK Product Option under
this Section 4.5. In any case, such cooperation shall include providing to GSK
within [*] ([*]) days after the CK [*] Notice, a comprehensive, detailed plan
and budget for development activities to be undertaken by CK with respect to
such CK Product during the one (1) year period following the date of the [*]
Notice, together with such formal plans as CK then has produced, if any, for the
conduct of [*] trials of such CK Product. Within [*] ([*]) days after GSK
exercises its CK Product Option with respect to a CK Product, CK shall provide
GSK with a statement of the Early Stage R&D Costs that would be required to be
reimbursed by GSK under Section 4.5.2(a) below. In the event GSK exercises its
CK Product Option with respect to a particular CK Product, the provisions of
Sections 4.5.2 through 4.7 below shall apply with respect to such CK Product.

4.5.2    Terms of License Upon Exercise of CK Product Option.
In the event that GSK so exercises the CK Product Option with respect to a
particular CK Product, such CK Product shall, upon such exercise, cease to be a
CK Product and shall thereafter be deemed a Licensed Product. In such event:

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-37-

(a)      Within [*] ([*]) days after GSK's exercise
of the CK Product Option, GSK shall pay to CK an amount equal to [*] percent (
[*] %) of the research and development costs incurred by CK with respect to such
CK Product outside of the Research Program up to the date of GSK's exercise of
the CK Product Option, as defined in Section 4.5.2(a)(i) and (ii) below (such
activities, the "Early Stage R&D" and such costs, the "Early Stage R&D Costs").

(i)      The Early Stage R&D Costs incurred
by CK for which CK shall receive reimbursement from GSK under this Section
4.5.2(a) shall only include those specifically directed to research and
development of the CK Product, to the extent not reimbursed by a Third Party,
including the following costs: (1) costs for the conduct of activities related
to [*] of the CK Product or the CK Compound incorporated in the CK Product; (2)
cost for the conduct of [*] and other [*] for a CK Product; (3) costs
specifically related to those activities intended to [*] and/or [*] or [*] or a
CK Compound incorporated in the CK Product, or to [*] ; (4) studies related to
[*], and other [*] of, or [*] or [*] of, a CK Product; (5) amounts paid to Third
Parties for their performance of Early Stage R&D of the particular CK Product;
(6) [*] conducting such Early Stage R&D (to the extent [*] under this
Agreement), plus [*] for such [*], [*] directly attributable to such Early Stage
RD and (7) [*] that are attributable to the conduct of Early Stage R&D,
including [*] specifically related to the CK Product; plus (subject to paragraph
(ii) below), for such items other than those in (5) above, a reasonable
allocation of [*] costs attributable to the particular CK Product. [*] costs
attributable to a CK Product may include a reasonable allocation of [*] labor, a
reasonable allocation of [*] costs, and a reasonable allocation of [*] costs
including [*] cost, [*] , and [*] over the [*] of [*] and [*] , and such
allocations shall be in accordance with reasonable cost accounting methods,
consistently applied by CK for its own internal accounting. [*] shall not
include: (a) corporate [*] or [*] costs not otherwise allocable to the [*] of
the CK Product; or (b) costs associated with [*] not attributable to the Early
Stage R&D. The Parties shall attempt to timely resolve any dispute with respect
to whether an item of cost or expense should be included within Early Stage R&D
Costs for a particular CK Product under this Section 4.5. If the Parties are
unable to resolve such dispute, the matter shall be referred to the [*] , and
[*] , for resolution. If such individuals are unable to resolve such dispute
within thirty (30) days after the matter is referred to them, the matter shall
be subject to arbitration under Section 12.3.1 below. In such event, GSK may
withhold [*] percent ( [*] %) of the disputed amount (i.e., [*] % times [*] % of
the disputed Early Stage R&D Costs), and failure by GSK to pay such portion of
the disputed amount under this Section 4.5 shall not be deemed a breach of this
Agreement unless and until it has been determined in an arbitration proceeding
under Section 12.3.1 below that GSK is obligated to pay such disputed amount,
and GSK fails to make such payment within thirty (30) days after such
determination.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-38-

(ii)     In no event, however, shall the
total [*] costs included within Early Stage R&D Costs exceed (a) [*] percent (
[*] %) with respect to research and preclinical development costs, or (b) [*]
percent ( [*] %) with respect to clinical development costs, in each case that
are described in (1) through (7) of Section 4.5.2 (a)(i) above.

(iii)    Notwithstanding the foregoing,
Early Stage R&D Costs shall not include costs for which GSK previously has
reimbursed CK under Section 6.2 or pursuant to this Section 4.5.2(a) (i.e., to
the extent such costs were included within the Early Stage R&D Costs for a
Licensed Product for which GSK previously exercised the CK Product Option).

(b)      The base royalties payable to CK with
respect to such Licensed Product shall equal [*] percent ( [*] %) of the royalty
rates specified in Section 6.6.2(a)(i) below (subject to paragraph (d) below).
It is understood, however, that for purposes of determining the applicable
royalty rate, the total annual Net Sales ranges shall be exactly the same as
specified in Section 6.6.2(a)(i) below; so that for example, if the Net Sales of
the Licensed Product for the particular calendar year equal $ [*], then
the royalty payable for such Licensed Product shall equal [*] percent ( [*] %).

(c)      For purposes of determining the milestone
payments under Section 6.4 below, such Licensed Product shall be deemed a
Licensed Product [*] for [*] (i.e., so that the milestone payments will equal
the amounts specified in Section 6.4.1). The milestone payments due with respect
to such Licensed Products under such Section 6.3.1 for Milestone 5 ( [*] ) and
Section 6.4.1 for Milestone 1 and Milestone 2 ( [*] , respectively) shall be due
within forty-five (45) days after GSK exercises the CK Product Option with
respect to such Licensed Product; provided, however, that a payment for a
particular Milestone shall not be so due if GSK has previously made a payment
under Section 6.3.1 below for such Milestone with respect to a Development
Compound directed to the same Mitotic Kinesin Target or under Section 6.4.1 for
such Milestone with respect to the same Licensed Product (i.e., before such
Mitotic Kinesin Target or Licensed Product became a CK Target or CK Product,
respectively); and provided, further, that for purposes of this Section
4.5.2(c), the amount due with respect to Milestone 5 under Section 6.3.1 shall
be [*] US Dollars ($ [*] ) rather than [*] US Dollars ($ [*] ). Notwithstanding
the foregoing, GSK shall have no obligation to make either such milestone
payment to CK if GSK previously made a milestone payment to CK with respect to
such Product for such milestone under Section 6.3 or 6.4 below before the
Licensed Product became a CK Product.

(d)      CK's Co-Funding Option under Section 3.4
above shall apply to such Licensed Product and CK shall exercise it, and the
royalties payable with respect to such Licensed Product shall equal the
royalties described in Section 4.5.2(b) above, plus X percentage points, where
"X" equals the difference in [*] between the [*] and the [*] , [*] , or [*] , as
the case maybe, in each case if such royalties had not been adjusted under
Section 4.5.2(b) above.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-39-

(e)      From and after the time that GSK exercises
the CK Product Option with respect to a CK Product (which will then become a
Licensed Product), CK and GSK shall cooperate with respect to the further
development activities of such Licensed Product, pursuant to a Development Plan
approved by the JDC. Immediately following GSK's exercise of the CK Product
Option, CK shall exercise the Co-Funding Option with respect to the Licensed
Product, and within [*] ([*]) days shall notify GSK of the CK Percentage, as set
forth in Section 3.4. Promptly following GSK's exercise of the CK Product Option
and CK's notification of the CK Percentage, the JDC shall establish such a
Development Plan for the Licensed Product. The Development Plan for the Licensed
Product shall reflect CK's exercise of its Co-Funding Option. In reviewing and
approving the Development Plan, the JDC shall take into consideration which
Party is more appropriate to conduct activities reflected in the Development
Plan, taking into consideration, among other factors, the scope and scale to
which CK had been conducting certain activities prior to GSK's exercise of the
CK Product Option. GSK and CK shall each assume those development activities
agreed by the JDC.

(f)      CK shall continue performing further
activities related to the development of such Licensed Product in accordance
with CK's own development plans for a period of one (1) year after GSK's
exercise of the CK Product Option, or until such earlier time as the JDC
establishes such a Development Plan, and thereafter the further development of
the Licensed Product shall be conducted in accordance with such Development
Plan, as modified by the JDC from time to time; provided, that during such
interim period CK shall not initiate a [*] trial, or make any major commitments
with respect to a [*] trial of such Licensed Product, including [*] , except as
approved by the JDC. Any activities that are to be transferred by CK to GSK
under the Development Plan shall be transferred as quickly as possible, and CK
shall take [*] to ensure such speedy transfer. All costs incurred by CK in
performing such activities (i.e., those after GSK's exercise of the CK Product
Option but prior to the JDC's establishment of a Development Plan), and those
conducted pursuant to the Development Plan so established, shall be reimbursed
by GSK to the extent they exceed the CK Percentage elected by CK under the
Co-Funding Option with respect to the Licensed Product. All such reimbursements
shall be made in the same manner as is provided in Section 6.2 below for funding
under the Research Plan (including the provisions for interim periods, as
contemplated in Section 6.2.4). CK and GSK shall establish specific reasonable
invoicing and payment procedures for reimbursements under this Section 4.5.2(f),
including the form of invoice, overall documentation requirements and accounting
methodologies.

(g)      Transition. Subject to paragraph (e) above,
and incident to the extent reasonably necessary for GSK to perform activities
assigned to it under the Development Plan approved by the JDC:

(i)      From and after the time that GSK
exercises the CK Product Option with respect to a CK Product (which will then
become a Licensed Product), CK shall cooperate fully with GSK to provide GSK
with all Licensed Technology and Information to which

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-40-

GSK has a right or license under this Agreement and which is necessary or
useful for GSK to perform such activities. Such cooperation shall include the
[*] disclosure of all Information, to the extent such information is not within
the possession or control of GSK, (including, without limitation, [*] , all to
the extent that such material is not in the possession of GSK, and such other
[*] and [*] as are reasonably necessary or useful for GSK to exercise its full
rights and perform such activities with respect to such CK Product.
Notwithstanding the foregoing, CK shall not be considered to be in breach of
this Section 4.5.2(g) for failure to disclose information, if, despite [*]
efforts, the identification of such information is impractical or such
information is not material. Without limiting the foregoing, CK shall use [*]
efforts to ensure orderly transition and uninterrupted research and development
of CK Products under this Section. GSK shall promptly reimburse CK's [*] costs
with respect to activities and materials provided by CK under this Section
4.5.2(g).

(ii)     In addition, the JDC shall meet and
discuss how best to proceed with the [*] of such CK Product in the best interest
of such CK Product and its commercial profile, taking into consideration the
relative capabilities of each Party, including CK's [*] or arrangements prior to
GSK's exercise of its CK Product Option. In the event that the JDC determines
that [*] such CK Product, CK shall cooperate fully to [*] related to the CK
Product as reflected in the Development Plan approved by the IDC.

(h)      For purposes of this Section 4.5.2, all
dosage forms, and all formulations, of the same active ingredient shall be
deemed a single Licensed Product. Licensed Products having a different or
additional active ingredient shall be deemed a separate Licensed Product if such
different or additional active ingredient is a different or additional CK
Compound or CK Product or another active ingredient in which CK has proprietary
rights (other than a Licensed Product otherwise licensed to GSK hereunder).

4.5.3    Termination. In the event that GSK does not elect to
exercise its CK Product Option on a CK Product, in accordance with Section 4.5.1
above, then the CK Product Option, and all of CK's obligations under this
Section 4.5 with respect to such CK Product, as well as with respect to all CK
Compounds and CK Products for the same CK Target shall terminate. CK shall
thereafter be free to develop such CK Products, CK Compounds and CK Targets,
alone or in connection with Third Parties.

4.5.4    [*] Products. It is understood that this Section 4.5
and the rights and obligations of GSK and CK under this Section 4.5 shall not
apply to any [*] Products. For such purposes, " [*] Products" shall mean those
CK Compounds and CK Products that are directed to Mitotic Kinesin Targets
designated as CK Targets under any Section of this Agreement

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-41-

other than (i) [*] or (ii) by reason of [*] failure to [*] a Development
Compound for such Target within the time period specified in [*] above.

4.5.5    No Implied Obligations. The only obligations of GSK
and CK under this Section 4.5 are as expressly stated herein, and there are no
further implied obligations relating to the matters contemplated therein.
Without limiting the foregoing, it is further understood and agreed that the
subject CK Product(s) may or may not be discovered or reduced to practice at
all, or that further modification and/or variations of a product may be
developed after the date CK provides notice under Section 4.5.1 above. It is
understood that modifications and/or variations of a Licensed Product as
described in Section 4.5.2(h) that are developed after the date CK provides
notice under Section 4.5.1 above shall be included within the Licensed Product
for which GSK exercised its CK Product Option.

4.6      CK Efforts. For as long as GSK retains an option on CK
Products as set forth in Section 4.5 above, CK shall use [*] efforts to
develop at least one CK Compound or CK Product, consistent with the practice of
CK in pursuing the development of pharmaceutical products of its own development
and of similar commercial potential value within the relevant product line.

4.7      Royalties to GSK.

4.7.1    Royalty Obligation. In the event that CK
commercializes a CK Product independently of GSK (i.e., in the case where GSK
does not exercise the CK Product Option), then in such case CK shall pay to GSK
a royalty on sales of such CK Product by CK, its Affiliates and Sublicensees, in
an amount to be reasonably established by the Parties, based on the extent to
which GSK has [*] under this Agreement, and/or has provided [*] to [*], that [*]
the research, development or commercialization of such CK Product. In the event
the Parties are not able to agree upon such royalty, then upon request by either
Party, such amount shall be determined in accordance with Section 12.3.1 below.
It is understood that, in connection with establishing the applicable royalty,
the ancillary terms of such royalty, such as the term for which such royalties
are due, the definition of CK's net sales, royalty reporting, audit rights, [*]
(such as those in Section [*] below) and the like will also be established,
which terms will be no less favorable to CK than the corresponding terms of this
Agreement. Notwithstanding the foregoing, in no event shall the royalty to be
paid to GSK exceed the following amounts, based on the stage of the CK Product
at the time the relevant Mitotic Kinesin Target became a CK Target (the
"Reversion Stage"), as reflected in the table below:

REVERSION STAGE                        [*] ROYALTY
------------------------------------------------------

[*]                                     [*]%   
------------------------------------------------------
[*]                                     [*]%  
------------------------------------------------------
[*]                                     [*]% 
------------------------------------------------------
[*]                                     [*]%  
------------------------------------------------------
[*]                                     [*]% 
------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-42-

4.7.2    [*]; [*]. For purposes of the foregoing table, the
Reversion Stage for all [*] and [*] shall be deemed the [*] stage.

4.7.3    Other Considerations. It is understood that the
royalty rates specified in 4.7.1 above are [*] . The actual royalty rate to be
applied in any given situation shall be [*] and [*] under the circumstances and
shall take into account [*] to Mitotic Kinesin Targets prior to or outside of
this Agreement, the actual contribution of [*] to the effort in terms of [*] ,
the possible need for [*] (and in such case the possibility that [*] ), and
other similar factors.

4.8      Other Formulations; Dosage Forms. For purposes of this Article
4, all dosage forms, and all formulations, of the same active ingredient shall
be deemed a single CK Product. CK Products having a different active ingredient
shall be deemed a separate CK Product.

ARTICLE V - LICENSE GRANTS

5.1      Research Licenses to CK and GSK. GSK hereby grants CK a
non-exclusive, worldwide license to make and use subject matter within the GSK
Existing Technology and Collaboration Technology, to conduct activities assigned
to CK under the Research Plan, during the Research Term. CK hereby grants GSK a
non-exclusive, worldwide license to make and use subject matter within the CK
Existing Technology and Collaboration Technology, to conduct activities assigned
to GSK under the Research Plan, during the Exclusivity Period and Extension
Period, if any. The licenses granted under this Section 5.1 shall not include
the right to grant or authorize sublicenses; provided, however, that the use by
GSK or CK of subcontractors approved by the JRC shall not be construed as a
sublicense.

5.2      Commercial Licenses to GSK.

5.2.1    Compounds. Development Compounds and Licensed
Products. Subject to the terms and conditions of this Agreement, CK hereby
grants GSK an exclusive license, under CK Existing Technology and CK's interest
in Collaboration Technology and Post-Collaboration Technology, (a) to make, have
made, use, sell, offer for sale and import Compounds, Development Compounds and
Licensed Products for use in the Field and in the Territory and (b) to make and
use Collaboration Targets, and any subject matter within the Collaboration
Technology or Post-Collaboration Technology, for the purpose of discovering and
commercializing Compounds, Development Compounds and Licensed Products for use
within the Field.

5.2.2    CK Library Compounds.

(a)      Notwithstanding Sections 1.4, 1.7, 1.13,
1.16 and 1.53, a CK Library Compound shall not be deemed within CK Existing
Technology, unless and until such time as such CK Library Compound has become
both a Compound and a Development Compound hereunder.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-43-

However, GSK is hereby granted a non-exclusive license to make and use CK
Library Compounds and CK Existing Technology to pursue discovery (including
optimization) and initial development of such CK Library Compounds and
derivatives thereof, for the purpose of identifying and conducting initial
development of Development Compounds for Collaboration Targets and, during the
Research Term and applicable extensions, for Mitotic Kinesin Targets (other than
CK Targets). The CK Library Compounds that GSK is licensed to make and use under
this Section 5.2.2 shall be limited to those (i) that were identified as
Compounds against a Mitotic Kinesin Target in activities under the Research
Plan; and (ii) that are derived from (i.e., tracing its chemical lineage to a CK
Library Compound or resulting from the direct progression through a continuing
medicinal chemistry program from a CK Library Compound, in each case as
evidenced by contemporaneous written laboratory records) the CK Library
Compounds described in the preceding clause (i). GSK shall have no research
license under this Section 5.2.2 with respect to CK Library Compounds that are
not described in (i) or (ii) above.

(b)      Notwithstanding Section 5.2.2(a) above, if
CK has progressed a CK Library Compound licensed to GSK under this Section 5.2.2
to a stage equivalent to a Development Compound, where the primary mode of
pharmacological action of such CK Library Compound is not through inhibition of
one or more Mitotic Kinesin Targets, prior to GSK progressing such CK Library
Compound to be a Development Compound, GSK's licenses to such CK Library
Compound shall terminate. A compound shall be deemed to have reached a "stage
equivalent to a Development Compound" if such compound would meet criteria
comparable those specified in Exhibit 2.5, or IND Enabling Studies have been
conducted for such compound. Upon request, CK shall use good faith efforts to
advise GSK whether it is actively pursuing such CK Library Compound, and CK
shall notify GSK at such time as such CK Library Compound has progressed to a
stage equivalent to a Development Compound as described in this Section
5.2.2(b).

(c)      Notwithstanding Section 5.2.2(a) above, GSK
agrees not to engage in optimization activities to discover Compounds that are
derived from a CK Library Compound in a manner that intentionally optimizes such
Compounds specifically to exploit the activity of such Compound against any
target, other than a Mitotic Kinesin Target that is not a CK Target.

5.2.3    Sublicenses. GSK may sublicense the right to [*]
and/or [*] a particular Development Compound or Licensed Product [*] or [*] .
GSK shall inform CK of its intention to sublicense its rights at least sixty
(60) days prior to the date GSK intends to execute such sublicense and shall
provide CK with the opportunity to provide comments to GSK with respect to such
sublicense. GSK shall consider CK's reasonable comments in its decision whether
to grant such sublicense. Notwithstanding the foregoing, (i) GSK shall have the
right to sublicense the right to [*] and/or [*] a Licensed Product [*] or [*] ,
provided that GSK is actively [*] and [*] such Licensed Product itself [*] , and
(ii) GSK shall have the right to have Licensed Products [*] for GSK by a Third
Party [*] and [*] . Subject to the foregoing, GSK shall have the sole right to
decide whether and how to grant any sublicenses under this Section 5.2.3. Any
sublicensee of GSK must have

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-44-

reasonable capabilities to support the [*] of the Development Compound and/or
Licensed Product. Any such sublicense (and any right to obtain such a
sublicense) shall be granted no earlier than the date the Compound incorporated
therein has been designated as a Development Compound in accordance with Section
2.5 above.

5.2.4    [*] . At least [*] ([*]) months prior to GSK [*], GSK
will notify CK in writing of its intent to [*] ("Initial Notice"). Upon request
by CK, GSK and CK will, during such [*] ([*]) month period, negotiate in good
faith the [*] to CK, provided that [*] by GSK for the Compound, Development
Compound or Licensed Product and the objective requirements set forth therein.
It is understood that any such [*] would be subject to agreement between the
Parties on the financial terms and other conditions of such [*] .
Notwithstanding the foregoing, this Section 5.2.4 shall not apply with respect
to [*] the Development Compound or Licensed Product.

5.2.5    No Other Active Ingredients. For clarity, it is
understood that, notwithstanding Section 1.44 above, the licenses to GSK under
this Section 5.2 shall not extend to any active ingredient included within a
Licensed Product other than a Compound, a Development Compound, or in the case
of a Licensed Product for which GSK exercised its CK Product Option pursuant to
Section 4.5 above, the active ingredients incorporated by CK into the CK Product
that became such Licensed Product.

5.3      Commercialization License to CK.

5.3.1    CK Compounds and CK Products. Subject to GSK's Option
for a license under Section 4.5 above, GSK hereby grants CK an exclusive
license, with the right to grant and authorize sublicenses, under GSK Existing
Technology (subject to Section 5.3.2 below), and GSK's interest in Collaboration
Technology and Post-Collaboration Technology, (a) to make, have made, use, sell,
offer for sale and import CK Compounds and CK Products in the Field in the
Territory and (b) to make and use CK Targets, and any subject matter within the
Collaboration Technology or Post-Collaboration Technology, solely for the
purpose of discovering, developing and commercializing CK Compounds and CK
Products.

5.3.2    GSK Library Compounds; Additional Research License.

(a)      Notwithstanding Sections 1.13, 1.16, 1.34
and 1.53, a GSK Library Compound shall not be deemed within the GSK Existing
Technology, unless and until such time as IND Enabling Studies are commenced by
or under authority of CK with respect to such GSK

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-45-

Library Compound. However, CK is hereby granted a non-exclusive license to make
and use GSK Library Compounds and GSK Existing Technology to pursue discovery
(including optimization) and initial development of such GSK Library Compounds
and derivatives thereof, for the purpose of identifying and conducting initial
development of CK Compounds that meet criteria similar to that of Development
Compounds; provided that the GSK Library Compounds that CK is so licensed to
make and use under this Section 5.3.2 shall be limited to those (i) that were
identified as Compounds against such Mitotic Kinesin Target before such Mitotic
Kinesin Target was designated as a CK Target, or (ii) that are derived from
(i.e., tracing its chemical lineage to a GSK Library Compound or resulting from
the direct progression through a continuing medicinal chemistry program from a
GSK Library Compound, in each case as evidenced by contemporaneous written
laboratory records) the GSK Library Compounds described in the preceding clause
(i). CK shall have no research license under this Section 5.3.2 with respect to
GSK Library Compounds that are not described in (i) or (ii) above.

(b)      Notwithstanding (a) above, if GSK has
progressed a GSK Library Compound licensed to CK under this Section 5.3.2. to a
stage equivalent to a Development Compound, where the primary mode of
pharmacological action of such GSK Library Compound is not through inhibition of
one or more Mitotic Kinesin Targets, prior to CK progressing such GSK Library
Compound to a stage equivalent to a Development Compound, CK's licenses to such
GSK Library Compound shall terminate. A compound shall be deemed to have reached
a "stage equivalent to a Development Compound" if such compound would meet
criteria comparable those specified in Exhibit 2.5, or IND Enabling Studies have
been conducted for such compound. Upon request, GSK shall use good faith efforts
to advise CK whether it is actively pursuing such GSK Library Compound and GSK
shall notify CK at such time as a GSK Library Compound has progressed to a stage
equivalent to a Development Compound as described in this Section 5.3.2(b).

(c)      Notwithstanding Section 5.3.2(a) above, CK
agrees not to engage in optimization activities to discover CK Compounds that
are derived from a GSK Library Compound in a manner that intentionally optimizes
such CK Compounds specifically to exploit the activity of such CK Compound
against any target, other than a CK Target.

5.3.3    No Other Active Ingredients. For clarity, it is
understood that, notwithstanding Section 1.9 above, the licenses to CK under
this Section 5.3 shall not extend to any active ingredient included within a CK
Product other than a CK Compound.

5.4      Additional Licenses for Unpatented Collaboration
and Post-Collaboration Technology.

5.4.1    License to GSK. CK hereby grants to GSK a
non-exclusive license, including the right to grant and authorize sublicenses,
under CK's interest in any Collaboration Technology and Post-Collaboration
Technology, other than CK Patents, to use and otherwise exploit the same for any
purpose, subject to Sections 4.1-4.3, and Section 5.3, above.

-46-

5.4.2    License to CK. GSK hereby grants to CK a
non-exclusive license, including the right to grant and authorize sublicenses,
under GSK's interest in any Collaboration Technology and Post-Collaboration
Technology, other than GSK Patents, to use and otherwise exploit the same for
any purpose, subject to Sections 4.1-4.3, and Section 5.2, above.

5.5      Cytometrix(TM)Technology. It is understood that CK has
developed certain Cytometrix(TM) Technology, which may be useful in the
discovery of Compounds, and that CK will apply such Cytometrix(TM) Technology to
the Research Program, as described more fully in the Research Plan.
Notwithstanding any other provision of this Agreement, however, the Parties
agree that CK's Cytometrix(TM) Technology is [*] or [*], and CK is [*] to [*]
GSK with such Cytometrix(TM) Technology; provided, however, that (i) [*], as
applicable, and (ii) [*] within the Cytometrix(TM) Technology would [*] be [*]
by the [*] or [*] of a Compound, Development Compound, or Licensed Product, such
[*] shall be [*], [*] for such purposes. [*] (i) [*]; (ii) [*] and (iii) [*].

5.6      [*]. If a chemical entity that would otherwise be a Compound
or CK Compound hereunder, meets the Compound Criteria for both a [*] and a [*],
then such chemical entity shall be considered a "[*]" if the difference in [*]
activity ([*]) is less than [*] between the [*] and the [*]. Furthermore, such a
chemical entity shall be deemed a Compound, and not a CK Compound, if its [*]
activity ([*]) is [*] greater against the [*] than against the [*]. Such a
chemical entity shall be deemed a CK Compound, and not a Compound, if its [*]
activity ([*]) is [*] greater against a [*] than against

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-47-

the [*]. With respect to [*], either Party shall have the right to pursue
research and optimization of such [*] for the purpose of identifying Compounds
or CK Compounds that meet the criteria for Development Compounds (or, in the
case of CK Compounds, criteria similar thereto); provided, however, that neither
Party shall commence clinical development or commercialize a [*] as a Compound,
Development Compound, Licensed Product, CK Compound or CK Product without the
prior written approval of the other Party. Notwithstanding the foregoing, GSK
shall not engage in optimization activities to discover Compounds in a manner
that intentionally optimizes such Compounds specifically to exploit the activity
of such Compound against a [*]; and, CK shall not engage in optimization
activities to discover CK Compounds in a manner that intentionally optimizes
such CK Compounds specifically to exploit the activity of such CK Compound
against a [*]. As used herein, [*] activity ([*]) shall mean the first criterion
set forth in Exhibit 1.17.

5.7      No Implied Licenses. Each Party acknowledges that the licenses
granted under this Article V are limited to the scope expressly granted, and all
other rights to Licensed Technology are expressly reserved to the Party owning
such Licensed Technology. Without limiting the foregoing, it is understood that
where an exclusive license under Licensed Technology is granted to a Party under
this Article V for a particular purpose, the Party granting such license retains
all of its rights to such Licensed Technology for all purposes not expressly
licensed. Accordingly, for example, the license granted under Section 5.2.1(b)
above shall not preclude CK from making or using a Collaboration Target for
purposes outside the Field.

5.8      Nothing in this Article V shall be construed as limiting or
changing the rights and obligations of the Parties under Sections 4.1.1 and
4.1.2, except to the extent provided in Section 5.5 above.

ARTICLE VI - PAYMENTS

6.1      Initial Payments.

(a)      Technology Access Fee. In consideration of
CK's development efforts prior to the Effective Date and the performance of its
obligations during the Research Program, on the Closing Date, GSK shall pay to
CK an initial fee of Fourteen Million U.S. Dollars (U.S. $14,000,000), which
amount shall be non-refundable and non-creditable against any other amounts due
CK under this Agreement.

(b)      Equity Investment. It is understood that GSK
has also agreed to make an equity investment in CK, on the Closing Date, in the
amount of Fourteen Million U.S. Dollars (U.S. $14,000,000) pursuant to the terms
and conditions of a Stock Purchase Agreement of even date referencing this
Agreement.

6.2      Research Payments - Funding. Subject to the limitations set
forth below, from and after the Effective Date, GSK shall reimburse costs
incurred by CK in performing the Research Program in accordance with the
Research Plan, in the following manner:

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-48-

6.2.1    FTEs. An FTE rate determined in accordance with this
Section 6.2.1 shall be used for purposes of determining the costs incurred by CK
with respect to CK personnel performing work on the Research Program. The FTE
rate shall be [*] U.S. Dollars (U.S. $[*]) per FTE (as adjusted below). The FTE
rate includes all salary, employee benefits, incidental materials and other
expenses including support staff and overhead for or associated with an FTE and
travel and lodging expenses incurred by such FTEs in performance of the Research
Program. Effective beginning with the calendar year 2002, the FTE rate shall
increase no more than once annually by the percentage increase, if any, in (i)
the Radford Associates Annual Biotechnology Compensation and Benefits Survey for
the San Francisco Bay Area, or (ii) the Consumer Price Index, for All Urban
Consumers for the San Francisco Bay Area, as published by the U.S. Department of
Labor, Bureau of Labor Statistics, in each case whichever increase is higher
since the last such increase under this Section 6.2.1, (or in the case of the
first such increase, the Effective Date) (the "Cost of Labor Increase"), upon
thirty (30) days prior written notice to GSK and such increase shall be
effective for the then-current and all subsequent Research Plans hereunder until
further modified under this Section 6.2.1.

6.2.2    Non-FTE Costs. If the JRC specifically requests, as
confirmed by GSK in writing or in the written Research Plan approved by the JRC,
that CK conduct and fund a research activity at an external center, CK's
out-of-pocket external costs incurred by CK in following such request shall be
reimbursed at CK's cost; provided that, if CK identifies that a particular task
can be efficiently performed by a Third Party, CK may satisfy its FTE commitment
with personnel from such Third Patty if such Third Party is approved by the JRC,
and that, unless the JRC determines otherwise, such Third Party personnel will
be deemed a CK FTE for purposes of the Research Plan and this Agreement.

6.2.3    Payment. On or before the first day of each calendar
[*] during the Research Term, after receipt of an invoice from CK, GSK shall pay
to CK an amount equal to the costs budgeted to be incurred by CK under the
Research Plan for such [*]. Unless otherwise specified in the applicable
Research Plan, amounts budgeted for the full year will be deemed budgeted in
equal amounts for each calendar [*] during such year. Within sixty (60) days
following the end of each calendar [*] during the Research Term, CK shall
provide to GSK a summary of the costs actually incurred during each calendar [*]
in performing the Research Plan during such period, in a form mutually agreed by
the Parties. If the costs so incurred by CK in such period are less than the
amounts budgeted for CK to so incur during such period under the Research Plan,
then the difference will be carried forward and credited against the next
payment due to CK under this Section 6.2. If CK incurs in such period costs in
excess of the amounts so budgeted, the excess may be carried forward and treated
as costs incurred in a subsequent period. Notwithstanding the foregoing, for the
period from the Effective Date through September 30, 2001, GSK shall pay to CK,
within ten (10) business days after the Effective Date, an amount equal to the
costs budgeted to be incurred by CK under the Research Plan for such period;
provided, however, that if GSK or CK terminates this Agreement pursuant to
Section 11.1.1, CK shall reimburse any payments made by GSK to CK under this
Section.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-49-

6.2.4    Interim Periods. In the event the JRC is unable for
any reason to establish a Research Plan for any period during the Research Term,
then in such case the [*] advance payments to CK for each [*] during any such
interim period shall equal [*] of the FTE rate multiplied by the actual number
of CK FTEs covered by the last Research Plan that was approved by the JRC, for
the last [*] covered by such approved Research Plan; provided that, if such
number exceeds the minimum number of CK FTEs required to be included in any
Research Plan for the particular Contract Year, as reflected in Section 2.6
above, then GSK may elect to [*] the number of CK FTEs for such interim period
to a number [*] specified in Section 2.6, by so notifying CK in writing. If GSK
so elects, the [*] advance payments to CK for each [*] during any such interim
period shall equal [*] of the FTE rate multiplied by the actual number of CK
FTEs listed in GSK's notice (which shall [*] number of CK's FTEs for such period
specified in Section 2.6 above). Any payments made under this Section 6.2.4
shall be non-refundable.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-50-

6.3      Research Milestone Payments.

6.3.1    Milestones. GSK shall pay to CK the following amounts
upon achievement of each occurrence of the following events (each a "Research
Performance Milestone"):

CASH PAYMENT
MILESTONE                                    (IN U.S. DOLLARS)
---------                                    -----------------

1.  [*]                                                                             $ [*]          

2.  [*]                                                                             $ [*]

3.  [*]                                                                             $ [*]

4.  [*]                                                                             $ [*]

5.  [*]                                                                             $ [*]

6.  [*]                                                                             $ [*]

6.3.2    Certain Terms and Conditions.

(a)      "[*]" shall have the meaning set forth in
Exhibit [*], attached hereto and incorporated herein.

(b)      In the event that the first Compound against
the [*] Mitotic Kinesin Target induces [*] , but [*], in its [*] discretion,
elects to approve the Compound as a [*], then Research Performance Milestone 5
shall be [*] to [*] United States dollars (U.S. $[*]). "[*] " shall have the
meaning set forth in Exhibit 6.3.2(b), attached hereto and incorporated herein.
If such [*] does not exhibit evidence of [*] in [*] (as defined in Exhibit
6.4.4), then the Development Milestone under Section 6.4 below (initiation of
[*]) for a Licensed Product incorporating such [*] shall be [*] by [*] U.S.
Dollars (U.S. $[*]).

(c)      It is understood that Research Performance
Milestone 5 may be satisfied by [*], if and when [*] by [*] as a [*] in
accordance with Section [*].

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-51-

(d)      Selection of [*] shall be in accordance with
Section [*]. It is understood that Research Performance Milestone [*] shall be
paid on a Target-by-Target basis, so that the selection of the first [*] for
each [*] Mitotic Kinesin Target shall trigger a separate payment of [*] U.S.
Dollars (U.S. $[*]).

6.4      Development Milestones. Except as set forth below, GSK shall
pay to CK upon achievement of the corresponding events set forth below (each, a
"Development Milestone") for each Licensed Product, regardless of whether the
development, promotion, or marketing of such Licensed Product is discontinued at
any time after the achievement of such milestone:

6.4.1    [*]. For each Licensed Product that [*]:

MILESTONE                           [*]                     [*]                [*]
---------                       ------------            ------------     -----------------

1. [*]                                            $[*]                        [*]          [*] 

2. [*]                                            $[*]                        [*]          [*]

3. [*]                                            $[*]                        [*]          $[*]

4. [*]                                            $[*]                        [*]          $[*]

5. [*]                                            $[*]                        [*]          $[*]

6. [*]                                            $[*]                       $[*]          $[*]

7. [*]                                            $[*]                       $[*]          $[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-52-

6.4.2    [*] For each Licensed Product that [*], on 
a Collaboration Target-by-Target basis:

MILESTONE                        [*]                   [*]                  [*]
---------                   ------------        -----------------     -----------------

1. [*]                                 $[*]                 [*]                    [*]

2. [*]                                 $[*]                 [*]                    [*]

3. [*]                                 $[*]                 [*]                   $[*]

4. [*]                                 $[*]                 [*]                   $[*] 

5. [*]                                 $[*]                 [*]                   $[*]

6. [*]                                 $[*]                $[*]                   $[*]

7. [*]                                 $[*]                $[*]                   $[*]

6.4.3    Certain Terms. For purposes of the Development
Milestones due under this Section 6.4:

(a)      In no event will multiple Development
Milestone payments be made for the same Licensed Product, except in the event
where a Licensed Product for [*] is also the [*] Licensed Product directed
against that Mitotic Kinesin Target to be [*] for a [*].

(b)      It is understood that the Development
Milestone payments reflected under the column "[*]" shall be payable whether or
not Development Milestones have been paid for such Licensed Product with respect
to [*]. In addition, the "[*]" need not be the same Licensed Product as the
"[*]."

(c)      Notwithstanding the definition of [*]
under Section [*], a clinical trial that is a [*] shall not be
deemed a [*] trial that meets such Development Milestone [*], and accordingly,
the payment corresponding to such Development Milestone [*] shall not become due
by reason of such a [*]. For purposes of this Section 6.4.3, a
"[*]" shall mean a [*], as provided in

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-53-

[*], submitted for the sole purpose of conducting a [*] study or [*] study of
the [*] of no more than [*] ([*]) [*] to compare the [*] of at least [*] ([*]),
but not more than [*] ([*]), [*]. Any clinical trial that includes
activities in addition to those listed in this Section, including without
limitation [*] or any subsequent clinical trial of the particular Compound,
shall not be deemed a [*], and upon initiation of such trial, Development
Milestone [*] shall be immediately due and payable.

(d)      For purposes of this Section 6.4, and
Section 6.6 below, all dosage forms, and all formulations, of the same active
ingredient shall be deemed a single Licensed Product. Licensed Products having a
different or additional active ingredient shall be deemed a separate Licensed
Product; provided, however, that the different or additional active ingredient
is a different or additional Development Compound than the original Development
Compound contained in the Licensed Product.

(e)      The Development Milestone payments under
Section 6.4.2 shall be determined on a Mitotic Kinesin Target-by-Target basis,
meaning, for example, that the [*] that is directed to a particular Mitotic
Kinesin Target shall trigger the payments under the column "[*]" milestone, and
that the [*] for another Mitotic Kinesin Target shall also trigger those
payments.

(f)      "[*]" of a particular clinical trial
shall mean the date of [*] of the [*] subject in such trial.

(g)      If a subsequent Development Milestone is
achieved with respect to a particular Licensed Product before a prior
Development Milestone ("prior" and "subsequent" referring to a lower number in
the tables above, e.g., Development Milestone 2 being "prior" to Development
Milestone 3), then all such prior Development Milestones shall be deemed
achieved upon achievement of the subsequent Development Milestone.

(h)      "[*]" of an [*] shall mean the date of 
receipt by GSK of written notice of [*] from the FDA (or its equivalent in a
country outside the U.S.) of an [*] for the Licensed Product for [*].

(i)      "[*] of an [*] by [*]" shall mean the date 
that an [*] has been [*] for a Licensed Product in [*]; provided that, if such
application is [*] by the [*] ("[*]") under the [*] the Development Milestone
will be met (in full). For purposes of the foregoing, validation of an [*] by
[*] or the [*] shall be deemed "[*]" of such [*] by such [*] or [*], as
applicable, and if an [*] is submitted under the [*] and validated by the [*]
("[*]"), such [*] shall be deemed [*] by a [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-54-

upon confirmation that the resulting [*] in the [*] will serve as the basis for
[*] in such [*].

(j)      "Receipt of [*] from [*]" shall mean the 
[*] for the Licensed Product, in [*]; provided, however, that GSK shall pay CK
[*] ([*]) of Development Milestone [*] under Sections 6.4.1 and 6.4.2, as
applicable, upon the date that GSK receives [*] from [*]. GSK shall subsequently
pay CK an additional [*] ([*]) of Development Milestone [*] when GSK receives
[*] from each of [*].

6.4.4    Credits.

(a)      Should all development of a particular
Licensed Product for a particular Collaboration Target discontinue prior to [*]
in [*], for any reason, and be replaced by an alternative Licensed Product
against that Collaboration Target, then, for the next Licensed Product for such
Collaboration Target to achieve a milestone for which a corresponding milestone
payment was made for the discontinued Licensed Product, no payment shall be due
with respect to such alternative Licensed Product with respect to such
milestone.

(b)      If there is evidence of [*] in [*] for a 
particular Licensed Product, but GSK, in its sole discretion, elects to continue
development of such Licensed Product, then (i) Development Milestone [*] shall
be [*] by [*] percent ([*]%), and (ii) Development Milestones [*] through [*]
shall each be [*] by [*] percent ([*]%). "[*]" shall have the meaning set forth
in Exhibit 6.4.4, attached hereto and incorporated herein. Notwithstanding the
foregoing, in the event that such Licensed Product receives [*] in the [*] or a
[*], and the [*] required [*] by such [*] does not [*], then the amount of all
such milestone [*] for such Licensed Product shall be paid to CK upon receipt of
such [*].

6.5      Milestone Payment Timing. The payments set forth in Sections
6.3 and 6.4 hereof shall each be due and payable by GSK to CK within forty-five
(45) days of the occurrence of the milestone event set forth therein. For
milestones accomplished by CK, such payment shall be due forty-five (45) days
after receipt by GSK of an invoice from CK therefor to GSK, subject to GSK's
verification during such forty-five (45) day period that the milestone occurred.
GSK and CK agree to promptly notify the other of its achievement of any
milestone.

6.6      Earned Royalties For Licensed Products. GSK shall pay CK a
royalty on worldwide Net Sales of Licensed Products by GSK, its Affiliates or
Sublicensees. Such royalty shall be paid based on the total annual worldwide Net
Sales for each calendar year, on a Licensed Product-by- Licensed Product basis.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-55-

6.6.1    General. Subject to Section 6.6.2 below, the annual
royalty rate for a particular Licensed Product in a given year shall be
determined by the total worldwide annual Net Sales of such Licensed Product for
the particular calendar year, according to the following schedules.

(a)      For each Licensed Product that [*]:

Total Annual Net Sales                Royalty
----------------------                -------

Less than $[*]                       [*]%
Between $[*] and $[*]                    [*]%
Greater than $[*]                     [*]%

(b)      For each Licensed Product that [*]:

Total Annual Net Sales                Royalty
----------------------                -------

Less than $[*]                      [*]%
Between $[*] and $[*]                   [*]%
Greater than $[*]                    [*]%

6.6.2    Licensed Products Subject to Co-Funding Option. With
respect to Licensed Products for which CK has exercised its Co-Funding Option
pursuant to Section 3.4, the annual royalty rate for a particular Licensed
Product in a given calendar year shall be determined by the total annual
worldwide Net Sales of such Licensed Product in that calendar year and the
percentage of Later Stage Development Costs for such Licensed Product that CK
elected to fund, according to the following schedules.

(a)      If CK elected to fund the Later Stage
Development Costs  with respect to a Co-Funded Product at a CK Percentage of [*]
([*]%),

(i)      For each Licensed Product [*]:

Total Annual Net Sales               Royalty
----------------------               -------

Less than $[*]                      [*]%
Between $[*] and $[*]                   [*]%
Greater than $[*]                    [*]%

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-56-

(ii)     For each Licensed Product that [*]:

Total Annual Net Sales                Royalty
----------------------                -------

Less than $[*]                       [*]%
Between $[*] and $[*]                    [*]%
Greater than $[*]                     [*]%

(b)      If CK elected to fund the Later Stage
Development Costs with respect to a Co-Funded Product at a CK Percentage of [*]
percent ([*]%),

(i)      For each Licensed Product that
[*]:

Total Annual Net Sales                Royalty
----------------------                -------

Less than $[*]                       [*]%
Between $[*] and $[*]                    [*]%
Greater than $[*]                     [*]%

(ii)     For each Licensed Product that [*]:

Total Annual Net Sales                Royalty
----------------------                -------

Less than $[*]                       [*]%
Between $[*] and $[*]                    [*]%
Greater than $[*]                     [*]%

(c)      For any particular Co-Funded Product for
which CK terminates its obligation to fund Later Stage Development Costs under
Section 3.4.2(e), GSK shall pay the royalty rate under this Section 6.6.2
corresponding to the CK Percentage elected by CK for such Co-Funded Product;
provided that GSK's obligation to pay the royalty rate set forth in this Section
6.6.2 for Net Sales of such Co-Funded Product shall continue only until such
time as the difference between the cumulative royalties paid under this Section
6.6.2 for such Co-Funded Product, and the cumulative royalties for Net Sales of
such Co-Funded Product that would have otherwise been payable under Section 6.6
if CK had not exercised its Co-Funding Option, equals the amount paid by CK to
GSK for Later Stage Development Costs, plus interest at a rate of [*] percent
([*]%) per annum, for such Co-Funded Product prior to the effective date of the
termination. Thereafter, GSK shall pay royalties on Net Sales of such Co-Funded
Product according to Section 6.6.1.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-57-

6.6.3    Other.

(a)      For purposes of determining the royalty
rates applicable hereunder, it is understood that "total annual Net Sales" shall
be determined on a world-wide, calendar year basis, and shall be determined
separately for each separate Licensed Product.

(b)      Further, it is understood that if the total
annual Net Sales for a particular calendar year are within a particular Net
Sales range, as reflected in the tables in paragraphs (a) or (b) of either 6.6.1
or 6.6.2 above, then the royalty corresponding to such range shall apply to all
total Net Sales for the particular calendar year (i.e., not just to those Net
Sales within the range). For example, for a Licensed Product [*] covered by
Section 6.6.1(a) above, if the total Net Sales in a particular calendar year are
$[*], then the royalty for all Net Sales of such Licensed Product for such
calendar year shall equal [*] percent ([*]%). Eighteen (18) months after the
date of the initial commercial sale of a Licensed Product in the Territory, GSK
and CK shall agree upon a reasonable mechanism to smooth out the quarterly
payment of royalties based on the expected levels of Net Sales of Licensed
Products for the particular calendar year, and the corresponding royalty
expected to be due for such calendar year, so that the royalties paid for each
quarter shall equal as approximately as practical the actual royalty that will
be payable for the calendar year in which such quarter occurs, based on the
application of this Section 6.6.

(c)      GSK agrees to establish list prices and
discounts for each Licensed Product in the best interests of such Licensed
Product, taking into account the competitive environment, product profile and
commercial potential of the Licensed Product. Without limiting the foregoing,
GSK agrees that it shall establish list prices and discounts for each Licensed
Product in a manner to maximize the commercial success of the Licensed Product
in a particular country. Such pricing and discounting decisions shall take into
consideration their impact on CK.

6.7      Term For Royalty Payment. Royalties payable under Section 6.6
shall be paid on a country-by-country basis from the date of the first
commercial sale of each Licensed Product with respect to which royalty payments
are due for a period which is the longer of:

(i)      the expiration of the last to
expire Patent in such country covering the composition of matter or use of a
Compound or Licensed Product; or

(ii)     [*] ([*]) years following the
date of the first commercial sale of such Licensed Product in such country.

6.8      Payment; Foreign Exchange. All payments under this Agreement
shall be made from the United States by a United States entity or from the
United Kingdom by a U.K. entity. The remittance of royalties payable on Net
Sales will be payable in U.S. dollars to a bank and to an account designated by
CK using a rate of exchange of the currency in which the Net Sales occurred with
U.S. dollars, as published in the Wall Street Journal on the last day of the
quarter for which such payment was due.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-58-

6.9      Taxes. Subject to Section 12.5, in the event that GSK is
required to withhold and remit any tax to the revenue authorities in any country
in the Territory regarding any milestone payment or royalties payable to CK due
to the laws of such country, such amount shall be withheld by GSK, and GSK shall
notify CK and promptly furnish CK with copies of any documentation evidencing
such withholding.

6.10     Timing of Royalty Payments and Reports. Royalty payments under
this Agreement shall be made to CK or its designee quarterly within sixty (60)
days following the end of each calendar quarter for which royalties are due.
Each royalty payment shall be accompanied by a report summarizing the Net Sales
during the relevant three (3) month period.

6.11     Accounting. The Parties shall maintain complete and accurate
records, in accordance with generally accepted accounting practices, which are
relevant to costs, expenses and payments under this Agreement. Such records
shall be open during reasonable business hours for examination at the other
Party's expense, upon written notice to the other Party, and not more often than
once each year by a certified public accountant or other representative selected
by the Party for the sole purpose of verifying the correctness of calculations
or such costs, expenses or payments made under this Agreement. In the event that
such examination establishes a discrepancy for any period covered by such
examination in excess of [*] percent ([*]%), the Party owing any payment shall
reimburse the other Party for such unpaid amount in addition to the expense of
the examination. Any records or accounting information received from the other
Party shall be Confidential Information for purposes of Article IX.

6.12     [*].

6.12.1   Right of [*]. In the event that (i) it becomes
necessary for [*] to [*] under [*] of a Third Party, where such [*] or [*] of a
Development Compound comprising a Licensed Product, or the [*] or [*] (as
defined below) of the Collaboration Target to which such Licensed Product is
directed, which Development Compound or Collaboration Target is within the CK
Existing Technology or consists of Collaboration or Post-Collaboration
Technology owned solely or jointly by CK, and such [*] would [*] or [*] of such
Licensed Product (but not, for example, by reason of its [*] or [*]), and (ii)
[*] must [*] such Third Party for such [*] on [*] such Licensed Product [*], [*]
may [*] that [*] of the [*] to such Third Party as the Parties agree under [*]
below, but in no event more than [*] percent ([*]%) of such [*], against [*] on
[*] of such Licensed Product [*], subject in each case to the [*] of [*]
specified in [*] below. [*] shall not be entitled to such [*] in [*] of the [*]
in the event the [*] of such Third Party for which such [*] have been incurred
are [*] or [*]. For purposes of this Section 6.12.1, a [*] shall "[*] of the
Collaboration Target" if such [*] a [*] or [*] by [*] of such Collaboration
Target.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-59-

6.12.2   Consultation; Disputes. [*] shall consult with [*]
prior to entering into any [*] with a Third Party for which [*] would seek to
[*] under this Section 6.12, and shall take into account reasonable suggestions
of [*] with respect to such proposed [*]. Any dispute under this Section 6.12,
including any dispute as to whether such a [*] is necessary, shall be resolved
in accordance with Section 12.3.1 below.

6.12.3   [*]. In addition to the [*], it is understood that on
a case-by-case basis, GSK and CK may agree that it would be in their mutual best
interests to [*] a [*] for [*] with a Licensed Product, and in such case may
similarly agree that it would be in their mutual best interests to [*] with
respect to such [*]; provided, however, that neither Party shall be obligated to
agree to any such [*] or [*], and no such [*] shall be made unless so agreed.

6.13     [*] in [*] for [*]. If, during the Exclusivity Period
or Extension Period, as applicable, [*] occurs in [*] or [*] of the [*] between
a Licensed Product being marketed and sold under this Agreement by GSK, its
Affiliates or Sublicensees and any [*] (as defined below) [*] and [*] (other
than a GSK Affiliate or Sublicensee), and for so long as such [*] is [*] and [*]
in such [*] or [*] of [*], and [*] of such [*] percent ([*]%) of the total [*]
of such [*] and the Licensed Product in the [*] in such Contract Year, the [*]
in respect of such [*] or [*] shall be [*] to the extent provided in Section [*]
below. GSK shall give CK [*] of such [*] with suitable and reasonable supporting
documentation. Any [*] in the [*] as a result of such [*] shall apply from the
[*] by GSK to CK of such [*] and shall be [*] only for the period such [*],
subject in each case to Section [*] below. For the purposes of this Section
6.13, a "[*]" shall mean any [*] (other than a Licensed Product sold by or under
authority of GSK) containing the [*] as the [*] in the Licensed Product being
sold by GSK, or its Affiliate or Sublicensee in [*], and which [*] the Licensed
Product in the [*] or [*].

6.14     Conditions to [*]; Amount of [*].

6.14.1   Conditions to [*]. It is understood that, if [*] of a
Licensed Product [*] are [*] by the [*] or by [*], [*] will be [*] by [*] due to
[*]. Consequently, the Parties acknowledge that Sections 6.12 and 6.13 are
intended only to avoid a [*] on [*] in the event described herein. Accordingly,
notwithstanding Section 6.12 or 6.13 above, the [*] with respect to [*] of a
Licensed Product [*] shall only be [*] if [*] and [*] of such Licensed Product
in [*] have been [*] by reason of either [*] or [*], and the [*] would create
[*] between GSK and CK with respect to the [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-60-

of such Licensed Product in [*] without a [*] under Section 6.12 or 6.13,
as applicable. In addition, (i) before any [*] under Section 6.12 or 6.13 shall
take effect, GSK shall consult with CK as to measures that can reasonably be
taken to [*] of such [*] or [*], and (ii) [*] under Section 6.12 or 6.13 shall
continue only if GSK reasonably initiates and continues to progress such [*];
and (iii) any [*] under Section 6.12 or 6.13 shall continue only if GSK
continues to pursue all reasonably available legal measures that could [*] or
[*] for [*] or [*] or [*], as applicable, including the [*] of any [*] that
could [*] or [*] of a [*], directly or indirectly, and the [*] of any applicable
[*] or [*] that could affect the [*].

6.14.2   Amount of [*]. The amount of the [*] under Sections
6.12 and 6.13 shall be reasonably agreed by GSK and CK, taking into account the
factors described in this Section 6.14 above, provided that the [*] otherwise
[*] on such [*] shall not be so [*], after [*] or [*] under this Agreement, if
any, to [*] specified in the tables below:

(a)      For Licensed Products [*]:

NO CO-FUNDING    [*]% CO-FUNDING    [*]% CO-FUNDING
-------------    ---------------    ---------------

TOTAL ANNUAL NET SALES

< $[*]                        [*]%              [*]%               [*]%

$[*] - $[*]                   [*]%              [*]%               [*]%

> $[*]                        [*]%              [*]%               [*]%

(b)      For Licensed Products that [*]:

NO CO-FUNDING    [*]% CO-FUNDING    [*]% CO-FUNDING
-------------    ---------------    ---------------

TOTAL ANNUAL NET SALES

< $[*]                        [*]%              [*]%               [*]%

$[*] - $[*]                   [*]%              [*]%               [*]%

> $[*]                        [*]%              [*]%               [*]%

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-61-

Accordingly, under the foregoing table, (i) if Net Sales of a
particular Licensed Product are less than [*] U.S. Dollars (U.S. $ [*]), the
royalty payable shall be [*] percent ([*]%); (ii) if Net Sales of a particular
Licensed Product are between than [*] U.S. Dollars (U.S. $ [*]) and [*] U.S.
Dollars (U.S. $[*]), the royalty payable shall be [*] percent ([*]%); and (iii)
if Net Sales of a particular Licensed Product exceed [*] U.S. Dollars (U.S.
$[*]), the royalty payable shall be [*] percent ([*]%). For example, if GSK is
entitled under Section 6.12 above to [*]on [*] of a Licensed Product [*] that is
co-funded by CK at the [*] percent ([*]%) level, and GSK's total annual Net
Sales for such Licensed Product is [*] U.S. Dollars (U.S. $[*]), then the
royalties due CK shall [*] percent ([*]%).

6.14.3   In the event the Parties are unable to agree on such [*], the
amount of the [*] shall be established in accordance with Section 12.3.1 below.
In any event, however, the [*] shall only apply for so long as the circumstances
and conditions described in Sections 6.12 and 6.13 above continue to exist, and
shall only apply to [*] on [*] of the particular Licensed Product [*].

6.15     [*]. In the event that a [*] in [*] or [*], other than a GSK
Affiliate or Sublicensee, for the Licensed Product, and as a result, the
conditions of Section 6.13 apply, then it is understood that [*] may be entitled
to a [*] in accordance with Section 6.14 above, as a result of such [*].

ARTICLE VII - COMMERCIALIZATION

7.1      Commercialization Rights. Subject to the provisions of Section
7.4 below, GSK shall be responsible for the establishment, control and
implementation of the strategy, plans and budgets for marketing and promotion of
the Licensed Products.

7.2      Commercialization Committee.

7.2.1    Establishment. No later than at the initiation of the
first Phase III clinical study for a Licensed Product, the Parties shall
establish a Joint Commercialization Committee ("JCC"). The JCC shall have
responsibility to monitor the conduct and progress of the commercialization
strategy, plans, and budgets, including establishment of a plan and budget for
the marketing, promotion, sale and distribution of such Licensed Product (each a
"Sales and Marketing Plan"). The JCC shall update the Sales and Marketing Plan
periodically, and no less often than annually, and shall include therein
detailed plans and budgets for the marketing, promotion, sale and distribution
of each Licensed Product.

7.2.2    Meetings; Information. The JCC shall meet at least
monthly. GSK shall notify CK at least two weeks in advance of the date of each
JCC meeting, and CK shall have the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-62-

opportunity to send [*] to each such meeting, who shall be designated as [*] of
the JCC. Either Party may replace its respective JCC representative(s) at any
time with prior written notice to the other Party. GSK shall provide such [*]
with schedules of all such meetings, as well as any other information
distributed to GSK members of the JCC. GSK agrees to keep CK informed regarding
the Sales and Marketing Plan (including by providing CK at least quarterly such
reports regarding shipments and sales of Licensed Products), and the activities
being undertaken with respect to the commercialization of the Licensed Product,
and shall consider all reasonable suggestions of CK in formulating and
implementing the Sales and Marketing Plan. GSK shall have right of final
decision regarding all matters under the jurisdiction of the JCC, subject to
Section 7.2.3 below.

7.2.3    Section 4.5 Products. With respect to any Licensed
Product for which GSK exercised the CK Product Option under Section 4.5 above,
then for all matters pertaining to such Licensed Product: (i) the JCC shall be
comprised of an equal number of representatives of each of GSK and CK, (ii)
decisions of the JCC shall be by majority vote, provided that if there is not an
equal number of representatives of each Party voting, then only an equal number
of representatives of each Party shall be entitled to vote on the matter, and
(iii) notwithstanding Section 7.2.2 above, GSK shall not have the right of final
decision with respect to such matters.

7.3      Commercialization Efforts.

7.3.1    Generally. GSK shall use diligent efforts to
discover, research, develop and commercialize Licensed Products, and to perform
its obligations under Sections 2.1, 3.1-3.3 and 7.1 of this Agreement, and to
obtain the optimum commercial return for each Licensed Product in all major
markets throughout the world, consistent with high professional standards for
the research, development, commercialization, and marketing of pharmaceutical
products of similar commercial value potential. GSK shall develop and
commercialize Licensed Products in the best interests of maximizing the success
of such Licensed Product.

7.3.2    Reversion to CK. If after the second anniversary of
the Exclusivity Period, or with respect to a particular Collaboration Target
that was an Extended Target, the second anniversary of the end of the Extension
Period under Section 4.2 with respect to such Collaboration Target, (i) GSK is
not actively and diligently performing IND Enabling Studies, or human clinical
trials or pursuing Marketing Approval with respect to a Development Compound or
Licensed Product directed to a Collaboration Target, and (ii) is not then
actively marketing a Licensed Product directed to such Collaboration Target,
then such Target shall cease to be a Collaboration Target for all purposes of
this Agreement and shall thereafter be deemed a CK Target. Notwithstanding the
foregoing, if prior to or during the period described in this Section 7.3.2, GSK
has conducted IND Enabling Studies or clinical trials of a Development Compound
or Licensed Product directed to a particular Collaboration Target, but later
ceased such Studies or trials, then such Target shall not so cease to be a
Collaboration Target by reason of this Section 7.3.2 if GSK has then ongoing and
is actively conducting a [*] Program with respect to such Collaboration
Target, and satisfies the conditions of (i) above within thirty-six (36) months
after the prior IND Enabling

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-63-

Studies and clinical trials ceased, whichever is later. It is understood that
this Section 7.3.2 shall not be deemed to limit Sections 4.2.1 or 7.3.1 above.

7.3.3    After the Exclusivity Period, if GSK acquires a
product that is directed to a Mitotic Kinesin Target, GSK shall continue to
commit resources to the discovery, development and commercialization of
Compounds, Development Compounds and Licensed Products hereunder for their
maximal commercial success and in a manner that will not disadvantage the
Licensed Product to the benefit of the newly acquired product. In addition, in
the event GSK is required by a regulatory agency to divest a Licensed Product in
North America or a Major European Country, CK shall have the first right to
negotiate with GSK to acquire full rights to such Licensed Product on
commercially reasonable terms. GSK shall provide written notice to CK of its
intent to divest the Licensed Product prior to entering into any agreement with
a Third Party, shall use commercially reasonable efforts to reach such an
agreement with CK, and shall provide reasonable assistance to CK with respect to
its discussions with the relevant governmental authority(ies) overseeing the
divestiture of such Licensed Product, including encouraging the relevant
governmental authority(ies) to select CK as the acquirer of the Licensed
Product. It is understood that any agreement for CK's acquisition of the
Licensed Product would be subject to agreement between the Parties on the
financial terms and other conditions of CK's acquisition of the Licensed
Product.

7.4      Co-Promotion Option of CK, Provided that CK has exercised its
Co-Funding Option under Section 3.4 or 4.5.2(d) with respect to a Licensed
Product, at any time prior to the MAA submission for a Licensed Product in the
United States and Canada (respectively), CK will have an option (the
"Co-Promotion Option") to co-promote such Licensed Product in the United States
and/or Canada (respectively) according to the terms and conditions set forth in
this Section 7.4. This Co-Promotion Option may be exercised, at CK's discretion,
on a product-by-product basis, for each Licensed Product with respect to which
CK has exercised its Co-Funding Option and has participated in funding [*] for
such Licensed Product under Section 3.4 or for which GSK exercised the CK
Product Option under Section 4.5 above. CK shall notify GSK of its intent to
exercise its Co-Promotion Option with respect to a particular Licensed Product
at any time prior to submission of an MAA for such Licensed Product (each such
Licensed Product for which CK exercises the Co-Promotion Option being referred
as a "Co-Promoted Product"). As used in this Section 7.4, "co-promote" shall
mean to promote jointly a Licensed Product through GSK and CK's respective sales
forces under a single trademark in a given country; "details" shall mean
face-to-face sales presentations made to physicians, nurses, pharmacists and
other individuals who provide health care services to patients, in their
capacity as such.

7.4.1    Scope of Co-Promotion. At such time as CK exercises
its Co-Promotion Option with respect to a Co-Promoted Product, it shall notify
GSK of the [*] that CK intends to perform annually for such Co-Promoted Product
(such total being referred to as the "Co-Promotion Percentage" for such
Co-Promoted Product) in each of the United States and Canada. This Co-Promotion
Percentage shall not be greater than [*] percent ([*]%), nor less than [*]
percent ([*]%), of the [*], in each of the United States and Canada, [*] to be
conducted for such Co-

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-64-

Promoted Product in any calendar year, unless otherwise agreed by the Joint
Commercialization Committee. CK shall have the right to [*] over the initial [*]
([*]) years of co-promoting a Co-Promoted Product; provided that CK must commit
to [*] at least [*] percent ([*]%) of its [*] in the [*], and [*] percent
([*]%) of such commitment in the [*], calendar year of such Co-Promoted
Products.

7.4.2    [*]. The Parties recognize that CK, under its
Co-Promotion Option, may receive orders from Third Parties for the Co-Promoted
Product. CK shall transmit such orders to GSK and [*].

7.4.3    Co-Promotion Coordination. The JCC shall be
responsible for coordinating the co-promotion activities under this Section 7.4,
and shall develop the strategies and programs to optimally carry-out details,
including but not limited to, the assignment of details in accordance with the
Sales and Marketing Plan. In the event CK exercises its Co-Promotion Option, the
Sales and Marketing Plan shall include detailed plans and budgets for the [*],
and shall at all times provide for CK sales representatives to conduct the [*]
to be conducted in the particular country (subject to CK's right to [*] CK's
[*], as described in Section 7.4.1 above); provided that such [*] be [*], and
that [*] will include at least a [*] in the particular therapeutic areas.

7.4.4    Co-Promotion Obligations. CK shall employ a
professional and trained sales force to co-promote the Co-Promoted Product in
the country(s) in which it has elected to co-promote, and such sales force shall
meet standards of competence and professionalism as is common in the
pharmaceutical industry. With the prior written consent of GSK (which shall not
be withheld or delayed unreasonably), CK may sub-contract its Co-Promotion
obligations to a Third Party, provided that CK has the right to approve the
hiring of sales personnel performing details for a Licensed Product hereunder
and to cause the removal from such detailing activities of such sales personnel.
In all events, CK's Co-Promotion and detailing shall be conducted in accordance
with the then current Sales and Marketing Plan and in accordance with all
applicable laws. [*] (including samples) as are reasonably necessary to
effectively promote the particular Co-Promoted Product consistent with the Sales
and Marketing Plan.

7.4.5    Reimbursement. GSK shall reimburse CK for the costs
incurred by CK in [*] in accordance with this Section 7.4, [*]. Promptly
following CK's exercise of the Co-Promotion Option for a particular Co-Promoted
Product, the Parties shall reasonably agree [*] to be paid to CK for [*]
performed by CK in accordance with the Sales and Marketing Plan then in effect
(the "[*]"). Such [*] shall equal CK's [*] cost of performing [*] over the
particular period, on a fully allocated basis, provided that the [*] shall not
exceed [*] for the Co-Promoted Product ([*]) for the [*] period. The [*] shall
be paid to CK quarterly in advance, based on the [*] budgeted to be conducted by
CK during such

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-65-

quarter under the Sales and Marketing Plan. Promptly following the end of each
calendar quarter, CK shall provide to GSK a report, in a form reasonably agreed
by the Parties, summarizing the [*] actually [*] during such quarter. In the
event the actual [*] was less than the [*] for which CK received advance
payment, then GSK shall be entitled to a credit for the [*] associated with such
shortfall against the next payment due to CK under this Section 7.4.5.

7.4.6    CK and GSK Right to Terminate. CK shall have the
right to terminate its Co-Promotion of any Co-Promoted Product, and its
obligations under this Article VII with respect to such Product, on a
product-by-product, country-by-country basis, upon [*] ([*]) days prior notice
to GSK. Upon such termination by CK, CK shall have no further right to [*] under
Section 7.4.5, other than for services provided prior to the date of
termination. GSK shall have the right to terminate CK's Co-Promotion of any
Co-Promoted Product, on a product-by-product, country-by-country basis, upon [*]
([*]) days prior notice to CK, in the event that employees or consultants
promoting the Co-Promoted Product, do not perform in accordance with GSK's Sales
and Marketing Plan for the Co-Promoted Product, and CK fails to correct such
non-performance during such [*]-day period. Upon such termination by GSK, CK
shall have no further right to [*] under Section 7.4.5, other than for services
provided prior to the date of termination.

7.5      CK Logo. The name and logo of CK shall appear, with reasonable
size and prominence, on all packaging, package inserts, labeling, marketing and
sales materials and advertisements for Licensed Products for which CK exercised
the Co-Funding Option under Section 3.4 above. In the case of such Co-Funded
Products that became Licensed Products pursuant to Section 4.5 above, the name
and logos of CK and GSK shall be of equal size and prominence.

ARTICLE VIII - OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

8.1      Ownership.

8.1.1    Generally. Each Party shall retain all of its rights,
title and interest in and to its Existing Technology, including the right to
transfer or license such intellectual property to others for any purpose,
subject only to its obligations under this Agreement, including but not limited
to the exclusivity obligations below. All right, title and interest in and to
all inventions made solely by personnel of a Party shall be owned by such Party.
All right, title and interest in and to all other inventions made jointly by
personnel of GSK and CK shall be jointly owned by GSK and CK in equal and
undivided shares. Except as expressly provided in this Agreement, neither Party
shall have any obligation to account to the other for profits, or to obtain any
consent of the other Party to license or exploit patented jointly-owned subject
matter, by reason of joint ownership thereof, and each Party hereby waives any
right it may have under the laws of any jurisdiction to require any such consent
or accounting.

8.1.2    CK Targets. Notwithstanding the foregoing, all
inventions and Information (including all Patents and intellectual property
rights in such inventions and Information) made by

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-66-

CK personnel in connection with activities specifically pertaining to CK
Targets, CK Compounds or CK Products shall be owned by CK. All inventions and
Information (including all Patents and intellectual property rights in such
inventions and Information) made by GSK personnel in connection with activities
specifically pertaining to CK Targets, CK Compounds or CK Products shall be
owned by GSK, and GSK hereby grants to CK an exclusive, worldwide license, with
the right to grant and authorize sublicenses, to make, have made, use, sell,
offer for sale, import and otherwise exploit subject matter within such
inventions, Information or intellectual property. It is understood that the
inventions and Information licensed to CK under this Section shall be limited to
inventions and Information that pertain to CK Targets, CK Compounds or CK
Products prior to their designation as such (e.g., with respect to CK Targets
prior to the time that the particular Mitotic Kinesin Target had been designated
as a CK Target).

8.2      Patent Filings. The Party responsible for Prosecution and
Maintenance (as defined below) of patents covering inventions within the
Collaboration Technology or Post-Collaboration Technology shall use [*] to
obtain a reasonable scope of protection of Compounds and CK Compounds, and will
consider in good faith reasonable comments provided by the other Party.

8.2.1    Joint Patents. The Prosecution and Maintenance of
jointly owned Patents shall be only as mutually agreed by GSK and CK. In such
connection, the Parties agree to cooperate in good faith to obtain appropriate
patent protection for Compounds, Licensed Products, CK Compounds, and CK
Products. Accordingly, the Parties agree to cooperate and to prepare and
prosecute patent applications for Patents within the Licensed Technology
directed to such claims in a manner that ensures reasonable scope of protection
for such subject matter. Subject always to the foregoing, [*] will be
responsible at the expense of [*] for drafting, filing, prosecuting and
maintaining any jointly owned Patent directed primarily to Compounds, including
but not limited to processes for making Compounds, methods of use of Compounds
or intermediates of such.

8.2.2    Solely Owned Patents. GSK or CK, as the case may be,
shall control the Prosecution and Maintenance of Patents within the
Collaboration Technology and Post-Collaboration Technology that are owned by
such Party, in each case [*] and using counsel of its choice and in such
countries as such Party determines is appropriate.

8.2.3    Other Matters Pertaining to Prosecution of Patents.

(a)      Disclosure. Prior to the filing of any
patent claiming Collaboration Technology, the JRC shall establish a subcommittee
to coordinate Prosecution and Maintenance of patents covering inventions within
the Collaboration Technology and Post-Collaboration Technology (the "Patent
Subcommittee"). After the end of the Research Term, the Patent Subcommittee
shall report to the JSC. Prior to filing any patent application claiming
Collaboration Technology or Post-Collaboration Technology, each Party shall
submit to the Patent Subcommittee an invention disclosure containing such
information and in a form to be mutually agreed by the Parties. Each Party shall
keep the Patent Subcommittee informed as to material developments with respect
to the Prosecution and Maintenance of Patents claiming Collaboration Technology
or Post-Collaboration Technology, including without limitation, by providing
upon request copies of any

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-67-

substantive documents that such Party receives from any patent office, including
notice of all interferences, reissues, re-examinations, oppositions or requests
for patent term extensions, and by providing the other Party the opportunity to
have reasonable input into the strategic aspects of such Prosecution and
Maintenance. Without limiting the foregoing, neither Party shall file an
application for such a Patent unless it has first disclosed the same to the
Patent Subcommittee.

(b)      If, during the term of this Agreement, the
Party responsible for prosecuting a Patent within the Collaboration Technology
or Post-Collaboration Technology, as specified in this Section 8.2, (the
"Prosecuting Party") intends to allow such Patent to lapse or become abandoned
without having first filed a substitute, the Prosecuting Party shall, whenever
practicable, notify the other Party of such intention at least sixty (60) days
prior to the date upon which such Patent shall lapse or become abandoned, and
such other Party shall thereupon have the right, but not the obligation, to
assume responsibility for the Prosecution and Maintenance and defense thereof at
its own expense with counsel of its own choice.

(c)      "Prosecution and Maintenance" or "Prosecute
and Maintain" with regard to a Patent shall mean the preparing, filing,
prosecuting and maintenance of such Patent, as well as re-examinations,
reissues, requests for patent term extensions and the like with respect to such
Patent, together with the conduct of interferences, the defense of oppositions
and other similar proceedings with respect to the particular Patent.

8.3      Patent Costs.

8.3.1    Collaboration and Post-Collaboration Technology. [*].
CK and GSK shall share the Patent Costs associated with the Prosecution and
Maintenance of jointly owned Patents, as the Parties agree.

8.3.2    CK and GSK Existing Technology. CK shall be
responsible for [*] percent ([*]%) of the Patent Costs incurred by CK prior to
and after the Effective Date in all countries in the Territory with respect to
CK Existing Technology. GSK shall be responsible for [*] percent ([*]%) of the
[*] incurred by GSK prior to and after the Effective Date in all countries in
the Territory with respect to GSK Existing Technology. If a Party chooses not to
Prosecute and Maintain a Patent within its Existing Technology that it solely
owns in a country or countries of the Territory, it shall use [*] efforts to
promptly notify the other Party of its decision, and, if such patent pertains to
a Collaboration Target, Compound, Development Compound, Licensed Product, CK
Compound or CK Product licensed to the other Party hereunder, the other Party
shall have the right to Prosecute and Maintain such Patent and at its own
expense with counsel of its own choice.

8.3.3    Definition of Patent Costs. "Patent Costs" shall mean
the reasonable fees and expenses paid to outside legal counsel, and filing,
maintenance and other out-of-pocket expenses paid to Third Parties, incurred in
connection with the Prosecution and Maintenance of Patents.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-68-

8.4      Third Party Technologies.

8.4.1    Existing Third Party Technology. It is understood
that certain Patents within the CK Existing Technology have been in-licensed
pursuant to that certain Exclusive License Agreement dated April 21, 1998, as
modified, among CK, the Regents of the University of California and the Board of
Trustees of the Leland Stanford Junior University (the "University License"),
and that CK shall be responsible for payment of all partnership and other fees
required pursuant to Section 5.2 thereof. As required for the furtherance of the
objectives of this Agreement, CK shall use [*] to maintain the University
License and to timely pay all fees due under the University License. Should CK
be unable to make any payment required under the University License, it shall
notify GSK, and GSK shall thereupon have the option to make such payment on
behalf of CK and to seek reimbursement from CK for such payment.

8.4.2    Acquired After Effective Date. In addition, if after
the Effective Date, CK or GSK (the "Sublicensing Party") acquire from a Third
Party subject matter within the Licensed Technology ("Third Party Technology"),
but that is subject to royalty or other payment obligations to the Third Party,
then the following shall apply: The licenses granted to the other Party (the
"Commercializing Party") under Section 5.2 and 5.3 above with respect to such
Third Party Technology shall be subject to the Commercializing Party's promptly
reimbursing the Sublicensing Party for any milestones, royalties or other
amounts that become owing to such Third Party by reason of the Commercializing
Party's exercise of such license or sublicense to the Third Party Technology.
Upon request by the Commercializing Party, the Sublicensing Party shall disclose
to the Commercializing Party a true, complete and correct written description of
such payment obligations, and the Commercializing Party's obligation to
reimburse such amounts following such request shall be limited to those payment
obligations as so disclosed by the Commercializing Party, with any such payments
made [*] under [*] (to the extent [*] applies). In the event that the
Commercializing Party does not promptly reimburse the Sublicensing Party for
such amounts upon request, then such Third Party Technology shall thereafter be
deemed excluded from the Licensed Technology. Notwithstanding the foregoing,
neither Party shall utilize in performing the Research Program any Third Party
Technology that would impose a royalty or other payment obligation to a Third
Party for which the other Party would become responsible under this Section
8.4.2 with respect to a Licensed Product or CK Product, unless the JRC has
approved such utilization.

8.5      Enforcement Rights.

8.5.1    Defense and Settlement of Third Party Claims. If a
Third Party asserts that a Patent or other right owned by it is infringed by the
manufacture, use, sale or importation of any Licensed Product, [*] shall have
the primary right but not the obligation to defend against any such assertions
at its cost and expense. In the event [*] elects to defend against any such
Third Party claims, [*] shall have the sole right to direct the defense of any
such Third Party claims and to elect to settle such claims. In any event, the
Parties shall assist one another and cooperate in any such litigation at the
other's request without expense to the requesting Party. Each Party may at its
own expense and with its own counsel join any defense brought by the other
Party.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-69-

8.5.2    Infringement by Third Parties.

(a)      If any Patent within the Licensed Technology
Controlled by CK is infringed by a Third Party in any country in connection with
the manufacture, use and sale of a product substantially similar to a Licensed
Product in such country, GSK shall have the primary right, but not the
obligation to institute, prosecute, and control any action or proceeding with
respect to such infringement of such Patent, by counsel of its own choice, and
CK shall have the right, at its own expense, to be represented in that action by
counsel of its own choice. If GSK fails to bring an action or proceeding within
a period of [*] ([*]) days after a request by CK to do so, CK shall have the
right to bring and control any such action by counsel of its own choice, and GSK
shall have the right to be represented in any such action by counsel of its own
choice at its own expense.

(b)      If any Patent within the Licensed Technology
that is Controlled by GSK is infringed by the manufacture, sale or importation
of a product substantially similar to a CK Product, CK shall have the primary
right, but not the obligation, to institute, prosecute, and control any action
or proceeding with respect to such infringement of such Patent, by counsel of
its own choice, and GSK shall have the right, at its own expense, to be
represented in that action by counsel of its own choice. If CK fails to bring an
action or proceeding within a period of [*] ([*]) days after a request by GSK to
do so, GSK shall have the right to bring and control any such action by counsel
of its own choice, and CK shall have the right to be represented in any such
action by counsel of its own choice at its own expense.

(c)      If one Party brings any such action or
proceeding in accordance with this Section 8.5.2, the second Party agrees to be
joined as a party plaintiff and to give the first Party reasonable assistance
and authority to file and prosecute the suit. The costs and expenses of the
Party bringing suit under this Section shall be borne by such Party, and any
damages or other monetary awards recovered shall be shared as follows: The
amount of such recovery actually received by the Party controlling such action
shall first be applied to the out-of-pocket costs of such action, and then shall
be shared (a) in the event of an action with respect to an infringing product
substantially similar to a Licensed Product, CK shall receive a percentage of
such net recovery equal [*] that would have been payable to CK with respect to
such Licensed Product (without giving effort to Sections [*] or [*] above)
(e.g., if CK were entitled [*] for such Licensed Product, CK would be entitled
to receive [*] of the net recovery), and GSK shall be entitled to the remainder
of such net recovery; and (b) in the event of an action with respect to an
infringing product substantially similar to a CK Product, GSK shall receive a
percentage of such net recovery equal to [*] that would be payable to GSK under
this Agreement with respect to such CK Product, and CK shall be entitled to the
remainder of such net recovery. A settlement or consent judgment or other
voluntary final disposition of a suit under this Section 8.5.2(c) may be entered
into without the consent of the Party not bringing the suit; provided that such
settlement, consent judgment or other disposition does not admit the invalidity
or unenforceability of any Patent within the Licensed Technology and provided
further, that any rights

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-70-

to continue the infringing activity in such settlement, consent judgment or
other disposition shall be limited to those rights that the granting Party
otherwise has the right to grant.

(d)      General. Subject to Paragraphs (a), (b) and
(c) above, with respect to jointly owned Patents, each Party may proceed in such
manner as the law permits. Each Party shall bear its own expenses, and any
recovery obtained by either Party may be retained by such Party unless otherwise
agreed.

ARTICLE IX - CONFIDENTIALITY

9.1      Confidentiality: Exceptions. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing, the Parties agree
that the receiving Party shall keep confidential and shall not publish or
otherwise disclose or use for any purpose other than as provided for in this
Agreement any Information and other confidential and proprietary information and
materials furnished to it by the other Party pursuant to this Agreement or any
Information developed during the term of this Agreement (collectively,
"Confidential Information"), except to the extent that it can be established by
the receiving Party that such Confidential Information:

(i)      was in the lawful knowledge and
possession of the receiving Party prior to the time it was disclosed to, or
learned by, the receiving Party, or was otherwise developed independently by the
receiving Party, as evidenced by written records kept in the ordinary course of
business, or other documentary proof of actual use by the receiving Party;

(ii)     was generally available to the
public or otherwise part of the public domain at the time of its disclosure to
the receiving Party;

(iii)    became generally available to the
public or otherwise part of the public domain after its disclosure and other
than through any act or omission of the receiving Party in breach of this
Agreement; or

(iv)     was disclosed to the receiving
Party, other than under an obligation of confidentiality, by a Third Party who
had no obligation to the disclosing Party not to disclose such information to
others.

9.2      Authorized Disclosure. Except as expressly provided otherwise
in this Agreement, each Party may use and disclose Confidential Information of
the other Party as follows: (i) under appropriate confidentiality provisions
substantially equivalent to those in this Agreement, in connection with the
performance of its obligations or exercise of rights granted or reserved in this
Agreement (including the rights to commercialize Licensed Products and CK
Products and to grant licenses and sublicenses hereunder), or (ii) to the extent
such disclosure is reasonably necessary in filing or prosecuting patent,
copyright and trademark applications, complying with the terms of licenses from
Third Parties with respect to a Party's Existing Technology, prosecuting or
defending litigation, complying with applicable governmental regulations,
obtaining regulatory approval, conducting preclinical or clinical trials,
marketing Licensed Products or CK Products, or otherwise

-71-

required by law, provided, however, that if a Party is required by law or
regulation to make any such disclosure of the other Party's Confidential
Information it will, except where impracticable for necessary disclosures, for
example in the event of medical emergency, give reasonable advance notice to the
other Party of such disclosure requirement and, except to the extent
inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Confidential Information
required to be disclosed or (iii) in communication with investors, consultants,
advisors or others on a need to know basis, in each case under appropriate
confidentiality provisions substantially equivalent to those of this Agreement,
or (iv) to the extent mutually agreed to by the Parties.

9.3      Termination of Prior Agreement. This Agreement supersedes the
Confidentiality Agreement between the Parties (or their predecessors) dated [*]
(including amendments) and the Materials Transfer Agreement between the Parties
dated [*], including all modifications. All information exchanged between the
Parties under that Agreement shall be deemed Confidential Information and shall
be subject to the terms of this Article IX.

9.4      Publications. Each Party shall submit any proposed publication
containing Confidential Information to the other Party at least [*] ([*]) days
in advance to allow that Party to review such planned public disclosure. The
reviewing Party will promptly review such proposed publication and make any
objections that it may have to the publication of Confidential Information of
the reviewing Party contained therein. Should the reviewing Party make an
objection to the publication of any such Confidential Information, then the
Parties shall discuss the advantages and disadvantages of publishing such
Confidential Information. If the Parties are unable to agree on whether to
publish the same, subject to Section 12.1 below, the JRC shall attempt to
resolve the matter. If the JRC is unable to resolve the matter promptly, the
Chief Executive Officer of CK and the Chairman, Research and Development,
Pharmaceuticals of GSK shall reasonably agree on the extent to which the
publication of such Confidential Information shall be made.

9.5      Limit on Disclosure of Information Relating to Mitotic Kinesin
Targets. Notwithstanding Section 9.2(i) above:

(a)      for both Parties during the Exclusivity
Period and any Extension Period, on a Target-by-Target basis with respect to any
Mitotic Kinesin Targets that have not been designated as a Collaboration Target
or a CK Target,

(b)      for CK, for the duration of its obligation
under Section 4.2.3 with respect to a particular Collaboration Target and with
respect to matters pertaining specifically to such Collaboration Target, and

(c)      for GSK, with respect to matters relating to
CK Targets, such Party in question shall not disclose to a Third Party any CK
Existing Technology, GSK Existing Technology, Collaboration Technology or
Post-Collaboration Technology specifically directed to matters within the Field
specifically pertaining to such Mitotic Kinesin Target(s), such as

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-72-

structure/activity relationship data, target validation data and the like;
provided, however, that CK shall have the right to disclose such data in (b)
above (other than data that is directed specifically to one or more Mitotic
Kinesin Targets other than CK Targets) (i) in connection with research and
development on CK Targets, CK Compounds and CK Products, or (ii) in connection
with commercialization of CK Products (subject to GSK's CK Product Option under
Section 4.5); and provided, further, that GSK shall have the right to disclose
such data in (c) above (other than data that is directed specifically to one or
more Mitotic Kinesin Targets other than Collaboration Targets) (i) in connection
with research and development on Collaboration Targets, Compounds, Development
Compounds and Licensed Products, or (ii) in connection with commercialization of
Licensed Products. This Section 9.5 shall not be deemed to restrict CK's
disclosure of any such Licensed Technology in connection with activities
pertaining to (x) performance of its obligations under the Research Program, (y)
[*] or [*] after such [*] are excluded from the Field pursuant to Section 2.6.4,
or (z) any disclosure authorized under Section 9.2(ii), (iii) or (iv) above.

ARTICLE X - REPRESENTATIONS AND WARRANTIES; COVENANTS AND INDEMNIFICATION

10.1     Representations and Warranties. Each of the Parties hereby
represents and warrants and covenants as follows:

(a)      This Agreement is a legal and valid
obligation binding upon such Party and enforceable in accordance with its terms.
Except as otherwise noted in Exhibit 10.1 hereto, the execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by which
it is bound, nor violate any law or regulation of any court, governmental body
or administrative or other agency having jurisdiction over it.

(b)      Other than the notification requirements
under the Hart-Scott-Rodino ("HSR") Act and approval of the transaction
contemplated by this Agreement by the Federal Trade Commission ("FTC"), no
government authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, under any applicable
laws, rules or regulations currently in effect, is or will be necessary for, or
in connection with, the transaction contemplated by this Agreement or any other
agreement or instrument executed in connection herewith, or for the performance
by it of its obligations under this Agreement and such other agreements.

(c)      Each Party has not, and during the term of
the Agreement will not, grant any right to any Third Party relating to its
respective technology in the Field which conflicts with the rights granted to
the other Party hereunder. Each Party will not, during the Exclusivity Period or
Extension Period, as applicable, encumber its respective CK Patents or GSK
Patents within the Licensed Technology, as applicable, with liens, mortgages,
security interests or another similar interest that would give the holder the
right to convert the interest into patent ownership, unless the encumbrance is
expressly subject to the licenses herein.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-73-

(d)      Each Party owns or otherwise controls all of
the rights, title and interest in and to its Patents and Know-How within the
Licensed Technology.

(e)      Each Party has no present knowledge from
which it concludes that the CK Patents or GSK Patents within the Licensed
Technology, as applicable, are invalid or that their exercise would infringe
patent rights of Third Parties.

(f)      Each Party has not omitted to furnish the
other with any information requested by the other Party, or intentionally
concealed from the other Party any information in its possession concerning the
Mitotic Kinesin Targets or the transactions contemplated by this Agreement which
would be material to the other Party's decision to enter into this Agreement and
to undertake the commitments and obligations set forth herein.

10.2     Indemnification.

10.2.1   Indemnification by GSK. GSK hereby agrees to
indemnify, defend and hold CK and its agents, directors and employees harmless
from and against any and all suits, claims, actions, demands, liabilities,
expenses and/or loss, including reasonable legal expense and attorney's fees
("Losses") resulting directly from the development, manufacture, use, handling,
storage, sale or other disposition of chemical agents or Licensed Products by
GSK, its Affiliates, agents or Sublicensees.

10.2.2   Indemnification by CK. CK hereby agrees to indemnify,
defend and hold GSK and its agents, directors and employees harmless from and
against any and all Losses resulting directly from the development, manufacture,
use, handling, storage, sale or other disposition of chemical agents or CK
Products by CK, its Affiliates, agents or Sublicensees.

10.2.3   Procedure. In the event a Party is seeking
indemnification under Sections 10.2.1 or 10.2.2, it shall inform the other Party
(the "Indemnifying Party") of a claim as soon as reasonably practicable after it
receives notice of the claim, shall permit the Indemnifying Party to assume
direction and control of the defense of the claim (including the right to settle
the claim) and shall cooperate as requested (at the expense of the Indemnifying
Party) in the defense of the claim.

10.3.    Covenants of the Parties.

(a)      Upon the terms and subject to the conditions hereof,
each of the Parties hereto shall use its good faith efforts, before the Closing
to (i) take, or cause to be taken, all actions necessary, proper or advisable
under applicable law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) make all necessary filings,
and thereafter make any other advisable submissions, with respect to this
Agreement and the transactions contemplated by this Agreement required under the
HSR Act; provided that, with respect to this clause (a), neither GSK nor CK
shall be required to agree to any modification or amendment that, in the
reasonable opinion of the Party's legal and/or financial counsel, would be
adverse to such Party.

-74-

The Parties hereto shall cooperate with each other in connection with the making
of all such filings. The Parties hereto shall furnish all information required
for any application or other filing to be made pursuant to the rules and
regulations of any applicable law in connection with the transactions
contemplated by this Agreement.

(b)      GSK and CK shall file as soon as practicable
(but not later than five (5) business days) after the Effective Date
notifications under the HSR Act and shall respond as promptly as practicable to
all inquiries or requests received from the FTC, the Antitrust Division of the
Department of Justice, for additional information or documentation and shall
respond as promptly as practicable to all inquiries and requests received from
any such authority (including any state attorney general) in connection with
antitrust matters. The Parties shall cooperate with each other in connection
with the making of all such filings or responses. GSK agrees to pay the filing
fees and all associated costs for required HSR filings related to this
Agreement.

ARTICLE XI - TERM AND TERMINATION

11.1     Term. Unless earlier terminated, the Agreement and the payment
obligations under Article VI will continue in effect, on a product-by-product
and country-by-country basis until the later of (i) the expiration of the last
to expire Patent within the Licensed Technology covering such Compound or
Licensed Product in such country, or (ii) [*] ([*]) years after the date of the
first commercial sale of such Licensed Product in such country. Effective upon
the expiration (but not earlier termination) of this Agreement, CK hereby grants
to GSK a fully-paid-up, royalty-free license under CK Existing Technology and
CK's interest in Collaboration Technology and Post-Collaboration Technology to
make, have made, use and sell the Development Compounds and Licensed Products in
the Territory without further payment or consideration to CK. Effective upon the
expiration of this Agreement, GSK hereby grants to CK a fully-paid-up,
royalty-free license, under GSK Existing Technology and GSK's interest in
Collaboration Technology and Post-Collaboration Technology, to make, have made,
use and sell the CK Compounds and CK Products, in the Territory without further
payment or consideration to GSK.

11.1.1   Termination Prior to Closing. This Agreement may be
terminated at any time prior to the Closing:

(a)      by GSK or CK, if all applicable waiting
periods for the HSR filing made in connection with this Agreement have not
lapsed or been terminated early by August 1, 2001 or the FTC initiates an
investigation into the transaction contemplated by this Agreement; or

(b)      by GSK or CK, if the Closing has not
occurred by August 1, 2001; or

(c)      by the mutual written consent of GSK and CK.

11.2     Termination For Breach. Either Party may terminate this
Agreement in the event the other Party shall have materially breached or
defaulted in the performance of any of its material obligations hereunder, and
such default shall have continued for ninety (90) days after written notice

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-75-

thereof was provided to the breaching party by the non-breaching party. Any
termination shall become effective at the end of such ninety (90) day period
unless the breaching party (or any other party on its behalf) has cured any such
breach or default prior to the expiration of the ninety (90) day period.

11.3     Termination Upon Notice.

11.3.1   Termination by GSK on Notice. GSK may terminate this
Agreement upon [*] ([*]) months written notice to CK, provided that such notice
is given after the fifth anniversary of the Effective Date; and provided further
that if GSK extends the Research Term in accordance with Section 2.8 above, such
termination may not take effect prior to the end of the Research Term.

11.3.2   Termination by GSK on a Product-by-Product Basis. In
addition GSK may terminate this Agreement as to any particular Licensed Product
by so notifying CK, which termination shall be effective [*] ([*]) months after
the date of such notice; provided, however, if the Research Term has ended and
as a result of such termination: (i) GSK is not actively performing substantial
research and/or development activities with respect to a Collaboration Target or
any Compound, Development Compound or Licensed Product directed to the
Collaboration Target that is so terminated, and is not then actively marketing a
Licensed Product directed to such Collaboration Target, then such Target shall
cease to be a Collaboration Target for all purposes of this Agreement, and shall
thereafter be deemed a CK Target; or (ii) GSK is not then actively pursuing
substantial research and/or development activities or human clinical trials with
respect to any Collaboration Target, Compound, Development Compound or Licensed
Product directed to any Collaboration Target, and is not then actively marketing
a Licensed Product directed to any Collaboration Target, then the termination of
such Licensed Product shall be deemed a termination of this Agreement in its
entirety under Section 11.3.1 above. This Section 113.2 shall not be deemed to
limit Sections 4.2.1 or 7.3.2 above.

11.3.3   Termination by CK on Notice. If at any time after the
Research Term the conditions in clause (ii) of Section 11.3.2 above are met
(i.e., regardless of whether GSK has formally terminated a particular Licensed
Product under Section 11.3.2), CK shall have the right to terminate this
Agreement upon [*] ([*]) months notice to GSK.

11.4     Termination on Bankruptcy. Either Party may terminate this
Agreement, if, at any time, the other Party shall file in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the Party or of substantially all of its
assets, or if the other Party proposes a written agreement of composition or
extension of substantially all of its debts, or if the other Party shall be
served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within [*] ([*]) days
after the filing thereof, or if the other Party shall propose or be a party to
any dissolution or liquidation, unless in connection with such dissolution or
liquidation this Agreement is assigned under Section 12.5, or if the other Party
shall make an assignment of substantially all of its assets for the benefit of
creditors.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-76-

11.5     Intentionally left blank.

11.6     Certain Payment Terms.

11.6.1   Milestone Payments. Notwithstanding anything herein
to the contrary, GSK shall not be obligated to pay any payment otherwise payable
under Section 6.3 as a result of occurrence of a Research Performance Milestone
or under Section 6.4 as the result of occurrence of a Development Milestone if
the Research Performance Milestone or Development Milestone occurs after (i) a
termination notice is properly given pursuant to Section 11.3 above or (ii) a
termination pursuant to Section 11.2 above by reason of a breach by CK.
Similarly, in the event that GSK terminates this Agreement with respect to a
particular Licensed Product in accordance with Section 11.3.2 above, GSK shall
not be obligated to pay any payment under Section 6.4 above as the result of
occurrence of a Development Milestone with respect to such terminated Licensed
Product if the milestone event occurs after a notice of such termination is
properly given by GSK pursuant to Section 11.3.2.

11.7     Effect of Termination.

11.7.1   Termination Prior to Closing. Notwithstanding any
other provision of this Agreement, in the event that this Agreement is
terminated pursuant to Section 11.1.1, this Agreement shall be deemed terminated
ab initio, and notwithstanding Section 11.7.3 below, no provisions of this
Agreement shall survive such termination. All amounts paid prior to the date of
such termination shall be non-refundable; provided that CK shall promptly
reimburse to GSK any amounts paid to CK under Sections 3.1.2 (a), 6.2 or 6.3
above. All Confidential Information disclosed prior to such termination shall be
deemed Confidential Information pursuant to the Confidentiality Agreement (as
amended) between the Parties dated [*], which Confidentiality Agreement shall
survive.

11.7.2   Accrued Rights, Surviving Obligations. Termination,
relinquishment or expiration of the Agreement for any reason shall be without
prejudice to any obligations which shall have accrued prior to such termination,
relinquishment or expiration, including, without limitation, the payment
obligations under Article 6 hereof and any and all damages arising from any
breach hereunder.

11.7.3   Survival. Except as provided under Section 11.7.1,
Articles 1,10,11 and 12 (other than Section 12.2) and Sections 8.1, 8.3, 9.1,
and 9.2 shall survive the expiration and any termination of this Agreement; and
Article 5 shall survive the expiration but not an earlier termination (except as
provided below) of this Agreement. In addition, the following provisions shall
survive termination of this Agreement in the events set forth below:

(a)      Certain Terminations. In the event of a
termination of this Agreement pursuant to Section 11.3, or termination by CK
pursuant to Section 11.2: (i) Section 4.4.2 shall survive, and all Licensed
Products, Compounds and Collaboration Targets shall be deemed CK Products, CK
Compounds and CK Targets, respectively; (ii) without limiting any other
provisions of

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-77-

this Section 11.7.3, CK's rights and GSK's obligations (but not GSK's rights or
CK's obligations) under Sections 2.4, 8.2.3 and 8.4.2 and under the last two
sentences of Section 3.2 shall survive; (iii) Sections 5.3 and 5.4.2 shall
survive, and in addition, CK shall have an irrevocable, exclusive, worldwide
license, with the right to grant and authorize sublicenses, under GSK's interest
in the Collaboration Technology and Post-Collaboration Technology, and any
trademarks owned by GSK and used specifically by GSK to identify the Licensed
Products (excluding the GlaxoSmithKline trade name and trade dress) to make,
use, sell, import and otherwise exploit products directed to Mitotic Kinesin
Targets for use in the Field (without giving effect to any modification under
Section 2.6.4), including the right to practice any invention within such
Technology for the purpose of conducting research or development activities
directed to such products; and (iv) without limiting the foregoing, GSK's
obligations under Section 4.1.1, 4.1.2 and 4.3.2 above shall continue for the
Exclusivity Period as if the Agreement had not been terminated. From and after
the date of a notice of termination in the events described in this Section
11.7.3(a), CK shall have no further obligations under this Agreement beyond
those obligations that survive termination in such events as specified in this
Section 11.7.3.

(b)      Breach by CK. In the event of a termination
of this Agreement by GSK pursuant to Section 11.2: (i) in the event that such
termination occurs before the end of the Research Term, those Lead Targets
identified as of the termination effective date but not selected pursuant to
Section 2.7 shall become Collaboration Targets, all other Mitotic Kinesin
Targets shall revert to CK and the licenses granted to GSK under Section 5.1
shall be expanded to include conducting research independently beyond the
Research Term for the purpose of identifying Compounds directed to such
Collaboration Targets, without any further payment by GSK to CK (subject to
(b)(ii)); (ii) the provisions of Article 6 (other than 6.2) and Sections 5.2
(other than 5.2.4), 5.4, 4.1.3 and 7.3.1, and GSK's rights and CK's obligations
(but not CK's rights or GSK's obligations) under Sections 2.4, 8.2.3 and 8.4.2
shall survive and, in addition, GSK shall have an irrevocable, non-exclusive,
worldwide license, with the right to grant and authorize sublicenses, under CK's
interest in the Collaboration Technology and Post-Collaboration Technology, to
make, use, sell, import and otherwise exploit products directed to Collaboration
Targets for use in the Field (without giving effect to any modification under
Section 2.6.4), including the right to practice any invention within such
Technology for the purpose of conducting research or development activities
directed to such products; and (iii) without limiting the foregoing, CK's
obligations under Section 4.1.1 and 4.1.2 above shall continue for the
Exclusivity Period as if the Agreement had not been terminated. From and after
the date of a notice of termination in the events described in this Section
11.7.3(b), GSK shall have no further obligations under this Agreement beyond
those obligations that survive termination in such events as specified in this
Section 11.7.3.

(c)      Termination under Section 11.3.3. In the
event CK provides notice to GSK of its intent to terminate this Agreement
pursuant to Section 11.3.3, then, with respect to any CK Compound or CK Product
for which CK had begun IND Enabling Studies that would otherwise be subject to
the CK Product Option, but for which CK has not completed [*] ([*]) [*] studies,
prior to the date of such notice (each, a "Potential Option Product"), GSK may
exercise its CK Product Option pursuant to Section 4.5, as follows:

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-78-

(i)      Upon request by GSK within thirty
(30) days after receiving CK's notice of termination under Section 11.3.3, GSK
may request that CK notify GSK of such Potential Option Products (the "GSK
Information Request"). Within thirty (30) days after receiving such GSK
Information Request, CK shall notify GSK of such Potential Option Products,
together with a copy of any IND that has been filed by CK with respect to such
Potential Option Product as of the date of such notice by CK (the "CK Notice").
Then, within [*] ([*]) days after GSK's receipt of the CK Notice, GSK may
exercise the CK Product Option with respect to such Potential Option Products
(i.e., as if CK had completed [*] ([*]) [*] studies for such Potential Option
Products and provided GSK a proper CK [*] Notice therefore in accordance with
Section 4.5). In such case, and solely for purposes of such case, (i) the first
three sentences of Section 4.5 shall not apply to GSK's exercise of the CK
Product Option for such Potential Option Products, (ii) notwithstanding Section
4.5.2(d) or any other provision of Section 4.5, CK shall not be obligated to
exercise the Co-Funding Option with respect to any Potential Option Product for
which GSK exercises the CK Product Option under this Section 11.7.3, and (iii)
CK's obligations under Section 4.6 shall thereafter terminate.

(ii)     In the event that GSK so exercises
the CK Product Option with respect to one or more Potential Option Products,
then CK's notice of termination described above shall not be effective under
Section 11.3.3, and this Agreement shall continue in force and effect, subject
to the terms and conditions hereof. However, in such case, upon such exercise by
GSK, all Collaboration Targets and Unselected Targets shall be deemed CK Targets
(notwithstanding Sections 2.7, 2.8, 4.2 or any other provision of this
Agreement), all Compounds, Development Compounds and Licensed Products shall be
deemed CK Compounds and CK Products, and the CK Product Option shall terminate
with respect to all such CK Targets, and all CK Compounds and CK Products
directed to such CK Targets (i.e., all rights of GSK under Section 4.5 shall
terminate with respect to CK Products directed to all Mitotic Kinesin Targets
other than those that were CK Targets at the time of CK's notice of termination
under Section 11.3.3). Once GSK has exercised the CK Product Option under this
Section 11.7.3(c), GSK shall not have any further right under this Section
11.7.3(c) upon a subsequent termination by CK under Section 11.3.3.

11.8     Termination Not Sole Remedy. Termination is not the sole
remedy under this Agreement and, whether or not termination is effected, all
other remedies will remain available except as agreed to otherwise herein.

ARTICLE XII - MISCELLANEOUS

12.1     Publicity

12.1.1   Financial Terms. Each of the Parties hereto agrees
not to disclose to any Third Party the financial terms of this Agreement without
the prior written consent of the other Party hereto, except to advisors,
investors and others on a need-to-know basis under circumstances that reasonably
ensure the confidentiality thereof, or to the extent necessary to comply with
the terms of licenses from Third Parties with respect to a Party's Existing
Technology, or to the extent required by law. Notwithstanding the foregoing,
following the Effective Date, the Parties shall agree upon a

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-79-

press release to announce the execution of this Agreement together with a
corresponding Question & Answer outline for use in responding to inquiries about
the Agreement; thereafter, GSK and CK may each disclose to Third Parties the
information contained in such press release and Question & Answer outline
without the need for further approval by the other.

12.1.2   Publicity Review. The Parties acknowledge the
importance of supporting each other's efforts to publicly disclose results and
significant developments regarding Licensed Products, CK Products and other
activities in connection with this Agreement, beyond what is required by law,
and each Party may make such disclosures from time to time with the approval of
the other Party, which approval shall not be unreasonably withheld or delayed.
Such disclosures may include, without limitation, achievement of Research
Performance Milestones, Development Milestones, significant events in the
research, development and regulatory process with respect to such a Development
Compound, Licensed Product or CK Product, commercialization activities and the
like. When a Party (the "Requesting Party") elects to make any such public
disclosure under this Section 12.1.2, it will give the other Party (the
"Cooperating Party") at least five (5) business days notice to review and
comment on such statement, it being understood that if the Cooperating Party
does not notify the Requesting Party in writing within such five day period of
any reasonable objections, as contemplated in this Section 12.1.2, such
disclosure shall be deemed approved, and in any event the Cooperating Party
shall work diligently and reasonably to agree on the text of any proposed
disclosure in an expeditious manner. The principles to be observed in such
disclosures shall be accuracy, compliance with applicable law and regulatory
guidance documents, reasonable sensitivity to potential negative reactions of
the EDA (and its foreign counterparts) and the need to keep investors informed
regarding the Requesting Party's business. Accordingly, the Cooperating Party
shall not withhold its approval of a proposed disclosure that complies with such
principles.

12.2     Overall Management of Collaboration.

12.2.1   Joint Steering Committee. The Parties shall establish
an overall committee ("Joint Steering Committee") to review and coordinate the
conduct of the collaboration under this Agreement. The Joint Steering Committee
shall be comprised of three (3) members each from CK and GSK, with the members
selected from senior management of each Party. Unless otherwise agreed, the
Joint Steering Committee shall at all times include [*]. The Joint Steering
Committee shall meet at least annually, or as more frequently as is requested by
either Party, to review and discuss the performance of the collaboration. All
other committees under this Agreement shall be subordinate to the Joint Steering
Committee.

12.2.2   Mutual Decisions. CK and GSK shall cause each of
their representatives on the JRC, JDC, or any other committee established under
this Agreement to vote, and shall otherwise perform their respective activities
under this Agreement, in the best interests of the collaboration contemplated
herein, including the timely research, development and commercialization of
Compounds, Development Compounds, Licensed Products and not in the present or
future interest

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-80-

of either Party outside the collaboration. Where this Agreement calls for
specified officers of CK and GSK to meet and resolve a particular issue, each
Party shall make its respective officer reasonably available for an in-person
meeting on at least three particular dates and times within the thirty (30) days
after the request.

12.3     Short-Form Arbitration.

12.3.1   Certain Disputes.

(a)      If the Parties do not agree upon (i) a
matter to be decided by the IDC, or the JCC, for which [*] does not have the
right to [*] (i.e., pursuant to the last sentence of Section [*], or under
Section [*], above) or the JRC (e.g., pursuant to Sections 2.2 and 2.3.2); or
(ii) the royalty terms to be established under Section 4.7 above; (iii) whether
one or more amounts are required to be reimbursed under Section 3.4.4 or
4.5.2(a); or (iv) a dispute under Section 6.12, 6.13 or 6.14 above, then such
matters in issue shall be determined by binding arbitration conducted pursuant
to this Section 12.3.1 by one (1) arbitrator. In such arbitration, the
arbitrator shall be an independent expert (including in the area of the dispute)
in the pharmaceutical or biotechnology industry mutually acceptable to the
Parties. If the Parties are unable to agree on an arbitrator, the arbitrator
shall be an independent expert as described in the preceding sentence selected
by the chief executive of the Chicago office of the American Arbitration
Association.

(b)      In the event of a dispute under (a) above,
(i) each Party shall prepare a written report setting forth its position with
respect to the substance of the dispute and (ii) in the case of a dispute under
(a)(i), (a)(ii) or (a)(iv) above (but not under (a)(iii)), the arbitrator shall
select one of the Party's positions as his decision, and shall not have
authority to render any substantive decision other than to so select the
position of either GSK or CK. Except as provided in the preceding clause (ii)
such arbitration shall be conducted in all respects under the rules of the
American Arbitration Association.

(c)      The costs of any arbitration under this
Section 12.3.1 shall be shared equally by the Parties, and each Party shall bear
its own expenses in connection with such arbitration. The Parties shall use
diligent efforts to cause the completion of any such arbitration within ninety
(90) days following a request by any Party for such arbitration.

12.3.2   Disputes as to CK Products. In the event that GSK
disputes under Section 2.6.4 or 4.5 above CK's right to develop or otherwise
commercialize products under Section 2.6.4 or 4.5 above, GSK shall initiate an
arbitration proceeding under this Section 12.3.2 within [*] ([*]) days of its
receipt of notice from CK that CK intends to so develop or otherwise
commercialize such a compound, product or Mitotic Kinesin Target. If GSK does
not initiate such arbitration within such [*] ([*]) day period, it shall have
no further right to dispute CK's right to develop and commercialize such
compound(s), product(s) or Target(s). Any such dispute shall be finally settled
by binding arbitration in Chicago under the Licensing Rules of American
Arbitration Association by a single arbitrator appointed in accordance with such
rules. The arbitrator shall be a retired federal judge with experience trying
patent cases, and the Parties shall use their respective best efforts to

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-81-

obtain a final determination by the arbitrator within sixty (60) days after the
initiation of such proceeding. THE FOREGOING REMEDY SHALL BE THE PARTIES' SOLE
AND EXCLUSIVE REMEDY WITH RESPECT TO ANY DISPUTE DESCRIBED IN THIS SECTION
12.3.2.

12.3.3   Retention of Rights. Nothing in this Section 12.3
shall preclude GSK or CK from resorting to judicial or equitable remedies for
any disputes not within Section 12.3.1 or 12.3.2.

12.4     Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with the laws of the [*], U.S.A., without reference to conflicts of
laws principles.

12.5     Assignment.

12.5.1   General. This Agreement shall not be assignable by
either Party to any Third Party hereto without the written consent of the other
Party hereto. Notwithstanding the foregoing, either Party may assign this
Agreement, without the written consent of the other Party, to an Affiliate or to
an entity that acquires all or substantially all of the business or assets of
such Party to which this Agreement pertains (whether by merger, reorganization,
acquisition, sale or otherwise), and agrees in writing to be bound by the terms
and conditions of this Agreement. Notwithstanding the foregoing, either Party
may assign and/or delegate any rights and/or obligations hereunder without the
consent of the other Party to an Affiliate that is at least ninety percent (90%)
owned by such Party, or, in the case of GSK, to an Affiliate that is at least
ninety percent (90%) owned, directly or indirectly, by the ultimate parent of
Glaxo Group Limited (for so long as such Party or parent maintains at least that
level of ownership); provided in each case, however, that such assignment shall
not relieve the assigning Party of any of its obligations hereunder. It is
understood that the provisions of Section 12.5.2 shall apply in the event of
assignment of this Agreement under the circumstances described therein. If any
permitted assignment would result in withholding or other similar taxes becoming
due on payments to the other Party under this Agreement, the assigning Party
shall be responsible for all such taxes and the amount of such taxes shall not
be withheld or otherwise deducted from the amounts payable to such other Party.
If, in such event, such other Party actually reduces the amount of income tax
paid by such Party as a result of using a credit for the amount of such
withholding or similar taxes paid by the assigning Party, then such other Party
shall promptly refund to the assigning Party the amount of such reduction in
income tax resulting from the use of such credit. No assignment and transfer
shall be valid and effective unless and until the assignee/transferee shall
agree in writing to be bound by the provisions of this Agreement. The terms and
conditions of this Agreement shall be binding on and inure to the benefit of the
permitted successors and assigns of the Parties.

12.5.2   Certain Matters Relating to Acquisitions. In the
event of an assignment of this Agreement to a Third Party, or another
transaction in which a Third Party becomes an Affiliate of CK that controls CK
(as "control" is defined in Section 1.2 above) (each such event, a "Subject
Transaction"), then the following shall apply:

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-82-

(a)      Notwithstanding the definitions of
Collaboration Technology, Post-Collaboration Technology, CK Patents and CK
Know-How, CK Existing Technology, Cytometrix Technology, Compounds, Development
Compounds, Licensed Products, CK Compounds, CK Products, CK Library Compounds,
or Mitotic Kinesin Targets (together, "Collective CK Technologies"), the
Collective CK Technologies shall not include any intellectual property or
subject matter (the "Previously Existing Subject Matter") that, prior to the
Subject Transaction, was held or Controlled by such Third Party (or an Affiliate
of such Third Party that was not an Affiliate of CK at the time of such
assignment or transaction, each such Third Party and Affiliate being referred to
as a "Subsequently Affiliated Company") and GSK shall have no right or license
under this Agreement to any such Previously Existing Subject Matter except as
may be agreed under Section 12.5.2(b)(i) or (b)(ii) below.

(b)      If, at the time of the Subject Transaction,
the Subsequently Affiliated Company had [*], or [*] for the [*] of [*] to [*]
which is then subject to [*] under [*] or [*], then:

(i)      CK in its sole discretion, may
elect to [*], including any [*], with the [*] efforts under this Agreement, on
the same terms and conditions.

(ii)     If CK does not make the election in
(i), then, on request by either Party, GSK and CK shall meet, together with
representatives of the Subsequently Affiliated Company, to discuss [*] to [*]
activities, including all relevant [*], on such terms as the parties may agree.
It is understood that any such [*] would [*] involve a [*] of the [*] granted to
CK and GSK hereunder. It is understood, however, that neither GSK nor CK shall
be obligated to enter into any agreement to so [*]. In the event the Parties do
not agree to so [*], then the provisions of subparagraphs (iii)-(vii) below
shall apply.

(iii)    Following the Subject Transaction,
the [*] immediately prior to the Subject Transaction (the "[*]") shall [*] and
[*] to those that were [*] to research activities (A) in the Research Program
and (B) which generate [*] that would reasonably accrue to the Research Program
or that are reasonably necessary for CK to fulfill its obligations under the
Research Program, to the extent CK would otherwise have [*] and [*] had the
Subject Transaction not occurred. The obligations under this paragraph (b)(iii)
shall terminate on the [*] of the Effective Date of this Agreement.

(iv)     [*] shall not disclose non-public
Collaboration Technology, Post-Collaboration Technology or GSK Existing
Technology to any Subsequently Affiliated Company for use in connection with the
research, development or commercialization of products within the Field, the
primary mode of pharmacological action of which is through the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-83-

inhibition of one or more Mitotic Kinesin Targets, other than those CK Targets
for which the CK Product Option under Section 4.5 above does not apply at that
time (i.e., CK Products directed to such CK Targets would not be subject to the
CK Product Option) (such Mitotic Kinesin Targets, excluding such CK Targets,
being referred to as "Restricted Mitotic Kinesin Targets"), unless [*] could 
have disclosed such item to a Third Party.

(v)      No Subsequently Affiliated Company
shall have any license under Collaboration Technology, Post-Collaboration
Technology, GSK Existing Technology, or CK Existing Technology for any purpose
unless such license could also be granted to a Third Party herein.

(vi)     The Parties shall use diligent
efforts to put procedures in place to [*] of GSK or CK Confidential Information
to a Subsequently Affiliated Company that would not [*] Third Party herein and
to prevent [*] of any [*], including requiring each Party's representatives on
the JRC, JDC, JSC and any employees performing research in connection with this
Agreement to [*] agreeing to comply with the [*] of this Agreement. Without
limiting the foregoing, any employee of [*] immediately prior to the Subject
Transaction who is transferred to a Subsequently Affiliated Company shall [*]
with respect to a Restricted Mitotic Kinesin Target at any Subsequently
Affiliated Company or in collaboration with personnel of such Subsequently
Affiliated Company, for so long as [*] activities with respect to such
Restricted Mitotic Kinesin Target are prohibited under Section 4.1.2 or 4.2.3
above.

(vii)    Notwithstanding the foregoing, the
conditions of subparagraphs (iii)-(vi) above shall be deemed satisfied in all
respects, if such [*] (or its successor) is maintained and operated as an
independent company. Such entity shall be deemed to be operated as an
independent company if, after the Subject Transaction (A) [*] can remain fully
bound under all terms and conditions of this Agreement, (B) [*] has the
capability to perform as would have CK prior to the Subject Transaction for all
purposes under this Agreement and (C) [*] and the Subsequently Affiliated
Company contractually commit that there shall be no disclosures or licenses with
respect to Licensed Technology under this Agreement from [*] to the Subsequently
Affiliated Company that would not have been either (x) permitted to be disclosed
or granted to a Third Party under this Agreement or (y) permitted to be used or
disclosed by CK for its independent efforts under this Agreement.

(c)      Unless this Agreement is [*] under Section
12.5.2(b)(i) or (ii) above, the Collective CK Technologies shall not include any
intellectual property or subject matter created or acquired by such Subsequently
Affiliated Company following the Subject Transaction, and no activities of the
Subsequently Affiliated Company shall be deemed within the Research Program. It
is understood, however, that if Cytokinetics, Inc. (i.e., the Party to this
Agreement) is legally merged with and into another corporate entity, then the
resulting merged corporate entity shall be fully bound by all provisions of this
Agreement and shall not be a "Subsequently Affiliated Company" under this
Section 12.5.2.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-84-

(d)      Subject to the foregoing and paragraph (b)
above, Sections 4.1.2 and 4.2.3 shall not apply with respect to activities of
the Subsequently Affiliated Company. In addition, subject to paragraph (b)
above, Section 2.6.4(b) shall not apply to a Subsequently Affiliated Company,
and no officer or representative of a Subsequently Affiliated Company shall be
required or permitted to serve on the JRC or JSC (e.g., under Section 2.2(a)
above).

12.5.3   Certain Additional Matters on Change of Control of
CK. Notwithstanding the provisions of Section 12.5.2, in the event CK assigns
this Agreement (i) to [*] [*] US Dollars ($[*]), or in (ii) the event that CK
merges or consolidates or enters into a similar transaction with such a
pharmaceutical or biotechnology entity in which such entity becomes an Affiliate
of CK, and, in either case, then upon request by GSK, the Parties will each use
their respective diligent efforts to put procedures into place to [*] under any
of Section 2.2, 3.2, 3.5, 7.2 and/or 7.4 above, including, without limitation,
requiring each Party's representatives on the JRC, JDC, JSC and any employees
performing research in connection with this Agreement to [*] agreeing to comply
with the [*] of this Agreement. It is understood that the provisions of Section
12.5.2 may also apply in the event of the occurrence of the events described in
this Section 12.5.3.

12.6     Performance Warranty. Each Party hereby warrants and
guarantees the performance of any and all rights and obligations by its
Affiliate(s).

12.7     Notices. All notices, requests and communications hereunder
shall be in writing and shall be personally delivered or sent by facsimile
transmission (confirmed by prepaid registered or certified mail, return receipt
requested or by international express delivery service) (e.g., Federal Express),
mailed by registered or certified mail (return receipt requested), postage
prepaid, or sent by international express courier service, and shall be deemed
to have been properly served to the addressee upon receipt of such written
communication, to following addresses of the Parties, or such other address as
may be specified in writing to the other Party hereto:

IF TO CK,

ADDRESSED TO: CYTOKINETICS, INC.
280 East Grand Avenue
South San Francisco, California 94080
Attention: Robert Blum,
Vice President, Business Development
Telephone: (650) 624-3002
Telecopy: (650) 624-3010

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-85-

WITH COPY TO: WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Kenneth A. Clark, Esq.
Telephone: (650) 493-9300
Telecopy: (650)493-6811

IF TO GSK,

ADDRESSED TO: GLAXO GROUP LIMITED, DOING BUSINESS AS GLAXOSMITHKLINE
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attention: Vice President, Business Development
Telephone: (610) 270-5973
Telecopy: (610) 270-5962

WITH A COPY TO: GLAXOSMITHKLINE
Corporate Legal Department
One Franklin Plaza
200 N. 16th Street/FP 2360
Philadelphia, PA 19103
Attention: Senior Vice President and Assistant
General Counsel-R&D Legal Operations
Telephone: 215-751-4000
Telecopy: 215-751-3935

12.8     Waiver. Neither Party may waive or release any of its rights
or interests in this Agreement except in writing. The failure of either Party to
assert a right hereunder or to insist upon compliance with any term or condition
of this Agreement shall not constitute a waiver of that right or excuse a
similar subsequent failure to perform any such term or condition. No waiver by
either Party of any condition or term in any one or more instances shall be
construed as a continuing waiver of such condition or term or of another
condition or term.

12.9     Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the Parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction. In the event a Party seeks to avoid a provision of this
Agreement by asserting that such provision is invalid, illegal or otherwise
unenforceable, the other Party shall have the right to terminate this Agreement
upon sixty (60) days' prior written notice to the asserting Party, unless such
assertion is eliminated and the effect of such assertion cured within such sixty
(60) day period. Any termination in accordance with the foregoing sentence shall
be deemed a termination pursuant

-86-

to Section 11.3.1 if the Party who made such assertion was GSK, and shall be
deemed a termination under Section 11.2 by reason of a breach by CK, if CK is
the Party who made such assertion.

12.10    Entire Agreement. This Agreement and the accompanying Stock
Purchase Agreement set forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersede and terminate all prior agreements and understanding
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.

12.11    Independent Contractors. Nothing herein shall be construed to
create any relationship of employer and employee, agent and principal,
partnership or joint venture between the Parties. Each Party is an independent
contractor. Neither Party shall assume, either directly or indirectly, any
liability of or for the other Party. Neither Party shall have the authority to
bind or obligate the other Party and neither Party shall represent that it has
such authority.

12.12    Headings. Headings used herein are for convenience only and
shall not in any way affect the construction of or be taken into consideration
in interpreting this Agreement.

12.13    Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and all of which
together, shall constitute one and the same instrument.

ARTICLE XIII - CLOSING

13.1     Upon the terms and subject to the conditions of this
Agreement, the closing of this Agreement and the closing of the Stock Purchase
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Wilson Sonsini Goodrich & Rosati, at 10:00 A.M. Pacific Daylight Time
on such date as agreed by the Parties (the "Closing Date"), or at such other
place or at such other time contemporaneous with satisfaction of the last
closing condition as GSK and CK may mutually agree upon in writing.

-87-

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized representatives as of the date and year first
above written.

CYTOKINETICS, INC.                      GLAXO GROUP LIMITED,
A GLAXOSMITHKLINE CORPORATION

By: /s/ James H. Sabry                  By: /s/ Tadataka Yamada
---------------------------------       -----------------------------
Name:  James H. Sabry, M. D., Ph. D.    Name:  Dr. Tadataka Yamada

Title: President and CEO                Title: Chairman, R&D

Date:  June 20, 2001                    Date:  6/20/01

-1-

EXHIBIT 1.17

COMPOUND CRITERIA

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

EXHIBIT 1.55

[*] PROGRAM ACTIVITIES

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 1.65

TRACTABLE COMPOUND CRITERIA

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 2.5

DEVELOPMENT COMPOUND CRITERIA

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 4.5.1

CLINICAL REPORT FORM

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 6.3.2

FEASIBILITY STUDY

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 6.3.2(b)

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 6.4.4

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

EXHIBIT 10.1

THIRD PARTY AGREEMENTS

EFFECTIVE DATE               COMPANY/CONSULTANT                              AGREEMENT WITH CYTOKINETICS
--------------               ------------------                              ---------------------------

[*]                  [*]                                                [*] 

[*]                  [*]                                                [*]

[*]                  [*]                                                [*]

[*]                  [*]                                                [*]

[*]                  [*]                                                [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Exhibit 10.18

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

MEMORANDUM

June 20, 2001

Cytokinetics, Inc.                                    Glaxo Group Limited
280 East Grand Avenue                                 709 Swedeland Road
South San Francisco, CA 94080                         King of Prussia, PA 19406

Reference is made to the Collaboration and License Agreement dated June 20, 2001
between Cytokinetics, Inc. and Glaxo Group Limited (the "Collaboration
Agreement"). The criteria to be agreed by the Parties as described in Section
1.49 shall be those criteria attached to this Memorandum as Appendix I and
incorporated herein. The Research Plan referenced in Section 1.58 shall be the
Research Plan attached to this Memorandum as Appendix II and incorporated
herein.

It is understood and agreed that this letter shall not be deemed superseded or
terminated by reason of Section 12.10 of the Collaboration Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized representatives as of the date and year first
above written.

CYTOKINETICS, INC.                                 GLAXO GROUP LIMITED, 
A GLAXOSMITHKLINE CORPORATION

By: /s/ James H. Sabry                    By: /s/ Tadataka Yamada
--------------------------------           --------------------------
Name: James H. Sabry, M.D., Ph.D.         Name: Dr. Tadataka Yamada
Title: President and CEO                  Title: Chairman, R&D
Date: June 20, 2001                       Date: 6/20/01

APPENDIX I

CRITERIA FOR MITOTIC KINESIN TARGET

"Mitotic Kinesin Targets" include the human kinesin proteins KSP; [*] and [*] as
exemplified by

1.       the [*] listed in (A); and

2.       those other human proteins that meet the following criteria

a.       [*]

b.       the kinesin plays a role in mitosis as evidenced by

i.       [*]

ii.      [*]

A.       [*] OF MITOTIC KINESINS

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-3-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-4-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-5-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-6-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-7-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-8-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-9-

[*]

KSP

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-10-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-11-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-12-

[*]

B.       Mitotic Kinesin [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-13-

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-14-

APPENDIX II - PART A

JOINT GSK-CK RESEARCH PLAN
MAY 7, 2001

2001 OBJECTIVES & Activities

LOGISTICAL ISSUES TO BE ADDRESSED (Q3)

MAJOR GOALS

-        [*]

NON-KSP
MAJOR GOALS

-        [*]

1.       [*]

-        [*]

[*]

2.       [*]

-        [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

APPENDIX II - PART A
JOINT GSK-CK RESEARCH PLAN
MAY 7, 2001

3.   [*]

-        [*]

[*]

4.       [*] ([*] KSP) [*]

-        [*] ([*] KSP)

-        [*]

[*]

5.   [*]

-        [*]

[*]

6.       [*]

-        [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

2

APPENDIX II - PART A
JOINT GSK-CK RESEARCH PLAN
MAY 7, 2001

KSP
MAJOR GOALS

-        [*]

1.       [*]

-        [*]

[*]

2.       [*]

-        [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

3

APPENDIX II - PART A
JOINT GSK-CK RESEARCH PLAN
MAY 7, 2001

3.       [*]

-        [*]

[*]

4.       [*]

[*]

5.       [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

4

APPENDIX II - PART A
JOINT GSK-CK RESEARCH PLAN
MAY 7, 2001

GSK-CK ALLIANCE, EFFORTS BY YEAR

2001                        2002                        2003                       2004                    2005
--------------------------  --------------------------  -------------------------  ------------------------  ---------------------

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

5

APPENDIX II - PART B

CYTOKINETICS/GSK
RESEARCH PLAN

1. [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Cytokinetics, Inc.                   Confidential                    Page 1 of 5

APPENDIX II - PART B
CYTOKINETICS/GSK
RESEARCH PLAN

2. [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Cytokinetics, Inc.                   Confidential                    Page 2 of 5

APPENDIX II - PART B
CYTOKINETICS/GSK
RESEARCH PLAN

3.   [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Cytokinetics, Inc.                    Confidential                   Page 3 of 5

APPENDIX II - PART B
CYTOKINETICS/GSK
RESEARCH PLAN
[*]

4.   [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Cytokinetics, Inc.                   Confidential                    Page 4 of 5

APPENDIX II -PART B
CYTOKINETICS/GSK
RESEARCH PLAN

5.   [*]

[*]

6.   [*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Cytokinetics, Inc.                   Confidential                    Page 5 of 5

Exhibit 10.19

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

[CYTOKINETICS LOGO]                                   
280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (650) 624-3010

October 28, 2002

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: [*] UNDER THAT CERTAIN COLLABORATION AND LICENSE AGREEMENT BY AND BETWEEN
GLAXO GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, ("GSK") AND CYTOKINETICS, INC.
("CK") OF EVEN DATE JUNE 20, 2001 (THE "COLLABORATION AGREEMENT").

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the "Letter
Amendment"), GSK desires to have CK [*], and CK agrees to [*], [*] as part of
the Research Program under the Collaboration Agreement, all on the terms set
forth herein.

Now therefore, GSK and CK agree, effective as of October 1, 2002 (the "Letter
Amendment Effective Date"), as follows:

1.   All capitalized terms not defined herein shall have the meaning
ascribed to them in the Collaboration Agreement.

2.   In accordance with the budget and timeline set forth in Attachment A
(attached hereto and incorporated herein by reference), CK shall use
its diligent efforts to [*] by [*].

3.   The [*] to be [*] under this Letter Amendment shall be selected as
agreed by the Parties [*] set forth in Attachment B (attached hereto
and incorporated herein by reference).

4.   GSK shall use its diligent efforts to resupply to CK sufficient
quantities of those chemical entities requested by CK to conduct such
[*] in order that CK may diligently conduct its activities in
accordance with the budget and timeline set forth in Paragraph 2
above.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
October 28, 2002
Page Two

5. In consideration for such [*], GSK shall pay to CK [*] U.S. Dollars 
(U.S.$[*] ) in two (2) installments as follows:

5.1 GSK shall pay to CK [*] U.S. Dollars (U.S.$[*] ) on the Letter 
Amendment Effective Date; and

5.2 GSK shall pay to CK [*] U.S. Dollars (U.S.$[*] ) on  [*] .

6. Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this Letter Amendment may be modified or amended except expressly in a
writing signed by both parties nor shall any terms be waived except
expressly in a writing signed by the party charged therewith. This
Letter Amendment shall be governed in accordance with the laws of the
[*] , without regard to principles of conflicts of laws.

Please sign and return two copies of this letter if you agree to the foregoing 
terms.

Sincerely,

/s/ Robert I. Blum
-------------------------
Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip K. Bhatnagar
-------------------------

Name: Pradip K. Bhatnagar

Title: Director, Genetic & Discovery Alliances

cc: Vice President, Business Development, Glaxo Group Limited, doing business 
as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations,
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional 
Corporation

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

ATTACHMENT A
CYTOKINETICS/GSK [*]

PLAN B            [*]                                   Oct       Nov       Dec      2002       Jan       Feb      2003
-----------------------------------------               -------   -------   -------   -------   -------   -------   -------

FTE expenses                                  [*]         [*]       [*]       [*]       [*]       [*]       [*]        [*] 

[*] work associated with [*]                  [*]                   [*]       [*]       [*]          

Capital Equipment                             [*]         [*]                           [*]          

Leased Equipment                              [*]         [*]       [*]       [*]       [*]       [*]       [*]        [*] 

Total                                         [*]         [*]       [*]       [*]       [*]       [*]       [*]        [*] 

CONFIDENTIAL

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Attachment B

[*]

CONFIDENTIAL

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Exhibit 10.20

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

280 East Grand Avenue
South San Francisco, CA 94080
[CYTOKINETICS LOGO]                        Tel (650) 624-3000 Fax (650) 624-3010

November 5, 2002

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: ASSIGNMENT OF GSK MEDICINAL CHEMISTRY PERSONNEL TO HIT-TO-LEAD ACTIVITIES
UNDER THAT CERTAIN COLLABORATION AND LICENSE AGREEMENT BY AND BETWEEN GLAXO
GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, ("GSK") AND CYTOKINETICS, INC. ("CK")
OF EVEN DATE JUNE 20, 2001 (the "COLLABORATION AGREEMENT")

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the "Letter
Amendment"), GSK desires to assign certain medicinal chemistry personnel within
GSK to perform hit-to-lead activities as part of the Research Program under the
Collaboration Agreement, all on the terms set forth herein.

Now therefore, GSK and CK agree, effective as of November 5, 2002 (the "Letter
Amendment Effective Date"), as follows:

1.       All capitalized terms not defined herein shall have the
meaning ascribed to them in the Collaboration Agreement.

2.       GSK may assign medicinal chemistry personnel (other than CK
FTEs) within GSK's high-throughput chemistry resource (the
"HTC Resource") at the rate (i.e., a running rate) of [*]
([*]) full-time equivalents or more, solely to perform
Hit-To-Lead activities under the Research Program relating to
a particular Mitotic Kinesin Target, without such assignment
and Hit-To-Lead activities accruing toward the [*] ([*]) FTE
limit of establishing a [*] Program pursuant to Section
2.6.2(a).

3.       Notwithstanding the foregoing, if a Tractable Compound has
been identified with respect to a particular Mitotic Kinesin
Target, the assignment by GSK of any medicinal chemistry
personnel (other than CK FTEs) to perform activities relating
to such Mitotic Kinesin Target, including without limitation
any medicinal chemistry personnel within the HTC Resource and
regardless of the activities of such personnel, shall accrue
towards the [*] ([*]) FTE limit of establishing a [*] Program
pursuant to Section 2.6.2(a).

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
November 5, 2002
Page Two

4.       As used herein, "Hit-To-Lead" shall mean those activities
directed to the process of synthesizing and identifying active
new chemical entities up to and including identification of a
compound that meets the Tractable Compound Criteria. It is
understood that activities directed to the subsequent
synthetic modification and testing of a Tractable Compound are
not included in Hit-To-Lead.

5.       Except as specifically modified or amended hereby, the
Collaboration Agreement shall remain in full force and effect
and, as modified or amended, is hereby ratified, confirmed and
approved. No provision of this Letter Amendment may be
modified or amended except expressly in a writing signed by
both parties nor shall any terms be waived except expressly in
a writing signed by the party charged therewith. This Letter
Amendment shall be governed in accordance with the laws of the
[*], without regard to principles of conflicts of laws.

Please sign and return two copies of this letter if you agree to the foregoing
terms.

Sincerely,

/s/ Robert I. Blum
-------------------------
Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip K Bhatnagar
--------------------------

Name: PRADIP K BHATNAGAR

Title: DIRECTOR, Genetic & Discovery Alliances

cc: Vice President, Business Development, Glaxo Group Limited, doing
business as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations,
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional
Corporation

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Exhibit 10.21

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

280 East Grand Avenue
South San Francisco, CA 94080
[CYTOKINETICS LOGO]                        Tel (650) 624-3000 Fax (650) 624-3010

December 13, 2002

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn:  Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: DEFINITION OF TOOL COMPOUND AND USE THEREOF UNDER THAT CERTAIN 
COLLABORATION AND LICENSE AGREEMENT BY AND BETWEEN GLAXO GROUP LIMITED, A 
GLAXOSMITHKLINE COMPANY, ("GSK") AND CYTOKINETICS, INC. ("CK") OF EVEN DATE 
JUNE 20, 2001 (THE "COLLABORATION AGREEMENT")

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the "Letter 
Amendment"), GSK and CK desire to use certain tool compounds arising under the 
Collaboration Agreement, all on the terms set forth herein.

Now therefore, GSK and CK agree, effective as of December 13, 2002 (the 
"Letter Amendment Effective Date"), as follows:

1.   All capitalized terms not defined herein shall have the meaning 
ascribed to them in the Collaboration Agreement.

2.   A "Tool Compound" shall mean any Compound, including but not limited
to [*] and [*], not designated nor intended to be designated as a
Development Compound, and that the JRC has approved for distribution
to Third Parties for the conduct of studies that may result in the
subsequent publication of the results of such studies; provided that,
such results are not to be reportable to the FDA. At the time of such
approval by the JRC, the composition of matter and method of use of
such Tool Compound shall be covered by a Patent within the Licensed
Technology.

3.   The JRC may amend the definition of Tool Compound at any time, such
amendments to be reflected in agreed and approved minutes of JRC
meetings; provided, once a Compound has met the definition of Tool
Compound it shall remain a Tool Compound, unless and until otherwise
mutually agreed in writing by the Parties.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
December 13, 2002
Page Two

4.    Notwithstanding Sections 1.13, 1.53 and 5.7, and the restrictions 
on use and disclosure set forth in Sections 4.1 and 9.5, of the
Collaboration Agreement, each Party shall have the right to use
Tool Compounds, and information relating thereto, outside the 
Research Program for the sole purpose of generating negative control
information in studies directed to the research, discovery and
development of compounds based on their activity in directly 
modulating a target other than a Mitotic Kinesin Target, and
Collaboration Technology and/or Post-Collaboration Technology shall
not include any inventions and/or results that arise from such use.

5.   Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain, in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this Letter Amendment may be modified or amended except expressly in
a writing signed by both Parties nor shall any terms be waived except
expressly in a writing signed by the Party charged therewith. This
Letter Amendment shall be governed in accordance with the laws of the
[*], without regard to principles of conflicts of laws.

Please sign and return two copies of this letter if you agree to the foregoing
terms.

Sincerely,

/s/ Robert I. Blum

Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip Bhatnagar

Name: Pradip Bhatnagar, Ph.D.

Title: Alliance Management, Director

cc: Vice President, Business Development, Glaxo Group Limited, doing business
as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations,
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional 
Corporation

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

Exhibit 10.22

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

[CYTOKINETICS LOGO]                        280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (650) 624-3010

July 11, 2003

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: ASSIGNMENT OF GSK MEDICINAL CHEMISTRY PERSONNEL TO HIT-TO-LEAD ACTIVITIES 
UNDER THAT CERTAIN COLLABORATION AND LICENSE AGREEMENT BY AND BETWEEN GLAXO 
GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, ("GSK") AND CYTOKINETICS, INC. ("CK") 
OF EVEN DATE JUNE 20, 2001 (THE "COLLABORATION AGREEMENT")

Dear Pradip:

Pursuant to that certain letter amendment to the Collaboration Agreement of even
date November 5, 2002 (the "Letter Amendment"), GSK and CK agreed to amend the
Collaboration Agreement in order to allow GSK to assign certain medicinal
chemistry personnel within GSK to perform hit-to-lead activities as part of the
Research Program under the Collaboration Agreement without such assignment
accruing toward the [*] ([*]) FTE limit of establishing a [*] Program pursuant
to Section 2.6.2(a) of the Collaboration Agreement.

Pursuant to this letter amendment to the Collaboration Agreement (the "H2L 
Letter Amendment"), GSK and CK desire to void such Letter Amendment in its 
entirety and replace it with this H2L Letter Amendment, all on the terms set 
forth herein.

Now therefore, GSK and CK agree, effective as of November 5, 2002 (the "H2L 
Letter Amendment Effective Date"), as follows:

1.   All capitalized terms not defined herein shall have the meaning
ascribed to them in the Collaboration Agreement.

2.   The Letter Amendment shall be void and have no force or effect as
between the parties, effective November 5, 2002.

3.   GSK may assign chemistry personnel (other than CK FTEs) within GSK's
chemistry resource at the rate (i.e., a running rate) of [*] ([*])
full-time equivalents or more, solely to perform Hit-To-Lead
activities under the Research Program relating to a particular Mitotic
Kinesin Target, without such assignment and Hit-To-Lead activities
accruing toward the [*]([*]) FTE limit of establishing a [*] Program
pursuant to Section 2.6.2(a).

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
July 11, 2003
Page Two

4.   Notwithstanding the foregoing, if a Tractable Compound has been
identified with respect to a particular Mitotic Kinesin Target, the
assignment by GSK of any chemistry personnel (other than CK FTEs) to
perform activities relating to such Mitotic Kinesin Target, including
without limitation any chemistry personnel within GSK's
high-throughout chemistry resource (the "HTC Resource") and regardless
of the activities of such personnel, shall accrue towards the [*]([*])
FTE limit of establishing a [*] Program pursuant to Section 2.6.2(a).

5.   As used herein, "Hit-To-Lead" shall mean those activities directed to
the process of synthesizing and identifying active new chemical
entities up to and including identification of a compound that meets
the Tractable Compound Criteria. It is understood that activities
directed to the subsequent synthetic modification and testing of a
Tractable Compound are not included in Hit-To-Lead.

6.   Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this H2L Letter Amendment may be modified or amended except expressly
in a writing signed by both parties nor shall any terms be waived
except expressly in a writing signed by the party charged therewith.
This H2L Letter Amendment shall be governed in accordance with the
laws of the [*], without regard to principles of conflicts of laws.

Please sign and return two copies of this letter if you agree to the foregoing 
terms.

Sincerely,

/s/ Robert I. Blum

Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip Bhatnagar
------------------------------------

Name: Pradip Bhatnagar
-------------------------------

Title: Director, Alliance Management
------------------------------

cc:  Vice President, Business Development, Glaxo Group Limited, doing business
as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations, 
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional 
Corporation

*    Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

Exhibit 10.23

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

[CYTOKINETICS LOGO]                   280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (630) 624-3010

July 28, 2003

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: COMPOUND CRITERIA UNDER THAT CERTAIN COLLABORATION AND LICENSE AGREEMENT BY 
AND BETWEEN GLAXO GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, ("GSK") AND 
CYTOKINETICS, INC. ("CK") OF EVEN DATE JUNE 20, 2001 (THE "COLLABORATION 
AGREEMENT").

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the "Compound 
Criteria Letter Amendment"), GSK and CK desire to revise the Compound Criteria 
applicable under the Collaboration Agreement as approved by the JRC on 
September 21, 2001, all on the terms set forth herein.

Now therefore, GSK and CK agree as follows:

1.   All capitalized terms not defined herein shall have the meaning 
ascribed to them in the Collaboration Agreement.

2.   For purposes of the Collaboration Agreement, "Compound Criteria" shall
mean, effective as of the Effective Date, those criteria set forth in
the revised Exhibit 1.17 attached hereto and incorporated by
reference. For clarity, it is understood that the Compound Criteria
may only be modified or amended pursuant in a writing signed by both
Parties referencing the Collaboration Agreement and expressly
modifying or amending the Compound Criteria.

3.   Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this Compound Criteria Letter Amendment may be modified or amended
except expressly in a writing signed by both Parties nor shall any
terms be waived except expressly in a writing signed by the Party
charged therewith. This Compound Criteria Letter Amendment shall be
governed in accordance with the laws of the [*], without regard to
principles of conflicts of laws.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
July 28, 2003
Page Two

Please sign and return two copies of this letter if you agree to the foregoing
terms.

Sincerely,

/s/ Robert I. Blum
-------------------------
Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip K. Bhatnagar
--------------------------

Name: Pradip K. Bhatnagar

Title: Director

cc: Vice President, Business Development, Glaxo Group Limited, doing
business as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations,
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional
Corporation

EXHIBIT 1.17
[Revised September 21, 2001]

Compound Criteria
(effective as of June 20, 2001)

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Exhibit 10.24

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

[CYTOKINETICS LOGO]                        280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (650) 624-3010

July 28, 2003

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: FEASIBILITY STUDY UNDER THAT CERTAIN COLLABORATION AND LICENSE AGREEMENT BY
AND BETWEEN GLAXO GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, ("GSK") AND
CYTOKINETICS, INC. ("CK") OF EVEN DATE JUNE 20, 2001 (THE "COLLABORATION
AGREEMENT")

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the
"Feasibility Study Letter Amendment"), GSK and CK desire to revise the
definition of Feasibility Study applicable under the Collaboration Agreement as
agreed by the JRC on July 25, 2003, all on the terms set forth herein.

Now therefore, GSK and CK agree as follows:

1.  All capitalized terms not defined herein shall have the meaning ascribed to
them in the Collaboration Agreement.

2.  For purposes of the Collaboration Agreement, "Feasibility Study" shall have
the meaning, effective as of the Effective Date, set forth in the revised
Exhibit 6.3.2, attached hereto and incorporated herein. For clarity, it is
understood that the definition of Feasibility Study may only be modified or
amended pursuant in a writing signed by both Parties referencing the
Collaboration Agreement and expressly modifying or amending the definition
of Feasibility Study.

3.  Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or amended,
is hereby ratified, confirmed and approved. No provision of this Feasibility
Study Letter Amendment may be modified or amended except expressly in a
writing signed by both Parties nor shall any terms be waived except
expressly in a writing signed by the Party charged therewith. This
Feasibility Study Letter Amendment shall be governed in accordance with the
laws of the [*], without regard to principles of conflicts of laws.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
July 28, 2003
Page Two

Please sign and return two copies of this letter if you agree to the foregoing 
terms.

Sincerely,

/s/ Robert I. Blum
---------------------------
Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip K. Bhatnagar
--------------------------

Name: Pradip K. Bhatnagar
--------------------

Title: Director
-------------------

cc:  Vice President, Business Development, Glaxo Group Limited, doing business 
as GlaxoSmithKline 
Senior Vice President and Assistant General Counsel-R&D Legal Operations,
GlaxoSmithKline Corporate Legal Department
Kenneth A. Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional 
Corporation

EXHIBIT 6.3.2
[Revised July 25, 2003]

Feasibility Study
(effective as of June 20, 2001)

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Exhibit 10.25

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

[CYTOKINETICS LOGO]                        280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (650) 624-3010

July 28, 2003

Glaxo Group Limited, doing business as GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attn: Pradip K. Bhatnagar, Ph.D., Director, Genetic & Discovery Alliances

RE: TRACTABLE COMPOUND CRITERIA UNDER THAT CERTAIN COLLABORATION AND LICENSE 
AGREEMENT BY AND BETWEEN GLAXO GROUP LIMITED, A GLAXOSMITHKLINE COMPANY, 
("GSK") AND CYTOKINETICS, INC. ("CK") OF EVEN DATE JUNE 20, 2001 (THE 
"COLLABORATION AGREEMENT")

Dear Pradip:

Pursuant to this letter amendment to the Collaboration Agreement (the "Tractable
Compound Criteria Letter Amendment"), GSK and CK desire to revise the Tractable 
Compound Criteria applicable under the Collaboration Agreement as agreed by the 
JRC on April 11, 2003, all on the terms set forth herein.

Now therefore, GSK and CK agree as follows:

1. All capitalized terms not defined herein shall have the meaning 
ascribed to them in the Collaboration Agreement.

2. For purposes of the Collaboration Agreement, "Tractable Compound
Criteria" shall mean, effective as of the Effective Date, those criteria
set forth in the revised Exhibit 1.65 attached hereto and incorporated
by reference. For clarity, it is understood that the Tractable Compound
Criteria may only be modified or amended pursuant in a writing signed by
both Parties referencing the Collaboration Agreement and expressly
modifying or amending the Tractable Compound Criteria.

3. Except as specifically modified or amended hereby, the Collaboration
Agreement shall remain in full force and effect and, as modified or
amended, is hereby ratified, confirmed and approved. No provision of
this Tractable Compound Criteria Letter Amendment may be modified or
amended except expressly in a writing signed by both Parties nor shall
any terms be waived except expressly in a writing signed by the Party
charged therewith. This Tractable Compound Criteria Letter Amendment
shall be governed in accordance with the laws of the [*], without regard
to principles of conflicts of laws.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pradip K. Bhatnagar, Ph.D.
July 28, 2003
Page Two

Please sign and return two copies of this letter if you agree to the foregoing 
terms.

Sincerely,

/s/ Robert I. Blum
------------------
Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer
Cytokinetics, Inc.

Agreed and accepted:

GLAXO GROUP LIMITED

/s/ Pradip K. Bhatnagar
-------------------------
Name: Pradip K. Bhatnagar
-------------------
Title: Director
------------------

cc: Vice President, Business Development, Glaxo Group Limited, doing business 
as GlaxoSmithKline
Senior Vice President and Assistant General Counsel-R&D Legal Operations, 
GlaxoSmithKline Corporate Legal Department
Kenneth A, Clark, Esq., Wilson Sonsini Goodrich & Rosati Professional 
Corporation

EXHIBIT 1.65
[Revised April 11, 2003]

Tractable Compound Criteria
(effective as of June 20, 2001)

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

.
.
.

EXHIBIT 10.26

TABLE OF CONTENTS

Page
----

1.       PURCHASE AND SALE OF SERIES D PREFERRED STOCK......................................    1

1.1      SALE AND ISSUANCE OF SERIES D PREFERRED STOCK.............................    1
1.2      CLOSING; DELIVERY.........................................................    1

2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................    2

2.1      ORGANIZATION, GOOD STANDING AND QUALIFICATION.............................    2
2.2      CAPITALIZATION............................................................    2
2.3      SUBSIDIARIES..............................................................    3
2.4      AUTHORIZATION.............................................................    3
2.5      VALID ISSUANCE OF SECURITIES..............................................    4
2.6      GOVERNMENTAL CONSENTS.....................................................    4
2.7      LITIGATION................................................................    4
2.8      INTELLECTUAL PROPERTY.....................................................    4
2.9      COMPLIANCE WITH OTHER INSTRUMENTS.........................................    5
2.10     AGREEMENTS; ACTION........................................................    5
2.11     DISCLOSURE................................................................    6
2.12     NO CONFLICT OF INTEREST...................................................    6
2.13     RIGHTS OF REGISTRATION....................................................    7
2.14     TITLE TO PROPERTY AND ASSETS..............................................    7
2.15     FINANCIAL STATEMENTS......................................................    7
2.16     CHANGES...................................................................    8
2.17     EMPLOYEE BENEFIT PLANS....................................................    9
2.18     TAX MATTERS...............................................................    9
2.19     INSURANCE.................................................................   10
2.20     LABOR AGREEMENTS AND ACTIONS..............................................   10
2.21     CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS..............   10
2.22     PERMITS...................................................................   10
2.23     CORPORATE DOCUMENTS.......................................................   10
2.24     ENVIRONMENTAL AND SAFETY LAWS.............................................   11
2.25     PRIVATE OFFERING..........................................................   11
2.26     OUTSTANDING BORROWING.....................................................   11

3.       REPRESENTATIONS AND WARRANTIES OF THE INVESTORS....................................   12

3.1      AUTHORIZATION.............................................................   12
3.2      PURCHASE ENTIRELY FOR OWN ACCOUNT.........................................   12
3.3      DISCLOSURE OF INFORMATION.................................................   12
3.4      RESTRICTED SECURITIES.....................................................   12
3.5      NO PUBLIC MARKET..........................................................   13
3.6      LEGENDS...................................................................   13
3.7      ACCREDITED INVESTOR.......................................................   13
3.8      FOREIGN

INVESTORS.........................................................   13

-i-

TABLE OF CONTENTS
(CONTINUED)

PAGE
----

4.       CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING................................   14

4.1      REPRESENTATIONS AND WARRANTIES............................................   14
4.2      PERFORMANCE...............................................................   14
4.3      COMPLIANCE CERTIFICATE....................................................   14
4.4      QUALIFICATIONS............................................................   14
4.5      OPINION OF COMPANY COUNSEL................................................   14
4.6      INVESTORS' RIGHTS AGREEMENT...............................................   14
4.7      VOTING AGREEMENT..........................................................   14
4.8      RESTATED CERTIFICATE......................................................   15
4.9      SECRETARY'S CERTIFICATE...................................................   15
4.10     COLLABORATION AGREEMENT...................................................   15
4.11     HART-SCOTT-RODINO.........................................................   15

5.       CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.................................   15

5.1      REPRESENTATIONS AND WARRANTIES............................................   15
5.2      PERFORMANCE...............................................................   16
5.3      QUALIFICATIONS............................................................   16
5.4      STOCKHOLDER APPROVAL......................................................   16
5.5      INVESTORS' RIGHTS AGREEMENT...............................................   16
5.6      VOTING AGREEMENT..........................................................   16
5.7      RESTATED CERTIFICATE......................................................   16
5.8      COLLABORATION AGREEMENT...................................................   16
5.9      HART-SCOTT-RODINO.........................................................   16

6.       COVENANTS OF THE INVESTOR..........................................................   16

6.1      TRADING RESTRICTION.......................................................   16
6.2      COME-ALONG................................................................   18
6.3      COMPANY'S RIGHT OF FIRST REFUSAL..........................................   19
6.4      OTHER AGREEMENTS..........................................................   20

7.       MISCELLANEOUS......................................................................   20

7.1      SURVIVAL OF WARRANTIES....................................................   20
7.2      TRANSFER; SUCCESSORS AND ASSIGNS..........................................   20
7.3      GOVERNING LAW.............................................................   21
7.4      COUNTERPARTS..............................................................   21
7.5      TITLES AND SUBTITLES......................................................   21
7.6      NOTICES...................................................................   21
7.7      FINDER'S FEE..............................................................   22
7.8      ATTORNEY'S FEES...........................................................   22
7.9      AMENDMENTS AND WAIVERS....................................................   22
7.10     EXPENSES..................................................................   22

-ii-

TABLE OF CONTENTS
(CONTINUED)

PAGE
----

7.11     SEVERABILITY..............................................................   23
7.12     DELAYS OR OMISSIONS.......................................................   23
7.13     ENTIRE AGREEMENT..........................................................   23
7.14     CORPORATE SECURITIES LAW..................................................   23
7.15     CONFIDENTIALITY...........................................................   23
7.16     QUALIFICATIONS............................................................   24

-iii-

EXHIBITS

Exhibit  A  -  Form of Fourth Amended and Restated Certificate of Incorporation

Exhibit  B  -  Schedule of Exceptions to Representations and Warranties

Exhibit  C  -  Form of Third Amended and Restated Investors' Rights Agreement

Exhibit  D  -  Form of Third Amended and Restated Voting Agreement

Exhibit  E  -  Form of Legal Opinion

CYTOKINETICS, INCORPORATED

SERIES D PREFERRED STOCK PURCHASE AGREEMENT

This Series D Preferred Stock Purchase Agreement (the "Agreement") is
made as of the 20th day of June, 2001 (the "Effective Date") by and between
Cytokinetics, Incorporated, a Delaware corporation (the "Company") and Glaxo
Wellcome International B.V., a Netherlands corporation (the "Investor").

RECITALS

WHEREAS, the Company and the Investor are entering into Collaboration
and License Agreement, contemporaneously with the execution of this Agreement
(the "Collaboration Agreement");

WHEREAS, pursuant to the transactions contemplated by this Agreement
and in connection with the Collaboration Agreement the Company desires to sell
to the Investor, and the Investor desires to purchase from the Company, shares
of the Company's Series D Preferred Stock;

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.       PURCHASE AND SALE OF SERIES D PREFERRED STOCK.

1.1      SALE AND ISSUANCE OF SERIES D PREFERRED STOCK.

(a)      The Company has, or will have before the
Closing (as defined in Section 1.2(a) below) authorized the sale and issuance of
up to 2,333,334 shares of Series D Preferred Stock. Subject to the terms and
conditions of this Agreement, the Investor agrees to purchase at the Closing and
the Company agrees to sell and issue to the Investor at the Closing 2,333,334
shares of Series D Preferred Stock at a purchase price of $6.00 per share for an
aggregate purchase price of $14,000,004. The shares of Series D Preferred Stock
issued to the Investor pursuant to this Agreement shall be hereinafter referred
to as the "Stock."

(b)      On or before the Closing, as defined below,
the Company shall have adopted and filed with the Secretary of State of the
State of Delaware the Fourth Amended and Restated Certificate of Incorporation,
substantially in the form attached hereto as Exhibit A (the "Restated
Certificate").

1.2      CLOSING; DELIVERY.

(a)      Closing. The purchase and sale of the Stock
shall take place at the offices of Wilson Sonsini Goodrich & Rosati ("WSGR"),
650 Page Mill Road, Palo Alto, California,

at 10:00 a.m., on a date within 5 days of the fulfillment of the conditions to
closing contained in Sections 4 and 5 of this Agreement (which time and place
are designated as the "Closing").

(b)      Delivery. At the Closing, the Company will
deliver to the Investor a certificate or certificates representing the number of
shares of Stock, against payment of the purchase price therefor by wire transfer
payable to the Company.

2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit B, which exceptions shall be
deemed to be representations and warranties as if made hereunder:

2.1      ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business, to execute and deliver this Agreement,
the Third Amended and Restated Investors' Rights Agreement (the "Investors'
Rights Agreement") substantially in the form attached hereto as Exhibit C, the
Third Amended and Restated Voting Agreement (the "Voting Agreement," and
together with the Investors' Rights Agreement, collectively, the "Ancillary
Agreements") substantially in the form attached hereto as Exhibit D, to issue
and sell the Stock and the Common Stock issuable upon conversion thereof
(together, as applicable, the "Stock"), and to carry out the provisions of this
Agreement, the Investors' Rights Agreement, the Voting Agreement, and the
Restated Certificate. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a material adverse effect on its business, assets, operations, affairs or
financial condition ("Material Adverse Effect").

2.2      CAPITALIZATION.

(a)      The authorized capital of the Company will
consist, immediately prior to the Effective Date, of:

(i)      24,800,000 shares of Preferred
Stock, of which 5,550,000 shares have been designated Series A Preferred Stock,
5,300,000 of which are issued and outstanding, and of which 7,000,000 have been
designated Series B Preferred Stock, 6,896,545 of which are issued and
outstanding and 12,250,000 of which have been designated Series C Preferred
Stock, 11,578,980 of which are issued and outstanding immediately prior to the
Effective Date. The rights, privileges and preferences of the Preferred Stock
are as stated in the Third Amended and Restated Certificate of Incorporation
(the "Certificate"). All of the outstanding shares of Preferred Stock have shall
be duly authorized and fully paid and are nonassessable and issued in compliance
with all applicable federal and state securities laws.

(ii)     40,000,000 shares of Common Stock,
3,529,176 shares of which are issued and outstanding immediately prior to the
Effective Date. All of the outstanding shares of Common Stock are duly
authorized and fully paid and are nonassessable and issued in compliance with
all applicable federal and state securities laws.

-2-

(iii)    The Company has reserved 6,332,345
shares of Common Stock for issuance to officers, directors, employees and
consultants of the Company pursuant to its 1997 Stock Plan duly adopted by the
Board of Directors and approved by the Company stockholders (the "Stock Plan").
Of such reserved shares of Common Stock, no shares have been issued pursuant to
restricted stock purchase agreements, and options to purchase 4,639,381 shares
have been granted. Of such options shares, 2,403,066 have been exercised and
2,236,315 are currently outstanding. Options to purchase 1,692,964 shares of
Common Stock remain available for issuance to officers, directors, employees and
consultants pursuant to the Stock Plan.

(iv)     Except for outstanding options
issued pursuant to the Stock Plan or preemptive rights pursuant to the
Investors' Rights Agreement, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock. No stock plan,
stock purchase, stock option or other agreement or understanding between the
Company and any holder of any equity securities or right to purchase equity
securities provides for acceleration or other changes in the vesting provisions
or other terms of such agreement or understanding as the result of any merger,
consolidated sale of stock or assets, change of control or other similar
transaction by the Company.

(b)      The authorized capital of the Company as set
forth in the Restated Certificate consists of:

(i)      27,300,000 shares of Preferred
Stock of which 5,550,000 shares shall be designated Series A Preferred Stock,
7,000,000 shall be designated Series B Preferred Stock, 12,250,000 shall be
designated Series C Preferred Stock and 2,500,000 shall be designated Series D
Preferred Stock. The rights, privileges and preferences of the Preferred Stock
shall be as stated in the Restated Certificate.

(ii)     45,000,000 shares of Common Stock.

2.3      SUBSIDIARIES. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.

2.4      AUTHORIZATION. All corporate action on the part of
the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Ancillary
Agreements (collectively the "Agreements"), the performance of all obligations
of the Company hereunder and thereunder and the authorization, issuance and
delivery of the Stock will be taken prior to the Closing, and the Agreements,
when executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (ii) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.

-3-

2.5      VALID ISSUANCE OF STOCK. The Stock that is being
issued to the Investor hereunder, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement, the
Investors' Rights Agreement and applicable state and federal securities laws.
Based in part upon the representations of the Investor in this Agreement and
subject to the provisions of Section 2.6 below, the Stock will be issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the Stock shall be, immediately prior to the
Closing, duly and validly reserved for issuance, and upon issuance in accordance
with the terms of the Restated Certificate, shall be duly and validly issued,
fully paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Investors' Rights Agreement
and applicable federal and state securities laws and will be issued in
compliance with all applicable federal and state securities laws.

2.6      GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder or other applicable state securities laws.

2.7      LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company or any of its subsidiaries that questions the validity of
the Agreements or the right of the Company to enter into them, or to consummate
the transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any Material Adverse Effect, or any change
in the current equity ownership of the Company, nor is the Company aware that
there is any basis for the foregoing. The Company is not a party to, or subject
to the provisions of, any material order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.

2.8      INTELLECTUAL PROPERTY. To its knowledge (but without
conducting any special investigation or patent search), the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information and proprietary
rights and processes (collectively, "Intellectual Property") necessary for its
business without any conflict with, or infringement of, the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the Intellectual Property of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products. The Company is not in breach
of any provision of any option, license or agreement as would have now or with
the passage of time a Material Adverse Effect. The Company has not received any
communications alleging that the Company has violated or infringed or, by
conducting its business, would violate or infringe any of the Intellectual
Property of any other person or entity. Neither the Company nor any of its
licensors is a party to any proceeding or litigation

-4-

relating to any Intellectual Property owned by or licensed to the Company. The
Company is not a party to any proceeding or litigation relating to the
Intellectual Property of any other person or entity. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interest
of the Company or that would conflict with the Company's business. Neither the
execution or delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as currently proposed, will, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, any contract, covenant or instrument under which any such
employee is now obligated. The Company does not believe it is or will be
necessary to use any inventions, trade secrets or proprietary information of any
of its consultants, or of its employees (or persons it currently intends to
hire) made prior to their employment by the Company.

2.9      COMPLIANCE WITH OTHER INSTRUMENTS.

(a)      The Company is not in violation or default
of any provisions of its Certificate or Bylaws or of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound
or of any material provision of federal or state statute, rule or regulation
applicable to the Company. The execution, delivery and performance of the
Agreements and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or be in material conflict with or
constitute, with or without the passage of time and giving of notice, either a
material default under any such provision, instrument, judgment, order, writ,
decree or contract or an event which results in the creation of any material
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval to the Company, its business or operations
or any of its assets or properties.

(b)      The Company has avoided every condition, and
has not performed any act, the occurrence of which would result in the Company's
loss of any right granted under any license, distribution agreement or other
agreement, the loss of which would have a Material Adverse Effect.

2.10     AGREEMENTS; ACTION.

(a)      There are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof.

(b)      Except for agreements explicitly
contemplated by the Agreements, there are no agreements, understandings,
instruments, contracts or proposed transactions to which the Company is a party
or by which it is bound that involve (i) obligations (contingent or otherwise)
of, or payments to, the Company in excess of, $100,000, (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from the
Company, (iii) the grant of rights to manufacture, produce, assemble, license,
market, or sell its products to any other person or affect the

-5-

Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products, or (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).

(c)      The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $50,000 or
in excess of $100,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business. For purposes of this
subsection (c) and subsection (b) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the minimum dollar amounts of such subsections.

(d)      The Company is not a party to and is not
bound by any contract, agreement or instrument, or subject to any restriction
under its Certificate or Bylaws, that would have a Material Adverse Effect.

(e)      The Company has not engaged in the past
three (3) months in any discussion (i) with any representative of any
corporation or corporations regarding the merger of the Company with or into any
such corporation or corporations, (ii) with any representative of any
corporation, partnership, association or other business entity or any individual
regarding the sale, conveyance or disposition of all or substantially all of the
assets of the Company or a transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the Company would be
disposed of, or (iii) regarding any other form of liquidation, dissolution or
winding up of the Company.

2.11     DISCLOSURE. The Company has provided the Investor
with all the information that the Investor has requested for deciding whether to
acquire the Stock and all information that the Company believes is reasonably
necessary to enable the Investor to make such a decision. No representation or
warranty of the Company contained in this Agreement and the exhibits attached
hereto or any certificate furnished or to be furnished to the Investor at the
Closing or Effective Date (when read together) contains or shall contain any
untrue statement of a material fact or omits or shall omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. To the
Company's knowledge, there are no facts which (individually or in the aggregate)
would have a Material Adverse Effect that have not been set forth in the
Agreements or the Exhibits hereto and thereto.

2.12     NO CONFLICT OF INTEREST. The Company is not indebted,
directly or indirectly, to any of its officers, directors, stockholders,
employees or consultants, or to their respective spouses or children, in any
amount whatsoever other than in connection with expenses or advances of expenses
incurred in the ordinary course of business or relocation expenses of employees.
To the

-6-

Company's knowledge, none of the Company's officers, directors, stockholders,
employees or consultants, or any members of their immediate families, are,
directly or indirectly, indebted to the Company or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company except that officers, directors,
stockholders, employees and consultants of the Company may own stock in (but not
exceeding two percent of the outstanding capital stock of) any publicly traded
companies that may compete with the Company. To the Company's knowledge, none of
the Company's officers, directors or stockholders or any members of their
immediate families are, directly or indirectly, interested in any material
contract with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.

2.13     RIGHTS OF REGISTRATION. Except as contemplated in the
Second Amended and Restated Investors' Rights Agreement dated as of November 22
and 24, 2000, and the Investors' Rights Agreement the Company is not under any
obligation and has not granted rights to register under the Securities Act any
of its presently outstanding securities or any of its securities that may
subsequently be issued. Except as contemplated in this Agreement, the Second
Amended and Restated Voting Agreement dated as of November 22 and 24, 2000, and
the Voting Agreement the Company has not, and to the knowledge of the Company no
shareholder of the Company has, entered into any agreement with respect to the
voting of shares of capital stock of the Company.

2.14     TITLE TO PROPERTY AND ASSETS. Except (a) as reflected
in the Financial Statements (defined in paragraph 2.15), (b) for liens for
current taxes not yet delinquent, (c) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (d) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(e) for minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances. With respect to the property and assets it leases, the Company is
in compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances, subject to clauses (a)-(e)
above. The Company does not own and has not agreed to purchase any real
property.

2.15     FINANCIAL STATEMENTS. The Company has made available
to the Investor the Company's audited financial statements (including balance
sheet, income statement and statement of cash flows) as of December 31, 2000 for
the fiscal year then ended, and its unaudited financial statements (including
balance sheet, income statement and statement of cash flows) as of March 31,
2001 and for the three-month period then ended (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except that the unaudited Financial Statements
may not contain all footnotes required by generally accepted accounting
principles. The Financial Statements fairly present the financial condition and
operating results of the Company as of the dates, and for the periods, indicated
therein, subject, in the case of unaudited Financial Statements, to normal
year-end audit adjustments. Except as set forth in the Financial

-7-

Statements, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to March 31, 2001 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm, or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.

2.16     CHANGES. After March 31, 2001, there has not been:

(a)      any change in the assets, liabilities,
financial condition or operating results of the Company from that reflected in
the Financial Statements, except changes in the ordinary course of business;

(b)      any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is presently proposed to be conducted);

(c)      any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;

(d)      any satisfaction or discharge of any lien,
claim, or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, prospects or financial condition of the Company (as such business is
presently conducted and as it is presently proposed to be conducted);

(e)      any material change to a material contract
or agreement by which the Company or any of its assets is bound or subject;

(f)      any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder;

(g)      any sale, assignment or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets;

(h)      any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;

(i)      any declaration, setting aside or payment or
other distribution in respect to any of the Company's capital stock, or any
direct or indirect redemption, purchase, or other acquisition of any of such
stock by the Company;

-8-

(j)      to the Company's knowledge, any other event
or condition of any character that might have a Material Adverse Effect;

(k)      any arrangement or commitment by the Company
to do any of the things described in this Section 2.16;

(l)      any resignation or termination of employment
of any officer or key employee of the Company; or

(m)      any loans or guarantees made by the Company
to or for the benefit of its employees, shareholders, officers or directors, or
any members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business.

2.17     EMPLOYEE BENEFIT PLANS.

(a)      The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.

(b)      There is no contract, agreement, plan or
arrangement covering any employee of the Company that, individually or
collectively, could, in connection with the transactions contemplated herein
accelerate the time of payment or vesting of any payment, forgive any
indebtedness, or increase the amount of any compensation due any employee.

2.18     TAX MATTERS. The Company has timely filed all returns
("Tax Returns") due with respect to all federal, state, county, local, foreign
and other taxes including, without limitation, income taxes, estimated taxes,
excise taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes,
employment and payroll related taxes, property taxes and import duties, whether
or not measured in whole or in part by net income (hereinafter, "Taxes" or,
individually, a "Tax") required to be filed by it through the date hereof unless
an extension to file any such Tax Return has been filed by the Company. All such
Tax Returns are true and correct in all material respects and all Taxes shown as
due on such Tax Return have been paid, other than Taxes being disputed by the
Company in good faith for which adequate reserves have been made in accordance
with GAAP. With respect to all Tax Returns of the Company, (i) there is no
unassessed Tax deficiency proposed or, to the knowledge of the Company,
threatened against the Company and (ii) no audit is in progress with respect to
any return for Taxes, no extension of time is in force with respect to any date
on which any return for Taxes was or is to be filed and no waiver or agreement
is in force for the extension of time for the assessment or payment of any Tax.
All provisions for Tax liabilities of the Company with respect to the Financial
Statements have been made in accordance with GAAP consistently applied, and all
liabilities for Taxes of the Company attributable to periods prior to or ending
on the Closing Date have been adequately provided for on the Financial Statement
in accordance with GAAP. There are no liens for Taxes on the assets of the
Company other than liens for Taxes not yet due and payable. The Company has
never been a "United States real property holding corporation" (a "USRPHC") as
that term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986,
as amended (the "Code"), and treasury regulations promulgated thereunder. The
Company is not a "foreign person" within the meaning of Section 1445 of the
Code.

-9-

2.19     INSURANCE. The Company has in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed. The Company has obtained life
insurance for James Sabry, and any other employees or consultants to the Company
deemed to be key to the success of the Company as determined in good faith by
the Company's Board of Directors.

2.20     LABOR AGREEMENTS AND ACTIONS. The Company is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, which could have a Material Adverse Effect, nor is the Company aware
of any labor organization activity involving its employees. The employment of
each officer and employee of the Company is terminable at the will of the
Company. The Company has complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. No employee of the Company has been granted the right to continued
employment by the Company or to any material compensation following termination
of employment with the Company. To the Company's knowledge, no officer or key
employee, or any group of key employees, intends to terminate their employment
with the Company. The Company does not have a present intention to terminate the
employment of any officer, key employee or group of key employees.

2.21     CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT
AGREEMENTS. Each employee, consultant and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary
information. Except as recorded on such agreements, no employee, officer or
consultant of the Company has excluded works or inventions made prior to his or
her employment with the Company from his or her assignment of inventions to the
Company pursuant to such agreements. The Company is not aware that any of its
employees or consultants is in violation thereof.

2.22     PERMITS. The Company has all material franchises,
permits, licenses and any similar authority necessary for the conduct of its
business. The Company is not in default in any material respect under any of
such franchises, permits, licenses or other similar authority.

2.23     CORPORATE DOCUMENTS. The Restated Certificate and
Bylaws of the Company on the Closing shall be in the form provided to counsel
for the Investor. The minute

-10-

books of the Company contain minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders since the date of incorporation and reflects all
actions by the directors (and any committee of directors) and stockholders with
respect to all transactions referred to in such minutes accurately in all
material respects.

2.24     ENVIRONMENTAL AND SAFETY LAWS. The Company is not in
violation of any applicable material statute, law or regulation relating to the
environment or occupational health and safety, and, to its knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation, and there is no material civil, criminal or
administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
Company's knowledge, threatened against the Company pursuant to any such
statute, law or regulation. No Hazardous Materials (as defined below) are used
or have been used, stored, or disposed of by the Company or, to the Company's
knowledge, by any other person or entity on any property owned, leased or used
by the Company. For the purposes of the preceding sentence, "Hazardous
Materials" shall mean (a) materials which are listed or otherwise defined as
"hazardous" or "toxic" under any applicable local, state, federal and/or foreign
laws and regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes, or other activities involving hazardous substances, including
building materials or (b) any petroleum products or nuclear materials.

2.25     PRIVATE OFFERING. No form of general solicitation or
general advertising was used by the Company or its representatives in connection
with the offer or sale of the Stock. No registration of the Stock or the shares
of common stock issuable upon conversion thereof, pursuant to the provisions of
the Securities Act or any state securities or "blue sky" laws, will be required
by offer, sale or issuance of the Stock. The Company agrees that neither it, nor
anyone acting on its behalf, shall offer to sell the Stock or any other
securities of the Company so as to require the registration of the Stock or the
shares of Common Stock issuable upon conversion thereof pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
unless such Stock or other securities are so registered.

2.26     OUTSTANDING BORROWING. Except as set forth in the
Financial Statements, the Schedule of Exceptions sets forth the amount of all
Indebtedness of the Company as of the date hereof, the liens that relate to such
Indebtedness and that encumber the Company's assets and the name of each lender
thereof. No holder of Indebtedness of the Company is entitled to any voting
rights in any matters voted upon by the holders of the Common Stock.
"Indebtedness" means, as to any person, (a) all obligations of such person for
borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such person to pay
the deferred purchase price of property or services, except trade accounts
payable and accrued commercial or trade liabilities arising in the ordinary
course of business, (c) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such person, whether periodically or upon the happening of a
contingency, (d) all indebtedness

-11-

created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all obligations of
such person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (f) all indebtedness secured by any Lien (other than
Liens in favor of lessors under leases other than leases included in clause (e))
on any property or asset owned or held by that person regardless of whether the
indebtedness secured thereby shall have been assumed by that person or is
non-recourse to the credit of that person, and (g) any material contingent
obligation of such person.

3.       REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. The Investor
hereby represents and warrants to the Company, that:

3.1      AUTHORIZATION. Such Investor has full power and
authority to enter into this Agreement. The Agreements, when executed and
delivered by the Investor, will constitute valid and legally binding obligations
of the Investor, enforceable in accordance with their terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors' rights generally, and as limited by laws relating to
the availability of a specific performance, injunctive relief, or other
equitable remedies, or (b) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.

3.2      PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is
made with the Investor in reliance upon the Investor's representation to the
Company, which by the Investor's execution of this Agreement, the Investor
hereby confirms, that the Stock to be acquired by the Investor will be acquired
for investment for the Investor's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Investor
further represents that the Investor does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Stock. The Investor has not been formed for the specific purpose of acquiring
the Stock.

3.3      DISCLOSURE OF INFORMATION. The Investor believes it
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Stock. The Investor has had an opportunity to
discuss the Company's business, management, financial affairs and the terms and
conditions of the offering of the Stock with the Company's management. The
Investor understands that such discussions, as well as any other written
information delivered by the Company to the Investor, were intended to describe
the aspects of the Company's business which it believes to be material.

3.4      RESTRICTED SECURITIES. The Investor understands that
the Stock has not been, and will not be, registered under the Securities Act, by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Investor's representations as
expressed

-12-

herein. The Investor understands that the shares of Stock are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Investor must hold the Stock indefinitely unless
they are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. The Investor acknowledges that the Company has no
obligation to register or qualify the Stock for resale except as set forth in
the Investors' Rights Agreement. The Investor further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period for the Stock, and on requirements relating to the
Company which are outside of the Investor's control, and which the Company is
under no obligation and may not be able to satisfy.

3.5      NO PUBLIC MARKET. The Investor understands that no
public market now exists for any of the securities issued by the Company, and
that the Company has made no assurances that a public market will ever exist for
the Stock.

3.6      LEGENDS. The Investor understands that the
certificate or certificates representing the Stock and any certificates
evidencing securities issued in respect of or exchange for the Stock, may bear
one or all of the following legends in substantially the form listed below:

(a)      "THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."

(b)      Any legend set forth in the other
Agreements.

(c)      Any legend required by the Blue Sky laws of
any state to the extent such laws are applicable to the shares represented by
the certificate so legended.

3.7      ACCREDITED INVESTOR. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.

3.8      FOREIGN INVESTORS. If the Investor is not a United
States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended), such Investor hereby represents that it has satisfied itself
as to the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Stock or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase, (iii)
any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Stock. Such Investor's
subscription and payment for and continued beneficial ownership of the Stock,
will not violate any applicable securities or other laws of the Investor's
jurisdiction.

-13-

4.       CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING. The
obligations of the Investor to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

4.1      REPRESENTATIONS AND WARRANTIES.

(a)      The representations and warranties of the
Company contained in Sections 2.4, 2.5 and 2.6 shall be true and correct in all
material respects on and as of the Closing except for the representations and
warranties which are qualified as to materiality by their terms, which shall be
true and correct on and as of the Closing.

(b)      The representations and warranties of the
Company contained in Section 2, other than the representations and warranties
contained in Sections 2.4, 2.5 and 2.6, shall be true and correct in all
material respects on and as of the Effective Date except for the representations
and warranties which are qualified as to materiality by their terms, which shall
be true and correct on and as of the Effective Date.

4.2      PERFORMANCE. The Company shall have performed and
complied in all material respects with all covenants, agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.

4.3      COMPLIANCE CERTIFICATE. The President of the Company
shall deliver to the Investor at the Closing a certificate dated as of the
Closing certifying that the conditions specified in Sections 4.1, 4.2 and 4.4
have been fulfilled.

4.4      QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Stock pursuant to this Agreement shall be obtained and effective
as of the Closing.

4.5      OPINION OF COMPANY COUNSEL. The Investor shall have
received from WSGR, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of Exhibit E.

4.6      INVESTORS' RIGHTS AGREEMENT. The Company and the
required holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall have executed and delivered the Investors' Rights
Agreement, substantially in the form attached hereto as Exhibit C.

4.7      VOTING AGREEMENT. The Company, the required holders
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock and the Founders shall have executed and delivered the Voting Agreement
substantially in the form attached hereto as Exhibit D.

-14-

4.8      RESTATED CERTIFICATE. The Company shall have filed
the Restated Certificate with the Secretary of State of Delaware on or prior to
the Closing, which shall continue to be in full force and effect as of the
Closing.

4.9      SECRETARY'S CERTIFICATE. The Investor shall have
received a certificate from the Company, in form and substance satisfactory to
the Investor, dated as of the Closing Date and signed by the Secretary or an
Assistant Secretary of the Company, certifying (a) that the attached copies of
the Restated Certificate, the Bylaws, resolutions of the Board of Directors and
resolutions of the stockholders of the Company approving the Agreements and the
transactions contemplated thereby, are all true, complete and correct and remain
unamended and in full force and effect, (b) as to the incumbency and specimen
signature of each officer of the Company executing the Agreements, and any other
document delivered in connection herewith on behalf of the Company and (c) that
the good standing of the Company, as evidenced by the attached Good Standing
certificates issued by the Delaware and California Secretaries of State, dated
with ten (10) business days of the Closing, remains in effect for such
jurisdictions.

4.10     COLLABORATION AGREEMENT. The Company and the Investor
shall have executed and delivered to each other the Collaboration Agreement and
such Collaboration Agreement shall not have been terminated.

4.11     HART-SCOTT-RODINO. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement, or the transactions
contemplated hereby or by the Collaboration Agreement shall have been entered by
any court or administrative body, and all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 (as amended from time to
time, the "HSR Act") shall have expired or terminated.

4.12     GOOD STANDING. The Investor shall have received
certificates of Good Standing issued by the Delaware and California Secretaries
of State showing that the Company is in good standing in such jurisdictions,
dated with ten (10) business days of the Closing.

5.       CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Investor under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

5.1      REPRESENTATIONS AND WARRANTIES.

(a)      The representations and warranties of the
Investor contained in Section 3.3 shall be true and correct in all material
respects on and as of the Effective Date, except for representations and
warranties which are qualified as to materiality by their terms, which shall be
true and correct on and as of the date of the Effective Date.

(b)      The representations and warranties of the
Investor contained in Section 3, other than those representations and warranties
contained in Section 3.3, shall be true and correct in all material respects on
and as of the Closing, except for representations and warranties 

-15-

which are qualified as to materiality by their terms, which shall be true and
correct on and as of the date of the Closing.

5.2      PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Investor on or prior to the
Closing shall have been performed or complied with in all material respects.

5.3      QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Stock pursuant to this Agreement shall be obtained and effective
as of the Closing.

5.4      STOCKHOLDER APPROVAL. The Company shall have obtained
the vote or written consent from the stockholders of the Company required to
approve the adoption and filing of the Restated Certificate, and otherwise
required to carry out the transaction contemplated by this Agreement, the
Ancillary Agreements and the Collaboration Agreement.

5.5      INVESTORS' RIGHTS AGREEMENT. The Investor and the
required holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall have executed and delivered the Investors' Rights
Agreement.

5.6      VOTING AGREEMENT. The Investo, the Founders and the
required holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock shall have executed and delivered the Voting Agreement.

5.7      RESTATED CERTIFICATE. The Restated Certificate filed
with the Secretary of State of Delaware prior to the Closing shall be in full
force and effect.

5.8      COLLABORATION AGREEMENT. The Company and the Investor
shall have executed and delivered to each other the Collaboration Agreement and
such Collaboration Agreement shall not have been terminated.

5.9      HART-SCOTT-RODINO. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement, or the transactions
contemplated hereby or by the Collaboration Agreement, shall have been entered
by any court or administrative body, and all applicable waiting periods under
the HSR Act shall have expired or terminated.

6.       COVENANTS OF THE INVESTOR.

6.1      TRADING RESTRICTIONS.

(a)      PURCHASES OF COMPANY STOCK.

(i)      The Investor agrees that neither it
nor any of its affiliates (for purposes of this Section 6, collectively, the
"Investor") will, for a period (the "No-Buy Period")

-16-

commencing on the date hereof and ending three (3) years after the closing of
the first firm commitment public offering of Common Stock of the Company to the
general public pursuant to an effective registration statement filed with the
SEC under the Securities Act (the "IPO"), acquire in any manner, directly or
indirectly, any securities of the Company, except pursuant to a transaction
approved by the Board of Directors of the Company, provided that, for a period
of 10 years after the expiration of the No-Buy Period, the Investor shall under
no circumstances, directly or indirectly, acquire any equity securities of the
Company that would cause the Investor's holdings of the Company's equity
securities, on an as-converted basis, to exceed the percentage of the Company's
fully diluted outstanding equity securities represented by the as-converted
Stock immediately after the closing of the IPO.

(ii)     TENDER OFFERS.

(1)      Notwithstanding anything
to the contrary in this Section 6.1(a), if a third party initiates an
unsolicited offer to purchase 30% or more of any class or series of the
Company's publicly traded securities (a "Hostile Tender Offer"), the Investor
may purchase the Company's securities that are the subject of the Hostile Tender
Offer without regard to the restrictions on the Investor set forth in this
Section 6.1(a).

(2)      Notwithstanding anything
to the contrary in this Section 6.1(a), if the Board of Directors of the Company
approves an Acquisition, as defined below in Section 6.2(b)(i), after the
Research Term (as such term is defined in the Collaboration Agreement, but not
to include any extensions of the initial Research Term (the "Restriction
Term")), the Investor may offer to purchase, and consummate the purchase of,
all, but not less than all, of the Company's outstanding securities without
regard to the restrictions on the Investor set forth in this Section 6.1(a).

(b)      SALES OF COMPANY STOCK.

(i)      In addition to the foregoing, the
Investor agrees that during the Restriction Term, the Investor shall not offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of in any manner, either directly or indirectly
("Sale" or "Sell"), any securities of the Company held by Investor ("Covenant
Shares"), provided that, nothing in the foregoing sentence shall prevent the
Investor from participating in, and selling the Covenant Shares through,
registrations of the Company's Common Stock ("Common Stock") pursuant to the
provisions of Section 1.3 of the Investors' Rights Agreement.

(ii)     After the expiration of such
Restriction Term the Investor and the Company agree and acknowledge that it is
in their mutual interest that disposition of the Covenant Shares be accomplished
in a manner that does not disrupt or undermine the trading market for Common
Stock (including any undue adverse reaction to the fact of sale of Covenant
Shares by the investor as a research collaborator of the Company), and the
parties will work together to explore methods of disposition in order to achieve
such goal.

-17-

(iii)    Notwithstanding anything to the
contrary in this Section 6.1(b), after the IPO of the Company, the Investor may
sell shares of Common Stock if (i) the publicly traded fair market value per
share of publicly traded shares of Common Stock, at the time of the sale by the
Investor of Common Stock, is greater than two and a half times the per share
price (as adjusted for combination, stock splits, stock dividends, subdivisions
or split-ups) that shares of Common Stock were initially offered to the public
in the IPO (the "IPO Price") and (ii) no sales by the Investor of shares of
Common Stock are at a price per share less than two and a half times (as
adjusted for combination, stock splits, stock dividends, subdivisions or
split-ups) the IPO Price, provided that, the aggregate gross proceeds to the
Investor of all sales of Common Stock pursuant to this Section 6.1(b)(iii) shall
not exceed $14,000,004. If the Investor intends to sell any shares of Common
Stock held by it pursuant to the provisions of this Section 6.1(b)(iii), the
Investor and the Company agree and acknowledge that it is in their mutual
interest that disposition of the Covenant Shares be accomplished in a manner
that does not disrupt or undermine the trading market for the Company's Common
Stock (including any undue adverse reaction to the fact of sale of Covenant
Shares by the investor as a research collaborator of the Company), and the
parties will work together to explore methods of disposition in order to achieve
such goal.

6.2      COME-ALONG.

(a)      COME-ALONG. The Investor hereby agrees that
at any meeting of the stockholders of the Company, however called, and in any
written action by consent of stockholders of the Company, the Investor shall
vote all Covenant Shares of the Company entitled to vote directly or indirectly
held by the Investor as directed by the holders of a majority of the outstanding
Registrable Securities, as such term is defined in the Investor Rights
Agreement, in connection with the approval of any matter upon which the
Registrable Securities may vote. The Investor shall not directly or indirectly
enter into any agreement or understanding with any person or entity, other than
the Company, to vote or give instructions in any manner inconsistent with the
preceding sentence. In the event the Investor fails to vote in accordance
herewith, the Investor shall be deemed to have irrevocably appointed such person
or persons as may be designated by the Board of Directors of the Company as
proxy to vote the Investor's stock in accordance herewith.

(b)      DISSENTERS' RIGHTS.

(i)      For purposes of this Section 6, the
term "Acquisition" shall mean any transaction pursuant to which the Company
proposes to (A) sell, lease, convey, or otherwise dispose of all or
substantially all of its property or business, (B) merge into or consolidate
with any other corporation or other entity or person or (C) effect any other
transaction or series of related transactions or other corporate reorganization
as a result of which the Company's stockholders of record as constituted
immediately prior to such transaction will, immediately after such transaction
(by virtue of securities issued as consideration for the Corporation's
acquisition or sale or otherwise) hold less than 50% of the voting power of the
surviving or acquiring entity.

(ii)     Notwithstanding anything to the
contrary in this Section 6.2, the Investor may vote any Covenant Shares held by
it at any meeting of the stockholders of the Company in favor of or against any
Acquisition if the Investor shall receive, pursuant to such

-18-

Acquisition, in exchange for its Covenant Shares cash or publicly traded
securities (the "Consideration") whose aggregate value (as reasonably determined
by the Company's Board of Directors, the "Aggregate Value") is less than the
Covenant Price, provided that, if the Aggregate Value of the Consideration is
greater than or equal to the Covenant Price, the Investor may only vote against
such proposed Acquisition if, prior to such vote, the Investor executes and
delivers to the Company a written agreement with the Company stating that the
Investor will not take any action to assert any dissenters' rights pursuant to
Chapter 13 of the Corporations Code of California or any appraisal rights
pursuant to Section 262 of the Delaware General Corporation Law (or any similar
dissenters rights pursuant to any other applicable state's corporate law). For
purposes of this Section 6.2(b)(ii), the term "Covenant Price" shall mean the
aggregate original purchase price paid by the Investor for Covenant shares then
held by the Investor at the record date for determination of shares entitled to
vote on any Acquisition, compounded annually at a rate of 6% per year.

6.3      COMPANY'S RIGHT OF FIRST REFUSAL.

(a)      RIGHT OF FIRST REFUSAL. Notwithstanding
anything to the contrary in this Section 6, in the event that the Investor
desires to directly or indirectly sell (or otherwise transfer), and has received
a bona fide offer in writing from a third party to buy, any Covenant Shares (a
"Transfer"), the Investor shall notify the Company in writing of the proposed
sale (a "Transfer Notice"). Each Transfer Notice shall contain all material
terms of the proposed sale (or transfer), including, without limitation, a copy
of the written offer received, the name and address of the prospective purchaser
(or transferee), the purchase price and terms of payment, the date and place of
the proposed sale (or transfer), and the number and description of the Covenant
Shares proposed to be sold (or transferred) by the Investor (the "Offered
Shares"). The Company shall have an option for a period of thirty (30) days from
receipt of the Transfer Notice to elect to purchase the Offered Shares at the
same price and subject to the same material terms and conditions as described in
the Transfer Notice (or terms and conditions as similar as reasonably possible).
The Company may exercise such purchase option and, thereby, purchase all (or a
portion of) the Offered Shares by notifying the Investor in writing before
expiration of the such thirty (30) day period as to the number of such shares
that it wishes to purchase. If the Company gives the Investor notice that it
desires to purchase such shares, then payment for the Offered Shares shall be by
check or wire transfer, against delivery of the Offered Shares to be purchased
at a place agreed upon between the parties and at the time of the scheduled
closing therefor, which shall be no later than the later of (i) forty-five (45)
days after the Company's receipt of the Transfer Notice or (ii) the date
contemplated in the Transfer Notice for the closing with the prospective third
party transferee(s). To the extent that the Company, or any assignee of the
Company, has not exercised its rights of first refusal as to the Offered Shares
within the time periods specified in this Section 6.3 the Investor shall be free
to sell the stock to such prospective purchaser (or transferee) on the same
terms and conditions as outlined in the Transfer Notice, provided that in the
event such Covenant Shares are not sold within ninety (90) days of the date of
the notice they shall once again be subject to this the right of first refusal.

(b)      ASSIGNMENT. Notwithstanding anything to the
contrary in this Agreement, prior to the IPO the Company's rights under this
Section 6.3 shall be assignable, in whole or in part,

-19-

in the sole discretion of the Company to any holder, or number of holders, of
securities of the Company.

(c)      TERMINATION. The right of first refusal in
this Section 6.3 shall terminate upon the earlier of (i) the closing of the IPO,
or (ii) an Acquisition in which the Company's stockholders receive cash or
publicly traded securities.

6.4      SUBSEQUENT RIGHTS. In the event that the Company
shall enter into a strategic alliance during the Restriction Term with a third
party similar to the Collaboration Agreement, and pursuant to which the Company
shall issue equity to such third party and in connection therewith impose
covenants on such third party with regard to the matters set forth in this
Section 6 that are materially less restrictive, when taken as a whole, than the
restrictions on the Investor set forth in this Section 6 (the "Third Party
Restrictions"), the provisions of this Section 6 shall thereafter be superceded
and replaced by the terms of the Third Party Restrictions, and the Investor
shall thereby become obligated under such Third Party Restrictions, to the
extent that the Third Party Restrictions are materially less restrictive to the
third party than the terms contained in this Section 6 are to the Investor.

6.5      INVALID TRANSFERS. Any sale, assignment or other
transfer of Covenant Shares by the Investor contrary to the provisions of this
Section 6 shall be null and void, and the transferee shall not be recognized by
the Company as the holder or owner of the Covenant Shares sold, assigned, or
transferred for any purpose (including, without limitation, voting or dividend
rights), unless and until the Investor has satisfied the requirements of this
Section 6 with respect to such sale. The Investor shall provide the Company with
written evidence that such requirements have been met or waived, and the
proposed transferee must acknowledge in writing to the Company that such
proposed transferee is bound by the provisions of Section 6 of this Agreement,
prior to consummating any sale, assignment or other transfer of securities, and
no Stock shall be transferred on the books of the Company until such written
evidence has been received by the Company from the Investor and any such
proposed transferee.

7.       MISCELLANEOUS.

7.1      SURVIVAL OF WARRANTIES. Notwithstanding the
provisions of Section 3.3 or any provision to the contrary contained in this
Agreement, all warranties, representations and covenants made by the Company in
or pursuant to this Agreement shall be considered to have been relied upon by
the Investor and except as otherwise set forth in this Agreement, the
representations, warranties and covenants of the Company and the Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement, the Effective Date and the Closing (regardless of
any investigation made by the Investor or on its behalf).

7.2      TRANSFER; SUCCESSORS AND ASSIGNS. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,

-20-

obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

7.3      GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.

7.4      COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

7.5      TITLES AND SUBTITLES. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

7.6      NOTICES. All notices, requests and communications
hereunder shall be in writing and shall be personally delivered or sent by
facsimile transmission (confirmed by prepaid registered or certified mail,
return receipt requested or by international express delivery service) (e.g.,
Federal Express), mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by international express courier service,
and shall be deemed to have been properly served to the addressee upon receipt
of such written communication, to following addresses of the parties, or such
other address as may be specified in writing to the other party hereto:

IF TO THE COMPANY,

ADDRESSED TO:     CYTOKINETICS, INC.
280 East Grand Avenue
South San Francisco, California 94080
Attention: Robert Blum,
Vice President, Business Development
Telephone: (650) 624-3002
Telecopy: (650) 624-3010

WITH COPY TO:     WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 Page Mill Road
Palo Alto, CA  94304-1050
Attention: Michael O'Donnell, Esq.
Telephone: (650) 493-9300
Telecopy: (650) 493-6811

IF TO INVESTOR,

ADDRESSED TO:     GLAXO WELLCOME INTERNATIONAL B.V.
Huis Ter Heideweg 62

-21-

3705 Zeist
The Netherlands
Attention: Chief Financial Officer
Telephone: 011-31-30-6938100
Telecopy: 011-31-30-6938293

WITH A COPY TO:   GLAXOSMITHKLINE
Corporate Legal Department
One Franklin Plaza
200 N. 16th Street / FP 2355
Philadelphia, PA 19102
Attention: Donald F. Parman, Vice President
and Associate General Counsel
Telephone: 215-751-7633
Telecopy:  215-751-5349

7.7      FINDER'S FEE. Each party represents that it neither
is nor will be obligated for any finder's fee or commission in connection with
this transaction. The Investor agrees, to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless the Investor from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.

7.8      ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.

7.9      AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived only with the written consent of the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 7.9
shall be binding upon the Investor and each transferee of the Stock (or the
Common Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company. Notwithstanding the foregoing, the Company may
waive any of the restrictions imposed by the Company on the Investor pursuant to
Section 6 herein by delivering to the Investor a written instrument of waiver,
certified by the Secretary or Chief Financial Officer of the Company ("Waiver"),
setting forth the terms of such Waiver and certifying that such Waiver was duly
approved by the Board of Directors of the Company.

7.10     EXPENSES. Each of the Company and the Investor shall
bear its own expenses incurred on its behalf with respect to this Agreement and
the transactions contemplated hereby.

-22-

7.11     SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (a) such provision shall be excluded from this Agreement, (b)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (c) the balance of the Agreement shall be enforceable in accordance
with its terms.

7.12     DELAYS OR OMISSIONS. No delay or omission to exercise
any right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

7.13     ENTIRE AGREEMENT. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to the subject matter hereof existing between the parties
hereto are expressly canceled.

7.14     CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

7.15     CONFIDENTIALITY. Each party hereto agrees that,
except, (i) as required by applicable law (provided that if so required, the
disclosing party will provide written notice to the affected party regarding
such potential disclosure, and use commercially reasonable efforts to limit such
disclosure and prevent any further disclosure), or (ii) with the prior written
permission of the affected party, it shall at all times keep confidential and
not divulge, furnish or make accessible to anyone any confidential information,
knowledge or data concerning or relating to the business or financial affairs of
the other parties to which such party has been or shall become privy by reason
of this Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder (except the obligations contained in
Section 6 of this Agreement which may be disclosed to shareholders of the
Company, or a bona fide proposed transferee of Covenant Shares)

-23-

or the ownership of Stock purchased hereunder. The provisions of this Section
7.15 shall be in addition to, and not in substitution for, the provisions of (i)
any separate nondisclosure agreement executed by the parties hereto with respect
to the transactions contemplated hereby, or (ii) the confidentiality provisions
contained in the Collaboration Agreement, or in any document or agreement
related thereto.

7.16     QUALIFICATIONS. All authorizations, filings,
approvals, or permits, if any, of any governmental authority or regulating body
of the United States or of any state that are required to be filed within, or
prior to, the period of 30 days from the date of the Closing, (the "Period") in
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement shall be obtained or filed by or on behalf of the Company prior to the
expiration of such Period.

[Signature Pages Follow]

-24-

The parties have executed this Series D Preferred Stock Purchase
Agreement as of the date first written above.

COMPANY:

CYTOKINETICS, INCORPORATED

By:___________________________________

Name:_________________________________

Title:________________________________

INVESTOR:

GLAXO WELLCOME INTERNATIONAL B.V.

By:___________________________________

Name:_________________________________

Title:________________________________

CYTOKINETICS, INC.
SERIES D PREFERRED STOCK
PURCHASE AGREEMENT

EXHIBIT A

FOURTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

CYTOKINETICS, INCORPORATED

EXHIBIT B

SCHEDULE OF EXCEPTIONS

ATTACHMENT A

FINANCIAL STATEMENTS

ATTACHMENT B

FINANCIAL STATEMENTS

EXHIBIT C

FORM OF THIRD AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT

EXHIBIT D

FORM OF THIRD AMENDED AND RESTATED

VOTING AGREEMENT

EXHIBIT E

FORM OF LEGAL OPINION

CYTOKINETICS, INCORPORATED

SERIES D PREFERRED STOCK PURCHASE AGREEMENT

June 20, 2001

Exhibit 10.27

CYTOKINETICS, INCORPORATED

AMENDMENT NO. 1 TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT

THIS AMENDMENT is made this 2nd day of April, 2003, between Cytokinetics,
Incorporated, a Delaware corporation (the "Company"), Glaxo Wellcome
International B.V., a Netherlands corporation ("GWI"), and Glaxo Group Limited,
a private limited company organized under the laws of England and Wales ("GGL"):

WHEREAS the Company and GWI entered into that certain Series D Preferred
Stock Purchase Agreement, dated as of June 20, 2001 (the "Agreement"), for the
purchase of 2,333,334 shares of Series D Preferred Stock of the Company by GWI;

WHEREAS Section 6 of the Agreement calls for certain restrictions on GWI
and its affiliates including, among other restrictions, purchasing additional
shares of capital stock of the Company;

WHEREAS GGL is an affiliate of GWI and desires to purchase 600,000 shares
of the Company's Series E Preferred Stock pursuant to that certain Series E
Preferred Stock Purchase Agreement, dated as of March 21, 2003 (the "Series E
Shares");

WHEREAS the Company desires to sell the Series E Shares to GGL;

WHEREAS the Company and GWI desire to amend Section 6.1(b)(iii) of the
Agreement as set forth herein;

WHEREAS Section 7.9 of the Agreement allows such Agreement to be amended
only with the written consent of the Company and GWI; and

WHEREAS GGL desires to be bound to the rights and obligations of the
Agreement, including, without limitation, Section 6 of the Agreement, as if GGL
were, in addition to GWI, the Investor thereunder, as such term is defined in
the Agreement.

NOW, THEREFORE, in consideration of the purchase of the Series E Shares by
GGL, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

1. COMPANY APPROVAL OF PURCHASE BY GGL OF THE SERIES E SHARES. The Company
hereby represents that the Board of Directors of the Company approved the sale
of the Series E Shares to GGL at the meeting of the Board of Directors held on
March 19, 2003.

2. AMENDMENT OF AGREEMENT.

(a) Section 6.1(b)(iii) of the Agreement shall be amended and
restated in its entirety to read as follows:

"(iii) Notwithstanding anything to the contrary in this Section 6.1(b),
after the IPO of the Company, the Investor may sell shares of Common Stock if
(i) the publicly traded fair market value per share of publicly traded shares of
Common Stock, at the time of the sale by the Investor of Common Stock, is
greater than two and a half times the per share price (as adjusted for
combination, stock splits, stock dividends, subdivisions or split-ups) that
shares of Common Stock were initially offered to the public in the IPO (the "IPO
Price") and (ii) no sales by the Investor of shares of Common Stock are at a
price per share less than two and a half times (as adjusted for combination,
stock splits, stock dividends, subdivisions or split-ups) the IPO Price,
provided that, the aggregate gross proceeds to the Investor of all sales of
Common Stock pursuant to this Section 6.1(b)(iii) shall not exceed $17,000,004.
If the Investor intends to sell any shares of Common Stock held by it pursuant
to the provisions of this Section 6.1(b)(iii), the Investor and the Company
agree and acknowledge that it is in their mutual interest that disposition of
the Covenant Shares be accomplished in a manner that does not disrupt or
undermine the trading market for the Company's Common Stock (including any undue
adverse reaction to the fact of sale of Covenant Shares by the investor as a
research collaborator of the Company), and the parties will work together to
explore methods of disposition in order to achieve such goal."

(b) The Company and GWI hereby consent to the amendment and
restatement of Section 6.1(b)(iii) as set forth herein.

3. AGREEMENT TO BE BOUND. GGL hereby agrees to be bound to the terms
of the Agreement and the rights and obligations of GWI thereunder, as if GGL
were the "Investor" thereunder, as such term is defined in the Agreement,
including, without limitation, the special definition of "Investor" set forth in
Section 6.1(a)(i). GGL hereby acknowledges that the Series E Shares, and all
other shares of capital stock of the Company acquired by GGL and GGL's
affiliates (either from GWI or otherwise) are hereby bound by the rights and
restrictions set forth in Section 6 of the Agreement as if GGL were the
"Investor" thereunder, as defined in the Agreement, including, without
limitation, the special definition of "Investor" set forth in Section 6.1(a)(i).
The parties hereto hereby agree: (i) that nothing in this Amendment shall be
construed to replace GWI with GGL as a party to the Agreement; (ii) that both
GWI and GGL shall be bound by the terms of the Agreement as the "Investor"
thereunder, and (iii) that the rights and obligations of GGL under Section 6 of
the Agreement shall be aggregated with, and not be in addition to, the rights
and obligations of GWI as if GWI and GGL were the "Investor" thereunder.

4. MISCELLANEOUS. 

(a) GOVERNING LAW. This Amendment and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

[Signature Page to Amendment No.1 to Series D
Preferred Stock Purchase Agreement]

(b) COUNTERPARTS. This Amendment may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

(c) TITLES AND SUBTITLES. The titles and subtitles used in this
Amendment are used for convenience only and are not to be considered in
construing or interpreting this Amendment.

(d) AMENDMENTS AND WAIVERS. Any term of this Amendment may be
amended or waived only with the written consent of the Company, GWI and GGL,
provided that at such time as GWI has transferred record ownership of all the
securities of the Company held by GWI to GGL, any term of this Amendment may be
amended or waived only with the written consent of the Company and GGL. Any
amendment or waiver effected in accordance with this Section 4(d) shall be
binding upon the GWI and GGL, each transferee of the securities of the Company
held by GWI or GGL, each future holder of all such securities, and the Company.

(e) SEVERABILITY. If one or more provisions of this Amendment are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Amendment, (b) the balance of the
Amendment shall be interpreted as if such provision were so excluded and (c) the
balance of the Amendment shall be enforceable in accordance with its terms.

[Signature Page Follows]

[Signature Page to Amendment No.1 to Series D
Preferred Stock Purchase Agreement]

IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the day and year first set forth above.

COMPANY:

CYTOKINETICS, INCORPORATED

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

Name:  James Sabry
------------------------------

Title: President & CEO
------------------------------

[Signature Page to Amendment No.1 to Series D
Preferred Stock Purchase Agreement]

GWI:

GLAXO WELLCOME INTERNATIONAL B.V.

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

Name:  Donald F. Parman
------------------------------

Title: Attorney-in-Fact
------------------------------

[Signature Page to Amendment No.1 to Series D
Preferred Stock Purchase Agreement]

GGL:

GLAXO GROUP LIMITED

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

Name:  Donald F. Parman
------------------------------

Title: Attorney-in-Fact
------------------------------

[Signature Page to Amendment No.1 to Series D
Preferred Stock Purchase Agreement]

Exhibit 10.28

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

EXCLUSIVE LICENSE AGREEMENT

BETWEEN

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,

THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY

AND

CYTOKINETICS, INCORPORATED

FOR

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

TABLE OF CONTENTS

Article No.                                    Title                                                   Page
-----------                                    -----                                                   ----

1.            DEFINITIONS ....................................................................      2
2.            EXCLUSIVE GRANT OF LICENSE......................................................      5
3.            GRANT OF SUBLICENSES............................................................      6
4.            PAYMENT TERMS...................................................................      7
5.            LICENSE-ISSUE FEE AND EQUITY....................................................      7
6.            MILESTONE PAYMENTS..............................................................      8
7.            EARNED ROYALTIES AND MINIMUM ANNUAL ROYALTIES...................................      9
8.            DUE DILIGENCE...................................................................     10
9.            PROGRESS AND ROYALTY REPORTS....................................................     11
10.           BOOKS AND RECORDS...............................................................     12
11.           LIFE OF THE AGREEMENT...........................................................     12
12.           TERMINATION BY UCSD.............................................................     13
13.           TERMINATION BY LICENSEE.........................................................     13
14.           DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION.......................     13
15.           USE OF NAMES AND TRADEMARKS.....................................................     14
16.           LIMITED WARRANTY ...............................................................     14
17.           PATENT PROSECUTION AND MAINTENANCE .............................................     15
18.           PATENT MARKING

.................................................................     16
19.           PATENT INFRINGEMENT.............................................................     17
20.           INDEMNIFICATION ................................................................     18
21.           NOTICES ........................................................................     19
22.           ASSIGNABILITY...................................................................     20
23.           NO WAIVER.......................................................................     20
24.           FAILURE TO PERFORM..............................................................     20
25.           GOVERNING LAWS..................................................................     20
26.           [Intentionally Omitted].........................................................     20
27.           GOVERNMENT APPROVAL OR REGISTRATION.............................................     20
28.           EXPORT CONTROL LAWS.............................................................     20
29.           SECRECY.........................................................................     21
30.           MISCELLANEOUS...................................................................     22

EXCLUSIVE LICENSE AGREEMENT

This License Agreement (the "Agreement") is made effective this 21st
day of April, 1998 (the "Effective Date") between THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY, a California corporation having offices at
900 Welch Road, Suite 350, Palo Alto CA, 94304, ("Stanford") and THE REGENTS OF
THE UNIVERSITY OF CALIFORNIA, a California corporation having its statewide
administrative offices at 300 Lakeside Drive, 22nd Floor, Oakland, California
94612-3550, ("The Regents"), both being represented by the University of
California, San Diego campus having its office at 9500 Gilman Drive, La Jolla,
CA 92093-0910, ("UCSD"), and CYTOKINETICS, INCORPORATED ("Licensee" or
"CYTOKINETICS"), a Delaware corporation having offices at 2800 Sand Hill Road,
Suite 250, Menlo Park, CA 94025. Stanford and The Regents are collectively
referred to herein as "Licensor."

WHEREAS

1.       Certain inventions, generally characterized as "[*]," as more
specifically described in (a) UCSD Case Nos. SD97-051, SD98-001, SD98-010 and
SD98-011; (b) UCSF Case No. SF 98-027 (Attorney Docket Number 18557B-000500);
and (c) Stanford Case No. S97-052 (collectively the "Invention"), were made in
the course of research at the UCSD, the University of California, San Francisco
("UCSF"), and Stanford and are covered by Licensor Patent Rights as defined
herein;

2.       The development of the Invention was sponsored in part by The
National Institutes of Health and The National Science Foundation, and as a
consequence, this license is subject to overriding obligations to the Federal
Government under 35 U.S.C. 200-212 and applicable regulations;

3.       The inventors are employees of The Regents or Stanford and
have assigned their rights to The Regents or Stanford, respectively;

4.       Licensee has evaluated the Invention under a Secrecy
Agreements with The Regents (UC Control Numbers 98-20-0009, 98-20-0010,
98-20-0019 and 98-20-0081), and has communicated its evaluation to The Regents;

5.       Licensee and The Regents have executed a Letter of Intent
dated 7 July, 1997, Control Number 98-30-0012;

6.       Licensee wishes to obtain rights from Licensor for the
commercial development, use, and sale of products from the Invention and
certain additional technologies as described in this Agreement, and Licensor is
willing to grant those rights so that the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

Invention and certain future technologies may be developed to their fullest and
the benefits enjoyed by the general public; and

7.       Licensee is a "small business firm" as defined in 15 U.S.C.
632;

8.       The parties recognize and agree that royalties due under this
Agreement will be paid on both pending patent applications and issued patents;

9.       Stanford and The Regents have entered into Interinstitutional
Agreements, attached as APPENDIX A and APPENDIX B ("Interinstitutional
Agreements"), pursuant to which the University of California, San Diego ("UCSD")
became authorized to administer the Invention. UCSD's office is located at 9500
Gilman Drive, La Jolla, CA 92093-0910. The Interinstitutional Agreement between
Stanford and The Regents set forth in APPENDIX A has been amended by the parties
thereto; the amendment is included in APPENDIX A.

10.      The development of the Invention was sponsored in part by the
Howard Hughes Medical Institute ("HHMI"). The Regents acquired the right to
license the Invention from HHMI, under the terms of the Interinstitutional
Agreement between HHMI and The Regents, UC Control No. 86-18-0017. The Regents
are required under the terms of the Interinstitutional Agreement, UC Control No.
86-18-0017, to grant HHMI a paid-up, non-exclusive, royalty-free irrevocable
license to use the Invention for its non-commercial purposes, but with no right
on the part of HHMI to sublicense.

In view of the foregoing, the parties agree:

1.       DEFINITIONS

1.1      "Affiliate" means any corporation or other business entity in
which Licensee owns or controls, directly or indirectly, at least twenty percent
(20%) of the outstanding stock or other voting rights entitled to elect
directors, or which owns or controls directly or indirectly at least twenty
percent (20%) of the outstanding stock or other voting rights entitled to elect
directors of Licensee; but in any country where the local law does not permit
foreign equity participation of at least twenty percent (20%), then an
"Affiliate" includes any company in which Licensee owns or controls or is owned
or controlled by, directly or indirectly, the maximum percentage of outstanding
stock or voting rights permitted by local law.

1.2      "Collaborating Partner" means any third party, including
without limitation, a pharmaceutical or biotechnology company, with which
Licensee or an Affiliate has a contractual relationship relating to the
Invention (i.e., a contractual relationship pursuant to which Licensee or the
Affiliate may grant sublicense rights to the third party with respect to all or
any portion of Licensee's license rights under Section 2.1 of this Agreement),
where any one or more of the following applies: (i) the third party grants to
Licensee or the Affiliate any right to develop, make, have made, use, import,
sell, have sold or distribute any technology, intellectual property or products;
(ii) the third party makes or may become

-2-

obligated to make payments to Licensee or the Affiliate, or Licensee or the
Affiliate makes or may become obligated to make payments to the third party on
account of research, development or distribution activities or expenses; or
(iii) the third party and Licensee or the Affiliate collaborate in connection
with drug discovery, including without limitation, an arrangement in which the
agreement between the third party and Licensee or the Affiliate creates a joint
research committee, joint development committee or similar body that has members
from both the third party and Licensee or the Affiliate, or an arrangement in
which the third party agrees to contribute or use its own products, technology
or intellectual property in conjunction with rights the third party obtains from
Licensee or the Affiliate.

1.3      "Device" means an instrument, machine or kit (including
screening or reagent kits and biological materials specifically claimed in
Licensor Patent Rights, but excluding all other biological materials, drugs,
compounds, computer hardware, computer software or computer-robot interfaces)
where all of the following apply: (i) the instrument, machine or kit is designed
for use in and is used in the Field of Use; (ii) the instrument, machine or kit
is sold by Licensee, an Affiliate or a Sublicensee to a third party that is not
a Collaborating Partner; (iii) the instrument, machine or kit is a Licensed
Product; and (iv) the sale or transfer of the instrument, machine or kit by
Licensee, the Affiliate or Sublicensee would constitute, but for the license
granted to Licensee under this Agreement, an infringement of any pending or
issued claim within Licensor Patent Rights.

1.4      "Field of Use" means all uses in humans or animals, including
all therapeutic and diagnostic uses, but excludes agricultural uses such as
herbicides or pesticides.

1.5      "First Market Introduction" means the first commercial sale or
commercial transfer to any third party after approval of a New Drug Application
("NDA") by the United States Food and Drug Administration ("FDA") of any Device,
Royalty-Bearing Product or Service.

1.6      "IND" means an Investigational New Drug Application relating
to any drug resulting from the use of a Licensed Product, Licensed Method or
Technology and approved by the U.S. Food and Drug Administration.

1.7      "Licensed Method" means any method that is covered by Licensor
Patent Rights, or the use of which would constitute, but for the license granted
to Licensee under this Agreement, an infringement of any pending or issued claim
within Licensor Patent Rights.

1.8      "Licensed Product" means any product that is covered by
Licensor Patent Rights, that is produced by the Licensed Method, or the use of
which would constitute, but for the license granted to Licensee under this
Agreement, an infringement of any pending or issued claim within Licensor Patent
Rights.

1.9      "Licensor Patent Rights" means Regents' Patent Rights and
Stanford Patent Rights.

-3-

1.10     "Net Sales" means the total of the gross prices actually
received by Licensee or an Affiliate on account of the sale or transfer of
Devices, Royalty-Bearing Products or Services by Licensee, an Affiliate or a
Sublicensee, less the sum of the following actual deductions where applicable:
customary cash, trade, or quantity discounts; sales, use, tariff, import/export
duties or other excise taxes imposed on particular sales; transportation charges
and allowances; and credits to customers because of rejections or returns. For
purposes of calculating Net Sales: (i) if Licensee sells or transfers a Device,
Royalty-Bearing Product or Service to an Affiliate and the Affiliate sells or
transfers such Device, Royalty-Bearing Product or Service, then only the sale by
the Affiliate shall be included in Net Sales, less the deductions described
above (and the sale or transfer by Licensee shall not be included in Net Sales);
and (ii) if Licensee or an Affiliate sells or transfers a Device,
Royalty-Bearing Product or Service to a Sublicensee, then only the sale by the
Sublicensee shall be included in Net Sales, less the deductions described above
(and the sale or transfer by Licensee or the Affiliate shall not be included in
Net Sales).

1.11     "Phase II Trials" means clinical trials conducted by Licensee
on a limited patient population to determine the effectiveness of the applicable
pharmaceutical for specific targeted indications, to determine dosage tolerance
and optimal dosage and to identify possible adverse side effects and safety
risks.

1.12     "Regents' Patent Rights" means any subject matter claimed in
or covered by any of the following:

a.       Case No. SD97-051 - "[*]," Serial [*];

b.       Case No. SD98-001 - "[*]," Serial [*];

c.       Case No. SD98-010 - "[*]," Serial [*];

d.       Case No. SD98-011 - "[*]," Serial [*];

e.       Case No. SF98-027 - "[*]," Serial number pending
(filed by UCSF on April 14, 1998; Attorney Docket Number 18557B-000500);

and continuing applications thereof including divisions, substitutions and
continuation-in-part applications supported by the original application or a
division or substitution (but excluding continuation-in-part applications not
supported by the original application or a division or substitution thereof);
any patents issuing on said applications including reissues, reexaminations and
extensions; and any corresponding foreign applications or patents.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-4-

1.13     "Rights" means Licensed Products and Licensor Patent Rights.

1.14     "Royalty-Bearing Product" means a Licensed Product that
incorporates drug raw material discovered by Licensor and licensed to Licensee
under this Agreement, and excludes, without limitation, Licensed Products
discovered by Licensee, an Affiliate or sublicensee in whole or in part through
the use of a Licensed Method.

1.15     "Service" means the screening of compounds by Licensee, an
Affiliate, or Sublicensee as a service for a third party where all of the
following apply: (i) the compounds are supplied by a third party, and Licensee,
the Affiliate or Sublicensee provides to the third party the results of the
screening in exchange for payment by the third party to Licensee, the Affiliate
or Sublicensee; (ii) the third party to whom Licensee is providing the service
is not a Collaborating Partner; and (iii) the screening by Licensee, the
Affiliate or Sublicensee would constitute, but for the license granted to
Licensee under this Agreement, an infringement of any pending or issued claim
within Licensor Patent Rights.

1.16     "Sublicense" means a sublicense granted by Licensee to a
Sublicensee of Licensee's license rights under Section 2.1 of this Agreement. 

1.17     "Sublicensee" means a third party, other than an Affiliate or
a Collaborating Partner, to which Licensee grants sublicense rights with respect
to Licensee's license rights under Section 2.1 of this Agreement to develop,
make, have made, import, sell, have sold and distribute Licensed Products.

1.18     "Stanford Patent Rights" means any subject matter claimed in
or covered by Stanford Case No. S97-052 - "[*]," Serial [*], and continuing
applications thereof including divisions, substitutions and continuation-in-part
applications supported by the original application or a division or substitution
(but excluding continuation-in-part applications not supported by the original
application or a division or substitution thereof); any patents issuing on said
applications including reissues, reexaminations and extensions; and any
corresponding foreign applications or patents.

1.19     "Technology" means all existing information of Licensor (as
reasonably determined by Licensor) relating to Rights to the extent applicable
to the Field of Use, including but not limited to (a) Data of a technical nature
relating to Rights, (b) useful pre-clinical, clinical and other data respecting
the safety and efficacy of Licensed Products, and (c) information that is
necessary or useful in connection with research or development activities, or in
connection with the manufacture, use or sale of Licensed Products or obtaining
governmental approvals relating to Licensed Products.

2.       EXCLUSIVE GRANT OF LICENSE

2.1      Subject to the limitations set forth in this Agreement,
Licensor grants to Licensee a world-wide license under Licensor Patent Rights to
develop, make, have made,

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-5-

use, import ??, have sold and distribute Licensed Products and products or
services that arise from ?? of or use Licensed Products, Licensed Methods
and Technology; to practice Licensed Methods; and to use Technology.

2.2      Except as otherwise provided in this Agreement, the license
granted in Section 2.1 with ?? to Licensor Patent Rights is exclusive for the
life of the Agreement. The license granted in Section 2.1 with respect to
Technology is non-exclusive for the life of this Agreement.

2.3      The license granted in Sections 2.1 and 2.2 is subject to all
the applicable provisions ?? license to the United States Government executed by
UCSD and is subject to the ?? obligations to the U.S. Government under 35
U.S.C. 200-212 and applicable government ?? regulations.

2.4      The licenses granted in Sections 2.1 and 2.2 are limited to
the Field of Use. Licensee ?? license under this Agreement outside the Field
of Use. Subject to restrictions imposed by ?? on The Regents, Licensee shall
have the first right to negotiate a license from The ?? future improvements
to the Invention in the Field of Use, provided: (i) such improvements arise from
research funded by Licensee or an Affiliate and performed by the very ?? of
the Invention on a campus governed by the Regents; (ii) such improvements are
solely ?? by The Regents; (iii) the licenses granted in Sections 2.1 and 2.2
remain exclusive; ?? (iv) this Agreement has not been terminated. Such "first
right to negotiate" shall ?? the date Licensee is informed by The Regents of
the improvement and shall terminate ?? therefrom.

2.5      The Regents and Stanford reserve all rights to use the
Invention and Technology ?? educational and research purposes.

3.       ?? SUBLICENSES

3.1      Licensor also grants to Licensee the right to issue
sublicenses to third parties under Licensor Patent Rights to make, have made,
use, import and sell and have sold Licensed Products, to practice the Licensed
Method and to use Technology, as long as Licensee has ?? exclusive rights
thereto in the Field of Use under this Agreement. To the extent applicable,
Sublicenses must include all of the rights and obligations due to The Regents
(and, if applicable, the United States Government, HHMI and Stanford) and
contained in this Agreement; provided, however, that sublicensees shall not be
obligated to make any payments to Licensor under Sections 4, 5, 6, 7 or 19.5 of
this Agreement (Licensee shall be responsible for complying with any payment
obligations as described in Sections 4, 5, 6, 7 and 19.5).

3.2      Licensee shall promptly provide Licensor with a copy of each
sublicense issued and summarize and deliver all reports due Licensor from
sublicensees.

-6-

3.3      Upon termination of this Agreement for any reason, Licensor,
at its sole discretion, shall determine whether Licensee shall cancel or assign
to Licensor any and all unexpired sublicenses.

4.       PAYMENT TERMS

4.1      Royalties are payable on Devices, Royalty-Bearing Products and
Services covered by both pending patent applications and issued patents.
Royalties generated will accrue in each country for the duration of Licensor
Patent Rights in that country and are payable to UCSD when Licensee (or, in the
case of sales by Affiliates, when the Affiliate) receives payment for
Royalty-Bearing Products from a third party.

4.2      Licensee shall pay earned royalties quarterly on or before
February 28, May 31, August 31 and November 30 of each calendar year. Each
payment will be for earned royalties accrued within Licensee's most recently
completed calendar quarter.

4.3      All payments due The Regents are payable in United States
Dollars. When Devices, Royalty-Bearing Products and Services are sold for
currencies other than United States Dollars, Licensee shall first determine the
earned royalty in the currency of the country in which Royalty-Bearing Products
were sold and then convert the amount into equivalent United States Dollars,
using the exchange rate quoted in the Wall Street Journal on the last business
day of the calendar quarter when payment was received by Licensee (or, in the
case of sales by Affiliates, when payment was received by the Affiliate).

4.4      If at any time legal restrictions prevent the remittance of
payments due within 180 days to Licensee from any country where a Device,
Royalty-Bearing Product or Service is sold, Licensee shall pay The Regents
payments owed directly from its U.S. source of funds.

4.5      If any patent or patent claim within Licensor Patent Rights is
held invalid by a court of competent jurisdiction and last resort and from which
no appeal has or can be taken, all obligation to pay royalties based on that
patent or claim or any claim patentably indistinct therefrom will cease as of
the date of final decision. Licensee will not, however, be relieved from paying
any royalties that accrued and were received before the final decision or that
are based on another patent or claim included within Licensor Patent Rights
that is not involved in the final decision.

4.6      In the event payments, patent cost reimbursements or fees are
not received by The Regents when due, Licensee shall pay to Licensor interest
charges at a rate of [*] percent ([*]%) per annum. Interest is calculated from
the date payment was due until actually received by The Regents.

5.       LICENSE-ISSUE AND PARTNERSHIP FEE

5.1      Licensee shall pay to Licensor a license-issue fee of: (i)
[*] ($[*]) within [*] days of the execution of this License Agreement; (ii) [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-7-

Dollars ($[*]) on the [*] of the Effective Date; and (iii) [*] Dollars ($[*]) on
the [*] of the Effective Date. This fee is non-refundable, non-cancelable, and
is not an advance against royalties. All payments due by Licensee to Licensor
hereunder shall be paid to UCSD. Licensee shall have no liability and Licensee's
rights under this Agreement shall not be affected on account of the failure of
UCSD to pay to Stanford or UCSF amounts due to Stanford or UCSF.

5.2      Within ten (10) days after receipt by Licensee from a
Collaborating Partner, pursuant to an agreement between Licensee and the
Collaborating Partner in which Licensee (i) grants to the Collaborating Partner
rights to sell, distribute or develop Licensed Products, or (ii) agrees to
collaborate with the Collaborating Partner in drug discovery for use in the
Field of Use using Licensed Products or Licensed Methods, of consideration in
the form of cash, stock purchase or equity investment in Licensee, with a
cumulative value equal to or grater than [*] Dollars ($[*]) but less than [*]
Dollars ($[*]), Licensee shall pay UCSD a partnership fee equal to $[*].
Thereafter, on February 28 of each year Licensee shall pay UCSD an annual
license fee equal to $[*] for each such collaboration agreement so long as the
agreement with the Collaborative Partner has not been terminated and the
Collaborative Partner continues to actively market and sell Licensed Products.
With respect to any Collaborating Partner, the $[*] fees described above shall
be increased to [*] U.S. Dollars ($[*]) when the cumulative consideration
described above received from such Collaborating Partner equals or exceeds [*]
U.S. Dollars ($[*]).

6.       MILESTONE PAYMENTS

Licensee shall pay to Licensor milestone payments in the following amounts
within thirty (30) days following the achievement of the specified events:

6.1      Within ten (10) days after the filing with the FDA of any IND
for a product discovered using Licensed Products by Licensee, an Affiliate or a
Sublicensee, $[*].

6.2      Within ten (10) days after the completion of Phase II Trials
(which will not be deemed to be complete until a Final Report for Phase II has
been submitted to and approved by the FDA) by Licensee, an Affiliate or a
Sublicensee for the first Royalty-Bearing Product, $[*]. Licensee shall only be
obligated to make one milestone payment under this Section 6.2.

6.3      Within ten (10) days after approval by the FDA of an NDA for a
product discovered using Licensed Products filed by Licensee, an Affiliate or a
Sublicensee, $[*].

6.4      Within ten (10) days after approval by the FDA of an NDA for a
product discovered using Licensed Products filed by a Collaborating Partner,
$[*].

All Milestone Payments made to Licensor prior to First Market Introduction of
any Device, Royalty-Bearing Product or Service shall be credited against
royalties owed to Licensor on

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-8-

account of such Device, Royalty-Bearing Product or Service. Thereafter,
milestone payments shall not be credited against royalties owed by Licensee to
Licensor.

7.       EARNED ROYALTIES AND MINIMUM ANNUAL ROYALTIES

7.1      a. Devices. Licensee shall pay to Licensor a royalty equal to:
(i) [*] percent ([*]%) of annual worldwide Net Sales by Licensee, an Affiliate
or a Sublicensee of Devices that do not contain computer hardware, computer
software or computer-robot interfaces; and (ii) [*] percent ([*]%) of annual
worldwide Net Sales by Licensee, an Affiliate or a Sublicensee of Devices that
contain computer hardware, computer software or computer-robot interfaces.

b. Royalty-Bearing Products. Licensee shall pay to Licensor a
royalty calculated on annual worldwide Net Sales of Royalty-Bearing Products by
Licensee, an Affiliate or a Sublicensee according to the following schedule:

1) [*]% on annual Net Sales of less than $[*];

2) [*]% on annual Net Sales greater than $[*], but
less than $[*];

3) [*]% on annual Net Sales greater than $[*], but
less than $[*];

4) [*]% on annual Net Sales greater than $[*], but 
less than $[*];

5) [*]% on annual Net Sales greater than $[*].

The royalty schedule described above shall be calculated based upon Net Sales of
Royalty-Bearing Products generated during each calendar year, so that aggregate
Net Sales are separately computed for each calendar year.

c. Services. Licensee shall pay to Licensor a royalty equal
to [*] percent ([*]%) of annual worldwide Net Sales of Services by Licensee, an
Affiliate or a Sublicensee.

Except for Devices, Royalty-Bearing Products and Services, no royalties shall be
payable with respect to the sale of Licensed Products, including without
limitation Licensed Products based on drug raw materials discovered in whole or
in part through the use of Licensed Methods such as screens, assays and
molecular targets such as molecular motors and their regulatory elements.

7.2      Licensee shall have the right to grant sublicenses under this
Agreement for all purposes and indications within the Field of Use. Licensee
shall pay The Regents "Licensor's Share" (defined below) of any "Qualified
Sublicense Payments" (defined below). "Qualified

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-9-

Sublicense Payments" shall mean up-front payments, milestone payments and the
premium portion over the then-fair market value of any purchase by the
Sublicensee of equity of Licensee, made by a Sublicensee to Licensee during the
term of this Agreement and the term of the applicable Sublicense, to the extent
made on account of the sublicense by Licensee of Licensor Patent Rights, but
shall not include: (i) payments made for the purchase of equity of Licensee to
the extent that the purchase is made at the then-fair market value of the
equity, as determined in good faith by the Board of Directors of Licensee; (ii)
royalties; and (iii) payments made for the purchase of products or services. If
the only license rights granted by Licensee to the Sublicensee consist of
Licensor Patent Rights and/or Licensed Methods (and no other rights, technology
or intellectual property), then "Licensor's Share" shall be [*] percent ([*]%)
of the Qualified Sublicense Payment. If the license rights granted by Licensee
to the Sublicensee include rights, technology or intellectual property in
addition to Licensor Patent Rights and/or Licensed Methods, then "Licensor's
Share" shall be [*] percent ([*]%) of the Qualified Sublicense Payment. Any
Qualified Sublicense Payments made by Sublicensee in a form other than cash
shall be valued at the then-fair market value of such Qualified Sublicense
Payments. If the parties cannot agree on the fair market value of such non-cash
Qualified Sublicense Payments, the parties agree to meet and negotiate in good
faith such fair market value.

7.3      Licensee shall pay to Licensor a minimum annual royalty of [*]
Dollars ($[*]) for the life of Licensor Patent Rights, beginning with the year
of the First Market Introduction of any Device, Royalty-Bearing Product or
Service, but no later than February 28 of the first full calendar year beginning
after the [*] year anniversary of the Effective Date. For the first year of
commercial sales, if earlier than the [*] year anniversary of the Effective
Date, Licensee's obligation to pay the minimum annual royalty will be pro-rated
for the number of months remaining in that calendar year when commercial sales
commence and will be due the following February 28, to allow for crediting of
the prorated year's earned royalties. For subsequent years, the minimum annual
royalty will be paid to Licensor by February 28 of the year immediately
following the applicable year, and will be credited against the earned royalty
due for the calendar year in which the minimum payment was made.

8.       DUE DILIGENCE

8.1      Licensee, on execution of this Agreement, shall itself or
through one or more third parties diligently proceed with the development,
manufacture and sale of Licensed Products and shall itself or through one or
more third parties earnestly and diligently endeavor to market the same within a
reasonable time after execution of this Agreement and in quantities sufficient
to meet market demands. Licensee shall develop one or more [*] incorporating
some portion of the Invention within [*] ([*]) months after the Effective Date.
Within [*] ([*]) months after the Effective Date, some combination of Licensee
and/or one or more sublicensees or partners of Licensee shall have initiated at
least [*] ([*]) [*] which [*] shall address at least [*] ([*]) of the following
[*]: [*] that Licensee informs Licensor are suitable [*]

* Certain information on this page has been omitted and filed Separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-10-

[*]. Licensor expects that the first sale of Licensed Products shall occur
within [*] ([*]) years of the execution date of this Agreement, unless the first
sale of Licensed Products is delayed by the process of regulatory approval by
federal, state or foreign national agencies or by the occurrence of other events
beyond the reasonable control of Licensee.

8.2      Licensee shall itself or through one or more third parties
endeavor to obtain all necessary governmental approvals for any manufacture, use
or sale of Licensed Products, or shall certify to UCSD in writing that none are
needed.

8.3      If Licensee (or an Assignee or sublicensee) fails to either:
(1) submit [*] to the [*] within [*] ([*]) years from the Effective Date of this
Agreement; or (2) begin to [*] the [*] within [*] ([*]) months after receiving
[*] of the [*] for such [*]; then UCSD has the right and option to either
terminate this Agreement or reduce Licensee's exclusive license to a
nonexclusive license. This right, if exercised by UCSD, supersedes the rights
granted in Article 2 (GRANT), and shall be exercised, if at all, by written
notice delivered to Licensee within thirty (30) days after the applicable date
described above.

8.4      In addition to the obligations set forth above, Licensee and
its partners, Affiliates and sublicensees shall collectively spend: (i) [*] $[*]
for the [*] during the [*] ([*]) [*] of this Agreement, and (ii) beginning with
the [*] and continuing through and including the [*], [*] $[*] for any [*] ([*])
[*].

9.       PROGRESS AND ROYALTY REPORTS

9.1      Beginning February 28, 1998 and semi-annually thereafter,
Licensee shall submit to UCSD a progress report covering Licensee's (and any
Affiliate's) activities related to the development and testing of all Devices,
Royalty-Bearing Products or Services arising from the use of a Licensed Product,
a Licensed Method or the Technology and the obtaining of the governmental
approvals necessary for marketing. Progress reports are required for each
Device, Royalty-Bearing Product or Service until the first commercial sale of
that Device, Royalty-Bearing Product or Service occurs in the United States.

9.2      Progress reports submitted under Paragraph 9.1 should include,
but are not limited to, the following topics related to the Device,
Royalty-Bearing Product or Service that arise from the use of a Licensed
Product, a Licensed Method or the Technology:

-        summary of work completed

* Certain information on this page has been omitted and filed Separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-11-

-        key scientific discoveries

-        summary of work in progress

-        current schedule of anticipated events or milestones

-        market plans for introduction of Devices, Royalty-Bearing
Products or Services arising from the use of a Licensed
Product, a Licensed Method or the Technology, and

-        a summary of resources (dollar value) spent in the reporting
period.

9.3      Licensee has a responsibility to inform UCSD of any change in
its status (or the status of any Affiliate that performs any activities in
connection with this Agreement) as a small business entity (as defined by the
United States Patent and Trademark Office).

9.4      Licensee shall report to UCSD in its immediately subsequent
progress and royalty report the date of first commercial sale of a Device,
Royalty-Bearing Product or Service in each country.

9.5      After the first commercial sale of a Royalty-Bearing Product
anywhere in the world, Licensee shall make quarterly royalty reports to UCSD on
or before each February 28, May 31, August 31 and November 30 of each year. Each
royalty report will cover Licensee' most recently completed calendar quarter and
will show (a) the gross sales and Net Sales of Devices, Royalty-Bearing Products
and Services sold during the most recently completed calendar quarter; (b) the
number of each type of Device, Royalty-Bearing Product or Service sold; (c) the
royalties, in U.S. dollars, payable with respect to sales of Devices, Royalty-
Bearing Products or Services; (d) the method used to calculate the royalty; and
(e) the exchange rates used.

9.6      If no sales of Devices, Royalty-Bearing Products or Services
have been made during any reporting period, a statement to this effect is
required.

10.      BOOKS AND RECORDS

10.1     Licensee shall keep accurate books and records showing all
Devices, Royalty- Bearing Products and Services manufactured, used, and/or sold
under the terms of this Agreement. Books and records must be preserved for at
least five (5) years from the date of the royalty payment to which they pertain.

10.2     Licensee' books and records relating to Net Sales must be open
to inspection by representatives or agents of Licensor at reasonable times. UCSD
shall bear the fees and expenses of examination but if an error in royalties of
more than [*] percent ([*]%) of the total royalties due for any year is
discovered in any examination then Licensee shall bear the reasonable fees and
expenses of that examination. Licensor agrees to keep confidential any
information discovered pursuant this Section 10.2 or Sections 9.1 or 9.2.

11.      LIFE OF THE AGREEMENT

* Certain information on this page has been omitted and filed Separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-12-

11.1     Unless otherwise terminated by operation of law or by acts of
the parties in accordance with the terms of this Agreement, this Agreement will
be in force from the Effective Date until: (1) if a patent that is included
within Licensor Patent Rights is issued, the expiration of the last-to-expire
patent licensed under this Agreement; (2) if no patent that is included within
Licensor Patent Rights is issued, [*] ([*]) years from the date of this
Agreement, unless all patent applications licensed under this Agreement have
been abandoned as of the [*] anniversary of this Agreement (and Licensor has
complied with its obligations in Article 17), in which case this Agreement shall
terminate on the [*] anniversary of this Agreement.

11.2     Any termination of this Agreement will not affect the rights
and obligations set forth in the following Articles:

Article 10   Books and Records

Article 14   Disposition of Licensed Products on Hand on
Termination

Article 15   Use of Names and Trademarks

Article 20   Indemnification

Article 24   Failure to Perform

Article 29   Secrecy

12.      TERMINATION BY UCSD

If Licensee fails to perform or violates any material term of this
Agreement, then UCSD may give written notice of default ("Notice of Default") to
Licensee. If Licensee fails to repair the default within sixty (60) days of the
effective date of Notice of Default (or, with respect to a default that is not
reasonably curable within sixty (60) days, such additional reasonable period of
time as may be required under the circumstances to cure the default, which
additional period of time in no event shall exceed one hundred eighty (180)
days), UCSD may terminate this Agreement and its licenses by a second written
notice ("Notice of Termination"). If a Notice of Termination is sent to
Licensee, this Agreement will automatically terminate on the effective date of
that notice. Termination will not relieve Licensee of its obligation to pay any
fees owing at the time of termination and will not impair any accrued right of
UCSD. These notices are subject to Article 19 (Notices).

13.      TERMINATION BY LICENSEE

13.1     Licensee has the right at any time to terminate this Agreement
in whole or as to any portion of Licensor Patent Rights by giving notice in
writing to UCSD. Notice of termination will be subject to Article 19 (Notices)
and termination of this Agreement will be effective ninety (90) days from the
effective date of notice.

13.2     Any termination under the above paragraph does not relieve
Licensee of any obligation or liability accrued under this Agreement prior to
termination or rescind any payment made to UCSD or anything done by Licensee
prior to the time termination becomes

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-13-

effective. Termination does not affect in any manner any rights of UCSD arising
under this Agreement prior to termination.

14.      DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION

Upon termination of this Agreement Licensee is entitled to dispose of
all previously made or partially made Licensed Products, but no more, within a
period of [*] ([*]) days provided that the sale of those Licensed Products is
subject to the terms of this Agreement, including but not limited to the
rendering of reports and payment of royalties required under this Agreement.

15.      USE OF NAMES AND TRADEMARKS

Nothing contained in this Agreement confers any right to use in
advertising, publicity, or other promotional activities any name, trade name,
trademark, or other designation of either party hereto (including contraction,
abbreviation or simulation of any of the foregoing). Unless required by law, the
use by Licensee of the names Stanford University, HHMI, UCSD, UCSF or any other
campus of The Regents is prohibited.

16.      LIMITED WARRANTY

16.1     The persons executing this Agreement on behalf of the
constituent members of Licensor warrant that they are duly authorized to do so.
Each constituent member of Licensor warrants that this Agreement constitutes the
binding obligation of such constituent member and is enforceable in accordance
with its terms. UCSD has separately provided to Licensee the Interinstitutional
Agreements. The Interinstitutional Agreements shall not be terminated, and may
not be amended in a manner that adversely affect Licensee's rights hereunder.

16.2     This license and the associated Invention are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. LICENSOR MAKES NO REPRESENTATION OR WARRANTY THAT
THE LICENSED PRODUCTS OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT OR OTHER
PROPRIETARY RIGHT.

16.3     IN NO EVENT MAY LICENSOR BE LIABLE FOR ANY INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF
THE INVENTION OR LICENSED PRODUCTS.

16.4     Nothing in this Agreement:

16.4.1   is a warranty or representation by Licensor as to the
validity or scope of any Licensor Patent Rights;

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-14-

16.4.2   is a warranty or representation that anything made,
used, sold or otherwise disposed of under any license
granted in this Agreement is or will be free from
infringement of patents of third parties;

16.4.3   is an obligation to bring or prosecute actions or
suits against third parties for patent infringement
except as provided in Article 19;

16.4.4   confers by implication, estoppel or otherwise any
license or rights under any patents of Licensor other
than Licensor Patent Rights as defined in this
Agreement, regardless of whether those patents are
dominant or subordinate to Regent's Patent Rights; or

16.4.5   is an obligation to furnish any know-how not provided
in Regents' Patent Rights except as otherwise
required under this Agreement.

17.      PATENT PROSECUTION AND MAINTENANCE

17.1     As long as Licensee has paid patent costs as provided for in
Paragraph 17.6, Licensor shall diligently endeavor to prosecute and maintain the
United States and foreign patents comprising Licensor Patent Rights, using
counsel of its choice selected from those approved by Licensee from the list
approved by Licensor. Licensor shall provide Licensee  with copies of all
relevant documentation so that Licensee may be informed of the continuing
prosecution and Licensee agrees to keep this documentation confidential.
Licensor's counsel will take instructions only from Licensor, considering input
from Licensee after these instructions have been approved in writing by
Licensor, and all patents and patent applications under this Agreement will be
assigned solely to Licensor.

17.2     Licensor shall give thirty (30) days advance notice to
Licensee of any intention or decision to abandon or to otherwise cease
preparation, filing, prosecution or maintenance of any patent or patent
application relating to the Licensor Patent Rights (a "Proposed Discontinued
Patent"); provided, however, that abandonment of a patent application in favor
of a continuation or continuation-in-part thereof shall not constitute
discontinuance or abandonment of the parent application. In such case, Licensee
may elect at its sole discretion to cause Licensor to continue the preparation,
filing, prosecution or maintenance of the Proposed Discontinued Patent, so long
as Licensee agrees to pay all reasonable costs of Licensor in connection with
such preparation, filing, prosecution or maintenance at its sole expense.
Discontinuance may be on a country-by-country basis or for a patent application
or patent series in total.

17.3     Licensor shall use all reasonable efforts to amend any patent
application to include claims reasonably requested by Licensee and to file
patent applications reasonably requested by Licensee to protect the products
contemplated to be sold under this Agreement.

17.4     Licensee may apply for an extension of the term of any patent
included within Licensor Patent Rights, if appropriate. Licensee shall prepare
all documents, and UCSD agrees to execute the documents and to take additional
action as Licensee reasonably requests in connection therewith.

-15-

17.5     If either party receives notice pertaining to infringement or
potential infringement of Licensor Patent Rights, that party shall notify the
other party within ten (10) days after receipt of notice of infringement, and
the terms of Paragraph 19 of this Agreement shall apply.

17.6     Licensee shall reimburse UCSD for all the reasonable costs of
preparing, filing, prosecuting and maintaining all United States and foreign
patent applications contemplated by this Agreement and requested by Licensee.
Relevant costs billed by UCSD's counsel will be rebilled to Licensee and are due
within 30 days of rebilling by UCSD. These costs include: (a) patent prosecution
costs for the Invention incurred by UCSD prior to the execution of this
Agreement; (b) any patent prosecution costs that may be incurred for
patentability opinions, re-examination, re-issue, interferences, or inventorship
determinations; and (c) an additional amount equal to [*]% of the amount
properly billed to Licensee under this paragraph with respect to amounts
incurred by Licensor after the Effective Date. Prior costs relating to the
filing of patents requested by Licensee will be due ninety (90) days after
execution of this Agreement and billing by UCSD.

17.7     Licensee may request Licensor to obtain patent or other patent
protection on the Invention or Licensor Patent Rights, as they relate to the
Field of Use in foreign countries, if" available, Licensor shall diligently
endeavor to obtain such patents or patent protection. If Licensee desires
Licensor to obtain such protection, Licensee shall notify Licensor of Licensee'
decision to have Licensor obtain or maintain foreign patents not less than sixty
(60) days prior to the deadline for any payment, filing, or action to be taken
in connection therewith. This notice concerning foreign filing must be in
writing, must identify the countries desired, and must reaffirm Licensee's
obligation to underwrite the costs thereof. The absence of such a notice from
Licensee to Licensor will be considered an election not to obtain or maintain
such foreign rights.

17.8     Licensee's obligation to underwrite and to pay patent
prosecution costs will continue for so long as this Agreement remains in effect,
but Licensee may terminate its obligations with respect to any given patent
application or patent upon three (3) months written notice to UCSD. Licensor
will use its best efforts to curtail patent costs when a notice of termination
is received from Licensee. Licensor may prosecute and maintain such
application(s) or patent(s) at its sole discretion and expense, but Licensee
will have no further right or licenses thereunder. Non-payment of patent costs
may be deemed by UCSD as an election by Licensee not to the maintain
application(s) or patent(s) for which payment was not made, provided that UCSD
notifies Licensee in writing prior to the time UCSD ceases maintenance of any
patent or patent application and Licensee has not made payment within ten (10)
days after receipt of such notice.

17.9     If Licensee terminates its obligation to pay patent
prosecution costs pursuant to Section 17.8, UCSD may, after notification of
Licensee, file, prosecute or maintain patent applications at its own expense in
any country in which Licensee has elected to terminate its payment obligation
pursuant to Section 17.8, and such applications and resultant patents will not
be subject to this Agreement.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-16-

18.      PATENT MARKING

Licensee shall mark all Licensed Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.

19.      PATENT INFRINGEMENT

19.1     If Licensee learns of the substantial infringement of any
patent licensed under this Agreement, Licensee shall call UCSD's attention
thereto in writing and provide UCSD with reasonable evidence of infringement.
Neither party will notify a third party of the infringement of any of Licensor
Patent Rights without first obtaining consent of the other party, which consent
will not be unreasonably denied or delayed. Both parties shall use their best
efforts, including but not limited to arbitration, in cooperation with each
other to terminate infringement without litigation.

19.2     Licensee may request that Licensor take legal action against
the infringement of Licensor Patent Rights. Request must be in writing and must
include reasonable evidence of infringement. If the infringing activity has
damaged or reasonably threatens to damage Licensee and has not abated within
seventy-five (75) days following the effective date of request, Licensor then
has the right to:

19.2.1   commence suit; or

19.2.2   refuse to participate in the suit.

UCSD shall give notice of Licensor's election in writing to Licensee by the end
of the seventy-fifth (75th) day after receiving notice of written request from
Licensee. Licensee may thereafter bring suit for patent infringement, at its own
expense, if and only if Licensor elects not to commence suit and if the
infringement occurred, at least in part, during the period and in a jurisdiction
where Licensee had exclusive rights under this Agreement. If Licensor elects to
commence suit, then Licensee may elect to share equally in the expense of such
litigation, subject to its right at any later time to discontinue sharing in the
expenses of the litigation. If, however, Licensee elects to bring suit in
accordance with this paragraph, Licensor may thereafter join that suit at its
own expense.

19.3     Legal action as is decided on will be at the expense of the
party bringing suit (subject to the election of Licensee to share equally in the
expenses of the legal action as described above). Subject to Section 19.5, all
recoveries recovered thereby will be shared between Licensor and Licensee pro
rata in accordance with the expenses paid by each party in connection with the
litigation (expenses paid by Licensor pursuant to the last sentence of Section
19.2 shall not be included in the determination of the pro rata share).

19.4     Each party shall reasonably cooperate with the other in
litigation proceedings instituted hereunder, but at the reasonable expense of
the party bringing suit. Litigation will

-17-

be controlled by the party bringing the suit, except that Licensor may be
represented by counsel of its choice and at its expense in any suit brought by
Licensee.

19.5     Any recovery actually obtained by Licensee in a patent
infringement action against a third party in excess of litigation costs will,
only to the extent that such recovery is attributable to Devices,
Royalty-Bearing Products or Services sold by the third party infringer, be
shared with Licensor as follows:

a)       any payment for past sales by the third party infringer of
Devices, Royalty-Bearing Products or Services will be deemed Net Sales and
Licensee will pay Licensor royalties thereon at the rates specified in Article
7.1.

b)       any payment which covers future sales of Devices,
Royalty-Bearing Products or Services will be deemed a sublicense to a
partnership project, and monies will be shared as specified in Sections 5.6 and
5.7, to a maximum of $[*] per each infringer's infringing product or [*]% of the
total payments made by the third party infringer to Licensee in connection with
the litigation, whichever is the lesser.

c)       Licensee and Licensor agree to negotiate in good faith
appropriate compensation to Licensor for any non-cash settlement or
cross-license settlement with an infringer; provided that (i) the compensation
shall only be provided to the extent such non-cash settlement or cross-license
settlement is attributable to the sale by the third party infringer of Devices,
Royalty-Bearing Products or Services; (ii) with respect to any non-cash or
cross-license settlement, Licensee shall pay to Licensor an amount equal to the
then fair market value of the non-cash or cross-license consideration received
by Licensee from the third party infringer.

d)       Licensor will not share in any portion of the recovery by
Licensee that is payment for willful infringement or is not paid with respect to
the sale by the third party infringer of Devices, Royalty-Bearing Products or
Services.

20.      INDEMNIFICATION

20.1     Licensee shall indemnify, hold harmless and defend Licensor,
its officers, employees, and agents; the sponsors of the research that led to
the Invention; and the inventors of the patents and patent applications in
Licensor Patent Rights and their employers against any and all claims, suits,
losses, damage, costs, fees, and expenses resulting from or arising out of
exercise of this license or any sublicense. This indemnification includes, but
is not limited to, any product liability, but shall exclude any breach of this
Agreement or any gross negligence or intentional misconduct by Licensor.

20.2     Within ninety (90) days after the Effective Date, Licensee, at
its sole cost and expense, shall insure its activities in connection with the
work under this Agreement and obtain, keep in force and maintain insurance as
follows, or an equivalent program of self insurance:

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-18-

Comprehensive or commercial form general liability insurance
(contractual liability included) with limits as follows:

-        Each Occurrence $[*] (to be increased to $[*] at any
time when Licensee is conducting human clinical
trials)

-        Products/Completed Operations Aggregate $[*]

-        Personal and Advertising Injury $[*]

-        General Aggregate (commercial form only) $[*]

The coverage and limits referred to under the above do not in any way
limit the liability of Licensee. Within ninety (90) days after the Effective
Date, Licensee shall furnish UCSD with certificates of insurance showing
compliance with all requirements. Certificates must:

-        Provide for thirty (30) day advance written notice to
UCSD and Stanford of any modification.

-        Indicate that UCSD and Stanford has been endorsed as
an additional Insured under the coverage referred to
under the above.

-        Include a provision that the coverage will be primary
and will not participate with nor will be excess over
any valid and collectable insurance or program of
self-insurance carried or maintained by UCSD and
Stanford.

20.3     UCSD shall promptly notify Licensee in writing of any claim or
suit brought against ?? respect of which UCSD intends to invoke the
provisions of this Article. Licensee shall ?? UCSD informed on a current basis
of its defense of any claims under this Article.

21.      NOTICES

Any ?? or payment required to be given to either party is properly
given and  effective on the ?? received. Notices shall be sent to the respective
addresses given below, or to another ?? as is designated by written notice given
to the other party.

In the case of Licensee:

Cytokinetics, Incorporated
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Attn: Dr. James Sabry, President and CEO

In the case of Licensor or UCSD:

THE UNIVERSITY OF CALIFORNIA, SAN DIEGO
Technology Transfer Office
9500 Gilman Drive
La Jolla, California 92093-0910

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-19-

Attention: Director;
Referring to: UCSD Case Nos. SD97-051,
SD98-001, SD98-010, SD98-011

22.      ASSIGNABILITY

This Agreement may be assigned by Licensor, but may be assigned by
Licensee only with the written consent of UCSD, which consent will not be
unreasonably withheld or delayed. Notwithstanding the foregoing, a merger or
sale of stock involving Licensee shall not be deemed to be an assignment of this
Agreement, and an assignment of this Agreement by Licensee in connection with a
sale of substantially all of Licensee's assets shall not require the consent of
UCSD. If Licensor assigns this Agreement, the assignee will agree in a written
agreement delivered to Licensee to be bound by the terms of this Agreement, and
Licensor shall continue to be bound by the terms of Articles 2 and 3, Section
16.1, Articles 17, 19, 21, 24, 25 and 30.

23.      NO WAIVER

No waiver by either party of any default of this Agreement may be
deemed a waiver' of any subsequent or similar default.

24.      FAILURE TO PERFORM

In either party finds it necessary to undertake legal action against
the other on account of failure of performance due under this Agreement, then
the prevailing party is entitled to reasonable attorney's fees in addition to
costs and necessary disbursements.

25.      GOVERNING LAWS

THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA, UNITED STATES OF AMERICA, WITH JURISDICTION IN
COURTS OF THE STATE OF CALIFORNIA, but the scope and validity of any patent or
patent application will be governed by the applicable laws of the country of
the patent or patent application.

26.      [Intentionally Omitted.]

27.      GOVERNMENT APPROVAL OR REGISTRATION

If this Agreement or any associated transaction to which Licensee
becomes a party is required by the law of any nation to be either approved or
registered with any governmental agency, Licensee shall assume all legal
obligations to do so.

28.      EXPORT CONTROL LAWS

-20-

Licensee shall observe all applicable United States and foreign laws
with respect to the transfer of Licensed Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations. This may
include a requirement that Licensee manufacture in the United States Licensed
Products that are to be sold in the United States.

29.      SECRECY

29.1     With regard to confidential information ("Data") supplied by
one party to another, which Data can be oral or written or both, both Licensee
and The Regents agree:

29.1.1    not to use the Data except for the sole purpose of
performing under the terms of this Agreement;

29.1.2   to safeguard Data against disclosure to others with
the same degree of care as it exercises with its own data of a
similar nature;

29.1.3   not to disclose Data to others (except by Licensee to
its actual or  prospective employees, agents, consultants,
contractors, investors, sublicensees, partners or regulatory
agencies who are bound to Licensee by a like obligation of
confidentiality) without the express written permission of the
other party (which shall not be unreasonably withheld or
delayed), except that neither party is prevented from using or
disclosing any of the Data that:

29.1.3.1 such party can demonstrate by written
records was previously known to it;

29.1.3.2 is now, or becomes in the future, public
knowledge other than through acts or omissions of
such party;

29.1.3.3 is lawfully obtained by Licensee from
sources independent of the other party; or

29.1.3.4 is required to be disclosed by law, court
order or process or by any governmental regulatory
body (including, without limitation, the United
States Securities and Exchange Commission); and

29.1.4   that the secrecy obligations of both parties with
respect to Data will continue for a period ending five (5)
years from the termination date of this Agreement.

29.2     With regard to biological material received by Licensee from
The Regents or Stanford, if any, including any cell lines, vectors, genetic
material, derivatives, products, progeny or material derived therefrom
("Biological Material"), Licensee agrees:

-21-

29.2.1   not to use Biological Material except for the sole
purpose of performing under the terms of this Agreement;

29.2.2   not to transfer Biological Material to others (except
to its actual or prospective employees, agents, consultants,
contractors, investors, partners, sublicensees, agents or
regulatory agencies who are bound to Licensee by like
obligations conditioning and restricting access, use and
continued use of Biological Material, including appropriate
Material Transfer Agreements with Licensee) without the
express written permission of UCSD, UCSF or Stanford, except
that Licensee is not prevented from transferring Biological
Material that:

29.2.2.1 becomes publicly available other than
through acts or omissions of Licensee, or

29.2.2.2 is lawfully obtained by Licensee from
sources independent of The Regents or Stanford;

29.2.3   to safeguard Biological Material against disclosure
and transmission to others with the same degree of care as
it exercises with its own biological materials of a similar
nature;

29.2.4   to destroy all copies of Biological Material at the
termination of this Agreement.

30.      MISCELLANEOUS

31.1     The headings of the several Paragraphs are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

31.2     This Agreement is not binding on the parties until it has
been signed below on behalf of each party. It is then effective as of the
Effective Date.

31.3     No amendment or modification of this Agreement is valid or
binding on the parties unless made in writing and signed on behalf of each
party.

31.4     This Agreement embodies the entire understanding of the
parties and supersedes all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof. The Secrecy Agreements referenced in Section 4 of the
recitals of this Agreement are hereby terminated.

31.5     In case any of the provisions contained in this Agreement is
held to be invalid, illegal, or unenforceable in any respect, that invalidity,
illegality or unenforceability will cot affect any other provisions of this
Agreement, and this Agreement will be construed as if the invalid, illegal, or
unenforceable provisions had never been contained in it.

-22-

IN WITNESS WHEREOF, both UCSD and Licensee have executed this
Agreement, in duplicate originals, by their respective and duly authorized
officers on the day and year written.

CYTOKINETICS, INCORPORATED              THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA

By: /s/ James Sabry                     By: /s/ Alan S. Paau
----------------------------            -------------------------------------
(Signature)                                 (Signature)

Name: JAMES SABRY                       Name: Alan S. Paau
---------------------------    
Dr. James Sabry                                                        

Title: President and Chief              Title: Director,
Executive Officer                Technology Transfer Office

Date: 5/4/98                            Date: 4/21/98

THE BOARD OF TRUSTEES OF THE
STANFORD JUNIOR UNIVERSITY

By: The Regents of The University of
California, as attorney-in-fact

By: /s/ Alan S. Paau
-------------------------------

Name: Alan S. Paau

Title: Director, Technology
Transfer Office

Date: 4/21/98

[SIGNATURE PAGE TO EXCLUSIVE LICENSE AGREEMENT]

-23-

Exhibit 10.29

MODIFICATION AGREEMENT

This agreement ("Agreement") is made on September 1, 2000 ("Effective
Date") by and between THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR
UNIVERSITY, a California corporation having offices at 900 Welch Road, Suite
350, Palo Alto, CA 94304 ("Stanford") and THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA, a California corporation having its statewide administrative offices
at 1111 Franklin Street, 12th Floor, Oakland, CA 94607-2500, ("The Regents")
both being represented by the University of California, San Diego campus having
its office at 9500 Gilman Drive, La Jolla, CA 92093-0910, ("UCSD"), and
CYTOKENETICS INCORPORATED ("Licensee" or "COMPANY"), a Delaware corporation
having offices at 280 East Grand Avenue, Suite 2, South San Francisco, CA 94080.
Stanford and The Regents are collectively referred to herein as "Licensor".

RECITALS

WHEREAS, COMPANY and Licensor have entered into an Exclusive License
Agreement, dated 21, April 1998 ("Original Agreement"); and

WHEREAS, COMPANY and Licensor wish to modify certain terms of the Original
Agreement for the purpose of including standard HHMI language.

NOW, THEREFORE, the parties agree:

1.   RELATIONSHIP OF THE PARTIES.  The provisions of the Original Agreement
shall continue in effect except as modified in Articles 2.1 and 20.1. A copy of
the Original Agreement is attached hereto and incorporated herein by reference.

2.   MODIFICATION PERMITTED IN ORIGINAL AGREEMENT.  Section 3 of Article 31
of the Original Agreement provides that there shall be no amendments or
modifications to the Original Agreement, except by a written document which is
signed by both parties. This Agreement is a modification of the Original
Agreement.

3.a. MODIFICATION:  Section 2.1 of the Original Agreement shall be modified
to read:

2.1   Subject to the limitations set forth in this Agreement and 
subject to the license granted to the U.S. Government and the HHMI as set forth 
in the Recitals above, Licensor hereby grants to the Licensee, a world-wide 
license under Licensor Patent Rights to develop, make, have made, use, import, 
sell, have sold and distribute Licensed Products and products or services that 
arise from the use of or use Licensed Products, Licensed Methods and Technology,
to practice Licensed Methods and to use Technology.

3.b. MODIFICATION:  Section 20.1 of the Original Agreement shall be
modified to read:

20.1  Licensee shall indemnify, hold harmless and defend Licensor, its
officers, employees, agents, HHMI and its trustees, and the sponsors of the 
research that led to the Invention; and the inventors of the patents and patent 
applications in Licensor Patent Rights and

their employees against any and all claims, suits, losses, damage, costs, fees, 
and expenses resulting from or arising out of exercise of this license or any 
sublicense. This indemnification includes, but is not limited to, any product 
liability, but shall exclude any breach of this Agreement or any gross 
negligence or intentional misconduct by Licensor.

4.   TERM OF AGREEMENT. This Agreement shall be effective on the Effective 
Date provided herein and shall terminate when the Original Agreement 
terminates, unless otherwise provided herein.

5.   CONSTRUCTION. In the event of any conflict or inconsistency between 
the provisions of this Agreement and the Original Agreement, the provisions of 
this Agreement shall control in all respects.

IN WITNESS WHEREOF, both Licensor and Licensee have executed this 
Agreement, in duplicate originals, by their respective and duly authorized 
officers on the day and year written below.

CYTOKINETICS:                           THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA:

By    /s/ Robert I. Blum                By     /s/ Alan S. Paau
------------------------------          --------------------------------
(Signature)                                (Signature)

Name:    Robert I. Blum                 Alan S. Paau, MBA, Ph.D.
---------------------------        

Title    Vice President,                Director, UCSD Technology Transfer and
Business Development             Intellectual Property Services
---------------------------

Date         9/1/00                     Date      8/30/2000
----------------------------            ------------------------------

THE BOARD OF TRUSTEES OF THE
STANFORD JUNIOR UNIVERSITY:

By:  The Regents of The University of 
California, as attorney-in-fact

By       /s/ Alan S. Paau
--------------------------------
(Signature)
Alan S. Paau, MBA, Ph.D.
Director, UCSD Technology Transfer and
Intellectual Property Services
Date     8/30/2000
-----------------------------

Exhibit 10.30

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

AZ AND CK CONFIDENTIAL

COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AND LICENSE AGREEMENT (this "AGREEMENT") is made and
entered into as of the 15th day of December, 2003 (the "EFFECTIVE DATE") by and
between Cytokinetics, Inc. a Delaware corporation, having a place of business at
280 East Grand Avenue, South San Francisco, CA 94080 ("CK") and AstraZeneca AB,
a company incorporated in Sweden under no. 556011-7482 with offices at S-151 85
Sodertalje, Sweden ("AZ"). CK and AZ are each referred to herein by name or as a
"PARTY" or, collectively, as "PARTIES."

RECITALS

A.       WHEREAS CK has developed Cytometrix(TM)* cellular phenotyping
technologies for compound profiling (the "CM SYSTEM," as further defined below);

B.       WHEREAS AZ is performing internal projects aimed at the
discovery and development of novel therapeutic products; and

C.       WHEREAS CK and AZ wish to collaborate on a research program
utilizing AZ and CK's knowledge, skills, and proprietary technology to develop a
module of the CM System for use as an in vitro predictor of hepatotoxicity.

NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

ARTICLE I - DEFINITIONS

Unless otherwise specifically provided in this Agreement, the following
capitalized terms shall have the following meanings as used in this Agreement:

1.1      "AFFILIATE" means, with respect to a Person, any Person that
Controls, is Controlled by or is under common Control with such first Person.
For purposes of this Section 1.1 only, "CONTROL" means (a) to possess, directly
or indirectly, the power to direct the management or policies of a Person,
whether through ownership of voting securities or by contract relating to voting
rights or corporate governance, or (b) to own, directly or indirectly, fifty
percent (50%) or more of the outstanding voting securities or other ownership
interest of such Person; provided

----------
*Cytometrix(TM) is a trademark of Cytokinetics, Inc

AZ AND CK CONFIDENTIAL

that, if local law in any country other than the United States requires a
maximum percentage of local ownership such that the maximum percentage that may,
under such local law, be owned by foreign interests is less than fifty percent
(50%), "CONTROL" means to own the maximum ownership percentage that may, under
such local law, be owned by foreign interests.

1.2      "APPLICABLE LAW" means the applicable laws, rules and
regulations, including any rules, regulations, guidelines or other requirements
of regulatory authorities that may be in effect from time to time.

1.3      "AZ BACKGROUND TECHNOLOGY" means any and all Technology
Controlled by AZ as of the Effective Date or during the Research Term
(regardless of when disclosed) and described on EXHIBIT 1.3, or included as AZ
Background Technology pursuant to Section 3.5. The AZ Background Technology
excludes (i) any and all Collaboration Technology and Collaboration Knowledge,
and (ii) any and all Technology provided to CK hereunder by or on behalf of AZ
consisting of General Methods.

1.4      "AZ COMPOUND" means each Compound intended or provided for use
in the Research Program hereunder by or for AZ, in each case identified by an AZ
Compound identifier listed on EXHIBIT 1.4 and identified therein as Public or
Proprietary, including additional AZ Compounds added pursuant to Section 3.2 and
excluding Compounds removed as Proscribed Compounds pursuant to Section 3.2.

1.5      "AZ COMPOUND DATA" means data proprietary to AZ and
conclusions derived by or for AZ from such data (other than Collaboration
Technology), existing as of the Effective Date or during the Research Term,
comprised of data and information that describes or otherwise relates to an AZ
Compound and (i) described in, included or required to be provided to CK under
Section 3.2 or the Research Plan, or (ii) otherwise disclosed by AZ to CK in
accordance with this Agreement.

1.6      "AZ FACILITY(IES)," when used in the singular, means the
primary location at which AZ performs the Research Program, as designated and
updated in accordance with Section 2.3 from time to time; and when used in the
plural, means any and all of AZ's facilities, also as designated and updated in
accordance with Section 2.3 from time to time.

1.7      "AZ IMPROVEMENTS" means Improvements that are made during the
Pilot License Term that are adaptations or modifications to the Cytometrix(TM)
Hepatotoxicity Module required solely for purposes of achieving compatibility of
the Cytometrix(TM) Hepatotoxicity Module with AZ's information technology or
bioinformatics infrastructure.

1.8      "AZ KNOWLEDGE" means Technology provided to CK by or on behalf
of AZ during the Research Term for use in the Research Program, which in each
case is not AZ Background Technology, Collaboration Technology, AZ Compounds or
AZ Compound Data.

1.9      "CHANGE OF CONTROL" means an event in which (i) any Person,
other than the shareholders of a Party as of the Effective Date of the
Agreement, acquires or becomes the beneficial owner of more than fifty percent
(50%) of the voting securities of that Party, (ii) a

-2-

AZ AND CK CONFIDENTIAL

Party enters into a merger, consolidation or other similar transaction with
another Person or Persons and is not the surviving entity in such transaction,
or (iii) a Party sells to any Person(s) in one or more related transactions all
or substantially all of its consolidated total assets. The public or private
sale of equity securities by the current shareholders of a Party in a single or
related series of transactions shall not constitute a Change in Control unless
as a result of such sale or sales one Person or group of Persons acting in
concert attains control of that Party or acquires or becomes the beneficial
owner of more than fifty percent (50%) of the voting securities of that Party or
such entity into which that Party has merged or consolidated.

1.10     "CK BACKGROUND TECHNOLOGY" means any and all Technology
Controlled by CK as of the Effective Date or during the Research Term
(regardless of when disclosed) and consisting of the CM System, embodied in CK's
proprietary standard operating procedures described on EXHIBIT 1.10, or included
as CK Background Technology pursuant to Section 3.5. The CK Background
Technology excludes (i) any and all Collaboration Technology and Collaboration
Knowledge, (ii) any and all Technology primarily related to the Prohibited
Field, and (iii) Technology provided to AZ hereunder by or on behalf of CK
consisting of General Methods.

1.11     "CK COMPOUND" means each Compound intended or provided for use
in the Research Program hereunder by or for CK, in each case identified by a CK
Compound identifier listed on EXHIBIT 1.11 and identified therein as Public or
Proprietary, including additional CK Compounds added pursuant to Section 3.2,
and excluding CK Compounds removed as Proscribed Compounds pursuant to Section
3.2.

1.12     "CK COMPOUND DATA" means data proprietary to CK and
conclusions derived by or for CK from such data (other than Collaboration
Technology), existing as of the Effective Date or during the Research Term,
comprised of data and information that describes or otherwise relates to a CK
Compound, and (i) described in, included, or required to be provided to AZ under
the Research Plan, or (ii) otherwise disclosed by CK to AZ in accordance with
this Agreement.

1.13     "CK FACILITY" means the primary location at which CK performs
the Research Program, as designated and updated in accordance with Section 2.2
from time to time.

1.14     "CK KNOWLEDGE" means Technology provided to AZ by or on behalf
of CK during the Research Term for use in the Research Program, which in each
case is not CK Background Technology, Collaboration Technology, Collaboration
Knowledge, CK Compounds or CK Compound Data.

1.15     "CM SYSTEM" means that certain Technology Controlled by CK as
of the Effective Date or during the Research Term consisting of the
Cytometrix(TM) cellular phenotyping technologies system employing
high-throughput fluidics, automation, microscopy, imaging analysis and advanced
bioinformatics to automate cellular phenotyping, as described in more detail on
EXHIBIT 1.15.

1.16     "COLLABORATION KNOWLEDGE" means all Technology conceived
and/or reduced to practice or otherwise generated through activities performed
under or in the scope of the

-3-

AZ AND CK CONFIDENTIAL

Research Program to the extent consisting of General Methods. For clarity,
Collaboration Knowledge excludes all Technology developed in the course of the
Exempt Activities.

1.17     "COLLABORATION TECHNOLOGY" means all Technology conceived
and/or reduced to practice or otherwise generated through activities performed
under or in the scope of the Research Program, solely by either AZ or CK or
jointly by the Parties, excluding Collaboration Knowledge and excluding any
Technology developed in the course of the Exempt Activities.

1.18     "COMPOUND" means a unique chemical entity.

1.19     "COMPOUND DATA" means the AZ Compound Data or the CK Compound
Data, as applicable, and similar data generated pursuant to the Research
Program.

1.20     "CONTRACT YEAR" means a year of 365 days (or 366 days in a
leap year) beginning on the Effective Date and ending one (1) year thereafter
and so on year-by-year. "CONTRACT YEAR ONE" means the first such year; "CONTRACT
YEAR TWO" means the second such year, and so on, year-by-year.

1.21     "CONTROL" means, with respect to any item of Technology, or a
particular Compound, or the related Intellectual Property Rights thereto, the
possession of the right, whether directly or indirectly, and whether by
ownership, license or otherwise, to disclose, deliver, assign, or grant a
license, sublicense or other right to or under such applicable Technology,
Compound or related Intellectual Property Rights, of the scope and as provided
for herein, without any of the following: (i) violating the terms of any
agreement or other arrangement with any Third Party existing as of the Effective
Date; (ii) the granting Party being required to pay any royalty or other
consideration to any Third Party that would not have been required had the
applicable right or license not been provided under this Agreement; or (iii)
violating any law, regulation, rule, code, order or other requirement of any
federal, state, foreign, local, or other government body or the need for any
additional permits, payments, authorizations, or approvals under any such law,
regulation, rule, code, order or requirement.

1.22     "CYTOMETRIX(TM) HEPATOTOXICITY MODULE" or "CHM" means that
certain module of the CM System developed in the course of performance and scope
of the Research Program, and directed to in vitro predictions of hepatotoxicity
(i.e., in vitro image-based assays that can be used to support selection of
chemical entities for drug discovery and development that may have a lower
intrinsic potential to cause liver toxicity).

1.23     "DELIVERABLES" means certain identified items required to be
delivered or provided by one Party to the other pursuant to the Research
Program, as set forth in EXHIBIT 1.23.

1.24     "EFFECTIVE DATE" means the date as set forth in the preamble
to this Agreement.

1.25     "EXEMPT ACTIVITIES" means, with respect to the specific Party
identified on EXHIBIT 1.25, the corresponding activities set forth on EXHIBIT
1.25.

-4-

AZ AND CK CONFIDENTIAL

1.26     "FIELD" means the use of imaging-based cellular phenotyping,
together with the use of analysis for the in vitro prediction of hepatotoxicity
to support drug discovery and development. For the avoidance of doubt, "FIELD"
excludes, without limitation, (i) any and all [*] applications (i.e., the direct
or indirect [*]), (ii) [*] applications (i.e., the direct or indirect [*]
whether by [*], [*], [*] or otherwise), (iii) any and all [*], [*] or similar
applications, or uses as a commercial service (e.g., as a service bureau or on
behalf of any Third Party) or product, and (iv) the use of the CM System or any
other Cytometrix(TM) cellular phenotyping and/or analysis technologies or
similar technologies (other than the Cytometrix(TM) Hepatotoxicity Module) to
investigate and engage in activities related to discovery and validation of any
[*] and/or [*].

1.27     "FTE" means the equivalent of one researcher employed by CK or
AZ having the requisite skills to fulfill CK's or AZ's obligations under this
Agreement and devoting the equivalent hours of a full time employee. For
purposes of this Agreement, "full time" shall mean 1880 hours per year as
determined in accordance with the applicable Party's regular project hour
reporting system.

1.28     "FULL LICENSE" has the meaning set forth in Section 5.7.

1.29     "FULL LICENSE TERM" means the period of time during which the
Full License is in effect, beginning as of the date the Full License is first
effective.

1.30     "GENERAL METHODS" means (a) methods or techniques for (i) cell
culture, (ii) cell plating and conditions therefor, (iii) automation, (iv)
automated image acquisition, (v) variable exposure of cells to treatment, and
(vi) automated addition of treatment and stains; and (b) general knowledge of
use to practitioners of toxicological studies or cellular phenotyping and
analysis.

1.31     "IMPROVEMENT" means any improvement, adaptation, modification
or upgrade arising during the Pilot License Term and/or the Full License Term.

1.32     "INTELLECTUAL PROPERTY RIGHTS" means any and all intellectual
property rights in, to, or arising out of any (i) Patents; (ii) trade secrets;
(iii) know-how (iv) copyrights, copyright registrations, or any national or
regional application therefor, in any territory, or any other right
corresponding thereto throughout the world, including moral rights; or (v) any
other intellectual property or proprietary right anywhere in the world,
including rights in or to any data bases, data collections (including knowledge
databases) or software (including any source code or object code form).

1.33     "JOINT RESEARCH COMMITTEE" or "JRC" means the committee
established pursuant to Section 2.4 herein.

1.34     "JOINT STEERING COMMITTEE" or "JSC" means the committee
established pursuant to Section 2.5 herein.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-5-

AZ AND CK CONFIDENTIAL

1.35     "PATENT" means any and all rights under any of the following,
whether existing now or in the future: (i) all national, regional and
international patents and patent applications, including provisional patent
applications, utility model, design registration, certificate of invention,
patent of addition or substitution, or other governmental grant for the
protection of inventions or industrial designs anywhere in the world, including
any reissue, renewal, re-examination or extension thereof; and (ii) any
application for any of the foregoing, including any international, provisional,
divisional, continuation, continuation-in-part, or continued prosecution
application.

1.36     "PERFORMANCE CRITERIA" means the functional criteria for
performance of the Cytometrix(TM) Hepatotoxicity Module, as set forth in EXHIBIT
1.36, as may be revised by the JRC or by mutual written agreement of the
Parties.

1.37     "PERSON" means an individual, sole proprietorship,
partnership, limited partnership, limited liability partnership, corporation,
limited liability company, business trust, joint stock company, trust,
incorporated association, joint venture or similar entity or organization,
including a government or political subdivision, department or agency of a
government.

1.38     "PILOT LICENSE" has the meaning set forth in Section 5.6.1.

1.39     "PILOT LICENSE TERM" is the period during which the Pilot
License is effective, (A) commencing on the earlier of (i) the date after the
last day of the Research Term or (ii) the date that the prototype Cytometrix(TM)
Hepatotoxicity Module, installed at the CK Facility and used in connection with
CK's infrastructure and instrumentation, first meets the Performance Criteria
therefor, as determined pursuant to Section 3.4, and then (B) continuing until
the earlier of (x) the date that the Cytometrix(TM) Hepatotoxicity Module,
installed at the AZ Facility and used in connection with AZ's infrastructure and
instrumentation, first meets the Performance Criteria therefor, as determined
pursuant to Section 3.4, or (y) the first anniversary of the date of
commencement (as described in clause (A) above) of the Pilot License Term,
subject to extension by mutual written agreement of the Parties.

1.40     "PRINCIPAL SCIENTIST" means the AZ Principal Scientist or the
CK Principal Scientist, as applicable, as each is defined in Sections 2.3.2 and
2.2.2, respectively.

1.41     "PROHIBITED FIELD" means any and all research, development or
commercialization activities directed toward any [*] or products for any such
applications.

1.42     "PROPRIETARY" means (i) with respect to a Compound, that the
Party providing such Compound hereunder Controls Patents which specifically
recite and specifically, but not solely generically, claim the making,
possession, use, sale, import or export of such Compound or has maintained, as a
trade secret, the composition of matter of such Compound, and (ii) with respect
to Compound Data, such data has been maintained as a trade secret by the
providing Party.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-6-

AZ AND CK CONFIDENTIAL

1.43     "PROSCRIBED COMPOUND" means:

1.43.1   with respect to an AZ Compound, a Compound that is
marked with the development flag in the [*] system. The development flag shall
be applied only to a Compound meeting any of the following criteria: (i) the
Compound is being actively developed; (ii) the Compound is commercially
sensitive to AZ; or (iii) the Compound is an isomer of a Compound described in
clause (i) or (ii). In marking with a development flag any Compound that is an
AZ Compound hereunder, AZ shall apply the same criteria in a manner consistent
with current internal policy and past practice as it does with other Compounds
under similar circumstances.

1.43.2   with respect to a CK Compound, a Compound that has
been designated as having restricted use within CK. Such restricted use applies
only to a Compound meeting any of the following criteria: (i) the Compound is
being actively developed; (ii) the Compound is commercially sensitive to CK; or
(iii) the Compound is an isomer of a Compound described in clause (i) or (ii).
In designating a Compound as having restricted use, CK shall apply the same
criteria in a manner consistent with current internal policy and past practice
as it does with other Compounds under similar circumstances.

1.44     "PUBLIC" means (i) with respect to a Compound, such Compound
is not Proprietary, and (ii) with respect to AZ Compound Data or CK Compound
Data, such data is not Proprietary.

1.45     "RESEARCH PLAN" means the document attached hereto as EXHIBIT
1.45 outlining the Research Program, the budget for the Research Program, and
each Parties' undertakings and obligations, including allocation of FTEs by CK
and AZ, in relation thereto.

1.46     "RESEARCH PROGRAM" has the meaning described in Section 2.1
hereof.

1.47     "RESEARCH TERM" means the period beginning on the Effective
Date and continuing for two (2) years thereafter, as may be extended in
accordance with Section 2.7 or by mutual written agreement of the Parties.

1.48     "TERM" means the period beginning on the Effective Date and
continuing until the earlier of the date upon which this Agreement expires by
its terms, is terminated in accordance with Article VIII, or extended by mutual
written agreement of the Parties.

1.49     "TECHNOLOGY" means any and all of the following, including
tangible copies and embodiments thereof:

1.49.1 information and materials (including Compounds)
relating to the subject matter of this Agreement and including data such as test
data (including pharmacological, toxicological and clinical test data) and image
data and in vitro and in vivo data;

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-7-

AZ AND CK CONFIDENTIAL

1.49.2 experimental methods and techniques, including those
that are part of or related to assays and cell cultures, screens, models,
practices, and know-how, techniques, trade secrets, and inventions (whether or
not patented or patentable);

1.49.3 instrumentation, including selection and arrangement of
instrumentation and setup or calibration settings;

1.49.4 computer software and code, and related technology,
including flow diagrams, designs, assemblers, applets, compilers, algorithms,
routines, design tools and user interfaces, in source code or object code form;
and

1.49.5 antibodies, markers, cells and cell lines;

in each case (i) to the extent and for so long as such subject matter
or materials are not generally available in the public domain or otherwise from
a Third Party without restriction, except as a result of a Party's activities in
violation of the terms or conditions of this Agreement, or (ii) to the extent
and for so long as there are protectable Intellectual Property Rights subsisting
in or encompassing those materials.

1.50 "THIRD PARTY" means any Person other than CK or AZ and the
Affiliates of either.

ARTICLE II - RESEARCH PROGRAM

2.1 RESEARCH PROGRAM.

2.1.1    GENERALLY. CK and AZ agree to conduct a collaborative
research program with the specific goal of creating the Cytometrix(TM)
Hepatotoxicity Module for use in the Field as an in vitro predictor of
hepatotoxicity (the "RESEARCH PROGRAM"). The Research Program shall be conducted
solely in accordance with the Research Plan then in effect unless otherwise
mutually agreed in writing by the Parties or through the JRC in accordance with
Section 2.4.4.

2.1.2    DILIGENT EFFORTS. Each Party shall apply the same
diligent efforts with respect to the Research Program as each, respectively,
expends for its own high priority discovery technology programs. Without
limiting the foregoing, each Party shall apply diligent efforts toward the
performance of activities under the Research Program and allocate personnel and
other resources as reasonably necessary to successfully complete those
activities within the timeframes set forth in the Research Plan then in effect.

2.1.3    CONTRIBUTIONS. Each Party shall contribute to the
Research Program the items identified in Article III.

2.2 CK FACILITIES AND CK PRINCIPAL SCIENTIST.

-8-

AZ AND CK CONFIDENTIAL

2.2.1    CK shall provide the facilities, equipment, and
manpower that are reasonably necessary or useful to carry out the work
undertaken by CK under the Research Program at 280 East Grand Avenue, South San
Francisco, CA 94080 (the "CK FACILITY"). CK shall have the right to change the
location of the CK Facility upon reasonable advance written notice to AZ.

2.2.2    The principal scientist designated by CK (the "CK
PRINCIPAL SCIENTIST") shall be responsible for all Research Program activities
undertaken by CK and shall supervise the work of all personnel engaged by CK in
the Research Program. The CK Principal Scientist shall serve as the primary
contact for AZ on all matters related to the Research Program. The CK Principal
Scientist is [*]. CK may change the CK Principal Scientist, but only to a
similarly qualified individual and only on providing AZ with prior written
notice. Notwithstanding any change in the identity of the CK Principal
Scientist, CK shall continue to be responsible for performing the activities
undertaken by it under the Research Program and any consent or agreement by AZ
pursuant to this Section 2.2.2 shall not be deemed to be a waiver of any right
or remedy AZ may have in relation to any failure of CK to conduct such
activities.

2.3 AZ FACILITIES AND AZ PRINCIPAL SCIENTIST.

2.3.1    AZ shall provide the facilities and equipment that
are reasonably necessary or useful to carry out the work undertaken by AZ under
the Research Program at [*] (the "AZ FACILITIES"). To the extent AZ is
authorized to use the Collaboration Technology or CK Background Technology at
more than one facility controlled by AZ, AZ shall designate in writing to CK
each such facility at which it is using the Collaboration Technology or CK
Background Technology. AZ shall provide prompt written updates of changes in the
location of any AZ Facility and AZ shall have the right to change the locations
of the AZ Facilities upon reasonable advance written notice to CK; provided that
after CK's delivery of the Cytometrix(TM) Hepatotoxicity Module such changes
shall only be effective upon CK's written approval.

2.3.2    The principal scientist designated by AZ (the "AZ
PRINCIPAL SCIENTIST") shall be responsible for all Research Program activities
undertaken by AZ and shall supervise the work of all personnel engaged by AZ in
the Research Program. The AZ Principal Scientist shall serve as the primary
contact for CK on all matters related to the Research Program. The AZ Principal
Scientist is [*]. AZ may change the AZ Principal Scientist, but only to a
similarly qualified individual and only on providing CK with prior written
notice. Notwithstanding any change in the identity of the AZ Principal
Scientist, AZ shall continue to be responsible for performing the activities
undertaken by it under the Research Program, and any consent or agreement by CK
pursuant to this Section 2.3.2 shall not be deemed to be a waiver of any right
or remedy CK may have in relation to any failure of AZ to conduct such
activities.

2.4 THE JOINT RESEARCH COMMITTEE. Promptly after the Effective Date,
the Parties shall establish a Joint Research Committee (the "JRC") as set forth
in this Section 2.4. The JRC will

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-9-

AZ AND CK CONFIDENTIAL

exist until the end of the Pilot License Term. Each Party shall keep the JRC
informed of its progress and activities within the Research Program.

2.4.1    MEMBERSHIP. The JRC shall be comprised of an equal
number of representatives from each of AZ and CK, initially three (3) from each
of AZ and CK, including one lead representative from each Party (who may be but
is not required to be the CK Principal Scientist for CK and the AZ Principal
Scientist for AZ) and any ad hoc members as requested by either Party and
approved by the other Party in writing. For CK, the lead representative is [*];
for AZ, the lead representative is [*]. A Party may replace its lead
representative or other representatives to the JRC with other similarly
qualified individuals by providing advance written notice to the other Party.

2.4.2    MEETINGS. The JRC shall meet regularly during the
Research Term and the Pilot License Term, including face-to-face meetings to be
held at least quarterly, telephone or videoconference calls to be held at least
monthly, with additional regular e-mail and telephone exchanges among the
members. The JRC shall create and agree on written minutes for each meeting of
the JRC. The Parties shall alternate responsibility for chairing the meetings.
Each Party shall bear the expenses of its JRC members related to such members'
participation on the JRC and attendance at JRC meetings.

2.4.3    RESPONSIBILITIES.

(a) The JRC shall have responsibility for: (i)
reviewing and coordinating the Research Program, and for expediting work
progress under the Research Plan currently in effect; (ii) overseeing,
reviewing, recommending the direction of, and allocating resources under the
Research Program; (iii) preparing the Research Plan for each Contract Year
(other than Contract Year One); (iv) adapting and revising the Research Plan, if
appropriate; (v) approving any use of a Third Party's Technology or Intellectual
Property Rights in connection with the Research Program; (vi) tracking and
recording Compound Data provided under Section 3.2 or otherwise generated
pursuant to the Research Program; (vii) monitoring performance of the Research
Program, including comparing its progress to established goals and revising the
Performance Criteria as may be required or appropriate from time to time,
including to address removal of Proscribed Compounds or Proscribed Compounds
pursuant to Section 3.2.4 or 3.2.5; and (viii) carrying out other
responsibilities or making any other decisions as are expressly allocated to the
JRC under this Agreement.

(b) The Parties, through the JRC, shall discuss and
consider a proposal to expand the Research Program to include [*] activities
with respect to AZ Compounds and CK Compounds. Such discussions shall commence
no more than [*] months after the Effective Date. If such proposal is approved
by the Parties following the recommendation of the JRC, then the Research Plan
and this Agreement will be revised to reflect such expansion, which may include
modification of the Field to include [*]. If such expansion is not approved,
then the Parties, through the JRC, shall discuss and consider a proposal to
extend the licenses to AZ Compound Data and AZ Compounds to permit CK to conduct
[*] at its own expense outside the Research Program.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-10-

AZ AND CK CONFIDENTIAL

2.4.4    DECISION MAKING. The JRC shall endeavor to reach
consensus on all matters brought before it. Decisions of the JRC must be made
with participation of at least two (2) representatives of each Party and by
unanimous vote of each participating representative. Decisions will be included
in the written minutes of a meeting, with such written minutes approved by all
Persons present at such a meeting of the JRC. In the event the JRC is unable to
resolve an outstanding matter, such matter shall be referred for resolution in
good faith by the Joint Steering Committee (JSC) as described in Section 2.5.

2.5 THE JOINT STEERING COMMITTEE. Promptly after the Effective Date,
the Parties shall establish a Joint Steering Committee (the "JSC") as set forth
in this Section 2.5. The JSC will exist throughout the term of this Agreement.

2.5.1    MEMBERSHIP. The JSC shall be comprised of two (2)
representatives from each of AZ and CK. For AZ, the representatives are [*] and
[*]. For CK, the representatives are [*] and another individual to be selected
by CK by written notice to AZ. Each Party may replace its representatives on the
JSC at any time by providing written notice to the other Party. Replacements
must have comparable seniority, responsibility and knowledge or experience.

2.5.2    MEETINGS. The JSC shall meet at least once annually
during the Research Term, and as necessary from time to time during the
remainder of the Term, including face-to-face meetings, telephone or video
conference calls. The location and other logistics of any meeting will be
determined by the JSC. The JSC shall create and agree on written minutes for
each meeting of the JSC. Each party shall bear the expenses of its JSC members
related to such members' participation on the JSC and attendance at JSC
meetings.

2.5.3    RESPONSIBILITIES. The JSC shall have responsibility
to oversee and review the Research Program and to arbitrate decision making as
described below.

2.5.4    DECISION MAKING. Decisions of the JSC shall be made
by unanimous vote, with each Party having a single vote irrespective of the
number of representatives actually in attendance at a meeting. Decisions will be
included in the written minutes of a meeting, with such written minutes approved
by all persons present at such a meeting of the JSC. If the Parties are unable
to reach resolution within [*] days following the date the matter in dispute is
first brought to the attention of the JSC, that matter shall be resolved in
accordance with Section 10.2.

2.6 RESEARCH PLAN.

2.6.1    INITIAL RESEARCH PLAN. The initial Research Plan,
which covers the Research Program during Contract Year One, is attached as
EXHIBIT 1.45. The Parties acknowledge and agree that such initial Research Plan
sets forth the goals and objectives of the Research Program and the broad terms
of the Parties' respective undertakings to achieve those goals and objectives.
The Parties further acknowledge and agree that the Research Plan will be
supplemented and otherwise amended by the JRC from time to time during the
Research Term

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-11-

AZ AND CK CONFIDENTIAL

for each stage of the Research Program to identify and define the specific
undertakings of the Parties required to implement the Research Program.

2.6.2    NEW RESEARCH PLANS. At least three (3) months prior
to the end of each Contract Year during the Research Term, the JRC shall meet to
establish the Research Plan for the upcoming Contract Year. The JRC shall
establish such Research Plan no later than thirty (30) days prior to the end of
the then-current Contract Year.

2.6.3    REVISED RESEARCH PLANS. In addition to new Research
Plans, the JRC shall review each Research Plan on an ongoing basis and may make
changes thereto in accordance with the procedures in Section 2.4.4.

2.6.4    REQUIREMENTS OF THE RESEARCH PLAN. Unless otherwise
agreed by each Party, the Research Plan must be consistent with the terms in
Article III and this Agreement generally.

2.7 EXTENSION OF RESEARCH TERM. [*] days prior to the expiration of the
initial Research Term, the JRC shall discuss the possibility of extending the
Research Program and correspondingly the Research Term. In such event, if the
Parties do not reach agreement on an extension of the Research Term prior to the
expiration of the initial Research Term, then the expiration date for the
initial Research Team will be extended for [*] days, in order to continue
negotiation of the terms and conditions for an extension of the Research Term,
if any.

2.8 INFORMATION AND REPORTS. During the Research Term, each Party shall
provide to the other, through the JRC, a written report summarizing the progress
of its activities and performance of the Research Program, and including data
and information pertaining to assays, protocols and procedures developed for use
with the Cytometrix(TM) Hepatotoxicity Module, and other information and
Technology as otherwise provided in the applicable Research Plan. Unless
otherwise agreed, such reports shall be due thirty (30) days after the end of
each calendar quarter and after the end of the Research Term. Upon the written
request of a Party, the other Party shall provide that requesting Party with raw
data generated by or on behalf of such other Party within the Collaboration
Technology and Collaboration Knowledge, to the extent not previously provided
hereunder. Without limiting the foregoing, each Party shall disclose to the
other Party, any and all Collaboration Technology and Collaboration Knowledge,
including any discoveries or inventions made by such Party in the scope of the
Research Program or pursuant to carrying out the Research Program, with
significant discoveries or advances being communicated as soon as practical
after such Collaboration Technology or Collaboration Knowledge is developed.

ARTICLE III - CONTRIBUTIONS TO THE RESEARCH PROGRAM

3.1 FTES. In its conduct of its activities under the Research Program
and unless otherwise mutually agreed in writing or determined by the JRC, each
Party shall assign the number of FTEs to the Research Program as follows: CK
shall commit [*] FTEs during each Contract Year to perform activities under the
Research Program in accordance with the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-12-

AZ AND CK CONFIDENTIAL

Research Plan then in effect, and AZ shall commit [*] FTEs during the Research
Term to perform activities under the Research Program in accordance with the
Research Plan then in effect. For clarity, AZ has agreed to fund during each
Contract Year of the Research Term [*] of the FTEs committed by CK, as described
in Section 6.1.

3.2 COMPOUNDS AND COMPOUND DATA.

3.2.1    AZ shall identify the AZ Compounds to be used in the
Research Program, and shall provide to CK the AZ Compounds in reasonable
quantities, but at least [*] for each AZ Compound. For each AZ Compound, AZ
shall provide the information, to the extent such information exists on the
Effective Date, contemplated by the version of EXHIBIT 1.4 attached to this
Agreement as of the Effective Date (which information, it is understood, may be
different for Proprietary and Public AZ Compounds). In addition to the
information on EXHIBIT 1.4, for each AZ Compound, AZ shall provide compound
purity and analytical and quality control data and procedures, to the extent
such information exists on the Effective Date. AZ is not required to provide [*]
for any Proprietary AZ Compounds. During the Research Term, AZ may include
additional Compounds as AZ Compounds upon written notice to CK or by mutual
written agreement of the Parties. For each such AZ Compound, AZ shall provide
the AZ Compound Data on EXHIBIT 1.4 and the other AZ Compound Data required
pursuant to this Section 3.2.1, to the extent such information exists at the
time such AZ Compound is added.

3.2.2    CK shall identify the CK Compounds to be used in the
Research Program, and make available for use in the Research Program, the CK
Compounds in reasonable quantities, but at least [*] for each CK Compound. For
each CK Compound, CK shall provide the information, to the extent such
information exists on the Effective Date, contemplated by the version of EXHIBIT
1.11 attached to this Agreement as of the Effective Date (which information, it
is understood, may be different for Proprietary and Public CK Compounds). In
addition to the information on EXHIBIT 1.11, for each CK Compound, CK shall
provide compound purity and analytical and quality control data and procedures,
to the extent such information exists on the Effective Date. CK is not required
to provide [*] for any Proprietary CK Compounds. During the Research Term, CK
may include additional Compounds as CK Compounds upon written notice to AZ or by
mutual written agreement of the Parties. For each such CK Compound, CK shall
provide the CK Compound Data on EXHIBIT 1.11 and other CK Compound Data required
pursuant to this Section 3.2.2, to the extent such information exists at the
time such CK Compound is added.

3.2.3    Each Party's rights with respect to the Compounds and
Compound Data delivered under this Agreement are as set forth in Section 5.3.

3.2.4    AZ may remove any Proprietary AZ Compound from use in
the Research Program, upon written notice to CK, if that Proprietary AZ Compound
becomes or is named a Proscribed Compound. EXHIBIT 1.4 shall be amended
accordingly and such Compound no longer shall be an "AZ Compound" for purposes
of this Agreement. Upon CK's receipt of notice that a Compound is a Proscribed
Compound and is being removed as an AZ Compound,

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-13-

AZ AND CK CONFIDENTIAL

CK shall, in AZ's sole discretion and at AZ's direction and expense, return or
destroy those removed Proscribed Compounds.

3.2.5    CK may remove a Proprietary CK Compound from use in
the Research Program, upon written notice to AZ, if that Proprietary CK Compound
becomes or is named a Proscribed Compound. EXHIBIT 1.11 shall be amended
accordingly and such Compounds no longer shall be "CK Compounds" for purposes of
this Agreement. Upon AZ's receipt of notice that a Compound is a Proscribed
Compound and is being removed as a CK Compound, AZ shall, in CK's sole
discretion and at CK's direction and expense, return or destroy those removed
Proscribed Compounds.

3.2.6    For clarity, nothing herein shall be deemed to create
an obligation on behalf of either Party to provide the other Party with
Compounds after the expiration of the Research Term, except that on an ongoing
basis after termination or expiration of the Research Term, AZ shall provide
Proprietary AZ Compounds to CK in specific amounts under the conditions
described in this Section 3.2.6 for the purpose of enabling CK to [*]. AZ shall
provide Proprietary AZ Compounds on the limited basis described herein in
accordance with the restrictions set forth in Section 3.2.7, Section 5.3 and
other reasonable and customary terms, provided the amount of payment for those
Proprietary AZ Compounds shall not exceed AZ's documented direct and reasonably
allocable indirect costs in obtaining such Compounds for any reason.

3.2.7    AZ's obligations under Section 3.2.6 shall extend for
no longer than [*] years after the date of expiration or termination of the
Research Term, but shall cease immediately upon termination of this Agreement
under Section 8.2.1 for CK's material breach or upon termination of this
Agreement under Section 8.2.3 for lack of feasibility.

3.2.8    AZ represents and warrants that no AZ Compound on
EXHIBIT 1.4 is, as of the Effective Date, a Proscribed Compound. CK represents
and warrants that no CK Compound on EXHIBIT 1.11 is, as of the Effective Date, a
Proscribed Compound.

3.3 DELIVERABLES. CK shall deliver or otherwise make available to AZ
the Deliverables, as defined in EXHIBIT 1.23. The timing, form and manner of
delivery are set forth on the Research Plan, including which of the software
components of the Cytometrix(TM) Hepatotoxicity Module or other Deliverables
will be delivered in source code form and which in object code form. The
Research Plan also sets forth the infrastructure and instrumentation required
for use of the Cytometrix(TM) Hepatotoxicity Module, and objectives for
development, delivery and functionality of the Cytometrix(TM) Hepatotoxicity
Module, including parameters for expandability and flexibility.

3.4 EVALUATION OF CYTOMETRIX(TM) HEPATOTOXICITY MODULE. After the
prototype Cytometrix(TM) Hepatotoxicity Module is installed at the CK Facility
and used in connection with CK's infrastructure and instrumentation, and then
again after the Cytometrix(TM) Hepatotoxicity Module is installed at the AZ
Facility and used in connection with AZ's infrastructure and instrumentation,
the Parties jointly shall perform mutually agreed testing and other evaluation

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-14-

AZ AND CK CONFIDENTIAL

procedures to determine whether the Cytometrix(TM) Hepatotoxicity Module meets
the Performance Criteria. If the Parties disagree as to whether the Performance
Criteria have been met, then the Parties shall cooperate to resolve any
disagreement. Where resolution is within the scope of the then-existing Research
Plan, the Parties shall cooperate to resolve the disagreement first under
Section 2.4 through the JRC, then under Section 2.5 through the JSC, and then
pursuant to Section 10.2. Where resolution is outside the scope of the
then-existing Research Plan, the Parties shall cooperate to resolve the
disagreement under Section 2.5 through the JSC, and then pursuant to Section
10.2.

3.5 TECHNOLOGY AND DELIVERY. AZ shall use diligent efforts to
make available for disclosure and delivery to CK, and CK shall use diligent
efforts to make available for disclosure and delivery to AZ, any and all
Technology that is (a) Controlled by the disclosing Party, (b) known to the
disclosing Party's personnel responsible for the Research Program or to
individuals that report to such personnel, and (c) is either reasonably required
or known to be useful to undertaking the activities under the Research Program
or performing the obligations required and activities contemplated under this
Agreement, whether such Technology arises out of Exempt Activities or otherwise
(such Technology, "RELEVANT TECHNOLOGY"). Relevant Technology includes AZ
Knowledge, CK Knowledge, AZ Background Technology and CK Background Technology.
Notwithstanding the foregoing, Relevant Technology shall exclude a Party's
Technology to the extent that disclosure of that Technology would materially
compromise an ongoing drug discovery or development program conducted by or on
behalf of that Party. Relevant Technology shall be disclosed in accordance with
this Section 3.5 below. Such disclosure shall occur within [*] months from the
time the disclosing Party's personnel responsible for the Research Program or
individuals that report to such personnel become aware of such Relevant
Technology.

3.5.1    If a disclosing Party deems Relevant Technology to be
AZ Background Technology or CK Background Technology, as applicable, then prior
to disclosing that Relevant Technology to the other Party hereunder, the
disclosing Party shall provide to the JRC a summary of that Relevant Technology,
in sufficient detail to determine whether that Relevant Technology is AZ
Background Technology or CK Background Technology, as applicable. The JRC will
confirm that such Relevant Technology is AZ Background Technology or CK
Background Technology; provided that it is not required to do so to the extent
the Relevant Technology consists of General Methods; and provided further and
notwithstanding the foregoing that the JRC is required to agree that Relevant
Technology is AZ Background Technology or CK Background Technology to the extent
it consists of a type of Technology already similar to that within CK Background
Technology or AZ Background Technology.

3.5.2    If the JRC confirms that Relevant Technology is AZ
Background Technology or CK Background Technology, as applicable, then the Party
to receive such Technology hereunder shall promptly notify the disclosing Party,
within [*] business days after confirmation by the JRC, if it does not wish
to receive such Relevant Technology; and provided further that AZ may not
decline to receive Relevant Technology to the extent that Relevant Technology is
reasonably necessary for the CHM to meet the Performance Criteria. The Parties
may agree that certain Technology should be disclosed in a different form or
manner

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-15-

AZ AND CK CONFIDENTIAL

(e.g., in object code rather than in source code), as appropriate. Exhibit 1.3
or Exhibit 1.10, as applicable, shall be amended to include such additional AZ
Background Technology or CK Background Technology.

3.5.3    If the JRC does not confirm such Relevant Technology
as AZ Background Technology or CK Background Technology and the receiving Party
has declined to receive such Relevant Technology, then the disclosing Party has
no obligation to disclose such Relevant Technology, and if the disclosing Party,
at its option, discloses such Technology, then it will be deemed AZ Knowledge or
CK Knowledge, as appropriate.

ARTICLE IV - EXCLUSIVITY OF EFFORTS

4.1 EXCLUSIVITY OF EFFORTS. Except for the Exempt Activities, during
[*], neither AZ nor CK shall collaborate or otherwise cooperate with any Third
Party to, and neither AZ nor CK shall, perform research or development
specifically directed to the Field, other than under the Research Program. For
the avoidance of doubt, during [*], nothing herein shall restrict either Party
in any way from [*]. It is understood that even if the foregoing exclusivity
provision terminates or expires, each Party shall continue diligently to
endeavor to fulfill all of its obligations hereunder during the remainder of the
term of the Agreement, including those obligations directed at enabling the
Cytometrix(TM) Hepatotoxicity Module to meet the Performance Criteria.

4.2 PERMITTED ACTIVITIES. Nothing herein shall be deemed to prevent or
restrict AZ's or CK's rights to undertake and perform the Exempt Activities and
CK's right to develop and commercialize the CM System for any and all
applications outside of the Field. Likewise, nothing herein shall be deemed to
prevent or restrict either Party's right to develop or commercialize methods of
or systems for in vitro prediction of hepatotoxicity when those methods or
systems are outside of the Field; provided that the Party is complying with its
obligations hereunder with respect to Confidential Information and Intellectual
Property Rights of the other Party.

ARTICLE V - OWNERSHIP AND LICENSE GRANTS

5.1 OWNERSHIP.

5.1.1    AZ OWNERSHIP. AZ owns and shall own all right, title
and interest in and to the AZ Background Technology, AZ Compounds, AZ Compound
Data, AZ Knowledge and all Intellectual Property Rights therein. As between the
Parties, AZ has the exclusive right, at its sole discretion and expense, to
apply for, register, maintain and enforce Patents and other

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-16-

AZ AND CK CONFIDENTIAL

Intellectual Property Rights as it deems appropriate with respect to any of the
AZ Background Technology, AZ Compounds, AZ Compound Data and AZ Knowledge.

5.1.2    CK OWNERSHIP. CK owns and shall own all right, title
and interest in and to the CM System, CK Compounds, CK Compound Data, CK
Background Technology, CK Knowledge and all Intellectual Property Rights
therein. Further, CK owns and shall own all right, title and interest in and to
the Collaboration Technology and Collaboration Knowledge, and in and to the
Cytometrix(TM) Hepatotoxicity Module, and all Intellectual Property Rights
therein. Accordingly, AZ hereby assigns to CK any and all right, title and
interest in and to the Collaboration Technology, Collaboration Knowledge, and
the Cytometrix(TM) Hepatotoxicity Module, together in each case with all
Intellectual Property Rights therein that AZ may acquire as a result of its
performance of the Research Program or activities under the Pilot License (1)
except that AZ shall not assign those Improvements (and the Intellectual
Property Rights therein) owned by AZ pursuant to Section 5.1.3, and (2) the
foregoing assignment is subject to the licenses granted by CK to AZ under
Sections 5.4.2, 5.4.3, 5.5, 5.6 and 5.7. As between the Parties, CK has the
exclusive right, at its sole expense, to apply for, register, maintain and
enforce Patents and other Intellectual Property Rights as it deems appropriate
with respect to any of the CK Background Technology, CK Knowledge, CK Compounds,
CK Compound Data, Cytometrix(TM) Hepatotoxicity Module, Collaboration
Technology, Collaboration Knowledge and Improvements owned by CK under Section
5.1.3. AZ agrees to execute documents, render such reasonable assistance, and
take such other reasonable action at CK's expense as CK may reasonably request
to apply for, register, perfect, confirm, and protect the rights it assigns to
CK under this Section 5.1.2.

5.1.3    IMPROVEMENTS. Without limiting Section 5.1.2, (i) all
AZ Improvements are owned by AZ (subject to the licenses granted to CK under
Section 5.1.4), and (ii) all other Improvements to the Cytometrix(TM)
Hepatotoxicity Module arising during the Pilot License Term, whether created
jointly or solely by one of the Parties, are owned by CK. Accordingly, AZ hereby
assigns to CK any and all right, title and interest in and to any Improvements
owned by CK pursuant to this Section 5.1.3. AZ agrees to execute documents,
render such reasonable assistance, and take such other reasonable action at CK's
expense as CK may reasonably request to apply for, registered, perfect, confirm
and protect the rights it assigns to CK under this Section 5.1.3. After the end
of the Pilot License Term, Improvements to the Cytometrix(TM) Hepatotoxicity
Module made by CK shall be owned by CK and Improvements to the Cytometrix(TM)
Hepatotoxicity Module made by AZ shall be owned by AZ. For avoidance of doubt,
neither Party has any right, license or access to Improvements made by the other
Party after the end of the Pilot License Term.

5.1.4    LICENSE TO AZ IMPROVEMENTS. AZ agrees to grant and
hereby grants CK a worldwide, perpetual, irrevocable, non-exclusive right and
license, including the right to grant and authorize sublicenses, under AZ
Intellectual Property Rights in AZ Improvements.

-17-

AZ AND CK CONFIDENTIAL

5.2 LICENSES TO BACKGROUND TECHNOLOGY.

5.2.1    AZ GRANT TO CK. AZ agrees to grant and hereby grants
CK a non-exclusive, worldwide, royalty-free right and license, under AZ
Intellectual Property Rights in AZ Background Technology, to use AZ Background
Technology solely for the purposes of CK performing the Research Program during
the Research Term. Upon completion of the Research Program and CK delivering to
AZ the items required to be provided under the Research Plan, and upon the
Cytometrix(TM) Hepatotoxicity Module, as installed at the CK Facility, meeting
the Performance Criteria, AZ agrees to grant and hereby grants to CK a
non-exclusive, worldwide, royalty-free, perpetual right and license, limited to
the Field, under AZ Intellectual Property Rights in AZ Background Technology,
for CK to practice AZ Background Technology in the production, use and
modification of the Cytometrix(TM) Hepatotoxicity Module and Improvements
thereof. For [*] years following the expiration of the Research Term, CK's
license under this Section 5.2.1 shall be restricted solely for internal
research purposes, which internal research purposes include CK's use of the
Cytometrix(TM) Hepatotoxicity Module in its research collaborations with any
collaborator when required to advance the research collaboration or CK's
internal drug discovery and development programs; provided that the
Cytometrix(TM) Hepatotoxicity Module is not the predominant component of the
relationship between CK and such collaborator and provided further that in any
research collaboration the Cytometrix(TM) Hepatotoxicity Module is used for
activities such as to inform lead generation or to triage hits and leads rather
than solely for activities such as screening entire libraries of compounds. For
the avoidance of doubt however, such internal research use shall expressly
exclude exploitation of the Cytometrix(TM) Hepatotoxicity Module as a commercial
product or service (e.g., as a service bureau), except as expressly provided
above. In connection with such internal research purposes, CK may authorize
collaborators and others to access and use of the AZ Background Technology at
CK's facility. After the first [*] years after the Research Term, CK is free to
sublicense its rights under this Section 5.2.1 without restriction.

5.2.2    CK GRANT TO AZ. CK agrees to grant and hereby grants
AZ a non-exclusive, worldwide, royalty-free right and license, outside the
Prohibited Field and limited to the Field, under CK Intellectual Property Rights
in CK Background Technology, to use CK Background Technology solely for the
purposes of AZ performing the Research Program during the Research Term. To the
extent that CK Background Technology is software and is delivered to AZ in
object code form, AZ shall not reverse engineer or otherwise attempt to derive
source code from that software.

5.3 LICENSES TO COMPOUNDS AND COMPOUND DATA.

5.3.1    AZ GRANT TO CK.

(a) AZ agrees to grant and hereby grants CK a
non-exclusive, worldwide, royalty-free license under AZ Intellectual Property
Rights in AZ Compounds and AZ Compound Data in the Field (a) during the Research
Term, solely in connection with CK's performance of the Research Program and in
accordance with the Research Plan, (b) during and after the Research Term, to
perform purity analysis, and (c) after the Research Term (1) for CK to

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-18-

AZ AND CK CONFIDENTIAL

[*] thereof, and (2) as expressly provided in Section 7.3. CK agrees that
although it may perform purity analysis as set forth above, neither it nor any
of its employees, agents or assigns shall [*], the AZ Compounds proprietary to
AZ without the prior written consent of AZ. For [*] years following the
expiration of the Research Term, CK's license under this Section 5.3.1 shall be
restricted solely for internal research purposes. For purposes of this
Agreement, internal research purposes include CK's use of the Cytometrix(TM)
Hepatotoxicity Module in its research collaborations with any collaborator when
required to advance the research collaboration or CK's internal drug discovery
and development programs; provided that the Cytometrix(TM) Hepatotoxicity Module
is not the predominant component of the relationship between CK and such
collaborator and provided further that in any research collaboration the
Cytometrix(TM) Hepatotoxicity Module is used for activities such as to inform
lead generation or to triage hits and leads rather than solely for activities
such as screening entire libraries of compounds. For the avoidance of doubt
however, such internal research use shall expressly exclude exploitation of the
Cytometrix(TM) Hepatotoxicity Module as a commercial product or service (e.g.,
as a service bureau), except as expressly provided above. In connection with
such internal research purposes, CK may authorize collaborators and others to
access and use of the AZ Compounds and Compound Data at CK's facility. After the
first [*] years after the Research Term, CK is free to sublicense its rights to
the AZ Compound Data for the purpose of [*] thereof under this Section 5.3.1(a).

(b) CK shall maintain written records regarding the
use of AZ Compounds and AZ Compound Data, and upon reasonable advance written
notice and during regular business hours, CK shall permit AZ or its authorized
designee to access CK Facilities, and to review required documentation to
determine compliance with the terms of this license.

5.3.2    CK GRANT TO AZ. CK agrees to grant and hereby grants
AZ a non-exclusive, worldwide, royalty-free license, but excluding all
activities in the Prohibited Field, under CK Intellectual Property Rights in CK
Compounds and CK Compound Data in the Field (a) during the Research Term, solely
in connection with AZ's performance of the Research Program and in accordance
with the Research Plan, (b) during and after the Research Term, to perform
purity analysis, and (c) after the Research Term (1) for AZ to [*] thereof, and
(2) as expressly provided in Section 7.3. AZ agrees that although it may perform
purity analysis as set forth above, neither it nor any of its employees, agents
or assigns shall [*], the CK Compounds proprietary to CK without the prior
written consent of CK.

5.3.3    PUBLIC COMPOUNDS AND PUBLIC COMPOUND DATA. The
Parties acknowledge that, with respect to any CK Compound or AZ Compound that is
designated as Public on EXHIBIT 1.11 or EXHIBIT 1.4 (as applicable) (together
with corresponding CK Compound Data or AZ Compound Data), nothing in this
Agreement will be construed to restrict either Party in any manner from using,
disclosing, reproducing, or obtaining from other sources such Compounds or such
data and information.

* Certain information on this page has been omitted and filed separately with 
the Commission. Confidential treatment has been requested with respect to the 
omitted portions.
-19-

AZ AND CK CONFIDENTIAL

5.4 KNOWLEDGE LICENSES.

5.4.1    AZ KNOWLEDGE. AZ grants CK an automatic, worldwide,
non-exclusive, royalty-free, perpetual and irrevocable license to use, reproduce
and otherwise exploit AZ Knowledge. The license granted in this Section 5.4.1
includes the right to disclose such AZ Knowledge to, and authorize further
disclosure and use by, Third Parties in connection with ongoing discovery,
development, collaboration and marketing or other activities. Disclosure to
Third Parties must be under appropriate terms and conditions including
restrictions equivalent to any in this Section 5.4.1 and, to the extent any AZ
Knowledge also is AZ's Confidential Information, confidentiality provisions
substantially equivalent to those in this Agreement.

5.4.2    CK KNOWLEDGE. CK grants AZ an automatic, worldwide,
non-exclusive, royalty-free, perpetual and irrevocable license, to use,
reproduce and otherwise exploit CK Knowledge, solely for applications outside
the Prohibited Field. The license granted in this Section 5.4.2 includes the
right to disclose such CK Knowledge to, and authorize further disclosure use by,
Third Parties in connection with ongoing discovery, development, collaboration
and marketing or other activities. Disclosure to Third Parties must be under
appropriate terms and conditions including restrictions equivalent to any in
this Section 5.4.2 and, to the extent any CK Knowledge also is CK's Confidential
Information, confidentiality provisions substantially equivalent to those in
this Agreement.

5.4.3    COLLABORATION KNOWLEDGE. During and after the
Research Term, CK grants AZ an automatic, worldwide, non-exclusive,
royalty-free, perpetual and irrevocable license, to use, reproduce and otherwise
exploit Collaboration Knowledge, solely for applications outside the Prohibited
Field. The license granted in this Section 5.4.3 includes the right to disclose
such Collaboration Knowledge to, and authorize further disclosure use by, Third
Parties in connection with ongoing discovery, development, collaboration and
marketing or other activities by or on behalf of AZ. Disclosure to Third Parties
of Collaboration Knowledge licensed under this Section must be under appropriate
terms and conditions including restrictions equivalent to any in this Section
5.4.3 and, to the extent any such Collaboration Knowledge also is CK's
Confidential Information, confidentiality provisions substantially equivalent to
those in this Agreement.

5.5 COLLABORATION TECHNOLOGY LICENSES.

5.5.1    CYTOMETRIX(TM) HEPATOTOXICITY MODULE MEETS
PERFORMANCE CRITERIA. Upon the Cytometrix(TM) Hepatotoxicity Module meeting the
Performance Criteria at the AZ Facility (as determined pursuant to Section 3.4),
CK agrees to grant and hereby grants to AZ a worldwide, perpetual,
non-transferable (except in accordance with Section 10.4), non-exclusive right
and license, outside the Prohibited Field, under CK Intellectual Property Rights
in Collaboration Technology. The rights granted in this Section 5.5.1 do not
extend to the use, development or exploitation of Collaboration Technology in
the Field, which restriction is for a period not to exceed [*] years following
the Pilot License Term (subject to earlier termination of the foregoing
restriction pursuant to Section 8.3.2(b) for termination of the Agreement under
Section 8.2.1).

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-20-

AZ AND CK CONFIDENTIAL

5.5.2    OPTION FOR LICENSES WHEN CYTOMETRIX(TM)
HEPATOTOXICITY MODULE FAILS TO MEET PERFORMANCE CRITERIA OR AGREEMENT IS
TERMINATED PURSUANT TO SECTION 8.2.3. If either (1) the Parties determine that
the Cytometrix(TM) Hepatotoxicity Module has not met the Performance Criteria
(as determined pursuant to Section 3.4) or (2) this Agreement is terminated
prior to the end of the Pilot License Term pursuant to Section 8.2.3 (Lack of
Feasibility), then AZ may, at its option, obtain a license to Collaboration
Technology as set forth in this Section 5.5.2. Upon the occurrence of either of
the conditions outlined above, AZ may provide notice to CK of its desire to
obtain such a license, and the Parties will negotiate in good faith an amount to
be paid for the license, but not to exceed US$[*]. Upon payment of such
amount, CK agrees to grant and hereby grants to AZ a worldwide, perpetual,
non-exclusive, non-transferable (except in accordance with Section 10.4),
irrevocable right and license under CK Intellectual Property Rights in
Collaboration Technology, solely for applications outside the Prohibited Field.

5.6 PILOT LICENSE AND SUPPORT.

5.6.1    PILOT LICENSE. Upon the Cytometrix(TM) Hepatotoxicity
Module meeting the Performance Criteria at the CK Facility, CK agrees TO grant
and hereby grants AZ, during the Pilot License Term, a worldwide, non-exclusive,
non-transferable (except in accordance with Section 10.4), royalty-free right
and license in the Field (but excluding all activities or applications in the
Prohibited Field), under CK Intellectual Property Rights in CK Knowledge, CK
Background Technology and Collaboration Technology, to use the Cytometrix(TM)
Hepatotoxicity Module, together with any Improvements owned by CK, solely for
its own internal research at the AZ Facility (the "PILOT LICENSE"). To the
extent that a software component of the Cytometrix(TM) Hepatotoxicity Module is
delivered in object code form, the license granted extends only to the object
code form and not the source code form of that software, and AZ shall not, and
shall not permit any Third Party to, reverse engineer or decompile, or otherwise
attempt to derive source code from that software component. To the extent that a
software component of the prototype version of the Cytometrix(TM) Hepatotoxicity
Module is delivered in source code form, AZ shall not modify that software
component and the use and disclosure thereof is subject to the requirements of
Section 7.1; however, it is understood that AZ may compile such source code to
create the object code derivative thereof.

5.6.2    SUPPORT. CK shall provide technical support as set
forth on EXHIBIT 5.6.2 with respect to the Cytometrix(TM) Hepatotoxicity Module.
For clarity, CK has no support obligations other than as expressly set forth on
that EXHIBIT 5.6.2.

5.7 AZ FULL LICENSE TO CYTOMETRIX(TM) HEPATOTOXICITY MODULE.

5.7.1    LICENSES. Upon the Cytometrix(TM) Hepatotoxicity
Module meeting the Performance Criteria at the AZ Facility, and upon payment by
AZ of the Milestone Payment under Section 6.2 and the Annual License Renewal
Fees thereafter, CK agrees to grant and hereby grants AZ, during the Full
License Term, a worldwide, non-exclusive, non-transferable (except in accordance
with Section 10.4), royalty-free right and license in the Field (but excluding
all activities or applications in the Prohibited Field), under CK Intellectual
Property

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-21-

AZ AND CK CONFIDENTIAL

Rights in CK Knowledge, CK Background Technology and Collaboration Technology,
(i) to use the Cytometrix(TM) Hepatotoxicity Module, and any Improvements (to
the extent such Improvements are in the Field, owned by CK, and in existence as
of the first day of the Full License Term), for its own internal research and
development program at any and all AZ Facilities, (ii) to make and distribute a
reasonable number of copies of the Cytometrix(TM) Hepatotoxicity Module,
including a reasonable number of backup copies thereof in connection with the
exercise of the rights set forth in clause (i) above, and (iii) to create
derivative works of the Cytometrix(TM) Hepatotoxicity Module only for the
purpose of maintaining and supporting AZ's authorized use thereof and to the
extent those derivative works are within the scope of the Deliverables described
in EXHIBIT 1.23 and of the following activities: refining the model by including
extra compounds, modifying existing assays, and incorporating additional assays
(the foregoing licenses in clauses (i) through (iii) above together are the
"FULL LICENSE"). To the extent that a software component of the Cytometrix(TM)
Hepatotoxicity Module is delivered in object code form, the license granted
extends only to the object code form and not the source code form of that
software, and AZ shall not, or permit any Third Party to, reverse engineer or
decompile, or otherwise attempt to derive source code from that software
component.

5.7.2    RECORDS. AZ shall maintain records regarding the use
of the Cytometrix(TM) Hepatotoxicity Module, and upon reasonable advance written
notice and during regular business hours, AZ shall permit CK or its authorized
designee to access AZ Facilities, and to review required documentation to
determine compliance with the terms of this license.

5.8 NO IMPLIED LICENSES. Each Party acknowledges that the rights and
licenses granted under this Article V are limited to the scope expressly granted
herein, and all rights not so granted are hereby expressly reserved. Nothing in
this Agreement shall limit in any respect the right of either Party to use its
own Technology to conduct research and development with respect to and
commercialize products or technologies outside the Field. Consistent with the
foregoing, it is understood that licenses to Collaboration Technology and
licenses to Collaboration Knowledge do not include or incorporate any right or
license to CK Background Technology; exploitation of Collaboration Technology or
Collaboration Knowledge may require a license to the underlying subject matter.
It is further understood that licenses to Collaboration Technology and licenses
to Collaboration Knowledge do not extend to the Cytometrix(TM) Hepatotoxicity
Module; exploitation of Collaboration Technology or Collaboration Knowledge that
is not independent of the Cytometrix(TM) Hepatotoxicity Module may require a
separate license to such Cytometrix(TM) Hepatotoxicity Module for use thereof.

ARTICLE VI - PAYMENTS

6.1 RESEARCH PROGRAM FUNDING.

6.1.1    FTE FUNDING. Each Party shall assume responsibility
for its own costs and expenses for its conduct of activities under the Research
Program with the sole exception that AZ shall fund, quarterly in advance, during
the Research Term (whether or not the Pilot License Term has begun), [*] of the
[*] FTEs to be committed by CK for the performance of the Research Program, at
the FTE rate set forth below. In total, subject to any

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-22-

AZ AND CK CONFIDENTIAL

Additional Items, the annual FTE funding to be provided by AZ to CK under this
Section 6.1.1 shall not exceed US$[*], unless otherwise separately agreed by the
Parties in writing.

6.1.2    The FTE rate is [*] dollars (US$[*]) per year, which
includes all employee-related compensation, including salaries, wages, bonuses,
benefits, profit sharing, stock option grants, and FICA costs, travel, meals and
entertainment (except in connection with reimbursed travel described below),
training, recruiting, relocation, operating supplies, postage, communications
expense, professional dues, depreciation, repairs and maintenance, rent and
lease, utilities, taxes, facilities and space costs, and computer service
charges. The FTE rate excludes the cost of items identified as Additional Items
as described in Section 6.1.2. AZ shall have no obligation to fund FTEs after
the Research Term. During the Pilot License Term, the direct out-of-pocket
expenses of travel and lodging incurred by CK personnel while required to be on
site pursuant to the Research Program will be reimbursed by AZ to CK; provided
that the CK employees are away from the facility at which those personnel
typically work and the duration of the trip is for an extended period of time
(i.e., more than three (3) working days). AZ shall reimburse CK for such direct
out-of-pocket expenses incurred by CK that are within the AZ travel guidelines
within sixty (60) days after receipt by AZ of a correct invoice with supporting
documentation from CK that identifies the name of the employee, the date of the
trip(s) taken and the total dollar amount incurred with sufficient detail to
determine amounts incurred for transportation, meals, lodging, and related
incidentals.

6.1.3    ADDITIONAL EXPENSES. From time to time, the JRC may
identify additional items or subject matter required to carry out the Research
Program, including additional licenses under Intellectual Property Rights of
Third Parties, extraordinary equipment or specialized reagents or any other
external costs (each such item an "ADDITIONAL ITEM"). In each instance, the JRC
will apportion the cost of Additional Items according to the following
principles: (i) if the Additional Item will be consumed fully during the
Research Term and will be used only for work in the Field, the expense will be
borne equally by CK and AZ; (ii) if the Additional Item will not be fully
consumed during the Research Term, or will be used during the Research Term
outside the Field by either CK or AZ, the expense will be apportioned between CK
and AZ in a manner that equitably reflects the relative value to the Research
Program of such Additional Item and for applications outside of the Research
Program for the Party(ies) that will have rights thereto. For clarity, neither
Party shall have any obligation to reimburse the other Party with respect to
amounts incurred by the other Party with respect to any Additional Item, except
as agreed by the JRC. Unless otherwise mutually agreed, during the Research
Program, CK shall be the contracting Party with respect to any such Additional
Items and shall directly pay for any such Additional Items. If there are cost
apportionment concerns regarding Additional Items during the Pilot Program,
responsibility for such costs shall be resolved by the JRC. All equipment
acquired during the Pilot Phase at the AZ facility shall become the property of
AZ.

6.2 MILESTONE PAYMENT. Upon completion of the Research Program, after
CK has delivered to AZ the items required to be provided under the Research
Plan, and upon the Cytometrix(TM) Hepatotoxicity Module, as installed at the AZ
Facility, meeting the Performance Criteria (as determined pursuant to Section
3.4), a milestone payment of [*] USD dollars

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-23-

AZ AND CK CONFIDENTIAL

(US$[*]) ("MILESTONE PAYMENT") will become due and payable. AZ shall pay the
Milestone Payment within thirty (30) days following receipt of an invoice from
CK, generated in accordance with the foregoing.

6.3 LICENSE RENEWAL FEES.

6.3.1    On each of the first [*] annual year anniversaries of
the date on which the Full License is first effective, AZ shall pay to CK an
annual license renewal fee of [*] dollars (US$[*]) ("ANNUAL LICENSE RENEWAL
FEE") for continuance of the Full License, within thirty (30) days after CK's
invoice. On each of the [*] through [*] annual year anniversaries of the date on
which the Full License is first effective, AZ has the option to (i) pay to CK
the annual license renewal fee of [*] dollars (US$[*]) for continuance of the
Full License, within thirty (30) days after CK's invoice or the end of a
Contract Year, or (ii) cease payments and terminate the Full License. Upon
either (i) a CK Change of Control event that arises due to CK's merger with,
acquisition by, or other similar transaction with a pharmaceutical company with
annual sales in excess of US$1 billion that occurs at any time during the Full
License, or (ii) payment of the [*] such annual license renewal fee in
accordance with this Agreement, the Full License granted to AZ pursuant to
Section 5.7 shall become fully paid up and perpetual.

6.3.2    To the extent CK licenses the use of the
Cytometrix(TM) Hepatotoxicity Module to any Third Party for an amount that is
leSS than the amount owed by AZ under Section 6.3.1, AZ's obligation to pay to
CK an Annual License Renewal Fee of US$[*] shall be reduced to the equivalent or
less than the lowest amount that such Third Party is obligated to pay.

6.4 TAXES. CK will be responsible for paying any and all taxes and
assessments relating to any income or other consideration that CK derives from
this Agreement. All payments made by AZ to CK under this Agreement shall be made
without any deduction or withholding for or on account of any taxes. Withholding
taxes, if any, must be paid by AZ to the relevant taxing authority on behalf of
CK.

6.5 TOTAL OBLIGATION. The Annual License Renewal Fees and the Milestone
Payment payable by AZ to CK pursuant to this Agreement, taken together with the
funding to be provided by AZ to CK and other amounts payable pursuant to this
Article 6, represent all of AZ's financial obligations to CK hereunder. CK shall
not be entitled to any additional compensation or remuneration from AZ under
this Agreement. The foregoing will not be construed as a limit on fees due for
termination, damages for breach, or obligations of indemnity.

ARTICLE VII - CONFIDENTIALITY

7.1 CONFIDENTIAL INFORMATION.  Except to the extent expressly
authorized by this Agreement or otherwise  agreed in writing,  the Parties agree
that, for ten (10) years after the expiration of the Research Term, the
receiving  Party shall keep  confidential  and shall not publish or  otherwise
disclose or use for any purpose  other  than  as  provided  for  in  this
Agreement  any   Confidential Information of the other Party. "CONFIDENTIAL
INFORMATION" means (i) any

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-24-

AZ AND CK CONFIDENTIAL

prototypes provided by CK under this Agreement or in connection with the
Research Program; (ii) information disclosed in tangible form that is marked
"confidential" or with other similar designation to indicate its confidential or
proprietary nature; and (iii) information disclosed orally, where such
information is either (A) of the type usually considered confidential or
proprietary in the biopharmaceutical industry or (B) otherwise indicated to be
confidential or proprietary by the disclosing Party at the time of the initial
disclosure thereof and confirmed in writing as confidential or proprietary by
the disclosing Party within thirty (30) days after such disclosure.
Notwithstanding the foregoing, Confidential Information shall not include
information that, in each case as demonstrated by written documentation:

(a) was already or becomes lawfully known to the
receiving Party, other than under an obligation of confidentiality, at the time
of disclosure;

(b) can be demonstrated by documentation or other
competent proof to have been in the receiving Party's or its Affiliates'
possession prior to disclosure by the disclosing Party;

(c) is subsequently received by the receiving Party
or its Affiliates from a Third Party who is not bound by any obligation of
confidentiality with respect to that information;

(d) is generally made available to Third Parties by
the disclosing Party without restriction on disclosure;

(e) was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
receiving Party or became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement; or

(f) was developed by the receiving Party without
reference to any information or materials disclosed or provided by the
disclosing Party.

7.2 PERMITTED DISCLOSURES. Notwithstanding Section 7.1 above, each
Party may disclose Confidential Information of the other Party as follows:

(a) to Third Parties (and to Affiliates) under
appropriate terms and conditions including confidentiality provisions
substantially equivalent to those in this Agreement in connection with obtaining
financing and other business activities, such Confidential Information permitted
under this subsection to be disclosed shall be limited to general descriptions
of the activities, technology and findings under this Agreement (including
associations), and shall exclude hepatotoxicity profiles, other than
toxicophoric centers, associated with chemotypes;

(b) as is reasonably necessary to exercise the rights
and licenses granted or reserved herein (including the right to grant
sublicenses);

-25-

AZ AND CK CONFIDENTIAL

(c) to the extent such disclosure is reasonably
necessary in filing for, registering or maintaining Intellectual Property Rights
in accordance with Section 5.1;

(d) as required by law or regulation (including
applicable securities regulations); provided, however, that if a Party is
required by law or regulation to make any such disclosure of the other Party's
Confidential Information it will, except where impracticable for necessary
disclosures, give reasonable advance notice to the other Party of such
disclosure requirement will use its reasonable efforts to secure confidential
treatment of such Confidential Information required to be disclosed; or

(e) to the extent mutually agreed to by the Parties.

7.3 RESTRICTIONS ON DISCLOSURE OF DATA SETS. Notwithstanding anything
to the contrary in this Agreement, AZ agrees that it shall treat as CK's
Confidential Information data sets generated by AZ using the CK Compounds.
Likewise, CK agrees that it shall treat as AZ's Confidential Information data
sets generated by CK using the AZ Compounds. However, CK may disclose those data
sets to CK collaborator(s) under appropriate obligations of confidentiality no
less protective than those for CK's own information. In addition, either Party
may use and disclose such data sets without restriction (a) as aggregated
information and data sets, whether about the proprietary or public AZ Compounds
or CK Compounds, as applicable for purposes of describing the utility of the
Cytometrix(TM) Hepatotoxicity Module and the general nature of the activities
under this Agreement; and (b) individual data sets about public AZ Compounds or
CK Compounds, as applicable, in each case so long as that Party does not
disclose specific [*], other than [*], that could be associated with specific
[*].

7.4 PRESS RELEASE; CONFIDENTIALITY OF TERMS OF AGREEMENT. Neither Party
shall disclose to any Third Party the terms of this Agreement without the prior
written consent of the other Party, except (a) to advisors and existing and
potential investors on a need to know basis under circumstances that reasonably
ensure the confidentiality thereof, (b) to Third Parties to the extent necessary
to comply with the terms of licenses from Third Parties with respect to a
Party's Confidential Information, (c) to the extent required by law or a court
or other governmental body; provided that in such situation the Party wishing to
disclose the terms gives reasonable advance written notice to the non-disclosing
Party of the proposed disclosure and the reason for such disclosure and uses
reasonable efforts to secure confidential treatment of such disclosed
information. Notwithstanding the foregoing, following the Effective Date, the
Parties shall issue a press release, substantially in the form of EXHIBIT 7.4,
to announce the execution of this Agreement, together with a corresponding
Question & Answer outline for use that has been approved in advance by both
Parties for the purpose of responding to inquiries about the Agreement;
thereafter, each of AZ and CK may each disclose to Third Parties the information
contained in such press release and Question & Answer outline without the need
for further approval by the other. In addition, with the advance review and
prior written approval of the other Party in each instance, each Party is
authorized to issue additional press releases when amounts such as milestone
payments or licensing fees become due under this Agreement.

*   Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-26-

AZ AND CK CONFIDENTIAL

7.5 PUBLICATION. Each Party acknowledges the other Party's interest in
publishing the results of the Research Program, obtaining valid patent
protection, and protecting business interests and trade secrets. Consequently,
if (i) CK, its employees, agents or consultants wish to make a publication
related to the CK Compounds or the AZ Compounds (it is understood that CK will
not disclose the identity of the AZ Compounds or other Confidential Information
of AZ without AZ's prior written consent), or (ii) AZ, its employees, agents or
consultants wish to make a publication regarding the use of the Cytometrix(TM)
Hepatotoxicity Module or CM System in any manner, with or without the CK
Compounds (it is understood that AZ will not disclose Confidential Information
of CK without CK's prior written consent), in each case, such Party shall
deliver to the other Party a copy of the proposed written publication or an
outline of an oral disclosure at least thirty (30) days prior to submission for
publication or presentation. The reviewing Party may (a) propose modifications
to the publication for patent reasons or business reasons, (b) delete any trade
secrets or Confidential Information of such Party included in that publication,
or (c) request a reasonable delay in publication or presentation to protect
know-how and patentable subject matter. Once a particular public disclosure has
been approved, either Party may disclose the information contained therein in
subsequent disclosures.

7.6 OUTSOURCING OF IT TECHNOLOGY SERVICES.

7.6.1    RIGHT TO OUTSOURCE. Without limiting the foregoing
confidentiality provisions, during the Pilot License Term and the Full License
Term, AZ shall have the right to appoint a Third Party ("OUTSOURCER") to provide
information technology "outsourcing" services to AZ and its Affiliates that
relates to the subject matter of this Agreement ("OUTSOURCE SERVICES") for the
purposes of enabling AZ to perform under the Agreement or enabling AZ to use
Technology and or information licensed under this Agreement, only on behalf of
AZ and for the purposes permitted under this Agreement. Outsource Services
include loading any software licensed under the Agreement onto equipment owned
or controlled by the Outsourcer, located either at the AZ Facility, an
Outsourcer's premises or at the CK Facility. In connection with an Outsourcer
providing Outsource Services, CK shall permit the Outsourcer to access, operate
and use such software on its equipment in its performance of the Outsource
Services, and shall otherwise permit the Outsourcer, in its performance of the
Outsource Services, to do anything that AZ or its Affiliates are not precluded
from doing under the Agreement that are reasonably connected to the Outsource
Services, such as accessing, operating and using items supplied or licensed
under the Agreement, and receiving and using services provided under the
Agreement.

7.6.2    COOPERATION WITH OUTSOURCER. AZ shall provide to CK a
copy of its agreement with any Outsourcer, to the extent relevant to either
Party's activities, rights or obligations under this Agreement. CK shall
reasonably cooperate with any authorized Outsourcer in the Outsourcer's
performance of the Outsource Services. In order to provide Outsource Services to
AZ under this Agreement, it may be necessary for Outsourcer to have access to CK
Confidential Information. Outsourcer shall be bound by terms of confidentiality
no less restrictive than those contained in this Agreement as applied to AZ.

-27-

AZ AND CK CONFIDENTIAL

ARTICLE VIII- TERM AND TERMINATION

8.1 TERM; EXPIRATION. This Agreement will commence upon the Effective
Date and unless terminated as provided in this Article VIII shall continue in
full force and effect until [*] months following payment by AZ of the [*] Annual
License Renewal Fee pursuant to Section 6.3.

8.2 EARLY TERMINATION.

8.2.1    MATERIAL BREACH. At any time during the Term, if a
Party materially breaches this Agreement and does not cure that material breach
within thirty (30) days after written notice from the non-breaching Party, then
upon further written notice the non-breaching Party may terminate this
Agreement. If within thirty (30) days following notice of breach from the
non-breaching Party, the Party allegedly in breach initiates a dispute
resolution procedure in good faith and as permitted under this Agreement for
resolution of the dispute for which termination is being sought and is
diligently pursuing such procedure (including any litigation or arbitration
following therefrom), then termination is effective only if at the conclusion of
the dispute resolution procedure, the initiating Party notifies the other Party
in writing that the termination shall take effect. The non-breaching Party may,
however, withhold or suspend performance of its obligations during the pendency
of such dispute resolution procedure, without being considered to be in breach
of its obligations hereunder, and without liability for having so withheld or
suspended performance. Notwithstanding anything to the contrary in this Section
8.2.1, however, if the breach is a failure to pay amounts due under Sections 6.2
or 6.3, then the licenses granted to AZ by CK shall not continue during pendency
of the dispute.

8.2.2    [INTENTIONALLY LEFT BLANK.]

8.2.3    MUTUALLY FOR LACK OF FEASIBILITY. If the Parties
mutually determine that installing and implementing the Cytometrix(TM)
Hepatotoxicity Module in a manner that meets the Performance Criteria is not
scientifically or commercially feasible, or if the Parties mutually determine,
after installing the Cytometrix(TM) Hepatotoxicity Module at the AZ Facility,
that it has material deficiencies that cannot reasonably be remedied, then by
mutual written agreement the Parties may terminate this Agreement.

8.2.4    BY AZ FOR ITS CONVENIENCE DURING LATER FULL LICENSE
TERM. During the [*] through [*] years of the Full License Term and not before,
and provided that AZ is in compliance with its obligations under this Agreement
and has paid all amounts previously due, for any reason or no reason, AZ may
terminate this Agreement by providing written notice of non-renewal at least
thirty (30) days prior to the date on which the annual renewal license fee would
be due.

8.2.5    BY AZ FOR ITS CONVENIENCE PRIOR TO [*] YEAR OF THE
FULL LICENSE TERM. At any time after the Research Term and prior to the [*] year
of the Full License Term, for any reason or for no reason, AZ may terminate this
Agreement by providing written notice at least ninety (90) days prior to such
termination.

*   Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-28-

AZ AND CK CONFIDENTIAL

8.2.6    BY EITHER PARTY FOR INSOLVENCY. At any time during
the Term, if either Party is subject to an Insolvency Event (defined below),
then the other Party may terminate this Agreement upon thirty (30) days prior
written notice to the other Party. For purposes of the foregoing, an "Insolvency
Event" is any of the following: (i) making a general assignment for the benefit
of creditors; (ii) filing an insolvency petition in bankruptcy (other than a
petition for reorganization); (iii) petitioning for or acquiesces in the
appointment of any receiver, trustee or similar officer to liquidate or conserve
its business or any substantial part of its assets; (iv) commencing under the
laws of any jurisdiction any proceeding involving its dissolution or liquidation
or any other similar proceeding; (v) ceasing to carry on the whole or
substantially the whole of its business or that part of its business to which
this Agreement relates; or (vi) becoming a party to any proceeding or action of
the type described above in (iii) or (iv) and such proceeding or action remains
undismissed or unstayed for a period of sixty (60) days.

8.3 CONSEQUENCES OF EXPIRATION OR TERMINATION.

8.3.1    SURVIVAL. In all events of expiration or termination
the provisions of Articles I (Definitions), VII (Confidentiality), and X
(Miscellaneous), and Sections 2.8(Information and Reports), 4.2 (Permitted
Activities), 5.1 (Ownership) (including 5.1.4 (License to AZ Improvements), 5.4
(Knowledge Licenses), 5.7.2 (Record Keeping), 5.8 (No Implied Licenses), 6.4
(Taxes), 8.3 (Consequences of Expiration or Termination), 9.2 (Warranty
Disclaimer) and 9.3 (No Liability) shall survive. In addition, the Full License
under Section 5.7 survives in any event if it has become fully paid-up pursuant
to the last sentence of Section 6.3 (License Renewal Fee).

8.3.2    OTHER CONSEQUENCES. The following are in addition to
any Sections that survive under Section 8.3.1. Sections or rights not noted as
surviving terminate on termination of the Agreement. In each case, on
termination each Party promptly shall return to the other Party any Technology
or Confidential Information of the other Party, except to the extent the
licenses granted pursuant to this Agreement to such Technology or Confidential
Information survive.

(a) In the event of expiration pursuant to Section
8.1 (Term; Expiration), Section 3.2.6 and Section 3.2.7 (Compounds) survive for
the period indicated therein, licenses to Background Technology (Section 5.2)
and Compounds and Compound Data (Section 5.3) survive, all licenses to
Collaboration Technology under Section 5.5.1 survive, CK may retain the physical
AZ Compounds and AZ Compound Data in its possession, and each Party shall retain
identical copies of the images and derived data generated during the Research
Term.

(b) In the event of termination by AZ under Section
8.2.1 (Material Breach by CK): (i) AZ has no further requirement to pay FTE
costs, the Milestone Payment, the Annual License Renewal Fees or any other
amounts not already due and owing; (ii) the licenses from CK to AZ for CK
Background Technology (Section 5.2) and CK Compounds and CK Compound Data
(Section 5.3) survive and AZ may retain the physical CK Compounds and CK
Compound Data in its possession; (iii) CK shall return to AZ all AZ Compounds in
its possession, and, for avoidance of doubt, AZ has no obligation to provide AZ
Compounds under

-29-

AZ AND CK CONFIDENTIAL

Section 3.2.6; (iv) the license from CK to AZ for Collaboration Technology
(under either Section 5.5.1 or Section 5.5.2, as appropriate) survive; (v) where
such termination occurs prior to the end of the Pilot License Term, CK will be
deemed to have granted a license to the components or portions of the
Cytometrix(TM) Hepatotoxicity Module installed at AZ Facilities, on the same
terms as Section 5.7, but without payment of further fees; (vi) where such
termination occurs during the Full License Term, the license granted to the
Cytometrix(TM) Hepatotoxicity Module to AZ continues in accordance with its
terms without additional payment of fees; (vii) CK shall deliver to AZ all
images and derived data generated during the Research Term in its possession;
and (viii) the restriction under the last sentence of Section 5.5.1 no longer
applies.

(c) In the event of termination by CK under Section
8.2.1 (Material Breach by AZ): (i) AZ shall pay, in each case to the extent not
yet paid, any remaining FTE costs, the Milestone Payment, and the unpaid balance
of the first [*] Annual License Renewal Fees; (ii) the licenses from AZ to CK
for AZ Background Technology (Section 5.2) and AZ Compounds and AZ Compound Data
(Section 5.3) survive and CK may retain the physical AZ Compounds and AZ
Compound Data in its possession; (iii) AZ's obligation to provide Proprietary AZ
Compounds under Section 3.2.6 and Section 3.2.7 continues for the time
indicated, regardless of whether or not the Research Term has been completed;
(iv) in the event that such termination occurs prior to the end of the Research
Term, AZ's obligations with respect to exclusivity of efforts (Section 4.1)
continue for an additional [*] month period; and (v) AZ shall deliver to CK all
images and derived data generated during the Research Term in its possession.

(d) [INTENTIONALLY LEFT BLANK.]

(e) In the event of termination under Section 8.2.3
(Mutually for Lack of Feasibility): (i) AZ shall pay remaining unpaid FTE costs
(if any); (ii) the licenses from AZ to CK for AZ Background Technology (Section
5.2), and AZ Compounds and AZ Compound Data (Section 5.3) survive and CK may
retain the physical AZ Compounds and AZ Compound Data in its possession; (iii)
the license from CK to AZ for Collaboration Technology (under either Section
5.5.1 or Section 5.5.2, as appropriate) survive; (iv) the Cytometrix(TM)
Hepatotoxicity Module (including backups thereof) shall be removed from any AZ
Facilities in which it has been installed, and all licenses granted to AZ
thereunder shall terminate; and (v) each Party shall retain identical copies of
the images and derived data generated during the Research Term.

(f) In the event of termination or non-renewal by AZ
under Section 8.2.4 (AZ Convenience During Later Full License Term): (i) the
license from CK to AZ for Collaboration Technology under Section 5.5.1 survives;
(ii) the licenses from AZ to CK for AZ Background Technology (Section 5.2) and
AZ Compounds and AZ Compound Data (Section 5.3) survive, and CK may retain the
physical AZ Compounds and AZ Compound Data in its possession; and (iii) the
Cytometrix(TM) Hepatotoxicity Module (including backups thereof) shall be
removed from any AZ Facilities in which it has been installed, and all licenses
granted to AZ thereunder shall terminate; and (v) each Party shall retain
identical copies of the images and derived data generated during the Research
Term.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-30-

AZ AND CK CONFIDENTIAL

(g) In the event of termination or non-renewal by AZ
under Section 8.2.5 (AZ Convenience Prior to [*] Year of the Full License
Term): (i) AZ shall pay, in each case to the extent not yet paid, any remaining
FTE costs, the Milestone Payment, and the unpaid balance of the first [*]
Annual License Renewal Fees; (ii) the license from CK to AZ for Collaboration
Technology under Section 5.5.1 survives; (iii) the licenses from AZ to CK for AZ
Background Technology (Section 5.2) and AZ Compounds and AZ Compound Data
(Section 5.3) survive, and CK may retain the physical AZ Compounds and AZ
Compound Data in its possession; (iv) AZ's obligation to provide AZ Compounds
under Section 3.2.6 continues and Section 3.2.7 survives; (iv) the
Cytometrix(TM) Hepatotoxicity Module (including backups thereof) shall be
removed from any AZ Facilities in which it has been installed, and all licenses
granted to AZ thereunder shall terminate; and (v) each Party shall retain
identical copies of the images and derived data generated during the Research
Term.

(h) In the event of termination by either Party under
Section 8.2.6 (Insolvency): (i) licenses already granted (to and from the
insolvent Party) continue in accordance with their terms and subject to payment
of related fees; (ii) each Party shall pay for services already provided; and
(iii) each Party shall retain identical copies of the images and derived data
generated during the Research Term.

8.4 ACCRUED LIABILITY. Termination or expiration of this Agreement for
any reason shall not release either Party hereto from any liability that at the
time of such termination or expiration has already accrued to the other Party
prior to such time including any and all damages arising from any breach
hereunder. Such termination or expiration will not relieve a Party from accrued
payment obligations or from obligations that are expressly indicated in this
Agreement to survive termination or expiration of this Agreement.

8.5 TERMINATION NOT SOLE REMEDY. Termination is not the sole remedy
under this Agreement and, whether or not termination is effected, all other
remedies will remain available except as agreed to otherwise herein.

ARTICLE IX - WARRANTY AND INDEMNIFICATION

9.1 REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and
warrants and covenants as follows:

(a) it is duly organized and validly existing under
the laws of the jurisdiction of its incorporation and has full corporate power
and authority to enter into this Agreement and is in good standing with all
relevant governmental authorities;

(b) this Agreement is a legal and valid obligation
binding upon such Party and enforceable in accordance with its terms; and
accordingly, it has taken all corporate actions necessary to authorize the
execution and delivery of this Agreement and the performance of its obligations
under this Agreement;

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-31-

AZ AND CK CONFIDENTIAL

(c) the execution, delivery and performance of the
Agreement by such Party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by which it is bound,
nor violate any law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it;

(d) it has not, and during the term of the Agreement
will not, grant any right to any Third Party relating to its respective
Technology in the Field which would conflict with the rights granted to the
other Party hereunder;

(e) it has the requisite rights to grants the
licenses set forth under this Agreement; and further, to the best of its
knowledge, as of the Effective Date there is no pending litigation or claim, and
no basis for such claim, challenging its right to grant the rights herein; and

(f) the execution, delivery and performance of this
Agreement will not result in a violation of, or be in material conflict with, or
constitute a material default, under any agreement in existence as of the
Effective Date between CK and Third Parties and that CK is not party to any
agreements that limit or in any other way affect or impair AZ's rights or
obligations under this Agreement, including but not limited to CK's rights and
obligations under that certain agreement between CK and GlaxoSmithKline dated
June 20, 2001.

9.2 WARRANTY DISCLAIMER. EXCEPT FOR ANY EXPRESS WARRANTY SET FORTH
WITHIN THIS AGREEMENT, ALL COMPOUNDS, THE CM SYSTEM, THE CYTOMETRIX
HEPATOTOXICITY MODULE, TECHNOLOGY AND OTHER MATERIALS PROVIDED BY THE PARTIES
HEREUNDER ARE PROVIDED "AS IS" AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW THE PARTIES HEREBY DISCLAIM AND EXCLUDE ANY AND ALL REPRESENTATIONS,
WARRANTIES, CONDITIONS OR OTHER TERMS, WHETHER WRITTEN OR ORAL, EXPRESSED OR
IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY OF QUALITY, PERFORMANCE,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE.

9.3 NO LIABILITY WITH RESPECT TO COMPOUNDS AND COMPOUND DATA. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY, OR ANY OF ITS EMPLOYEES OR AGENTS, WHETHER FOR BREACH OF CONTRACT,
NEGLIGENCE OR OTHERWISE, WITH REGARD TO THE PROVISION OF COMPOUNDS OR COMPOUND
DATA, EXCEPT FOR A BREACH OF ITS OBLIGATIONS TO DELIVER AND LICENSE SUCH
COMPOUNDS OR COMPOUND DATA UNDER THIS AGREEMENT IN ACCORDANCE WITH THE TERMS
HEREOF.

9.4 INDEMNITY.

9.4.1    INDEMNIFICATION BY CK. In addition to any other
remedy available to AZ, CK shall indemnify, defend and hold harmless AZ, its
Affiliates and its and their respective agents, employees, officers and
directors (the "AZ INDEMNITEES") from and against any and all

-32-

AZ AND CK CONFIDENTIAL

liability, claims, demands, causes of action, damage, loss, cost or expense
(including reasonable attorneys' fees) arising out of Third Party claims or
suits to the extent resulting from: (i) CK's performance of, or failure to
perform, its obligations under this Agreement; or (ii) breach by CK of any of
its representations and warranties under Section 9.1 above, provided, however,
that CK's obligations pursuant to this Section 9.4 shall not apply to the extent
such claims or suits result from the negligence or willful misconduct of any of
the AZ Indemnitees.

9.4.2    INDEMNIFICATION BY AZ. In addition to any other
remedy available to CK, AZ shall indemnify, defend and hold harmless CK, its
Affiliates and its and their respective agents, employees, officers and
directors (the "CK INDEMNITEES") from and against any and all liability, claims,
demands, causes of action, damage, loss, cost or expense (including reasonable
attorneys' fees) arising out of Third Party claims or suits to the extent
resulting from: (i) AZ's performance of, or failure to perform, its obligations
under this Agreement; or (ii) breach by AZ of any of its representations and
warranties under Section 9.1 above; provided, however, that AZ's obligations
pursuant to this Section 9.4 shall not apply to the extent such claims or suits
result from the negligence or willful misconduct of any of the CK Indemnitees.

9.4.3    NOTIFICATION OF CLAIM; CONDITIONS TO INDEMNIFICATION
OBLIGATIONS.

(a) As a condition to a Party's right to receive
indemnification under this Section 9.4, it shall: (i) promptly notify ("CLAIM
NOTICE") the other Party as soon as it becomes aware of a claim or suit for
which indemnification may be sought pursuant hereto (provided that the failure
to give a Claim Notice promptly shall not prejudice the rights of an indemnified
Party except to the extent that the failure to give such prompt notice
materially prejudices the indemnifying Party; however, in no event shall the
indemnifying Party be liable for any loss that results from any delay in
providing the Claim Notice); (ii) cooperate with the indemnifying Party in the
defense of such claim or suit, at the expense of the indemnifying Party,
including providing reasonable information, including, but not limited to,
copies of all papers and official documents received in respect of any such
loss; and (iii) if the indemnifying Party confirms in writing to the indemnified
Party its intention to defend such claim or suit within ten (10) days of receipt
of the Claim Notice, permit the indemnifying Party to control the defense of
such claim or suit, including without limitation the right to select defense
counsel; provided that if the indemnifying Party fails to (x) provide such
confirmation in writing within the ten (10) day period or (y) diligently and
reasonably defend such suit or claim at any time, its right to defend the claim
or suit shall terminate immediately in the case of (x) and otherwise upon twenty
(20) days' written notice to the indemnifying Party without cure and the
indemnified Party may assume the defense of such claim or suit at the sole
expense of the indemnifying Party and may settle or compromise such claim or
suit without the consent of the indemnifying Party. In no event, however, may
the indemnifying Party compromise or settle any claim or suit in a manner which
admits fault or negligence on the part of any indemnified Party or that
otherwise materially affects such indemnified Party's rights or requires any
payment by an indemnified Party without the prior written consent of such
indemnified Party. Subject as expressly provided above, the indemnifying Party
will have no liability under this Section 9.4 with respect to claims or suits
settled or compromised (including by admission) without its prior written
consent.

-33-

AZ AND CK CONFIDENTIAL

(b) Each Claim Notice shall contain a description of
the claim and the nature and amount of the loss claimed (to the extent that the
nature and amount of such loss is known at such time).

ARTICLE X - MISCELLANEOUS

10.1     GOVERNING LAW. The interpretation and construction of this
Agreement and any dispute arising from the performance or breach hereof shall be
governed by and construed and enforced in accordance with, the laws of the State
of New York, United States of America, excluding any conflicts or choice of law
rule or principle that might otherwise refer construction or interpretation of
this Agreement to the substantive law of another jurisdiction.

10.2     DISPUTE RESOLUTION. Prior to initiating any proceeding before
a court or arbitrator, or in another tribunal, all outstanding matters arising
under this Agreement must be submitted to the JSC for good faith negotiation as
described in Section 2.4, and then for resolution pursuant to Section 2.5.
Matters not resolved under Section 2.5 will be referred to the Chief Executive
Officer for CK, and Executive Vice President, Head of Global Discovery Research
for AZ (collectively the "SENIOR MANAGEMENT") for resolution. Any final decision
mutually agreed to by Senior Managements of the Parties shall be in writing and
shall be conclusive and binding on the Parties. If resolution cannot be reached
by the Senior Management within thirty (30) days from the date the matter in
dispute is first brought to the attention of the Senior Management, the dispute
is subject to arbitration under Section 10.3.

103      ARBITRATION. Except as set forth in Sections 2.4 and 2.5, any
dispute arising out of or relating to the negotiation, interpretation, breach or
performance of this Agreement shall be settled by binding arbitration in
accordance with the rules of arbitration indicated below. The number of
arbitrators shall be three (3), of whom each Party shall appoint one (1). The
two arbitrators so appointed will select the third and final arbitrator. The
place of arbitration shall be San Francisco, California. The language used in
the arbitration proceedings shall be English. The proceedings, including any
outcome, shall be confidential. The arbitration shall be governed by the United
States Arbitration Act 9 U.S.C. Sections 1-16 to the exclusion of any
inconsistent state laws and judgment on the award rendered by the arbitration
may be entered by any court having jurisdiction. Nothing in this Article X will
preclude either Party from seeking interim or provisional relief from a court of
competent jurisdiction, including a temporary restraining order, preliminary
injunction or other interim equitable relief, concerning a dispute either prior
to or during any arbitration if necessary to protect the interests of such Party
or to preserve the status quo pending the arbitration proceeding.

10.4     ASSIGNMENT. This Agreement shall not be assignable by either
Party to any Third Party hereto without the written consent of the other Party
hereto; except that either Party shall always have the right, without such
consent, (a) to perform any or all of its obligations and exercise any or all of
its rights under this Agreement through any of its Affiliates, and (b) on
written notice to the other Party, assign any or all of its rights and delegate
any or all of its obligations hereunder to any of its Affiliates or to any
successor in interest (whether by merger, acquisition, asset purchase or
otherwise) to all or substantially all of the business to which this

-34-

AZ AND CK CONFIDENTIAL

Agreement relates. Any permitted successor of a Party or any permitted assignee
of all of a Party's rights under this Agreement that has also assumed all of
such Party's obligations hereunder in writing shall, upon any such succession or
assignment and assumption, be deemed to be a party to this Agreement as though
named herein. All validly assigned rights of a Party shall inure to the benefit
of and be enforceable by, and all validly delegated obligations of such Party
shall be binding on and be enforceable against, the permitted successors and
assigns of such Party, provided that such Party, if it survives, shall remain
jointly and severally liable for the performance of such delegated obligations
under this Agreement. Any attempted assignment or delegation in violation of
this Section 10.4 shall be void.

10.5     PERFORMANCE WARRANTY. AZ hereby warrants and guarantees the
performance of any and all rights and obligations by its Affiliate(s).

10.6     DEBARMENT. To the extent required by applicable law, neither
Party shall use, in any capacity, in connection with the performance of its
obligations under this Agreement, any person debarred or subject to debarment or
otherwise disqualified or suspended from performing the Research Program or
otherwise subject to any restrictions or sanctions by any other governmental or
regulatory authority or professional body with respect to the performance of the
Research Program. Accordingly, to the extent applicable, a Party shall
immediately notify the other Party in writing if any person who is performing
under this Agreement is or becomes debarred or if any action, suit, claim,
investigation, or other legal or administrative proceeding is pending or, to the
best of the Party's knowledge, threatened, that would make any person performing
hereunder a person that is debarred or would preclude the Party from performing
its obligations under this Agreement.

10.7     FORCE MAJEURE. Except with respect to payment of money, no
Party shall be liable to the other for failure or delay in the performance of
any of its obligations under this Agreement for the time and to the extent such
failure or delay is caused by earthquake, riot, civil commotion, war, terrorist
acts, strike, flood, or governmental acts or restriction, or other cause that is
beyond the reasonable control of the respective Party. The Party affected by
such force majeure will provide the other Party with full particulars thereof as
soon as it becomes aware of the same (including its best estimate of the likely
extent and duration of the interference with its activities), and will use
commercially reasonable efforts to overcome the difficulties created thereby and
to resume performance of its obligations as soon as practicable. If the
performance of any such obligation under this Agreement is delayed owing to such
a force majeure for any continuous period of more than one hundred eighty (180)
days, the Parties hereto will consult with respect to an equitable solution,
including the possibility of the mutual termination of this Agreement.

10.8     NOTICES. All notices, requests and communications hereunder
shall be in writing and shall be personally delivered or sent by facsimile or
e-mail transmission (receipt confirmed), mailed by registered or certified mail
(return receipt requested), postage prepaid, or sent by international express
courier service, and shall be deemed to have been properly served to the
addressee upon receipt of such written communication, to following addresses of
the Parties, or such other address as may be specified in writing to the other
Party hereto:

-35-

AZ AND CK CONFIDENTIAL

IF TO CK,

ADDRESSED TO:     CYTOKINETICS, INC.
280 East Grand Avenue
South San Francisco, CA 94080-4808
Attention: Robert Blum, Senior Vice President, Finance
and Corporate Development, and Chief Financial Officer
Telephone: (650) 624-3000
Telecopy: (650) 624-3010
E-mail: rblum@cytokinetics.com

WITH A COPY TO:   WILSON SONSINI GOODRICH & ROSATI, PC
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Kenneth A. Clark, Esq.
Telephone: 415-493-9300
Telecopy: 415-493-6811
E-mail: kclark@wsgr.com

IF TO AZ,

ADDRESSED TO:     ASTRAZENECA AB
R&D Headquarters
S-151 85 Sodertalje, Sweden
Attention: Jan Lundberg
Executive Vice President, Discovery Research
Telephone: [*]
E-mail: [*]

WITH A COPY TO:   ASTRAZENECA AB
LEGAL DEPARTMENT
S-151 85 Sodertalje, Sweden
Attention: Johannes Linde
Associate General Counsel
Telephone: [*]
Telecopy: [*]

10.9     WAIVER. Neither Party may waive or release any of its rights
or interests in this Agreement except in writing. The failure or either Party to
assert a right hereunder or to insist upon compliance with any term or condition
of this Agreement shall not constitute a waiver of that right or excuse a
similar subsequent failure to perform any such term or condition. No waiver by
either Party of any condition or term in any one or more instances shall be
construed as a continuing waiver of such condition or term or of another
condition or term.

10.10    SEVERABILITY. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and

* Certain information on this page has been omitted and filed separately with 
the Commission. Confidential treatment has been requested with respect to the 
omitted portions.

-36-

AZ AND CK CONFIDENTIAL

enforceable substitute provision that most nearly reflects the original intent
of the Parties and all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties hereto as nearly as may be possible. Such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. In the
event a Party seeks to avoid a provision of this Agreement by asserting that
such provision is invalid, illegal or otherwise unenforceable, the other Party
shall have the right to terminate this Agreement upon thirty (30) days' prior
written notice to the asserting Party, unless such assertion is eliminated and
the effect of such assertion cured within such thirty (30)-day period. Any
termination in accordance with the foregoing sentence shall be deemed a
termination pursuant to Section 8.2 and the Party who made such assertion shall
be deemed the breaching Party.

10.11    DAMAGES EXCLUSION AND LIMITATION. EXCEPT WITH RESPECT TO
DAMAGES OR OBLIGATIONS ARISING OUT OF UNAUTHORIZED EXPLOITATION OF THE OTHER
PARTY'S INTELLECTUAL PROPERTY RIGHTS OR BREACH OF ARTICLE VII, IN NO EVENT WILL
EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR
ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL,
EXEMPLARY, OR PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE,
STRICT LIABILITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR
REVENUE OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH
DAMAGES. The forgoing applies to obligations and damages under Article IX.

10.12    ENTIRE AGREEMENT. This Agreement sets forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto and supersedes and terminates all prior agreements
and understanding between the Parties with respect to the subject matter hereof,
including that certain Mutual Non-Disclosure Agreement between the Parties dated
January 29, 2003 (the "NDA"), as amended on July 9, 2003, and on August 11,
2003. Notwithstanding the foregoing, all information exchanged between the
Parties pursuant to the NDA shall be deemed Confidential Information of the
Party that disclosed it thereunder and shall be subject to the terms of this
Article VII. There are no covenants, promises, agreements, warranties,
representations conditions or understandings, either oral or written, between
the Parties with respect to the subject matter hereof other than as set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.

10.13    INDEPENDENT CONTRACTORS. Nothing herein shall be construed to
create any relationship of employer and employee, agent and principal,
partnership or joint venture between the Parties. Each Party is an independent
contractor. Neither Party shall assume, either directly or indirectly, any
liability of or for the other Party. Neither Party shall have the authority to
bind or obligate the other Party and neither Party shall represent that it has
such authority.

-37-

AZ AND CK CONFIDENTIAL

10.14    HEADINGS. Headings used herein are for convenience only and
shall not in any way affect the construction of or be taken into consideration
in interpreting this Agreement.

10.15    COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in two counterparts, each of which shall be deemed an original, and all
of which together, shall constitute one and the same instrument. This Agreement
may be executed as counterparts and the signature page delivered by facsimile.
The Parties agree that such execution and facsimile delivery shall have the same
force and effect as delivery of an original document with original signatures,
and that each Party may use such facsimile signatures as evidence of the
execution and delivery of this Agreement by both Parties.

[The remainder of this page left intentionally blank]

-38-

AZ AND CK CONFIDENTIAL

IN WITNESS WHEREOF, this Agreement is executed by the authorized
representatives of the Parties as of the Effective Date.

ASTRAZENECA AB                         CYTOKINETICS, INC.

By: /s/ Per From                       By: /s/ James Sabry
---------------------------            ---------------------------
Name: Per From                         Name: James Sabry

Title: President & CEO                 Title: President and CEO

-39-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.3

AZ BACKGROUND TECHNOLOGY

[*]

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

EXHIBIT 1.4: AZ COMPOUNDS

The heading in each column indicates whether the information in that
column should be provided for Public Compounds, Proprietary Compounds, or both.
Information identified with *** is to be provided as of the Effective Date.

[*]                   [*]            [*]              [*]             [*]           [*]           [*]        

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
[*]                                  [*] 
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------

[*]         [*]         [*]                        [*]               [*]      [*]        [*]      Comments  
-------------------------------------------------------------------------------------------------------------------

[*]      [*]
-------------------------------------------------------------------------------------------------------------------
[*]               

-------------------------------------------------------------------------------------------------------------------
[*]     
-------------------------------------------------------------------------------------------------------------------
[*]
-------------------------------------------------------------------------------------------------------------------

--------
(1) Such an identifier must be unique, but need not be the identifier used
internally at the providing Party.

(2) If Compound is Proprietary, then in addition to the target class, identify
whether the molecular target is the same.

(3) Reported as an EC50.

(4) Reported as a curve, not as an EC50.

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

1                    2               3                 4              5             6               7
[*]                  [*]             [*]               [*]            [*]           [*]             [*]      
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------

8                  9                                        10
[*]                [*]                                       [*]
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

[*]                                [*]                                         [*]                     [*]      Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-2-

AZ AND CK CONFIDENTIAL

1                   2                3                 4              5              6              7
[*]                 [*]              [*]               [*]            [*]            [*]            [*]      
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]
------------------------------------------------------------------------------------------------------------------------

8                  9                               10
[*]                [*]                              [*]
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------

11                                 12                                      13                         14       15
[*]                                [*]                                     [*]                        [*]      Comments
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-3-

AZ AND CK CONFIDENTIAL

[*]                 [*]              [*]               [*]            [*]           [*]            [*]        
------------------------------------------------------------------------------------------------------------------------

[*]                                  [*]                                                                            
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
-----------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
-----------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
-----------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]                                                                      
------------------------------------------------------------------------------------------------------------------------

[*]               [*]              [*]                          
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

[*]                              [*]                                        [*]                        [*]      Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------
[*]                                                                                                                     
-----------------------------------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-4-

AZ AND CK CONFIDENTIAL

[*]                  [*]             [*]               [*]            [*]           [*]            [*]        
------------------------------------------------------------------------------------------------------------------------

[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
-----------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]         
------------------------------------------------------------------------------------------------------------------------

[*]              [*]               [*]           
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

11                            12                                  13                  14          15
[*]                           [*]                                 [*]                 [*]         Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-5-

AZ AND CK CONFIDENTIAL

[*]                  [*]             [*]               [*]            [*]           [*]            [*]        
------------------------------------------------------------------------------------------------------------------------

[*}                                  [*]    
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------
[*]                                  [*]           
------------------------------------------------------------------------------------------------------------------------

[*]                [*]              [*]                            
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------

[*]                                [*]                                       [*]          .             [*]     Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-6-

AZ AND CK CONFIDENTIAL

1                     2               3            4               5             6             7
[*]                   [*]             [*]          [*]             [*]           [*]           [*]
------------------------------------------------------------------------------------------------------------------------

[*]                                   [*]
---------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                   [*]
------------------------------------------------------------------------------------------------------------------------

8                    9             10
[*]                  [*]            [*]                       
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------

11                   12                                          13                                14           15
[*]                  [*]                                         [*]                               [*]          Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------

*  Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-7-

AZ AND CK CONFIDENTIAL

1                            2          3                    4               5             6             7
[*]                          [*]        [*]                  [*]             [*]           [*]           [*]
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]  
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]
------------------------------------------------------------------------------------------------------------------------
[*]                                     [*]

8                  9               10
[*]                [*]              [*]            
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------

11                             12                                          13                                14            15
[*]                            [*]                                         [*]                               [*]           Comments
-----------------------------------------------------------------------------------------------------------------------------------

[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------------------------------------------------------------------
[*]

*    Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-8-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.10

CK BACKGROUND TECHNOLOGY

CK Background Technology comprises the Technology disclosed in the
following patents and patent applications.

APPLN. NO. /    FILING
CASE NO.     (PUB. NO.)      DATE                TITLE / SUBJECT MATTER                STATUS / NOTES
------------------------------------------------------------------------------------------------------

1008        [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1008A       [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1009        [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1009A       [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1009B       [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1009C       [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1009D       [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1011        [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1011A       [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1011B       [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1011PCT     [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1011EP      [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1011.1      [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------
1011.1PCT   [*]            [*]        [*]                                             [*]

------------------------------------------------------------------------------------------------------
1011.1US    [*]            [*]        [*]                                             Pending

------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

APPLN. NO. /    FILING
CASE NO.     (PUB. NO.)      DATE                 TITLE / SUBJECT MATTER                 STATUS / NOTES
---------------------------------------------------------------------------------------------------------

1011.1EP       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1011.1GB       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1026           [*]            [*]        [*]                                            Pending
---------------------------------------------------------------------------------------------------------
1026PCT        [*]            [*]        [*]                                            [*]

---------------------------------------------------------------------------------------------------------
1027.1         [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1027.1PCT      [*]            [*]        [*]                                            [*]

---------------------------------------------------------------------------------------------------------
1027.1EP       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1035.1PCT      [*]            [*]        [*]                                            [*]

---------------------------------------------------------------------------------------------------------
1035.1EP       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1035.1GB       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1036           [*]            [*]        [*]                                            [*]
---------------------------------------------------------------------------------------------------------
1036.1PCT      [*]            [*]        [*]                                            [*]

---------------------------------------------------------------------------------------------------------
1036A          [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1036.1EP       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1036.1GB       [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1037           [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1037PCT        [*]            [*]        [*]                                            [*]

---------------------------------------------------------------------------------------------------------
1037GB         [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------
1037EP         [*]            [*]        [*]                                            Pending

---------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-2-

AZ AND CK CONFIDENTIAL

APPLN. NO. /     FILING
CASE NO.     (PUB. NO.)       DATE                  TITLE / SUBJECT MATTER                 STATUS / NOTES
-----------------------------------------------------------------------------------------------------------

1062        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1062PCT     [*]              [*]         [*]                                                   [*]
-----------------------------------------------------------------------------------------------------------
1064        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1064PCT     [*]              [*]         [*]                                                    [*]
-----------------------------------------------------------------------------------------------------------
1064EP      [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1074        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1131        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1132        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1146        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1146.1      [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------
1170        [*]              [*]         [*]                                                  Pending
-----------------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-3-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.11

CK COMPOUNDS

[*]                 [*]               [*]            [*]          [*]           [*]
---------------------------------------------------------------------------------------------

[*]                                   [*]   
---------------------------------------------------------------------------------------------
[*]                                   [*]   
---------------------------------------------------------------------------------------------
[*]                                   [*]   
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------
[*]                                   [*]
---------------------------------------------------------------------------------------------

[*]               [*]                       [*]                   [*]            
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------

[*]                     [*]                             [*]                  [*]       Comments
------------------------------------------------------------------------------------------------------

[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]       
------------------------------------------------------------------------------------------------------
[*]

-------------------------

(1) Such an identifier must be unique, but need not be the identifier used
internally at the providing Party.

(2) If Compound is Proprietary, then in addition to the target class, identify
whether the molecular target is the same.

(3) Reported as an EC50.

(4) Reported as a curve, not as an EC50.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

[*]              [*]                 [*]             [*]          [*]            [*]
----------------------------------------------------------------------------------------------

[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------
[*]                                  [*]
----------------------------------------------------------------------------------------------

[*]                  [*]                       [*]                      [*]              
----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------

[*]                    [*]                           [*]                    [*]       Comments
---------------------------------------------------------------------------------------------------

[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------
[*]             
---------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-2-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.15

CM SYSTEM

The CM System is an automated cell biology platform designed to quantify
cellular phenotypes. Cytokinetics has developed the CM System for use across the
drug discovery process, including target identification and validation, primary
and secondary compound screening, mechanism-of-action studies and compound
attrition management.

The components of the current CM System can be broken down as follows:

-        Culture and plating of cells

-        Automated addition of treatments and stains

-        Variable exposure of cells to treatment

-        Automated image acquisition

-        Cell-by-cell image analysis

-        Quantitative cell-by-cell biological analysis

-        Statistical analysis to generate compound "fingerprints" and
compound classifications

All the experimental data, including images, compound fingerprints and
classifications are available for interpretation and decision support.

[CM SYSTEM FLOW DIAGRAM]

CELL CULTURE

A variety of cell lines and primary cell types are used in the CM System. The
phenotype of interest is generally dependent on the cell type. By quantitatively
comparing the response to a treatment across a variety of cell types, a fuller
understanding of the effect of the treatment can be obtained. The cell types
employed in the CM System have been selected for relevance to particular
therapeutic problems, for biological diversity, for responsiveness in CM
profiling experiments, and for reproducibility.

TREATMENT

The CM System can be used to quantify the effects of chemical compounds, or a
variety other treatments, such as antibodies, toxins and transfected siRNAs, on
the chosen cell types. The process of defining the CM experiment and the
resulting required treatment plate format is handled in the in the CM System
LIMS.

AZ AND CK CONFIDENTIAL

AUTOMATED PLATE PREPARATION

The CM System automation includes the plating of cells, incubation with
treatment and staining of the cells. Quantitative reproducibility of assay
results requires consistent fluidics. The CM System LIMS include data system
interfaces for all fluidics operations.

IMAGING

High-quality imaging provides the primary data for the CM System. Imaging data
are automatically stored to computer disk for analysis.

IMAGE ANALYSIS

Proprietary image analysis algorithms are used to segment images into individual
cells and organelles. A large number of morphological and intensity-related
features are extracted from each image. The CM System uses a scalable
distributed computing architecture designed to take advantage of additional
networked computers as computation demands increase. All results are stored in
the CM System experiment database.

DATA ANALYSIS

CM System data analysis quantifies compound "fingerprints" in three phases:

-        sub-cellular measurements

-        biological features

-        compound fingerprints

The process of generating compound fingerprints uses the image features, such as
object area, intensity, shape, texture, etc., and experimental process
parameters, e.g. drug, concentration, cell line, time point, etc., to generate
so-called biological features. Examples of biological features from
Cytokinetics' cell-cycle work include Mitotic Index, G1 phase, S phase, and
Golgi apparatus classification. Treatment fingerprints are the CM System
representation of the cellular phenotype and are generated from multidimensional
analysis of the biological features. Compound groups are assembled when a group
of compound phenotypes is compared and compounds with similar fingerprints are
assembled.

VISUALIZATION

CM System data can be reviewed at many levels, including visualizing compound
fingerprints, reviewing biological analysis and viewing the original
experimental images. Various biological reports and analyses are generated
allowing access to information and analyses at any of the three levels:

-        Compound Fingerprint Analyses

-2-

AZ AND CK CONFIDENTIAL

-        Standardized and Ad Hoc Biological Reports

-        Biological Experimental Data

The highest level is the compound fingerprint analyses, examples of which are
Principal Component Analysis (PCA) Plots and Trellis Plots. The former are
three-dimensional representations of the higher-dimensional dose-response data,
the latter are representations of the fingerprint data at a given dose.
Standardized and ad hoc biological reports, include cell-cycle analysis and
dose- and time-response curves. Biological experimental data constitute the
primary level and include all the data collected during the CM System
experiment, such as the treatment name and concentration, cell type, marker,
imaging parameters, extracted features, and exposure time.

An exemplary use of the CM System in compound profiling has the following
hierarchy of data:

[TYPES OF DATA GENERATED BY THE CM SYSTEM]

FIGURE 1: Types of data generated by the CM System.

-3-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.23

DELIVERABLES

This Exhibit 1.23 defines the Deliverables for the Research Program.

CELL CULTURE

The [*] for preparing and handling the [*] used in the CHM will be [*]. Initial
implementation will be at [*] on [*]. In accordance with the Research Plan, the
[*] will be subsequently [*] at [*] using [*]. The [*] will be [*].

TREATMENT PREPARATION

The CHM [*] and the associated [*] will be [*] for initial implementation at [*]
within [*]. Acknowledging that [*] has its own [*] and [*], [*] will provide to
[*] of the [*], including the definition of the [*] and the [*] enabling [*] to
[*] for use on [*].

AUTOMATED PLATE PREPARATION

The [*] will include [*], [*], and [*]. The [*] for [*] will be [*] and [*]. The
[*] will include both [*] and [*] for all necessary [*]. Again, acknowledging
that [*] has its own [*] and [*], [*] will provide to [*] on the [*], enabling
[*] to [*] for use on [*].

IMAGING

The [*] will be generated at [*] using an [*] or comparable [*] and [*]. The
data will be [*] for subsequent [*] and [*]. The [*], [*] and [*] for [*] and
[*] to specific locations to support the [*] will be [*], documented [*] for
usage on [*] and [*].

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

IMAGE ANALYSIS

The parties will develop CHM [*] characterizing [*], [*], [*]. Those [*] will be
[*], [*] and [*] at [*] during the [*]. [*] and [*] will be stored in the [*].
[*] will [*] the [*] and [*] and [*] of the [*] as part of the CHM.

DATA ANALYSIS

The parties will [*], [*] and [*] CHM [*] analogous to
[*], as appropriate to [*]. [*] will document and provide to [*] for
[*] for use at [*]
as part of the CHM. [*] will [*] of this [*] on [*] and [*] at [*] on the [*].

VISUALIZATION

The parties will [*] via [*], [*], [*] and [*]. The [*] CHM [*] and [*] will be
[*] and [*] to [*] for usage at [*] as part of the CHM. [*] will [*] the [*] of
this [*] on [*] and [*] at [*] on [*] as part of the CHM.

OVERALL CHM PROCESS - [*]

In addition, an [*] which [*] the [*], [*] and [*] for [*] and [*] the [*] and
to [*] of the [*]) will be [*] and [*] to [*] so that [*] can implement
necessary [*] within [*] on [*] a part of the CHM.

INFORMATION EXCHANGE DURING THE RESEARCH TERM

In the course of the [*], a [*] of [*] will need to be [*]. The [*] of the [*],
[*], the [*] and of the [*], the [*] and the [*], will be [*] at [*]. [*] will
require [*] to the [*].

[*] will be [*] as [*], [*] and [*] for [*] in [*]. The [*] will be

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2-

AZ AND CK CONFIDENTIAL

provided for use with [*]. [*] is responsible for acquiring its own [*].

[*]

[*]

ACCESS TO [*] EMPLOYED DURING THE RESEARCH TERM OF THE COLLABORATION

[*]

[*]

THE CYTOMETRIX(TM) HEPATOTOXICITY MODULE: [*] DELIVERED TO AZ FOR IDENTIFICATION
OF HEPATOTOXICITY IN [*] DURING THE [*]

[*] of the [*], [*], [*], [*] and [*] for the overall [*] and the [*] will be
delivered to [*] during the [*]. [*] will be [*] on the [*] and [*] of the CHM
per the [*].

[*] and [*] with [*] for [*], [*] and [*] will be delivered. The [*] will
constitute the [*] of the Cytometrix(TM) Hepatotoxicity Module, from [*] to [*]
of a [*]. [*] on the [*] and [*] will be provided.

[*]

[*]

[*]

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-3-

AZ AND CK CONFIDENTIAL

[*]

THIRD PARTY PRODUCTS INCLUDED IN THE DELIVERABLES

[*]

INFORMATION EXCHANGE

[*]
[*]
[*]
[*]

ALGORITHMS USED AS PART OF THE RESEARCH PLAN

[*]
[*]

[*]

[*]

CYTOMETRIX(TM) HEPATOTOXICITY MODULE

Hardware systems:

All computers are to be Intel(R) Pentium(R) series, operating systems are to be
Microsoft(R) Windows(R) 2000 or above.
(Memory, processor requirements TBD)

Applications Software:

[*]

[*]

[*]

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-4-

AZ AND CK CONFIDENTIAL

[*]

[*]

[*]

[*]

*    Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-5-

AZ AND CK CONFIDENTIAL

EXHIBIT 1.25

EXEMPT ACTIVITIES

AZ: With respect to AZ, Exempt Activities means the:

[*]

[*]

CK: With respect to CK, Exempt Activities means the:

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

EXHIBIT 1.36

PERFORMANCE CRITERIA

[*]

[*]

[*]

[*]

[*]

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

EXHIBIT 1.45

RESEARCH PLAN

REVISION HISTORY

[*]                  [*]           First Draft        2 pages
Cytokinetics              

[*]                  [*]           Version 1.0
AstraZeneca              

[*]                  [*]           Version 1.7
AstraZeneca              

[*]                  [*]           Version 1.8
Cytokinetics              

[*]                  [*]           Version 1.9
Cytokinetics              

[*]                  [*]           Version 2.0
Cytokinetics              

WSGSR                [*]           Version 2.1        Editing and consistency
with main body of
Agreement

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

TABLE OF CONTENTS

1.       Introduction                                    1

1.1    Discovery Problems                       1

1.2    Approach                                 1

1.3    Project Aims                             2

2        Project Organisation                            2

2.1    Roles and Responsibilities               2

2.2    Meetings Plan                            2

2.3    Communication Formats                    2

3.       Respective Contributions                        3

4.       Project Plan                                    7

4.1    Project Phases                           7

4.2    Collaboration Deliverables               9

-i-

AZ AND CK CONFIDENTIAL

ARTICLE I         INTRODUCTION

1.1      DISCOVERY PROBLEMS

Section 1.01 Candidate Drugs (CDs) that fail to make it to market are both
common and expensive. It has been estimated that that less than 10% of CDs
result in a marketable product with each late stage failure incurring
significant costs. Approximately 50% of these failures can be attributed to
toxicological problems. There will be a greater need for early stage profiling
in the future as high throughput screening increases the number of active
compounds per target. Clearly, improved early stage toxicity profiling will aid
the selection of CDs less likely to fail in the development phase and allow a
more informed decision about which active compounds should be progressed.

1.2      APPROACH

Section 1.02 [*]

Section 1.03 [*]

Section 1.04 [*]

*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.

AZ AND CK CONFIDENTIAL

1.3      PROJECT AIMS

The project aim is to utilise the expertise and knowledge within both companies
to develop a high content biology platform for hepatotoxicity profiling of
compounds. At the end of the collaboration the platform would be available for
use in both companies in their own R&D programmes.

To share between AZ and CK [*] and AZ proprietary toxicological data.

[*]

ARTICLE II        PROJECT ORGANISATION

2.1      ROLES AND RESPONSIBILITIES - TO BE APPOINTED

2.2      MEETINGS PLAN

Weekly telephone conference calls/NetMeeting will be held between AZ &
CK scientists to discuss detailed scientific progress and issues.

Monthly video conference calls of project management team

Quarterly visits, alternating between AZ and CK will be held.

All meetings are to be scheduled at the outset of each project phase,
agendas to be circulated at least 2 days before weekly meetings, and 1
week before monthly and quarterly.

2.3      COMMUNICATION FORMATS

All documents will follow the defined project format (attach templates)
in MS Word for Windows v2000 or MS PowerPoint for Windows v2000. Up to
date project plan will be available to all parties in MS Project for
Windows v2000. MS Project will be used for GANT charts.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2-

AZ AND CK CONFIDENTIAL

ARTICLE III       RESPECTIVE CONTRIBUTIONS

FTE commitments are man-years for the complete lifetime of the project
- nominally [*] months.

AZ                                   CK
------------------------------------------------------------------------------------------------

[*]                           [*] FTE                              [*] FTE
----------------------------------------------------------
[*]                           [*]                                  [*]

[*]                                  [*]

[*]                                  [*]

[*]                                  

[*]                                  
----------------------------------------------------------
[*]                           [*]                                  [*]

[*]                                  [*]
------------------------------------------------------------------------------------------------
[*]                           [*]
------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-3-

AZ AND CK CONFIDENTIAL

[*]                        [*] FTE                              [*] FTE

[*]                                  [*]

[*]                                  

[*]                                  

[*]                                  

[*]                                  

[*]                                  

[*]                                  

[*]                                  

[*]                                  
------------------------------------------------------------------------------------------------
[*]                        [*] FTE

[*]

------------------------------------------------------------------------------------------------
[*]                        [*] FTE                              [*] FTE

[*]                                  [*]

[*]
------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-4-

AZ AND CK CONFIDENTIAL

[*]                        [*]FTE                               [*]FTE
[*]                                  [*]
[*]                                  [*]
[*]                           
------------------------------------------------------------------------------------------------
[*]                                                             [*]FTE         
[*]
-----------------------------------------------------------------------------------------------
[*]                        [*]FTE                               [*]FTE
[*]                                  [*]
[*]
------------------------------------------------------------------------------------------------
[*]                        [*]FTE                               [*]FTE
[*]                                  [*]
[*]
[*]
[*]
[*]
------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

-5-

AZ AND CK CONFIDENTIAL

[*]                                                        [*] FTE
[*]

------------------------------------------------------------------------------------------------
[*]                  [*] FTE                               [*] FTE          
[*]                                   [*]
[*]                                   [*]
[*]

------------------------------------------------------------------------------------------------
[*]                  [*] FTE                               [*] FTE
[*]                                   [*]
[*]
[*]
[*]
[*]
[*]

------------------------------------------------------------------------------------------------
[*]                  [*] FTE [*]                            [*] FTE [*]
[*]
[*]

------------------------------------------------------------------------------------------------

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-6-

AZ AND CK CONFIDENTIAL

ARTICLE IV        PROJECT PLAN

4.1      PROJECT PHASES
[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-7-

AZ AND CK CONFIDENTIAL

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

*    Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.

-8-

AZ AND CK CONFIDENTIAL

4.2      DELIVERABLES FOR RESEARCH PROGRAM:

The Deliverables for the Research Program are defined in Exhibit 1.23
of the Agreement.

-9-

AZ AND CK CONFIDENTIAL

EXHIBIT 5.6.2

SUPPORT

DURING THE [*] WILL:

-    Perform installation of the [*] at [*]. Given prior preparation, by [*], of
the required [*] on the [*] at a [*] this effort is estimated to take [*]
to complete.

-    Supply [*] with a [*] and [*] for its own use in the event of [*] during
the [*].

-    Train [*] on [*].

-    Supply [*] with [*] for the [*] as defined in Deliverables Exhibit 1.23.

-    Prepare [*] as necessary and [*] to [*] with [*].

IN THE EVENT OF [*], WHETHER DURING THE [*] OR [*], [*] WILL:

-    Expect that [*] will [*] from the [*] and [*] supplied by [*] during the
[*] at [*].

-    Answer [*] via phone, video conference or email regarding [*] or [*] to [*]
of the CHM.

-    In the event, that the [*] do not result in a [*] at [*], [*] will on a
[*], [*] to the [*] and [*] a [*] of the CHM.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

EXHIBIT 7.4

Contacts:

CYTOKINETICS, INC.                                                                 ASTRAZENECA (MEDIA ENQUIRES)
Robert I. Blum                                                                     Steve Brown, +44 (0) 207 304 5033
SVP, Finance and Corporate Development, and CFO                                    Scott Young, +1.781.839.4589
(650) 624-3000                                                                     Kellie Rivest, +1.781.839.4151

BURNS MCCLELLAN, INC.
E. Blair Clark (investors) or Justin Jackson (media)
(212) 213-0006

FOR IMMEDIATE RELEASE

CYTOKINETICS AND ASTRAZENECA ANNOUNCE
TECHNOLOGY DEVELOPMENT COLLABORATION FOCUSED ON PREDICTIVE TOXICITY

ALLIANCE LEVERAGES CYTOMETRIX(TM) CELLULAR PHENOTYPING TECHNOLOGIES

SOUTH SAN FRANCISCO, CA AND LONDON, UK, DEC. 18, 2003 - Cytokinetics, Inc., and
AstraZeneca Pharmaceuticals announced today that the two companies have entered
into an exclusive collaboration to develop automated imaging-based cellular
phenotyping and analysis technologies for the in vitro prediction of
hepatotoxicity. The companies have agreed to commit internal resources and
combine efforts aimed at addressing an important inflection point in the
pharmaceutical discovery and development process. Under the terms of the
agreement, AstraZeneca will fund technology development activities at
Cytokinetics over a two-year research term. The agreement further provides for a
milestone payment and annual licensing fees to be paid to Cytokinetics upon the
Cytometrix(TM) Hepatotoxicity Module successfully achieving certain agreed upon
performance criteria.

"Under this collaboration, we have the potential to develop new technologies
that may systematically and reliably predict toxic and non-toxic
pharmacophores," stated Jay Trautman, Ph.D., Cytokinetics' Vice President of
Technology. "AstraZeneca has decades of molecular toxicology and pathology
experience. By combining this expertise with Cytokinetics' validated cellular
phenotyping technologies, we have an opportunity to together bring forward an
application module of the Cytometrix(TM) technologies that may deliver
productivity gains for each of our later stage discovery and pre-clinical
development processes."

AstraZeneca's Vice President and Global Head of Safety Assessment, Peter
Moldeus, Ph.D., stated, "Complications associated with toxicity are a major
challenge for the pharmaceutical industry, as these toxicities often result in a
project's failure after substantial investments have already been made.
Diminishing the risks associated with toxicity by identifying a compound's
off-target liabilities earlier could significantly increase our development
success. We believe that Cytokinetics' Cytometrix(TM) cellular phenotyping
technologies have potential to help AstraZeneca remain at the forefront of
research in this area."

CYTOMETRIX(TM) TECHNOLOGIES

The collaboration will leverage Cytokinetics' proprietary platform,
Cytometrix(TM) cellular phenotyping technologies, which are routinely utilized
in Cytokinetics' screening processes to analyze both on-target and off-target
effects of candidate compounds. Cytometrix(TM) cellular phenotyping technologies
utilize cell-based assays to create digital phenotypic profiles ("fingerprints")
representative of diverse molecular mechanisms of drug action. Cytometrix(TM)
fingerprints detail information on the potency and specificity of a compound or
drug-related toxicities. Cytokinetics presently employs Cytometrix(TM) cellular
phenotyping technologies to eliminate compounds of mixed mechanism, allowing the
company to focus its medicinal chemistry and pharmacology resources more
selectively on higher quality chemical series. This collaboration with
AstraZeneca is designed to develop a new Cytometrix(TM) technologies application
called the Cytometrix(TM) Hepatotoxicity Module for the in vitro prediction of
hepatotoxicities downstream of screening.

- more -

Cytokinetics and AstraZeneca Collaboration Press Announcement
December 18, 2003
Page 2

ABOUT CYTOKINETICS

Founded in 1998 and privately held, Cytokinetics is dedicated to the discovery,
development and commercialization of a novel class of therapeutics resulting
from its leadership position in the emerging field of cytoskeletal pharmacology.
The cytoskeleton is a complex, dynamic framework that impacts all aspects of
cell function including cell division, cell motility, intracellular transport,
muscle contractility and regulation of cellular organization. Cytokinetics' R&D
efforts aim to address pharmaceutical needs in cancer, cardiovascular and
infectious diseases and feature proprietary Cytometrix(TM) cellular phenotyping
technologies designed to industrialize cell biology for increased speed and
productivity in drug discovery and development. Cytokinetics and GlaxoSmithKline
have entered into a broad strategic collaboration to discover, develop and
commercialize novel small molecule therapeutics targeting mitotic kinesins for
applications in the treatment of cancer and other diseases. Cytokinetics and
GlaxoSmithKline are conducting Phase I studies with the first novel anti-cancer
drug candidate emerging from the collaboration and intend to expand clinical
development upon completion of these studies. Additional information about
Cytokinetics can be obtained at www.cytokinetics.com.

ABOUT ASTRAZENECA

AstraZeneca is a major international healthcare business engaged in the
research, development, manufacture and marketing of prescription pharmaceuticals
and the supply of healthcare services. It is one of the top five pharmaceutical
companies in the world with healthcare sales of over $17.8 billion and leading
positions in sales of gastrointestinal, oncology, cardiovascular, neuroscience
and respiratory products. AstraZeneca is listed in the Dow Jones Sustainability
Index (Global and European) as well as the FTSE4Good Index. Worldwide,
AstraZeneca has six major research and development sites and four discovery
sites employing more then 11,000 people in six countries including Canada,
France, India, Sweden, United Kingdom and the United States. For more
information, please visit www.astrazeneca.com/research.

# # #

Exhibit 10.31

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF
1933, AS AMENDED.

COLLABORATION AGREEMENT

THIS COLLABORATION AGREEMENT (the "Agreement") is made and entered into as of
the last execution date by a Party to this Agreement ("Effective Date") by and
between EXELIXIS, INC., a Delaware corporation having a principal place of
business at 170 Harbor Way, P.O. Box 511, South San Francisco, California
94083-0511 ("Exelixis"), and CYTOKINETICS, INC., a Delaware corporation having a
place of business at 280 East Grand Avenue, South San Francisco, California
94080 ("Cytokinetics"). As used herein, references to Cytokinetics and Exelixis
shall also include their respective Affiliates.

BACKGROUND

A.     Cytokinetics is engaged in the research, development and
commercialization of biotechnology and pharmaceutical products;

B.     Exelixis is engaged in the research, development and
commercialization of biotechnology, pharmaceutical, agrochemical
and agricultural products and has developed novel proprietary
methods for the generation of compound libraries;

C.     Cytokinetics desires to obtain, and Exelixis desires to supply,
certain of such compounds for screening and further evaluation
and development by each Party, all on the terms and conditions
set forth below.

NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the Parties as
follows:

1.      DEFINITIONS.

1.1      "AFFILIATE" shall mean an entity which controls, is
controlled by or is under the common control with a Party. An entity shall be
regarded as in control of another entity for purposes of this definition if it
owns or controls more than fifty percent (50%) of the shares of the subject
entity entitled to vote in the election of directors (or, in the case of an
entity that is not a corporation, for the election of the corresponding managing
authority).

1.2      "COLLABORATION" shall mean a collaborative
relationship between a Party and a third party(ies), the subject of which is the
research, discovery, development, manufacturing and/or commercialization of
Pharmaceuticals.

1.3      "COMPOUND" shall mean each chemically distinct
compound that is synthesized by Exelixis that fulfills fee Quality Control
Criteria on a per Plate basis and is delivered to Cytokinetics in accordance
with Section 3.4.

1.4      "COMPOUND PATENT" shall mean patents and patent
applications covering the composition, use, or method of preparation, of any
Compound, filed after the date of synthesis of such Compound hereunder, whether
foreign or domestic, all patents arising from such applications, and all patents
and patent applications based on, or claiming or corresponding to the priority
dates, of

-1

any of the foregoing and any renewals, reissues, extensions, (or other
governmental actions that provide exclusive right to the owner thereof in the
patented subject matter beyond the original expiration date), substitutions,
confirmations, registrations, revalidations, reexaminations, additions,
continuations, continued prosecutions, continuations-in-part or divisions of or
to any of the foregoing, including, without limitation, supplementary protection
certificates or the equivalent thereof.

1.5      "CONFIDENTIAL INFORMATION" shall have the meaning as
set forth in Article 5.

1.6      "DESIGN CRITERIA" shall mean the criteria for the
design and/or synthesis of the Compounds as established by the JRC pursuant to
Section 3.2.

1.7      "DRUG PRODUCT" shall mean a composition of matter
used in the treatment, prevention or diagnosis of disease, state or condition,
which composition of matter is (i) a Compound, or (ii) derived from the use of a
Compound as [*] of such composition of matter.

1.8      "DRUG PRODUCT USE" shall mean use solely to research,
develop and/or commercialize a Drug Product, internally or as part of a
Collaboration, including the right to have any of the foregoing conducted on a
Party's (including Collaboration partners') behalf by a third party.

1.9      "EXELIXIS BACKGROUND TECHNOLOGY" shall mean Exelixis
Patent Rights and Exelixis Know-How.

1.9.1    "EXELIXIS PATENT RIGHTS" shall mean (i)
patents and patent applications, whether foreign, or domestic, that claim, or
are necessary or useful to exploit (A) a Compound or composition-of-matter
containing such Compound or a method of use thereof or (B) a process developed
prior to the Effective Date and/or under the Research Program, in each case, for
the synthesis of Compounds (or analogs or derivatives thereof as provided in
Section 4.2.2), and (ii) any divisions, continuations, continuations-in-part,
reissues, reexaminations, or extensions to the extent the same have an earliest
effective filing date prior to the date described in (i) above, and any (iii)
substitutions, confirmations, registrations, or revalidations of any of the
foregoing, in each Case, which are owned or controlled by Exelixis (solely or
jointly), to the extent Exelixis has the right to license or sublicense the
same.

1.9.2    "EXELIXIS KNOW-HOW" shall mean synthetic
protocols developed prior to the Effective Date and/or under the Research
Program, in each case, which are necessary or useful for the synthesis of the
Compounds (or analogs or derivatives thereof as provided in Section 4.2.2), and
any technical information, know-how, process, procedure, composition, method,
formula, technique, software, design, drawing or data directly relating to the
Compounds or necessary or useful for the manufacture, use or exploitation
thereof.

1.10     "INTERNAL RESEARCH USE" shall mean use solely for
research and/or pharmaceutical lead discovery purposes, internally or as part of
a Collaboration, including the right to have any of the foregoing conducted on a
Party's (including Collaboration partners') behalf by a

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2

third party; provided, it is understood and agreed that such use shall exclude
the right to develop and/or commercialize the Compounds.

1.11     "PARTY" OR "PARTIES" shall mean individually
Exelixis, Cytokinetics or an Affiliate of the same, and collectively, Exelixis,
Cytokinetics and their Affiliates.

1.12     "PLATE" shall have the meaning as set forth in
Appendix B.

1.13     "PROGRAM COMPOUND INFORMATION" shall mean data,
methods, results, conclusions, information and/or deliverables generated in
connection with the design and/or production of the Compounds under the Research
Program that are necessary for a person trained in the art of compound synthesis
to make the Compounds, including without limitation, Design Criteria, structure,
composition, results from Quality Control Criteria analysis of each Compound by
[*], methods of synthesis, synthons, and non-commercially available building
blocks relating to the Compounds.

1.14     "QUALITY CONTROL CRITERIA" OR "QCC" shall mean the
quality control criteria established by the Parties as described in Appendix B,
as may be amended by the JRC from time to time.

2.       RESEARCH PROGRAM.

2.1      GENERAL. Cytokinetics and Exelixis will conduct a
research program on a collaborative basis with the principal goal of producing a
high throughput screen library consisting of up to a total of [*] ([*])
Compounds (the "Research Program"). The Research Program shall be conducted in
accordance with the Design Criteria as established by the JRC, unless otherwise
agreed by the Parties in writing. Each Party agrees to keep the other Party
informed of its progress and activities within the Research Program. The
scientific scope of the Research Program is further described in Appendix A,
attached hereto, as may be amended in writing by the JRC from time to time under
Section 3.2.

2.2      LIBRARY. Exelixis shall diligently utilize its
combinatorial Chemistry expertise and apply its related technologies, as
directed by the JRC, to generate the Compounds on behalf of the Parties.
Exelixis shall be responsible for all components of library production,
analytics, informatics and formatting.

2.3      NOVEL COMPOUNDS. Exelixis and Cytokinetics shall each
use their respective diligent efforts to design Compounds that are not covered
by any Exelixis or Cytokinetics intellectual property either (i) existing as of
the Effective Date and excluded from the Research Program or (ii) arising
outside of the Research Program during the Term (as defined in Section 8.1) that
is owned, assigned and/or licensed by Exelixis or Cytokinetics. Without limiting
the foregoing, each Party shall use its diligent efforts to not (i) design
and/or synthesize any Compounds under this Agreement that have been, or are in
the process of being, designed and/or synthesized under any other
collaboration(s) it has with a third party, and/or (ii) design and/or synthesize
any other compounds under any other collaboration(s) it has with a third party
that have been, or are in the process of being, designed and/or synthesized as a
Compound under this Agreement.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-3

2.4      PERSONNEL. In accordance with Section 5.1, Exelixis
may disclose to employees and personnel of Exelixis (each, a "Research Program
Personnel"), on a need to know basis under circumstances that ensure the
confidentiality thereof, information within the Program Compound Information,
including any Cytokinetics Confidential Information, Design Criteria, and/or
Quality Control Criteria included therein, solely to conduct their designated
activities under the Research Program. Exelixis may disclose to third parties
who are under contractual relationship with Exelixis to synthesize scaffolds
and/or generic structures (each a "Exelixis Third Party Supplier") information
within the Program Compound Information (but excluding Design Criteria, Quality
Control Criteria, specific structures or compositions of the Compounds to be
produced hereunder, or results from Quality Control Criteria analysis of the
Compounds by [*]) to the extent necessary for such Exelixis Third Party
Supplier to perform its activities as described hereunder. Any Exelixis Third
Party Supplier performing such activities shall be under a confidentiality
agreement with Exelixis on terms no less restrictive than the confidentiality
provisions of this Agreement.

2.5      NO CONFLICTING ACTIVITIES. During the Term of this
Agreement, Exelixis shall not, and shall ensure that the Research Program
Personnel shall not, conduct the Research Program in conjunction with any other
projects being conducted at, or on behalf of, Exelixis that would (a) conflict
with any of the provisions of this Agreement, or (b) preclude Exelixis from
complying with the provisions hereof. In addition, Exelixis shall not enter into
agreements with Exelixis Third Party Suppliers that conflict with any of the
provisions of this Agreement and shall use diligent efforts to ensure compliance
with the confidentiality provisions, documentation requirements and intellectual
property rights provisions of this Agreement.

2.6      RECORDS. In connection with the performance of the
Research Program, Exelixis shall ensure that the Research Program Personnel who
perform such services shall maintain laboratory notebooks, records and data
("Records") in accordance with good laboratory and research practices.

2.7      REPORTS. Exelixis shall promptly provide to the JRC
documentation as to the Compounds, Program Compound Information, Records,
methods, results, conclusions, information and/or other deliverables made,
conceived, reduced to practice or otherwise generated in connection with this
Agreement ("Reports"). All Reports, Records, including any required laboratory
notebooks, records and data pursuant to any research services conducted under
the Research Program, shall be [*] by [*] and [*], shall be treated in all
respects as [*] Confidential Information of [*] and [*], and [*] shall have the
right to disclose, use and exploit such information in conjunction with its
disclosure, use and exploitation of the Compounds and Program Compound
Information in accordance with Article 4. The JRC shall deliver to Cytokinetics
such documentation from time to time and Without request by Cytokinetics.

2.8      FURTHER ASSURANCES. Exelixis shall provide to
Cytokinetics documentation reasonably requested by Cytokinetics in order to
assist Cytokinetics in determining whether any Compounds, Program Compound
Information, Plates, Records, Reports, and/or other deliverables comply fully
with this Article 2, Article 3 and Appendices A and B.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-4

3.       RESEARCH PROGRAM OVERVIEW.

3.1      JOINT RESEARCH COMMITTEE. Promptly after the
Effective Date, the Paries shall establish a six (6) member committee (the
"Joint Research Committee" or "JRC") composed of three (3) representatives from
each Party to manage the Research Program. Each representative of the JRC shall
have one (1) vote. All decisions of the JRC shall be made by unanimous vote. In
the event a unanimous decision can not be reached, then either Party may, by
written notice to the other Party, have such issue referred to the [*] of
Cytokinetics and Exelixis, [*] and [*], respectively, for resolution by good
faith negotiations within thirty (30) days after such notice is received.
Minutes of the JRC shall be taken, and shall, at a minimum, record all decisions
made. Such minutes shall be approved by both Parties. Each Party may replace its
appointed JRC representatives at any time upon written notice to the other
Party.

3.2      JRC RESPONSIBILITIES. The JRC shall be responsible
for planning, overseeing, reviewing and coordinating the work being done under
the Research Program, including; (i) making decisions regarding the specific
details of templates and Compounds for synthesis, including without limitation
the Design Criteria for the Compounds; (ii) evaluating progress against
timelines established by the JRC for the Research Program, including without
limitation the design, quality assurance testing and delivery of Compounds;
(iii) establishing and monitoring the schedule for delivery of Compounds; (iv)
establishing, maintaining and updating on an ongoing basis a database record of
the design of each of the Compounds and each Party's contribution to such
design, as further described in Section 4.3.2; (v) recording and approving
meeting minutes; and (vi) having the authority to accept or reject any Plates
and/or Compound(s) synthesized that failed the Quality Control Criteria
established by the Parties as set forth in Appendix B attached hereto, as may
be amended in writing by the JRC from time to time.

3.3      MEETINGS. The JRC shall meet quarterly, or as more or
less often as otherwise mutually agreed by the Parties, at such locations as the
Parties agree. It is understood that such meetings shall be held at least
quarterly in person, otherwise by telephone, in writing or by electronic mail.
The JRC shall provide monthly written updates to each Party as to the progress
of the Research Program.

3.4      DELIVERABLES.

3.4.1    COMPOUNDS. Exelixis shall deliver to
Cytokinetics, in accordance with the timelines as established by the JRC, the
number of unique Compounds as set forth in Table 1 below, such Compounds to be
delivered in Plates in accordance with the provisions of Appendices A and B:

Table 1:

Year      No. Of Compounds
----      ----------------

[*]             [*]
[*]             [*]
[*]             [*]
[*]             [*]
[*]             [*]
Total:          [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-5

The JRC shall use diligent efforts to establish the Design Criteria for the
Compounds, and schedule the synthesis thereof, such that the Plates will be
delivered to Cytokinetics on a regular basis, with the goal of making such
deliveries [*], but in no event [*] (with goal of each such delivery equaling
approximately [*] if [*] (and [*] if [*]) of the total amount of Compounds
scheduled to be delivered in such year), or, as may be mutually agreed by the
Parties, on an alternative schedule.

Exelixis shall deliver Plates to Cytokinetics promptly following the synthesis
and quality assurance testing of the Compounds formatted thereon; provided,
Exelixis shall use diligent efforts to complete such synthesis, quality
assurance testing, and delivery of Plates within [*] ([*]) months after the JRC
has established the Design Criteria of the Compounds formatted thereon. In the
event Exelixis is unable to maintain such scheduled synthesis, quality assurance
testing, and/or deliveries it shall provide Cytokinetics with prompt written
notice thereof.

3.4.2    PLATE FORMAT. All Compounds shall be
formatted according to Appendix A; provided, that if requested by Cytokinetics,
Exelixis may deliver a format that consists of [*] ([*]) compounds per
Plate. Other formats proposed by Cytokinetics shall be reviewed and agreed in
writing by the JRC. Any additional final custom formatting for Cytokinetics'
purpose shall be performed at Cytokinetics.

3.4.3   ACCEPTANCE/REJECTION/RESYNTHESIS/REPLACEMENT
OF PLATE(S). All Plates that fulfill the Quality Control Criteria set forth in
Appendix B and are delivered to Cytokinetics shall be deemed accepted ("Accepted
Plates"). Plates that do not fulfill Quality Control Criteria will be reviewed
by the JRC and accepted, rejected or designated for re-synthesis by the JRC. If
a Plate is accepted by the JRC, the compounds on such Plate shall be considered
to have met the Quality Control Criteria and shall be deemed Compounds. If a
Plate is rejected, upon agreement with the JRC, the entire Plate may be
resynthesised. The re-synthesis of Plates shall not involve either reformatting
of compounds, removal or replacement of compounds. Exelixis shall promptly
notify the JRC of the existence of any excess template material. Any excess
template material shall [*] the Parties and made available to each of the
Parties within a reasonable time after the JRC's receipt of such notification
from Exelixis. With respect to Plates, and/or compounds synthesized by Exelixis
under the Research Program which are rejected by the JRC, the JRC shall
determine whether such Plates and/or compounds, including any related Program
Compound Information, shall be destroyed and/or [*] between the Parties. It is
understood and agreed, that neither Party shall have the right to disclose, use
and/or exploit such rejected Plates and/or compounds, including any related
Program Compound Information, except as expressly authorized by the JRC in
writing. In the event that the Plate(s) delivered to Cytokinetics contain
Compound(s) that do not substantially match with the Program Compound
Information supplied by Exelixis, Cytokinetics shall notify Exelixis within [*]
thereof, and Exelixis shall promptly replace such Plate(s) with Plate(s) of
Compounds substantially matching such Program Compound Information, [*] to
Cytokinetics. Notwithstanding the above, Exelixis shall not be responsible for
losses resulting from, relating to or arising from (i) acts or omissions or the
gross negligence or willful misconduct of Cytokinetics or (ii) damage to Plates
or Compounds that occur after delivery to Cytokinetics.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-6

3.4.4    PROGRAM COMPOUND INFORMATION. At the time of
delivery of each Plate, Exelixis shall deliver to Cytokinetics Program Compound
Information substantially relating to each Compound contained on such Plate.
Exelixis and Cytokinetics will diligently work to define a suitable electronic
format, and subject to electronic file format compatibility, Exelixis shall make
the Program Compound Information available in electronic files for batch
registration as set forth in Appendix B.

3.4.5    OTHER DELIVERABLES. Without limiting the
foregoing, Exelixis shall deliver to Cytokinetics the deliverables set forth on
Appendix A in accordance with the time schedules set forth therein.

4.       OWNERSHIP AND USE OF MATERIALS AND INFORMATION AND LICENSES.

4.1      COMPOUNDS AND [*]. All right, title and interest in
and to the Compounds and [*] shall be jointly owned by Cytokinetics and
Exelixis, shall be treated in [*] Confidential Information of [*], and each
Party shall have the right to disclose, use and exploit such Compounds and [*]
in accordance with the rights and licenses granted in this Article 4. Each Party
shall have a worldwide, [*], assignable, fully paid-up, royalty free, [*] right,
with the right to grant and authorize sublicenses subject to Section 4.1 (i) and
(ii) below, under such right, title and interest to disclose, use and exploit
the Compounds and [*], including the right to resynthesize such Compounds, for
(i) Internal Research Use, and (ii) Drug Product Use, [*]; provided, in each
case, [*] shall have the right to sell, license, sublicense, lend, lease, assign
or otherwise transfer the Compounds and/or [*] to any third party, except (a)
for contract research, contract development, contract manufacturing or
Collaboration purposes or (b) as a Drug Product. The Parties expressly
understand and agree that no rights or licenses are granted by [*] to [*] under
this Section 4.1, whether by implication, estoppel or otherwise, except as
expressly set forth in this Section 4.1. [*] shall have the right to research,
develop, make, have made, import, have imported, use, sell and offer for sale
analogs and derivatives of the Compounds without limitation, but no rights or
licenses are granted, or obligations imposed, [*] pertaining to such analogs and
derivatives. Subject to the confidentiality provisions contained herein, [*]
shall also have the right to practice and use [*] with such analogs and
derivatives.

4.2      LICENSE TO EXELIXIS BACKGROUND TECHNOLOGY.

4.2.1    COMPOUNDS. For each Compound on an Accepted
Plate and its corresponding Program Compound Information, Exelixis hereby grants
to Cytokinetics a worldwide, nonexclusive, royalty-free, fully-paid-up, [*],
sublicenseable subject to Section 4.2.1(i) and (ii) below, right and license,
under the Exelixis Background Technology to practice and use all intellectual
property rights therein with respect to such Compound and Program Compound
Information, including the right to resynthesize such Compounds, for (i)
Internal Research Use, and (ii) Drug Product Use; provided, Cytokinetics shall
not have the right to license or sublicense the Exelixis Background Technology
to any third party, except as it relates to its practice and use of the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-7

Compounds and/or Program Compound Information (a) for contract research,
contract development, contract manufacturing or Collaboration purposes, or (b)
as a Drug Product.

4.2.2    ANALOGS AND DERIVATIVES OF COMPOUNDS. In
addition, Exelixis hereby grants to Cytokinetics a worldwide, nonexclusive,
royalty-free, fully-paid-up, [*], sublicenseable (as provided below), right and
license, under the Exelixis Background Technology to practice and use all
methods of synthesis developed prior to the Effective Date and/or under the
Research Program, in each case, to research, develop, make, have made, import,
have imported, use, sell and offer for sale analogs and derivatives of such
Compounds and Program Compound Information for the same uses described in
Section 4.2.1 (i) and (ii) above, except such uses, including sublicensing
rights, shall apply to such analogs and derivatives rather than such Compounds.

4.3      PATENTS AND PATENT APPLICATIONS.

4.3.1    COMPOUND PATENTS. It is anticipated that
each Party may independently file Compound Patents claiming Compounds when
utility has been established for such Compounds by or on behalf of a Party. Each
Party hereby grants to the other Party a worldwide, perpetual, irrevocable,
assignable, fully paid-up, royalty-free, non-exclusive license, (with the right
to sublicense to third parties pursuant to a Collaboration), under its Compound
Patents to practice and use any and all methods of use and compositions of
matter claims contained therein obtained on the Compound(s), including the right
to resynthesize such Compound(s), in each case, solely for Internal Research
Use. Notwithstanding the foregoing, it is understood that a patent claim of a
Compound Patent may encompass many compounds in addition to the Compound(s), and
that no license or other intellectual property right is granted to the other
Party in respect of such additional compounds encompassed by the claims,
including any methods of use or compositions of matter thereof, that are not
Compound(s).

4.3.2    NOVEL COMPOUNDS: INVENTORSHIP AND COMPETING
FILINGS.  

(a)      DESIGN CRITERIA. The JRC shall,
with respect to each Compound designed and/or synthesized under the Research
Program, mutually determine in good faith whether the chemical identity of such
Compound was designed solely by Cytokinetics, solely by Exelixis, or jointly.
After this mutual determination is made, the JRC shall document the full names
of each Party's personnel responsible for the design of such Compound in
question in a suitable database or other permanent record to which both Parties
and their counsel shall have access. The Parties acknowledge that their
determination of design under this Section 4.3.2 will be made in the absence of
any knowledge concerning the specific utility of such Compounds. Accordingly,
any determination made under this Section 4.3.2 shall be limited to design,
alone, and shall not, per se, be construed as a determination of inventorship of
such Compounds in question.

(b)      INVENTORSHIP AND COMPETING FILINGS.

(i)    The timing and strategy of
filing Compound Patents shall be at the sole discretion of the Party wishing to
file ("the Applicant Party"); provided both Parties agree not to file any
Compound Patent claiming one (1) or more Compounds until utility has been in

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-8

good faith reasonably established for such Compounds by or on behalf of such
Party. The Applicant Party shall be under no obligation to discuss or disclose
any portion of any Compound Patents to the other Party (the "Non-Applicant
Party"), except, and only to the extent, as may be required by law to enable the
Non-Applicant Party to perform its obligations under this Section 4.3.2. Subject
to the foregoing, in no event shall the Applicant Party be required to disclose
additional subject matter of the patent claims in such Compound Patents, such as
specific uses recited or generic structures that encompass the Compound(s)
and/or other compounds claimed. If an employee of the Non-Applicant Party is
determined to be an inventor on a claim covering a Compound within a Compound
Patent of the Applicant Party, then the Non-Applicant Party hereby assigns and
agrees to assign its rights (subject to Section 4.3.2(b)(ii) below), and shall
use its best efforts to ensure that such employee inventors assign their rights,
of inventorship and ownership in such claim to the extent such claim is
specifically directed to such Compound (but not to any other compounds covered
in such claim), obtained by virtue of holding said rights under a duty to
assign, to the Applicant Party, and to take all reasonable steps necessary, at
the Applicant Party's expense, to perfect such assignment. It is understood and
agreed that such claims on novel Compounds assigned under this Section 4.3.2
shall be subject to the licenses set forth in Section 4.3.1, including any
rights and restrictions contained therein.

(ii)   For the avoidance of doubt,
it is understood by the Parties that both may file Compound Patents on the same
Compound(s) with the same or substantially the same utility, and that under this
set of circumstances, the national patent laws in each country where competing
filings are made shall be applied in and by the respective patenting authorities
to determine questions of priority and patentability and shall determine the
ownership of the competing claims. Each Party further agrees to cooperate, and
shall use [*] efforts to ensure that its employee inventors cooperate, with
the other in making any declarations, oath, assignments and the like necessary
to perfect such filings. With respect to any information disclosed by a Party to
the other Party pursuant to this Section 4.3.2, notwithstanding anything to the
contrary in this Agreement, the receiving Party acknowledges that it shall have
no right to use or disclose such information of the disclosing Party without the
disclosing Party's prior written consent.

(c)      SUBSEQUENT DISCLOSURES. With
respect to any further disclosures that may be required in order to prosecute
and maintain claims already assigned under this Section 4.3.2, the assigning
Party (the "Assignor") agrees to cooperate with the Party to whom such claims
have been assigned (the "Assignee"), and to take all [*] steps necessary to
perfect such assignment, including without limitation to use [*] efforts to
ensure that each of its employee inventors on such claims cooperates with the
Assignee on such further disclosures. On a case-by case basis, the Parties shall
discuss and agree upon a mechanism by which such employee inventors of the
Assignor on such claims may communicate and cooperate directly with the
Assignee, including without limitation, having such employee inventors enter
into a separate confidentiality agreement (which covers only such further
disclosures) directly with the Assignee.

4.3.3    PROSECUTION OF PATENTS. Each Party shall be
solely responsible, at Its own expense and discretion, for prosecuting,
maintaining, enforcing and defending patents solely owned by such Party,
including without limitation those patent claims assigned to it by the other
Party pursuant to Section 4.3.2.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-9

5.       CONFIDENTIAL INFORMATION.

5.1      CONFIDENTIALITY. Each Party agrees to maintain, for a
period of ten (10) years from the date of disclosure, as confidential and not
use for any purpose or disclose to any third party (except to (i) Exelixis
Third Party Suppliers under Section 2.4, (ii) third party contractors from
academic and contract research and/or development organizations authorized to
conduct activities for a Party (including its Collaboration partners) under
Article 4, and (iii) Collaboration partners, in each case, on a need to know
basis under circumstances that ensure the confidentiality thereof), all
information disclosed by one Party to the other Party under this Agreement,
whether in writing or presented, stored or maintained in or by electronic,
magnetic or other means, and marked "Confidential" at the time of such
disclosure, or if disclosed orally, confirmed in writing and marked as
"Confidential" within thirty (30) days following such oral disclosure, including
without limitation all such information relating to the business, plans and/or
technology of the Parties hereto, including, but not limited to technical
information, including inventions, discoveries, methods, plans, processes,
specifications, characteristics, raw data, equipment design, know-how, show-how,
experience and trade secrets; developmental, marketing, sales, operating and
performance information; computer programming techniques; computational
chemistry data or processes; information relating to the design of chemical
structures and compounds, synthetic protocols, analytical data and procedures,
including but not limited to, the Research Program, the Compounds and/or Program
Compound Information for drug discovery and/or parallel synthesis directed to
therapeutic, diagnostic, prophylactic, prognostic, agrochemical or agricultural
applications; and all record-bearing media containing or disclosing the
foregoing information and techniques, including written business plans, patents
and patent applications, grant applications, notes and memoranda (collectively
"Confidential Information").

5.2      EXCLUSIONS. Notwithstanding the foregoing, the
Parties' obligations of confidentiality shall not apply to any information
contained within the Confidential Information, to the extent such information:

(a)      was known to the receiving Party at the time
of receiving such information, as evidenced by its contemporaneous written
records;

(b)      is now, or hereafter becomes, through no act
or failure to act on the part of the receiving Party, generally known or
available in the public domain;

(c)      is the subject of a written permission to
disclose provided by the disclosing Party;

(d)      is independently developed by or for the
receiving Party without access to, or knowledge of, the disclosing Party's
Confidential Information as evidenced by its contemporaneous written record; or

(e)      is hereafter furnished to the receiving
Party by a third party, as a matter of right and without restriction on
disclosure.

-10

5.3      RESTRICTIONS ON USE OF CONFIDENTIAL INFORMATION.
Notwithstanding the provisions of Section 5.1 above, each Party may disclose the
other Party's Confidential Information (i) solely to the extent necessary to
exercise the rights granted, and obligations assigned, to it hereunder (provided
it uses reasonable efforts to protect such information commensurate with the
efforts used to protect its own most sensitive information of a similar nature),
(ii) as reasonably necessary to prosecute or defend litigation; in connection
with financings, securities offerings, or merger or acquisitions; to provide
information to tax or other governmental authorities, (iii) or to the extent
such disclosure is reasonably necessary to comply with applicable governmental
laws, regulations, or orders (provided that, if a Party is required to make any
such disclosure of the other Party's Confidential Information, it will, to the
extent it may legally do so, give reasonable advance notice to the latter Party
of such disclosure and will use its reasonable efforts to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise)).

5.4      NONDISCLOSURE OF TERMS. Each of the Parties agrees
not to disclose to any third party the terms of this Agreement without the prior
written consent of the other Party hereto, except to such Party's attorneys,
advisors, investors, potential investors or acquirers or partners and others on
a need to know basis under circumstances that reasonably ensure the
confidentiality thereof, or to the extent required by law.

6.       PAYMENTS.

6.1      INITIAL PAYMENT. Cytokinetics shall pay Exelixis an
upfront fee of (i) [*] ($[*]) upon signing of the Agreement, and (ii) [*] ($[*])
upon delivery of the first [*] ([*]) Compounds hereunder (collectively, the
"Upfront Fee"), which Upfront Fee is intended to [*] the Compounds to be
delivered to Cytokinetics during the [*] of the Research Program. Exelixis shall
invoice Cytokinetics for the first payment on the Effective Date, and the second
payment upon the delivery of the first [*] ([*]) Compounds. Cytokinetics shall
pay such invoices [*] of receipt. The [*] shall be [*] of Compounds by
Cytokinetics. It is understood and agreed that Exelixis' right to receive and
retain such payment is contingent upon Exelixis' obligation to deliver to
Cytokinetics that number of Compounds (including their substantially related
Program Compound Information) that correspond to such payments.

6.2      PAYMENT SCHEDULE. In consideration  of Exelixis
providing Compounds to Cytokinetics, Cytokinetics shall pay Exelixis at the rate
of [*] U.S. Dollars ($[*]) per Accepted Plate, based upon a rate of [*] U.S
Dollars ($[*]) per Compound and [*] ([*]) Compounds per Plate up to a [*] of
[*] ([*]) Compounds. All Accepted Plates shall be delivered promptly to
Cytokinetics. Exelixis shall invoice Cytokinetics for each Accepted Plate at the
rate provided herein within [*] days after the first business day of each
calendar quarter.

6.3      DELIVERY TERMS. All deliveries shall be F.O.B.
Exelixis shipping dock at the address located at the front of this Agreement,
and Cytokinetics shall assume all shipping and

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-11

insurance charges for delivery of such Compounds, which shall be billed directly
to Cytokinetics from the carrier, unless otherwise agreed by the Parties.

6.4      PAYMENT TERMS. Subject to the acceptance of Compounds
by Cytokinetics as set forth in Section 3.4.3, payments by Cytokinetics to
Exelixis shall be due within [*] upon receipt of invoice from Exelixis;
provided, it is understood and agreed that Cytokinetics shall have no obligation
to make any payments to Exelixis, until such time as the [*] is [*] of the first
[*] ([*]) of such Compounds by Cytokinetics.

7.       REPRESENTATIONS AND WARRANTIES.

7.1      Each of the Parties hereby represents and warrants,
as of the Effective Date, as follows;

(a)      It is a corporation or entity duly organized
and validly existing under the laws of the state or other jurisdiction of its
incorporation or formation.

(b)      It has the full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.

(c)      All corporate acts and other proceedings
required to be taken to authorize such execution, delivery and consummation have
been duly and properly taken and obtained.

(d)      This Agreement has been duly executed and is
a legal and valid obligation binding upon such Party and enforceable in
accordance with its terms.

(e)      It has not previously granted, and during
the Term (as defined in Section 8.1) will not make any commitment or grant any
rights which are in conflict with the rights and licenses granted to other Party
herein.

7.2      Each of the Parties hereby agrees to promptly notify
the JRC of any change in its business which would be reasonably expected to
materially delay or impair its ability to perform its obligations hereunder, so
that the JRC may discuss and agree upon a reasonable resolution that addresses
any POTENTIAL harm caused to the other Party by such anticipated delay or
impairment.

8.       TERM; TERMINATION.

8.1      TERM. The term of this Agreement shall commence on
the Effective Date and, unless earlier terminated as provided in this Article 8,
continue in full force and effect until [*] ([*]) years from the Effective Date,
as may be extended by Cytokinetics pursuant to Section 8.3 (the "Term").

8.2      [*] TERMINATION. Commencing upon the [*] of the
Effective Date, this Agreement may be terminated [*], with [*], at any time for
any reason upon ninety (90) days prior written notice [*]. Without limiting the
foregoing [*], upon any such notice of termination under this

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-12

Section 8.2, the Parties shall agree upon and issue a joint press statement
[*].

8.3      EXTENSION OF DELIVERY SCHEDULE OF COMPOUNDS.
Cytokinetics [*] may extend the overall timeline for design, development and
delivery of the Compounds (as summarized in Section 3.4.1-Table 1, for Years
[*]), and, concurrent with such extension, extend the Term of this Agreement up
to an additional [*], upon ninety (90) days prior written notice to Exelixis.
Notwithstanding the above, the number of Compounds to be delivered by Exelixis
to Cytokinetics in Year [*] shall be [*] ([*]) Compounds, and upon mutual
agreement of the Parties, Cytokinetics may [*] the number of Compounds to be
delivered by Exelixis in any given year, but such [*] shall not be [*] ([*])
Compounds per year.

8.4      TERMINATION FOR MATERIAL BREACH. Ether Party may
terminate this Agreement for any material breach of this Agreement by the other
Party, if such breach is not cured within sixty (60) days after the breaching
Party receives written notice of such breach by the nonbreaching Party. Such
termination shall be effective upon expiration of such sixty (60) day period.

8.5      EFFECTS OF TERMINATION.

8.5.1    ACCRUED RIGHTS. Termination of this Agreement shall
not affect the rights and obligations of the Parties that accrued prior to the
effective date of such termination.

8.5.2    CONFIDENTIAL INFORMATION. Upon request, each Party
agrees to destroy any copies of Confidential Information of the other Party
whenever the work hereunder for which they have been supplied is completed,
discontinued or otherwise terminated, other than any Confidential Information
contained within the Compounds and/or Program Compound Information, Reports
and/or Records. Notwithstanding the above, the Parties expressly agree that one
(1) complete set of Confidential Information may be retained solely for
evidentiary purposes.

8.5.3    MATERIALS. Upon any termination of this Agreement,
other than for uncured failure to make payments due by Cytokinetics in
accordance with Sections 6.1, 6.2, and/or 8.5.4, Exelixis shall cooperate fully
and timely with Cytokinetics regarding the transfer to Cytokinetics of
Cytokinetics' [*] Plates, Compounds (including any partial or completed
compounds paid for by Cytokinetics), templates, starting materials,
intermediates, synthons and building blocks relating to such Compounds
(including any partial or completed compounds paid for by Cytokinetics) and
necessary or useful for the synthesis thereof, Program Compound Information,
Reports and Records.

8.5.4    COSTS AND PAYMENTS.

(a)      Upon notice of any termination of this
Agreement prior to expiration of its Term, Exelixis shall stop all further work
under the Research Program, and use its best efforts to cancel any cancelable
costs. Notwithstanding anything to the contrary in this Agreement, Cytokinetics
shall have no obligation to make any payments to Exelixis for any Compounds
delivered after notice of such termination that fail to meet the QCC.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-13

(b)      If [*] under Section 8.2, Cytokinetics shall
pay Exelixis (i) in [*] for any compounds [*] for synthesis by the JRC [*];
provided, such compounds meet the QCC or are accepted by the JRC as Compounds
(or if the IRC is no longer in existence, by mutual agreement of the Parties),
and are delivered to Cytokinetics, with their substantially relating Program
Compound Information, within [*] ([*]) months after such submission for
synthesis by the JRC, and (ii) [*] of all actual, reasonable, documented,
non-cancelable costs incurred by Exelixis prior to the effective date of such
termination, to the extent such costs were approved by the JRC (or if incurred
after the effective date of such termination, to the extent such costs are [*]
and are necessary to synthesize and deliver such Compounds), and subject to
Exelixis using [*] to cancel all cancelable costs. Within thirty (30) days of
delivery of the last of the Compounds in accordance with this Section 8.5.4(b),
Exelixis shall provide Cytokinetics with an invoice setting forth the amount
owed for such Compounds ([*]), its actual, reasonable, documented,
non-cancelable costs incurred by Exelixis for the conduct of the Research
Program prior to the effective date of such termination, and such costs incurred
by Exelixis and [*] after the effective date of such termination and prior to
the effective date of delivery of the last of the Compounds (and to the extent
any amounts remain from any moneys previously paid by Cytokinetics to Exelixis,
the outstanding balance in such account).

(c)      If Exelixis terminates this Agreement
pursuant to Section 8.4 due to Cytokinetics' material breach, Cytokinetics
agrees to pay Exelixis (i) in [*] for any compounds that meet the QCC or are
accepted by JRC as Compounds, and are delivered to Cytokinetics, with their
substantially relating Program Compound Information, prior to the effective date
of termination, and (ii) [*] of all actual, reasonable, documented,
non-cancelable costs incurred by Exelixis prior to the effective date of
termination, to the extent such costs were approved by the JRC and subject to
Exelixis [*] to cancel all cancelable costs. Within thirty (30) days of any such
termination, Exelixis shall provide Cytokinetics with an invoice setting forth
the amount owed for such Compounds ([*]), and its actual, reasonable,
documented, non-cancelable costs incurred by Exelixis for the conduct of the
Research Program prior to the effective date of such termination (and to the
extent any amounts remain from any moneys previously paid by Cytokinetics to
Exelixis, the outstanding balance in such account).

(d)      If Cytokinetics terminates this Agreement
pursuant to Section 8.4 due to Exelixis' material breach, without limiting any
remedies Cytokinetics may have at law, Cytokinetics agrees to pay Exelixis in
[*] for any compounds that meet the QCC or are accepted by JRC as Compounds, and
are delivered to Cytokinetics, with their substantially relating Program
Compound Information, prior to the effective date of termination. Within thirty
(30) days of any such termination, Exelixis shall provide Cytokinetics with an
invoice setting forth the amount owed for such Compounds ([*]) (and to the
extent any amounts remain from any moneys previously paid by Cytokinetics to
Exelixis, the outstanding balance in such account).

(e)      Subject to delivery to Cytokinetics of the
materials and information listed in Section 8.5.3, and verification by
Cytokinetics of Exelixis' invoice, within

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-14

thirty (30) days after receipt of adequate documentation therefor, the Parties
shall settle, in accordance with this Section 8.5.4, any such outstanding
amounts. If there is a balance owed to Exelixis, Cytokinetics shall make a
payment to Exelixis (and/or Exelixis may retain from moneys previously paid by
Cytokinetics) for such Compounds and, except for termination of this Agreement
due to Exelixis' material breach, such Exelixis' costs. Following settlement of
such outstanding amounts, if there is a balance remaining in Exelixis' accounts
from any moneys previously paid by Cytokinetics to Exelixis, Exelixis shall
refund such amounts to Cytokinetics.

8.6.     SURVIVAL. The provisions of Articles 4, 5, 7, 9, 10,
11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and 21 and Sections 6.1, 8.5 and 8.6
shall survive termination or expiration of this Agreement for any reason. Upon
any termination of this Agreement, neither Party shall have any ongoing
obligation to the other Party, except as expressly provided herein.

9.       PUBLICITY. The Parties shall issue a mutually agreed-upon
joint press release to announce the signing of this Agreement; thereafter,
Exelixis and Cytokinetics may each disclose to third parties the information
contained in such press release without the need for further approval by the
other.

10.      PUBLIC PRESENTATIONS. The Parties acknowledge that they,
independently or jointly, may wish to make a Public Presentation of information
and data generated in the course of the Research Program. The term "Public
Presentation" shall mean the submission for publication of any manuscript,
abstract or other form of public presentation, including, without limitation,
posters, doctoral theses, slides and texts of oral presentations, and texts of
any transmission through any electronic media, e.g. any computer access system
such as the Internet, World wide Web, etc.

The Party wishing to make a Public Presentation (the "Publishing Party") shall
provide to the other Party (the "Non-Publishing Party") a complete copy of its
proposed publication at least thirty (30) days prior to the date of its intended
submission for publication, and agrees, upon request, not to submit any such
abstract or manuscript for publication until (i) the Non-Publishing Party is
given a reasonable period of time to secure patent protection for any material
in such proposed publication which it believes to be patentable, and (ii) to
remove, at the Non-Publishing Party's reasonable request, any Confidential
Information of the Non-Publishing Party and/or any [*] contained within such
proposed publication. Both Parties understand that a reasonable commercial
strategy may require delay of publication of information contained within a
Public Presentation for filing of patent applications. Neither Party shall have
the right to publish or present Confidential Information of the other Party or
any [*] in any Public Presentation without the other Party's prior written
consent. Subject to the foregoing, at the Non-Publishing Party's reasonable
request, the Publishing Party shall remove the [*]  and Non-Publishing Party's
Confidential Information from such proposed publication. The Publishing Party
agrees to provide the Non-Publishing Party with a final copy of the proposed
publication prior to its disclosure.

Nothing contained in this Article 10 is intended to grant any right or license
to either Party to commercialize or file patent applications on any information
of the Publishing Party that is included in such Public Presentation. Any
disputes between the Parties regarding delaying a Public Presentation to permit
the filing of a patent application shall be referred to the JRC.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-15

11.      INDEMNIFICATION.

11.1     INDEMNIFICATION. Each Party agrees to be responsible
and assume liability for its own acts, gross negligence, and/or willful
misconduct, including those of its employees, Affiliates, independent
contractors and other agents, to the full extent permitted by law, and shall
indemnify and hold the other Party, and its employees, Affiliates, directors and
agents, harmless from and against any third party claims or liabilities
(including, without limitation, reasonable attorney's fees) arising from any
such acts or gross negligence, and/or willful misconduct; provided, however,
that the Party entitled to indemnification pursuant to this Article 10 shall
cooperate with the indemnifying Party in defending against any such claims or
liabilities and shall not settle any such claim without the prior consent of the
indemnifying Party, which consent shall not be unreasonably withheld.

11.2     PROCEDURES. A Party (the "Indemnitee") that intends
to claim indemnification under this Article 11 shall promptly notify the other
Party (the "Indemnitor") in writing of any claim, complaint, suit, proceeding or
cause of action in respect of which the Indemnitee intends to claim such
indemnification (for purposes of this Section 11.2, each a "Claim"), and the
Indemnitor shall have sole control of the defense and/or settlement thereof;
provided that the Indemnitee shall have the right to participate, at its own
expense, with counsel of its own choosing in the defense and/or settlement of
such Claim. The indemnification under this Article 11 shall not apply to amounts
paid with respect to settlement of any Claim if such settlement is effected
without the consent of the Indemnitor, which consent will not be unreasonably
withheld or delayed. The failure to deliver written notice to the Indemnitor
within a reasonable period of time after the commencement of any such claim,
suit or proceeding, if prejudicial to its ability to defend such action, shall
relieve such Indemnitor of any liability to the Indemnitee under this Article
11, but the omission to so deliver written notice to the Indemnitor shall not
relieve the Indemnitor of any liability to any Indemnitee otherwise than under
this Article 11. Without limiting the foregoing, the Indemnitee shall keep the
Indemnitor fully informed of the progress of any Claim for which it intends to
claim, indemnification under this Article 11.

12.      FORCE MAJEURE. Except with respect to the payment of monies
due hereunder and the responsibility to maintain the confidentiality of
Confidential Information and the obligations of non-disclosure and non-use
thereof, neither Party shall be considered in default in the performance of any
obligation hereunder to the extent that the performance of such obligation is
prevented or delayed by fire, flood, explosion, strike, war, insurrection,
embargo, government requirement, civil or military authority, natural disaster
or any other event, occurrence or condition which is not caused, in whole or in
part, by that Party and which is beyond the reasonable control of that Party.

13.      DISCLAIMER.

13.1     EACH PARTY ACKNOWLEDGES THAT THE COMPOUNDS AND
PROGRAM COMPOUND INFORMATION WHICH WILL BE PRODUCED PURSUANT TO THE RESEARCH
PROGRAM ARE EXPERIMENTAL AND THEIR PROPERTIES ARE NOT COMPLETELY KNOWN. EACH
PARTY SHALL BEAR FULL RESPONSIBILITY FOR SAFE HANDLING, STORAGE, TRANSFER AND
USE OF ANY COMPOUNDS AND PROGRAM COMPOUND INFORMATION IN ITS POSSESSION.

-16

13.2     EACH PARTY AGREES TO ACT IN ACCORDANCE WITH ALL
IMPORT/EXPORT LAWS AND ENVIRONMENTAL AND DRUG LAWS AND REGULATIONS AND ALL OTHER
LAWS AND REGULATIONS APPLICABLE TO THE USE AND POSSESSION OF THE COMPOUNDS AND
PROGRAM COMPOUND INFORMATION.

13.3     EXCEPT AS EXPRESSLY SET FORTH HEREIN, COMPOUNDS AND
PROGRAM COMPOUND INFORMATION PROVIDED HEREUNDER. ARE PROVIDED "AS IS" AND
WITHOUT WARRANTY OR CONDITIONS OF ANY KIND, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE.

13.4     WITHOUT LIMITING THE PARTIES' RESPECTIVE
INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 11, IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES INCURRED BY THE
OTHER PARTY, INCLUDING LOST PROFITS OR ANTICIPATED REVENUES OR PROFITS RELATING
TO THE SAME), ARISING FROM OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, WHETHER BASED IN CONTRACT, TORT (INCLUDING WITHOUT LIMITATION
NEGLIGENCE) OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OR ANY LIMITED REMEDY PROVIDED HEREIN.

14.      GOVERNING LAW. The validity and interpretation of this
Agreement and the legal relations of the Parties under this Agreement shall be
governed by the laws of the State of California, without reference to its
conflict of laws principles.

15.      ASSIGNMENT. This Agreement shall not be assignable by either
Party without the prior written consent of the other Party; except that Exelixis
or Cytokinetics may assign, at their discretion, the Agreement without such
consent (i) to an Affiliate, or (ii) to a third party pursuant to merger,
acquisition, consolidation, reorganization or sale of all or substantially all
of its assets to which this Agreement relates; provided that, such assignee or
transferee has agreed in writing to be bound by the terms and conditions of this
Agreement. Any attempted assignment contrary to this Article 15 shall be void.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties, their successors and assigns.

16.      HEADINGS. The headings for each article and section in this
Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section.

17.      INDEPENDENT CONTRACTOR. For the purposes of this Agreement and
all services to be provided hereunder, each Party shall be, and shall be deemed
to be, an independent contractor and not an agent or employee of the other
Party. Neither Party shall have authority to make any statements,
representations or commitments of any kind, or take action, which shall be
binding on the other Party, except as may be explicitly provided for herein or
authorized by the other Party in writing.

-17

18.      SEVERABILITY. If any one or more provisions of this Agreement
shall be found to be illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, provided the surviving agreement materially
comports with the parties' original intent.

19.      WAIVER. Waiver or forbearance by either Party or the failure
by either Party to claim a breach of any provision of this Agreement or exercise
any right or remedy provided by this Agreement or applicable law, shall not be
deemed to constitute a waiver with respect to any subsequent breach of any
provision hereof.

20.      NOTICES. Any notice, payment or report required or permitted
to be given under this Agreement shall be deemed to have been sufficiently given
if mailed by first class certified or registered airmail addressed to the
Parties as follows:

Exelixis - U.S. Postal Service:
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, California 94083-0511 USA
Attention: Vice President, Corporate Technology Development

Exelixis - Other Mail Delivery Carrier:
Exelixis,Inc. 
169 Harbor Way
South San Francisco, California 94080 USA
Attention: Vice President, Corporate Technology Development

Cytokinetics:
Cytokinetics, Inc.
280 East Grand Avenue
South San Francisco, California 94080
Attention: Senior Vice President, Finance and Corporate
Development 
Chief Financial Officer

21.      ENTIRE AGREEMENT. This instrument contains the entire 
agreement between the Parties hereto as to the subject matter hereof. The
provisions of the Confidential Disclosure Agreement, entered into on February
12, 2001, is expressly superseded and terminated hereby, and any confidential or
proprietary information disclosed thereunder shall be subject to the terms of
this Agreement. No verbal agreement or representation between the Parties hereto
either before, during or after execution of this Agreement shall affect or
modify any of the terms or obligations herein. No amendment or modification of
any term, provisions or conditions of this Agreement shall be binding or
enforceable unless in writing and signed by each of the Parties. This Agreement
may be executed in counterparts, each of which taken together shall be
considered part of the entire document.

-18

The undersigned represent that they are duly authorized to execute this
Agreement.

CYTOKINETICS, INC.                             EXELIXIS, INC.

BY: /s/ Robert I. Blum                         By: /s/ Glen Y. Sato
-------------------------                      ----------------------------

Name: Robert I. Blum                           Name: Glen Y. Sato

Title: ______________________                  Title: CFO and VP, Legal Affairs

Date: 12/28/01                                 Date: 12/28/01

-19

APPENDIX A

RESEARCH PROGRAM

1) LIBRARY SCOPE & SIZE;

A library of [*] compounds based on [*] will be designed jointly by Cytokinetics
and Exelixis and subsequently synthesized by Exelixis.

2) LIBRARY CONSTRUCTION:

[*] compounds will be derived from [*] libraries of [*] compounds. Each of the
[*] libraries will be derived from [*] of [*] and a [*] of [*] per [*] (each, a
"Library"). The details and identity of [*] component for the [*] will be
determined by the JRC. Approximately [*] of each compound will be prepared and
quality controlled by [*]. [*]. For [*] compounds per plate, a [*] of [*] per
Plate will be transferred to Cytokinetics (that is, [*]). Following delivery of
the [*] Plate within a Library, Exelixis shall deliver to Cytokinetics a [*] of
[*] of each [*] used in such Library. Cytokinetics shall own all right, title
and interest in such delivered [*], and shall have the right to use and exploit
such [*] without limitation or obligation to account to Exelixis to the extent
allowed under Section 4 of the Agreement.

3) EXELIXIS COMPOUND PLATE FORMAT:

Exelixis formats screening plates in a [*] plate format with [*], i.e., a total 
of [*] compounds per plate.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-20

APPENDIX B

QUALITY CONTROL CRITERIA

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-21

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-22

-23

Exhibit 10.32

[*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY 
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND 
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 
1933, AS AMENDED.

280 East Grand Avenue
South San Francisco, CA 94080
Tel (650) 624-3000 Fax (650) 624-3010

[CYTOKINETICS LOGO]

April 10, 2003

Exelixis, Inc.
169 Harbor Way
South San Francisco, CA 94080
Attention: Pamela A. Simonton, J.D., L.L.M., Vice President, Corporate
Technology Development

RE: FIRST LETTER AMENDMENT UNDER THAT CERTAIN COLLABORATION AGREEMENT BY AND
BETWEEN EXELIXIS, INC. ("EXELIXIS") AND CYTOKINETICS, INC. ("CYTOKINETICS") OF
EVEN DATE DECEMBER 28, 2001 (THE "AGREEMENT")

Dear Ms. Simonton:

This letter serves to amend the Agreement between Exelixis, Inc. and
Cytokinetics, Inc. dated December 28, 2001 (the "Agreement") (the "Letter
Amendment"). Subject to execution of this Letter Amendment, CK shall [*]  
described in the notice from Robert Blum to Pamela Simonton of January
16, 2003.

Now therefore, Exelixis and Cytokinetics agree, effective as of March 31, 2003
(the "Letter Amendment Effective Date"), us follows:

1.       All capitalized terms not defined herein shall have the meaning
ascribed to them in the Agreement.

2.       Appendix B is hereby amended in its entirety to read as attached
hereto.

3.       Notwithstanding Section 3.2 and Section 3.4.1, it is understood and
agreed that [*] of Exelixis and [*] of Cytokinetics will
establish mutually agreed upon delivery dates for Compounds for the remainder of
the 2003 calendar year. Such delivery dates will be subject to periodic reviews
and updates as required.

4.       Section 3.4.3 is hereby amended to add the following at the end of the
paragraph:

Notwithstanding the above, [*].

BIN 1                           BIN 2                           BIN 3
----------------------------------------------------------------------------------------------------

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

Pamela A. Simonton, J.D., L.L.M.
April 10, 2003
Page Two

5.       It is understood and agreed that there will be continued [*] and [*]. 
Changes or additions to the [*] will be brought before the JRC for ratification.

6.       In accordance with Section 3.4.3, Cytokinetics will notify Exelixis of
any Plates that fail to meet the purity standards of the Quality Control
Criteria described on Exhibit B within [*] following delivery
thereof to Cytokinetics. In addition, it is agreed and understood that
Cytokinetics will provide Exelixis with [*] for such Plates after
providing such notification.

7.       Section 3.4.4 is hereby amended in its entirety to read as follows:

3.4.4    PROGRAM COMPOUND INFORMATION. [*] the scheduled
delivery date for each shipment of Plates of Compounds, Exelixis will
deliver to Cytokinetics a [*] and [*] for the analytical data for such
Compounds. A JRC subcommittee will meet [*] the delivery date for such
Plates to discuss the library production and the analytical data. At
the time of delivery of each Plate, Exelixis shall deliver to
Cytokinetics all Program Compound Information substantially relating
to each Compound contained on such Plate. Exelixis and Cytokinetics
will diligently work to define a suitable electronic format, and
subject to electronic file format compatibility, Exelixis shall make
the Program Compound Information available in electronic files for
batch registration as set forth in Appendix B.

All other terms of the Agreement remain the same.

Please sign below to indicate your acceptance of the revised terms set forth
above and return this letter to me. A duplicate original is enclosed for your
records.

If you have any questions, please do not hesitate to contact me at (650)
624-3002 or Elisabeth Schnleders at (650) 624-3083.

With regards,

Sincerely,

/s/ Robert I. Blum

Robert I. Blum
Senior Vice President, Finance and Corporate Development
Chief Financial Officer

Agreed and accepted;

EXELIXIS, INC.

/s/ [ILLEGIBLE]
--------------------------------

Name: [ILLEGIBLE]

Title: [ILLEGIBLE]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

APPENDIX B

QUALITY CONTROL CRITERIA

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-1

[*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. 

-2

Exhibit 10.33

PROMISSORY NOTE

South San Francisco, California                                         $100,000

July 12, 2002

FOR VALUE RECEIVED, the undersigned Robert I. Blum ("BORROWER") hereby
promises to pay to the order of Cytokinetics, Incorporated, a Delaware
corporation ("LENDER" also known as "Cytokinetics") at 280 East Grand Avenue,
South San Francisco, California (or at such other address as the holder of this
NOTE may designate by notice to BORROWER), in lawful money of the United States
of America, the sum of one hundred thousand Dollars ($100,000), as set forth
below.

1.     Definitions.

a.       "INTEREST RATE" shall mean the PRIME RATE plus 1%,
which sum is equal to 5.75% per annum.

b.       "SHARES" shall mean 166,667 shares of Common Stock of
the LENDER presently owned by BORROWER that will
secure payment hereunder.

c.       "DUE DATE" shall mean the earliest of any of the
following:

(i)    the sale, conveyance, alienation, assignment,
pledge, grant of any lien or other transfer by
BORROWER of any of the SHARES without the
prior written consent of the LENDER;

(ii)   ninety (90) days after TERMINATION OF
EMPLOYMENT;

(iii)  eighteen (18) months after a LIQUIDITY EVENT;
or

(iv)   such earlier date as may be required by LENDER
upon acceleration of the DUE DATE in
accordance with Section 5 of this NOTE.

d.       "TERMINATION OF EMPLOYMENT" shall mean the voluntary
or involuntary termination of BORROWER's employment
relationship with LENDER for any reason or no reason,
with or without cause.

e.       "LIQUIDITY EVENT" shall mean (i) an acquisition of
the LENDER in which the stockholders of the LENDER
receive cash or publicly traded securities in
exchange for their shares of stock of the LENDER, or
(ii) the first public offering by the LENDER of
shares of its capital stock pursuant to a
registration statement on Form S-1 under the
Securities Act of 1933.

1

f.       "PRIME RATE" shall mean an interest rate equal to the
interest rate announced by the Federal Reserve Bank
of San Francisco as its prime rate as of the date of
this NOTE.

2.     Payments.

a.       Commencing on the date hereof, interest on the unpaid
principal balance of this NOTE shall accrue at the
INTEREST RATE.

b.       The NOTE shall be repayable according to the
following schedule:

(i)    On the first anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(ii)   On the second anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(iii)  20% of the original principal balance of this
NOTE on the third anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(iv)   20% of the original principal balance of this
NOTE on the fourth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(v)    20% of the original principal balance of this
NOTE on the fifth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date; and

(vi)   40% of the original principal balance of this
NOTE on the sixth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date.

Notwithstanding the foregoing, all principal and
accrued interest on the principal balance of this
NOTE shall be due and payable on the DUE DATE.

g.       All payments shall be applied first against accrued
interest, and secondly against principal.

3.     Prepayment.

BORROWER may prepay all or any portion of the principal on this NOTE
and the accrued interest without penalty or acceleration of the DUE
DATE of this NOTE.

2

4.     Security/Insurance.

This NOTE is secured by a pledge of the SHARES under the terms of a
SECURITY AGREEMENT, substantially in the form attached hereto as
Exhibit A (the "SECURITY AGREEMENT") and dated as of even date hereof,
and is subject to all of the provisions thereof.

5.     Acceleration of DUE DATE.

The entire unpaid principal of this NOTE and accrued interest thereon
shall at the election of the LENDER, become immediately due and payable
upon the occurrence of any of the following, irrespective of the DUE
DATE as otherwise defined in this NOTE:

a.       BORROWER fails to make any payment when the same is
due;

b.       BORROWER fails to perform or observe any of the
covenants or obligations of BORROWER set forth in
this NOTE or contained in the SECURITY AGREEMENT for
a period of ten (10) days after written notice
thereof from LENDER;

c.       A bankruptcy or insolvency proceeding is instituted
by or against BORROWER, or if a receiver is appointed
for the property of BORROWER; or

d.       BORROWER makes an assignment for the benefit of
creditors.

6.     Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any payment
when the same is due, LENDER shall be entitled to recover from BORROWER
all costs of effecting collection of the same, including reasonable
attorneys' fees. Unpaid principal and interest subject to collection
shall bear interest at the maximum rate allowed under California law
for nonexempt lenders.

7.     Certification of BORROWER.

So long as the NOTE shall remain outstanding, BORROWER shall not sell,
assign, transfer, convey, pledge, or grant a lien against the SHARES.
In the event of any involuntary (by act of law or otherwise) sale,
conveyance, pledge, lien, alienation or other transfer by BORROWER of
any of the SHARES, BORROWER shall immediately notify LENDER.

BORROWER also warrants that, upon the written request of LENDER,
BORROWER shall deliver to LENDER a written confirmation that a sale,
conveyance, pledge, lien, alienation or other transfer of the SHARES
has not occurred.

3

8.     Full Recourse.

The holder of this NOTE shall have full recourse against the BORROWER,
and shall not be required to proceed against the collateral securing
the NOTE pursuant to the SECURITY AGREEMENT in the event of the
occurrence of an event set forth in Section 5 of this NOTE.

9.     No Right to Continued Employment.

Nothing contained herein shall be construed to confer on BORROWER any
right to continued employment with the LENDER.

10.    Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to personal
jurisdiction in any court in San Mateo County, California.

11.    Successors.

This NOTE shall be binding upon and shall inure to the benefit of the
parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

Effective as of the date set forth above.

BORROWER:

__________________________________________
Name:_____________________________________

ACCEPTED AND ACKNOWLEDGED:

LENDER:

4

CYTOKINETICS, INCORPORATED, a Delaware corporation

By: ____________________________________
Name: __________________________________
Title: _________________________________

By: ____________________________________
Name: __________________________________
Title: _________________________________

5

EXHIBIT A

SECURITY AGREEMENT

This Security Agreement is made as of July 12, 2002 between
Cytokinetics, Incorporated, a Delaware corporation ("Pledgee"), Robert I. Blum
("Pledgor"), and Secretary of Pledgee, as the agent of Pledgee and holder of the
Collateral, as defined below, pledged hereunder ("Pledgeholder").

Recitals

Pursuant to the Promissory Note dated July 12, 2002 (the "Note"),
between Pledgor and Pledgee, the Pledgee has loaned to Pledgor the principal
amount of $100,000 (the "Loan").

NOW, THEREFORE, it is agreed as follows:

1. Creation and Description of Security Interest. In consideration of
the Loan, Pledgor, pursuant to the California Uniform Commercial Code, hereby
pledges 166,667 shares of Common Stock of the Pledgee presently owned by Pledgor
which shall to the maximum extent permitted consist at all times of vested
shares (i.e. shares that are not subject to Pledgee's repurchase option) (herein
sometimes referred to as the "Collateral") and herewith delivers any
certificates currently held by Pledgor representing such Collateral to
Pledgeholder, who shall hold said certificates on behalf of Pledgee subject to
the terms and conditions of this Security Agreement.

The Collateral (together with an executed blank stock assignment or
assignments in substantially the form attached hereto as Annex 1) shall be held
by Pledgeholder on behalf of Pledgee as security for the repayment of the Note,
and any extensions or renewals thereof, to be executed by Pledgor pursuant to
the terms of the Note, and Pledgeholder shall not sell, assign, transfer,
pledge, encumber or dispose of such Collateral except in accordance with the
provisions of this Security Agreement.

2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

(a) Payment of Indebtedness. Pledgor will pay the principal
sum of the Note secured hereby, and interest thereon, at the time and in the
manner provided in the Note.

(b) Encumbrances. The Collateral is free of all other adverse
claims, encumbrances, defenses and liens (other than restrictions on transfer
imposed by applicable securities laws), except for (i) Pledgee's rights to
repurchase the Collateral in connection with the termination of Pledgor's
service relationship with the Pledgee, (ii) the pledge of the Collateral
hereunder as security for payment of the Note, and (iii) the pledge of the
Collateral as security for payment of other obligations between the Pledgor and
Pledgee, and Pledgor will not further encumber the Collateral without the prior
written consent of Pledgee.

3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Collateral pledged
hereunder.

4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Collateral originally pledged hereunder. In the event
of substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Collateral" in this Security Agreement shall include the substituted investment
property of Pledgor as a result thereof.

5. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the pledged Collateral, such rights and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Collateral then
held by Pledgeholder shall be immediately delivered to Pledgeholder, to be held
under the terms of this Security Agreement in the same manner as the Collateral
pledged.

6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

(a) Payment of principal or interest on the Note becomes
delinquent; or

(b) Pledgor fails to perform or observe any of the covenants
or obligations of Pledgor set forth in the Note or contained in this Security
Agreement for a period of 10 days after written notice thereof from Pledgee; or

(c) A bankruptcy or insolvency proceeding is instituted by or
against Pledgor, or if a receiver is appointed for the property of Pledgor; or

(d) Pledgor makes an assignment for the benefit of creditors.

In the case of a default, as set forth above, Pledgee shall have the
right to accelerate payment of the Note, and Pledgee shall thereafter be
entitled to pursue its remedies under the California Uniform Commercial Code.

7. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
assign, transfer, withdraw, pledge, substitute or otherwise dispose of all or
any part of the Collateral without the prior written consent of Pledgee.

8. Term. The within pledge of Collateral shall continue until the
payment of all indebtedness secured hereby.

-2-

9. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against Pledgor, or if a receiver is appointed
for the property of Pledgor, or if Pledgor makes an assignment for the benefit
of creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.

10. Pledgeholder Liability.

(a) Pledgeholder shall not be liable to any party for any of
its acts, or omissions to act, as Pledgeholder unless Pledgeholder is proved to
have acted in bad faith. Any act done or omitted pursuant to the advice of legal
counsel, other than an act or omission involving gross or willful negligence,
shall be deemed to be done or omitted in good faith.

(b) Pledgeholder shall be entitled to employ such legal
counsel and other experts as Pledgeholder may deem necessary to properly advise
Pledgeholder in connection with its obligations hereunder, and Pledgeholder may
rely upon the advice of such counsel. Such counsel's reasonable fees and costs
shall be borne 50% by Pledgor and 50% by Pledgee.

(c) It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by Pledgeholder hereunder, Pledgeholder is authorized and
directed to retain in Pledgeholder's possession as agent of Pledgee without
liability to anyone all or any part of said securities until such disputes shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of arbitration or of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but Pledgeholder shall be under no duty whatsoever to institute or
defend any such proceedings.

In addition, upon any dispute Pledgeholder should be entitled to engage
legal counsel, one-half of whose fees and expenses shall be borne by Pledgor and
one-half by Pledgee.

11. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

12. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

13. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.

-3-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

"PLEDGOR"                            By: _________________________________

Name: ___________________________

_________________________________
Address

_________________________________

"PLEDGEE"                                Cytokinetics, Incorporated,
a Delaware corporation

By: _____________________________

Title: __________________________

"PLEDGEHOLDER"                           _________________________________
Secretary of Pledgee

-4-

ANNEX 1

STOCK POWER AND ASSIGNMENT

SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Security Agreement
dated as of ___________________, 200__ the undersigned hereby sells, assigns and
transfers unto ___________________________________________________, shares of
the Common Stock of Cytokinetics, Incorporated, a Delaware corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. _____ delivered herewith, and does hereby
irrevocably constitute the Secretary of the Company as attorney-in-fact, with
full power of substitution, to transfer said stock on the books of the Company.

Dated: ____________, 20____

_________________________________
(Signature)

_________________________________
(Print Name)

THIS STOCK POWER MAY ONLY BE UTILIZED IN CONNECTION WITH THE PROVISIONS OF THE
SECURITY AGREEMENT DATED AS OF ____________, 200__, BY AND BETWEEN THE SIGNATORY
HERETO AND THE COMPANY.

-5-

Exhibit 10.34

PROMISSORY NOTE

South San Francisco, California                            $37,400.00

May 20, 2002

FOR VALUE RECEIVED, the undersigned David Morgans, ("EMPLOYEE") and Sandra
Morgans, (Collectively, "BORROWER") hereby promises to pay to the order of
Cytokinetics, Inc., a Delaware corporation ("LENDER" also known as
"Cytokinetics") at 280 East Grand Avenue, South San Francisco, California (or at
such other address as the holder of this NOTE may designate by notice to
BORROWER), in lawful money of the United States of America, the sum of
Thirty-Seven Thousand Four Hundred Dollars ($37,400.00), as set forth below.

1.       Definitions.

a.       "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

b.       "APPLICABLE FEDERAL RATE" shall mean the monthly long-term
applicable Federal or other rate (as defined in the CODE) as
of the date of the occurrence of this NOTE.

d.       "DUE DATE" shall mean the earliest of any of the following:

(i)      thirty (30) days after TERMINATION OF EMPLOYMENT of
EMPLOYEE; or

(ii)     May 20, 2011, provided that if BORROWER is unable to
repay this NOTE at such time, LENDER in its
discretion shall consider extending the DUE DATE.

e.       "TERMINATION OF EMPLOYMENT" shall mean the voluntary or
involuntary termination of EMPLOYEE'S employment relationship
with LENDER for any reason or no reason, with or without
cause.

2.       Payments.

a.       Interest on the unpaid principal balance of this NOTE shall
accrue at the APPLICABLE FEDERAL RATE, compounded monthly,
commencing on the date hereof.

b.       No payment of principal or interest shall be due and payable
until the DUE DATE, at which time all accrued interest on the
principal balance of this NOTE shall be due and payable.

Page 1

c.       All payments shall be applied first against accrued interest,
and secondly against principal.

3.       Prepayment.

BORROWER may prepay all or any portion of this NOTE and the accrued
interest without penalty or acceleration of the DUE DATE of this NOTE.

4.       Unsecured Note.

This NOTE is unsecured.

5.       Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any payment
when the same is due, LENDER shall be entitled to recover from BORROWER
all costs of effecting collection of the same, including reasonable
attorneys' fees. Unpaid principal and interest subject to collection
shall bear interest at the maximum rate allowed under California law
for nonexempt lenders.

7.       Certification of BORROWER.

BORROWER warrants that BORROWER, shall immediately notify LENDER if any
of the following occurs:

a.       the sale, conveyance, alienation or other transfer by BORROWER
of the PRINCIPAL RESIDENCE, whether voluntary or involuntary,
by act of law or otherwise; or

b.       any other change that removes BORROWER as a holder of record
of title to the PRINCIPAL RESIDENCE; or

c.       any default under any deed of trust that is senior to the Deed
of Trust securing BORROWER'S obligation to LENDER hereunder.

BORROWER also warrants that, upon the written request, of LENDER,
BORROWER shall deliver to LENDER a written confirmation that none of
the events listed immediately above has occurred. BORROWER further
certifies that BORROWER reasonably expects to itemize deductions for
each year during which this loan is outstanding.

2

6.       Termination.

The obligations of BORROWER hereunder shall terminate upon the
indefeasible payment in full by BORROWER of all of its obligations
evidenced by this NOTE.

7.       Forgiveness of NOTE and/or Accrued Interest.

a.       In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on the
fifth (5th) anniversary date of this NOTE, one quarter (1/4)
of the then outstanding principal balance of this NOTE shall
be forgiven on such date. Thereafter, in the event BORROWER
remains an employee in good standing of LENDER, as determined
in LENDER'S sole discretion, on each succeeding anniversary
date of this NOTE through and including the eighth (8th)
anniversary date hereof, one quarter (1/4) of the then
outstanding principal balance of this NOTE shall be forgiven
on each such date.

b.       In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on each
anniversary date of this NOTE, all accrued interest shall be
forgiven on such date.

c.       In the event that EMPLOYEE dies or becomes permanently
disabled any outstanding principal balance of this NOTE and
all accrued interest shall be forgiven on such date.

d.       In the event of any such forgiveness of principal and/or
interest, BORROWER shall be responsible for all taxes
related thereto.

8.       Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to personal
jurisdiction in any court in San Mateo County, California.

9.       Successors.

This NOTE shall be binding upon and share inure to the benefit of the
parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

3

Effective as of the date set forth above.

BORROWER:

/s/ David Morgans
------------------------------
David Morgans, Ph.D.

/s/ Sandra Morgans
------------------------------
Sandra Morgans

ACCEPTED AND ACKNOWLEDGED:

LENDER:

CYTOKINETICS, INC., a Delaware corporation

By: /s/ James Sabry
---------------------------------------
James Sabry, Ph.D., M.D. President & CEO

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

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

4

Exhibit 10.35

PROMISSORY NOTE

South San Francisco, California                                     $150,000.00

October 18,2000

FOR VALUE RECEIVED, the undersigned David Morgans ("EMPLOYEE") and Sandra
Morgans, (collectively, "BORROWER") hereby promises to pay to the order of
Cytokinetics, Inc., a Delaware corporation ("LENDER" also known as
"Cytokinetics") at 280 East Grand Avenue, South San Francisco, California (or at
such other address as the holder of this NOTE may designate by notice to
BORROWER), in lawful money of the United States of America, the sum of One
Hundred Fifty Thousand Dollars ($150,000.00), as set forth below.

1.       Definitions.

a.       "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

b.       "APPLICABLE FEDERAL RATE" shall mean the monthly long-term
applicable Federal or other rate (as defined in the CODE) as
of the date of the occurrence of this NOTE.

c.       "DUE DATE" shall mean the earliest of any of the following:

(i)      thirty (30) days after TERMINATION OF EMPLOYMENT of
EMPLOYEE; or

(ii)     October 18, 2009, provided that if BORROWER is unable
to repay this NOTE at such time, LENDER in its
discretion shall consider extending the DUE DATE.

d.       "TERMINATION OF EMPLOYMENT" shall mean the voluntary or
involuntary termination of EMPLOYEE'S employment relationship
with LENDER for any reason or no reason, with or without
cause.

2.       Payments.

a.       Interest on the unpaid principal balance of this NOTE shall
accrue at the APPLICABLE FEDERAL RATE, compounded monthly,
commencing on the date hereof.

b.       No payment of principal or interest shall be due and payable
until the DUE DATE, at which time all accrued interest on the
principal balance of this NOTE shall be due and payable.

Page 1

c.       All payments shall be applied first against accrued interest,
and secondly against principal.

3.       Prepayment.

BORROWER may prepay all or any portion of this NOTE and the accrued
interest without penalty or acceleration of the DUE DATE of this NOTE.

4.       Unsecured Note.

This NOTE is unsecured.

5.       Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any payment
when the same is due, LENDER shall be entitled to recover from BORROWER
all costs of effecting collection of the same, including reasonable
attorneys' fees. Unpaid principal and interest subject to collection
shall bear interest at the maximum rate allowed under California law
for nonexempt lenders.

6.       Termination.

The obligations of BORROWER hereunder shall terminate upon the
indefeasible payment in full by BORROWER of all of its obligations
evidenced by this NOTE.

7.       Forgiveness of NOTE and/or Accrued Interest.

a.       In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on the
fifth (5th) anniversary date of this NOTE, one quarter (1/4)
of the then outstanding principal balance of this NOTE shall
be forgiven on such date. Thereafter, in the event EMPLOYEE
remains an employee in good standing of LENDER, as determined
in LENDER'S sole discretion, on each succeeding anniversary
date of this NOTE through and including the eighth (8th)
anniversary date hereof, one quarter (1/4) of the then
outstanding principal balance of this NOTE shall be forgiven
on each such date.

b.       In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on each
anniversary date of this NOTE, all accrued interest shall be
forgiven on such date.

c.       In the event that EMPLOYEE dies or becomes permanently
disabled, any outstanding principal balance of this NOTE and
all accrued interest shall be forgiven on such date.

2

d.       In the event of any such forgiveness of principal and/or
interest, BORROWER shall be responsible for all taxes related
thereto.

8.       Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to personal
jurisdiction in any court in San Mateo County, California.

9.       Successors.

This NOTE shall be binding upon and share inure to the benefit of the
parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

Effective as of the date set forth above.

BORROWER:

/s/ David Morgans
------------------------------------
David Morgans, Ph.D.

/s/ Sandra Morgans
------------------------------------
Sandra Morgans, Ph.D.

ACCEPTED AND ACKNOWLEDGED:

LENDER:

CYTOKINETICS, INC., a Delaware corporation

By: /s/ Lauren L. Stevens
--------------------------------
Name:  Lauren L. Stevens, Ph.D.
Title: Vice President, Intellectual Property &           [SEAL]
Legal Affairs

3

By: /s/ Don Oestreicher
---------------------------
Name: Don Oestreicher
Title: Vice President, Informatics Engineering

4

Exhibit 10.36

PROMISSORY NOTE

South San Francisco, California                                          $82,600

July 12, 2002

FOR VALUE RECEIVED, the undersigned David Morgans ("BORROWER") hereby
promises to pay to the order of Cytokinetics, Incorporated, a Delaware
corporation ("LENDER" also known as "Cytokinetics") at 280 East Grand Avenue,
South San Francisco, California (or at such other address as the holder of this
NOTE may designate by notice to BORROWER), in lawful money of the United States
of America, the sum of Eighty Two Thousand Six Hundred Dollars ($82,600), as set
forth below.

1.     Definitions.

a.       "INTEREST RATE" shall mean the PRIME RATE plus 1%,
which sum is equal to 5.75% per annum.

b.       "SHARES" shall mean the options to purchase 137,666
shares of Common Stock of the LENDER presently held
by BORROWER and the shares of Common Stock of the
LENDER to be acquired by BORROWER upon exercise of
such options that will secure payment hereunder.

c.       "DUE DATE" shall mean the earliest of any of the
following:

(i)    the sale, conveyance, alienation, assignment,
pledge, grant of any lien or other transfer by
BORROWER of any of the SHARES without the
prior written consent of the LENDER;

(ii)   ninety (90) days after TERMINATION OF
EMPLOYMENT;

(iii)  eighteen (18) months after a LIQUIDITY EVENT;
or

(iv)   such earlier date as may be required by LENDER
upon acceleration of the DUE DATE in
accordance with Section 5 of this NOTE.

d.       "TERMINATION OF EMPLOYMENT" shall mean the voluntary
or involuntary termination of BORROWER's employment
relationship with LENDER for any reason or no reason,
with or without cause.

e.       "LIQUIDITY EVENT" shall mean (i) an acquisition of
the LENDER in which the stockholders of the LENDER
receive cash or publicly traded securities in
exchange for their shares of stock of the LENDER, or
(ii) the

1

first public offering by the LENDER of shares of its
capital stock pursuant to a registration statement on
Form S-1 under the Securities Act of 1933.

f.       "PRIME RATE" shall mean an interest rate equal to the
interest rate announced by the Federal Reserve Bank
of San Francisco as its prime rate as of the date of
this NOTE.

2.     Payments.

a.       Commencing on the date hereof, interest on the unpaid
principal balance of this NOTE shall accrue at the
INTEREST RATE.

b.       The NOTE shall be repayable according to the
following schedule:

(i)    On the first anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(ii)   On the second anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(iii)  20% of the original principal balance of this
NOTE on the third anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(iv)   20% of the original principal balance of this
NOTE on the fourth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(v)    20% of the original principal balance of this
NOTE on the fifth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date; and

(vi)   40% of the original principal balance of this
NOTE on the sixth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date.

Notwithstanding the foregoing, all principal and
accrued interest on the principal balance of this
NOTE shall be due and payable on the DUE DATE.

g.       All payments shall be applied first against accrued
interest, and secondly against principal.

3.     Prepayment.

2

BORROWER may prepay all or any portion of the principal on this NOTE
and the accrued interest without penalty or acceleration of the DUE
DATE of this NOTE.

4.     Security/Insurance.

This NOTE is secured by a pledge of the SHARES under the terms of a
SECURITY AGREEMENT, substantially in the form attached hereto as
Exhibit A (the "SECURITY AGREEMENT") and dated as of even date hereof,
and is subject to all of the provisions thereof.

5.     Acceleration of DUE DATE.

The entire unpaid principal of this NOTE and accrued interest thereon
shall at the election of the LENDER, become immediately due and payable
upon the occurrence of any of the following, irrespective of the DUE
DATE as otherwise defined in this NOTE:

a.       BORROWER fails to make any payment when the same is
due;

b.       BORROWER fails to perform or observe any of the
covenants or obligations of BORROWER set forth in
this NOTE or contained in the SECURITY AGREEMENT for
a period of ten (10) days after written notice
thereof from LENDER;

c.       A bankruptcy or insolvency proceeding is instituted
by or against BORROWER, or if a receiver is appointed
for the property of BORROWER; or

d.       BORROWER makes an assignment for the benefit of
creditors.

6.     Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any payment
when the same is due, LENDER shall be entitled to recover from BORROWER
all costs of effecting collection of the same, including reasonable
attorneys' fees. Unpaid principal and interest subject to collection
shall bear interest at the maximum rate allowed under California law
for nonexempt lenders.

7.     Certification of BORROWER.

So long as the NOTE shall remain outstanding, BORROWER shall not sell,
assign, transfer, convey, pledge, or grant a lien against the SHARES.
In the event of any involuntary (by act of law or otherwise) sale,
conveyance, pledge, lien, alienation or other transfer by BORROWER of
any of the SHARES, BORROWER shall immediately notify LENDER.

3

BORROWER also warrants that, upon the written request of LENDER,
BORROWER shall deliver to LENDER a written confirmation that a sale,
conveyance, pledge, lien, alienation or other transfer of the SHARES
has not occurred.

8.     Full Recourse.

The holder of this NOTE shall have full recourse against the BORROWER,
and shall not be required to proceed against the collateral securing
the NOTE pursuant to the SECURITY AGREEMENT in the event of the
occurrence of an event set forth in Section 5 of this NOTE.

9.     No Right to Continued Employment.

Nothing contained herein shall be construed to confer on BORROWER any
right to continued employment with the LENDER.

10.    Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to personal
jurisdiction in any court in San Mateo County, California.

11.    Successors.

This NOTE shall be binding upon and shall inure to the benefit of the
parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

Effective as of the date set forth above.

BORROWER:

/s/ David Morgans
__________________________________________

Name:         David Morgans Jr.
_____________________________________

4

ACCEPTED AND ACKNOWLEDGED:

LENDER:

CYTOKINETICS, INCORPORATED, a Delaware corporation

By: /s/ James Sabry
-------------------------------------
Name: 
----------------------------------
Title: 
---------------------------------
By: /s/ Robert Blum
------------------------------------
Name: Robert I. Blum
----------------------------------
Title: SVP Corp Dev & Finance & CFO
---------------------------------
5

Exhibit 10.37

PROMISSORY NOTE

South San Francisco, California                                         $215,000

July 12, 2002

FOR VALUE RECEIVED, the undersigned Jay Trautman ("BORROWER") hereby
promises to pay to the order of Cytokinetics, Incorporated, a Delaware
corporation ("LENDER" also known as "Cytokinetics") at 280 East Grand Avenue,
South San Francisco, California (or at such other address as the holder of this
NOTE may designate by notice to BORROWER), in lawful money of the United States
of America, the sum of Two Hundred Fifteen Thousand Dollars ($215,000), as set
forth below.

1.     Definitions.

a.       "INTEREST RATE" shall mean the PRIME RATE plus 1%,
which sum is equal to 5.75% per annum.

b.       "SHARES" shall mean the options to purchase 125,000
shares of Common Stock of the LENDER presently held
by BORROWER and the shares of Common Stock of the
LENDER to be acquired by BORROWER upon exercise of
such options that will secure payment hereunder.

c.       "DUE DATE" shall mean the earliest of any of the
following:

(i)    the sale, conveyance, alienation, assignment,
pledge, grant of any lien or other transfer by
BORROWER of any of the SHARES without the
prior written consent of the LENDER;

(ii)   ninety (90) days after TERMINATION OF
EMPLOYMENT;

(iii)  eighteen (18) months after a LIQUIDITY EVENT;
or

(iv)   such earlier date as may be required by LENDER
upon acceleration of the DUE DATE in
accordance with Section 5 of this NOTE.

d.       "TERMINATION OF EMPLOYMENT" shall mean the voluntary
or involuntary termination of BORROWER's employment
relationship with LENDER for any reason or no reason,
with or without cause.

e.       "LIQUIDITY EVENT" shall mean (i) an acquisition of
the LENDER in which the stockholders of the LENDER
receive cash or publicly traded securities in
exchange for their shares of stock of the LENDER, or
(ii) the

1

first public offering by the LENDER of shares of its
capital stock pursuant to a registration statement on
Form S-1 under the Securities Act of 1933.

f.       "PRIME RATE" shall mean an interest rate equal to the
interest rate announced by the Federal Reserve Bank
of San Francisco as its prime rate as of the date of
this NOTE.

2.     Payments.

a.       Commencing on the date hereof, interest on the unpaid
principal balance of this NOTE shall accrue at the
INTEREST RATE.

b.       The NOTE shall be repayable according to the
following schedule:

(i)    On the first anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(ii)   On the second anniversary of this NOTE, all
interest accrued under this NOTE to such date;

(iii)  20% of the original principal balance of this
NOTE on the third anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(iv)   20% of the original principal balance of this
NOTE on the fourth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date;

(v)    20% of the original principal balance of this
NOTE on the fifth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date; and

(vi)   40% of the original principal balance of this
NOTE on the sixth anniversary of this NOTE,
plus all interest accrued under this NOTE to
such date.

Notwithstanding the foregoing, all principal and
accrued interest on the principal balance of this
NOTE shall be due and payable on the DUE DATE.

g.       All payments shall be applied first against accrued
interest, and secondly against principal.

3.     Prepayment.

2

BORROWER may prepay all or any portion of the principal on this NOTE
and the accrued interest without penalty or acceleration of the DUE
DATE of this NOTE.

4.     Security/Insurance.

This NOTE is secured by a pledge of the SHARES under the terms of a
SECURITY AGREEMENT, substantially in the form attached hereto as
Exhibit A (the "SECURITY AGREEMENT") and dated as of even date hereof,
and is subject to all of the provisions thereof.

5.     Acceleration of DUE DATE.

The entire unpaid principal of this NOTE and accrued interest thereon
shall at the election of the LENDER, become immediately due and payable
upon the occurrence of any of the following, irrespective of the DUE
DATE as otherwise defined in this NOTE:

a.       BORROWER fails to make any payment when the same is
due;

b.       BORROWER fails to perform or observe any of the
covenants or obligations of BORROWER set forth in
this NOTE or contained in the SECURITY AGREEMENT for
a period of ten (10) days after written notice
thereof from LENDER;

c.       A bankruptcy or insolvency proceeding is instituted
by or against BORROWER, or if a receiver is appointed
for the property of BORROWER; or

d.       BORROWER makes an assignment for the benefit of
creditors.

6.     Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any payment
when the same is due, LENDER shall be entitled to recover from BORROWER
all costs of effecting collection of the same, including reasonable
attorneys' fees. Unpaid principal and interest subject to collection
shall bear interest at the maximum rate allowed under California law
for nonexempt lenders.

7.     Certification of BORROWER.

So long as the NOTE shall remain outstanding, BORROWER shall not sell,
assign, transfer, convey, pledge, or grant a lien against the SHARES.
In the event of any involuntary (by act of law or otherwise) sale,
conveyance, pledge, lien, alienation or other transfer by BORROWER of
any of the SHARES, BORROWER shall immediately notify LENDER.

3

BORROWER also warrants that, upon the written request of LENDER,
BORROWER shall deliver to LENDER a written confirmation that a sale,
conveyance, pledge, lien, alienation or other transfer of the SHARES
has not occurred.

8.     Full Recourse.

The holder of this NOTE shall have full recourse against the BORROWER,
and shall not be required to proceed against the collateral securing
the NOTE pursuant to the SECURITY AGREEMENT in the event of the
occurrence of an event set forth in Section 5 of this NOTE.

9.     No Right to Continued Employment.

Nothing contained herein shall be construed to confer on BORROWER any
right to continued employment with the LENDER.

10.    Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to personal
jurisdiction in any court in San Mateo County, California.

11.    Successors.

This NOTE shall be binding upon and shall inure to the benefit of the
parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

Effective as of the date set forth above.

BORROWER:

/s/ Jay Trautman
__________________________________________

Name:           Jay Trautman
_____________________________________

4

ACCEPTED AND ACKNOWLEDGED:

LENDER:

CYTOKINETICS, INCORPORATED, a Delaware corporation

By: /s/ James Sabry
-------------------------------------
Name: 
----------------------------------
Title: 
---------------------------------
By: /s/ Robert Blum
------------------------------------
Name: Robert I. Blum
----------------------------------
Title: SVP. Corp. Dev. & Finance & CFO
---------------------------------

5

EXHIBIT A

SECURITY AGREEMENT

This Security Agreement is made as of July 12, 2002 between
Cytokinetics, Incorporated, a Delaware corporation ("Pledgee"), Jay Trautman
("Pledgor"), and Secretary of Pledgee, as the agent of Pledgee and holder of the
Collateral, as defined below, pledged hereunder ("Pledgeholder").

Recitals

Pursuant to the Promissory Note dated July 12, 2002 (the "Note"),
between Pledgor and Pledgee, the Pledgee has loaned to Pledgor the principal
amount of $215,000 (the "Loan").

NOW, THEREFORE, it is agreed as follows:

1. Creation and Description of Security Interest. In consideration of
the Loan, Pledgor, pursuant to the California Uniform Commercial Code, hereby
pledges 125,000 shares of Common Stock of the Pledgee presently owned by Pledgor
which shall to the maximum extent permitted consist at all times of vested
shares (i.e. shares that are not subject to Pledgee's repurchase option) (herein
sometimes referred to as the "Collateral") and herewith delivers any
certificates currently held by Pledgor representing such Collateral to
Pledgeholder, who shall hold said certificates on behalf of Pledgee subject to
the terms and conditions of this Security Agreement.

The Collateral (together with an executed blank stock assignment or
assignments in substantially the form attached hereto as Annex 1) shall be held
by Pledgeholder on behalf of Pledgee as security for the repayment of the Note,
and any extensions or renewals thereof, to be executed by Pledgor pursuant to
the terms of the Note, and Pledgeholder shall not sell, assign, transfer,
pledge, encumber or dispose of such Collateral except in accordance with the
provisions of this Security Agreement.

2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

(a) Payment of Indebtedness. Pledgor will pay the principal
sum of the Note secured hereby, and interest thereon, at the time and in the
manner provided in the Note.

(b) Encumbrances. The Collateral is free of all other adverse
claims, encumbrances, defenses and liens (other than restrictions on transfer
imposed by applicable securities laws), except for (i) Pledgee's rights to
repurchase the Collateral in connection with the termination of Pledgor's
service relationship with the Pledgee, (ii) the pledge of the Collateral
hereunder as security for payment of the Note, and (iii) the pledge of the
Collateral as security for payment of other obligations between the Pledgor and
Pledgee, and Pledgor will not further encumber the Collateral without the prior
written consent of Pledgee.

3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Collateral pledged
hereunder.

4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Collateral originally pledged hereunder. In the event
of substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Collateral" in this Security Agreement shall include the substituted investment
property of Pledgor as a result thereof.

5. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the pledged Collateral, such rights and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Collateral then
held by Pledgeholder shall be immediately delivered to Pledgeholder, to be held
under the terms of this Security Agreement in the same manner as the Collateral
pledged.

6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

(a) Payment of principal or interest on the Note becomes
delinquent; or

(b) Pledgor fails to perform or observe any of the covenants
or obligations of Pledgor set forth in the Note or contained in this Security
Agreement for a period of 10 days after written notice thereof from Pledgee; or

(c) A bankruptcy or insolvency proceeding is instituted by or
against Pledgor, or if a receiver is appointed for the property of Pledgor; or

(d) Pledgor makes an assignment for the benefit of creditors.

In the case of a default, as set forth above, Pledgee shall have the
right to accelerate payment of the Note, and Pledgee shall thereafter be
entitled to pursue its remedies under the California Uniform Commercial Code.

7. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
assign, transfer, withdraw, pledge, substitute or otherwise dispose of all or
any part of the Collateral without the prior written consent of Pledgee.

8. Term. The within pledge of Collateral shall continue until the
payment of all indebtedness secured hereby.

-2-

9. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against Pledgor, or if a receiver is appointed
for the property of Pledgor, or if Pledgor makes an assignment for the benefit
of creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.

10. Pledgeholder Liability.

(a) Pledgeholder shall not be liable to any party for any of
its acts, or omissions to act, as Pledgeholder unless Pledgeholder is proved to
have acted in bad faith. Any act done or omitted pursuant to the advice of legal
counsel, other than an act or omission involving gross or willful negligence,
shall be deemed to be done or omitted in good faith.

(b) Pledgeholder shall be entitled to employ such legal
counsel and other experts as Pledgeholder may deem necessary to properly advise
Pledgeholder in connection with its obligations hereunder, and Pledgeholder may
rely upon the advice of such counsel. Such counsel's reasonable fees and costs
shall be borne 50% by Pledgor and 50% by Pledgee.

(c) It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by Pledgeholder hereunder, Pledgeholder is authorized and
directed to retain in Pledgeholder's possession as agent of Pledgee without
liability to anyone all or any part of said securities until such disputes shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of arbitration or of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but Pledgeholder shall be under no duty whatsoever to institute or
defend any such proceedings.

In addition, upon any dispute Pledgeholder should be entitled to engage
legal counsel, one-half of whose fees and expenses shall be borne by Pledgor and
one-half by Pledgee.

11. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

12. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

13. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.

-3-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

"PLEDGOR"                                By:  ____________________________
Name: ______________________

____________________________
Address

"PLEDGEE"                                     Cytokinetics, Incorporated,
a Delaware corporation

By: ________________________

Title: _____________________

"PLEDGEHOLDER"
____________________________
Secretary of Pledgee

-4-

ANNEX 1

STOCK POWER AND ASSIGNMENT

SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Security Agreement
dated as of ___________________, 200__ the undersigned hereby sells, assigns and
transfers unto ___________________________________________________, shares of
the Common Stock of Cytokinetics, Incorporated, a Delaware corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. _____ delivered herewith, and does hereby
irrevocably constitute the Secretary of the Company as attorney-in-fact, with
full power of substitution, to transfer said stock on the books of the Company.

Dated: ________________________, 20____

____________________________
(Signature)

____________________________
(Print Name)

THIS STOCK POWER MAY ONLY BE UTILIZED IN CONNECTION WITH THE PROVISIONS OF THE
SECURITY AGREEMENT DATED AS OF ____________, 200__, BY AND BETWEEN THE SIGNATORY
HERETO AND THE COMPANY.

-5-

Exhibit 10.38

PROMISSORY NOTE

South San Francisco, California                                      $200,000.00
November 12, 2001

FOR VALUE RECEIVED, the undersigned James H. Sabry ("EMPLOYEE") and Sandra J.
Spence, (collectively, "BORROWER") hereby promises to pay to the order of
Cytokinetics, Inc., a Delaware corporation ("LENDER" also known as
"Cytokinetics") at 280 East Grand Avenue, South San Francisco, California (or at
such other address as the holder of this NOTE may designate by notice to
BORROWER), in lawful money of the United States of America, the sum of Two
Hundred Thousand Dollars ($200,000.00), as set forth below:

1.     Definitions.

a.    "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

b.    "APPLICABLE FEDERAL RATE" shall mean the monthly long-term
applicable Federal or other rate (as defined in the CODE) as
the date of the occurrence of this NOTE.

c.    "DUE DATE" shall mean the earliest of any of the following:

i.    thirty (30) days after TERMINATION OF EMPLOYMENT of
EMPLOYEE; or

ii.   November 12, 2010, provided that if BORROWER is
unable to repay this NOTE at such time, LENDER in
its discretion shall consider extending the DUE
DATE.

d.    "TERMINATION OF EMPLOYMENT" shall mean the voluntary or
involuntary termination of EMPLOYEE'S employment relationship
with LENDER for any reason or no reason, with or without
cause.

2.     Payments.

a.    Interest on the unpaid principal balance of this NOTE shall
accrue at the APPLICABLE FEDERAL RATE, compounded monthly,
commencing on the date hereof.

b.    No payment of principal or interest shall be due and payable
until the DUE DATE, at which time all accrued interest on the
principal balance of this NOTE shall be due and payable.

c.    All payments shall be applied first against accrued interest,
and secondly against principal.

1

3.     Prepayment.

BORROWER may prepay all or any portion of this NOTE and the accrued
interest without penalty or acceleration of the DUE DATE of this
NOTE.

4.     Unsecured Note.

This NOTE is unsecured.

5.     Collection Costs Borne by BORROWER.

In the event of any failure on the part of BORROWER to make any
payment when the same is due, LENDER shall be entitled to recover
from BORROWER all costs of effecting collection of the same,
including reasonable attorneys' fees. Unpaid principal and interest
subject to collection shall bear interest at the maximum rate
allowed under California law for nonexempt lenders.

6.     Termination.

The obligation of BORROWER hereunder shall terminate upon the
indefeasible payment in full by BORROWER of all of its obligations
evidenced by this NOTE.

7.     Forgiveness of NOTE and/or Accrued Interest.

a.    In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on the
fifth (5th) anniversary date of this NOTE, one quarter (1/4)
of the then outstanding principal balance of this NOTE shall
be forgiven on such date. Thereafter, in the event EMPLOYEE
remains an employee in good standing of LENDER, as determined
in LENDER'S sole discretion, on each succeeding anniversary
date of this NOTE through and including the eighth (8th)
anniversary date hereof, one quarter (1/4) of the then
outstanding principal balance of this NOTE shall be forgiven
on each such date.

b.    In the event EMPLOYEE remains an employee in good standing of
LENDER, as determined in LENDER'S sole discretion, on each
anniversary date of this NOTE, all accrued interest shall be
forgiven on such date.

c.    In the event that EMPLOYEE dies or becomes permanently
disabled, any outstanding principal balance of this NOTE and
all accrued interest shall be forgiven on such date.

d.    In the event of any such forgiveness of principal and/or
interest, BORROWER shall be responsible for all taxes related
thereto.

2

8.     Governing Law.

This NOTE shall be governed by and construed in accordance with the
internal laws of the State of California. BORROWER consents to
personal jurisdiction in any court in San Mateo County, California.

9.     Successors.

This NOTE shall be binding upon and share inure to the benefit of
the parties hereto and their respective representatives, heirs,
administrators, successors and assigns.

Effective as of the date set forth above.

BORROWER:

/s/ James H. Sabry
-----------------------
James H. Sabry

/s/ Sandra J. Spence
-----------------------
Sandra J. Spence

ACCEPTED AND ACKNOWLEDGED:

LENDER

CYTOKINETICS, INC., a Delaware corporation

By:    /s/ Robert I. Blum
--------------------------------
Name:  Robert I. Blum
Title: Senior Vice President,
Corporate Development & Finance,
Chief Financial Officer

3

EXHIBIT C

LOAN

The Company is offering you a loan for up to $200,000. The loan will be interest
free and will also be forgivable over a nine-year period of time during your
employment with the Company.

At the end of the fifth year one-quarter of the loan is forgiven; at the end of
the sixth, seventh and eight year one-quarter of the loan on each of those years
will be forgiven. Should you decide to voluntarily terminate your position with
the Company prior to the end of your fifth year of employment at Cytokinetics,
you will be responsible for reimbursing the Company for your full loan upon
departure from the Company. If you voluntarily leave anytime during the sixth,
seventh or eighth year, the amount of the loan minus the forgiven portion is due
to the Company upon your departure.

You are required to pay imputed taxes as regular income on the interest rate
(set at Prime Rate) of the interest "free" loan. At the end of the fifth, sixth,
seventh and eighth year you will be required to pay taxes only on the forgivable
portion of the loan (one-quarter of the loan each year).

Exhibit 10.39

CYTOKINETICS, INCORPORATED

CASH BONUS AGREEMENT

This Cash Bonus Agreement (the "Agreement") is entered into effective
as of SEPTEMBER 1, 2002(the "Effective Date"), by and between Cytokinetics,
Incorporated, a Delaware corporation (the "Company"), and Robert I. Blum (the
"Employee").

1.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $7,000, less applicable withholding taxes, on June
30, 2003, (ii) $7,000, less applicable withholding taxes, on June 30, 2004,
(iii) $27,000, less applicable withholding taxes, on June 30, 2005, (iv) $25,000
less applicable withholding taxes, on June 30, 2006, (v) $24,000, less
applicable withholding taxes, on June 30, 2007 and (vi) $3,000, less applicable
withholding taxes, on June 30, 2008 (collectively, the "Cash Bonus"), provided
that Employee remains an employee in good standing of the Company, as determined
in the Company's sole discretion, on each such date.

2.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

3.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

4.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements whether written or oral;
provided, however, that this Agreement is meant to be in addition to any other
compensation arrangements Employee may have with the Company. No waiver,
alteration, or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by the parties hereto or their duly
authorized representatives. Neither this Agreement nor any rights of Employee
hereunder may be assigned or transferred by Employee.

5.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: /s/ James Sabry
-------------------------------------
Title: 
----------------------------------
EMPLOYEE

/s/ Robert Blum
-----------------------------------------
Signature

Robert I. Blum
-----------------------------------------
Name

-2-

Exhibit 10.40

CYTOKINETICS, INCORPORATED

AMENDED AND RESTATED CASH BONUS AGREEMENT

This Amended and Restated Cash Bonus Agreement (the "Agreement") is
entered into effective as of December 1, 2002 (the "Effective Date"), by and
between Cytokinetics, Incorporated, a Delaware corporation (the "Company"), and
Robert I. Blum (the "Employee").

WHEREAS the Company and the Employee entered into a Cash Bonus
Agreement dated as of September 1, 2002 (the "Prior Agreement"); and

WHEREAS the Company and the Employee desire to amend and restated the
Prior Agreement in its entirety with this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
agree as follows:

1.       Amendment and Restatement. The Company and the Employee hereby
amend and restate the Prior Agreement in its entirety with this Agreement.

2.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $9000, less applicable withholding taxes, on
December 15, 2003 (ii) $9,000, less applicable withholding taxes, on June 30,
2004, (iii) $40,100, less applicable withholding taxes, on June 30, 2005, (iv)
$38,300, less applicable withholding taxes, on June 30, 2006 (v) $36,500, less
applicable withholding taxes, on June 30, 2007 and (vi) $3,600, less applicable
withholding taxes, on June 30, 2008 (collectively, the "Cash Bonus"), provided
that Employee remains an employee in good standing of the Company, as determined
in the Company's sole discretion, on each such date.

3.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

4.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

5.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements, including, without
limitation, the Prior Agreement, whether written or oral; provided, however,
that this Agreement is meant to be in addition to any other compensation
arrangements Employee may have with the Company. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by the parties hereto or their duly authorized
representatives. Neither this Agreement nor any rights of Employee hereunder may
be assigned or transferred by Employee.

6.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

[remainder of this page intentionally left blank]

-2-

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: _____________________________________

Title: __________________________________

EMPLOYEE

_________________________________________
Signature

_________________________________________
Name

-3-

Exhibit 10.41

CYTOKINETICS, INCORPORATED

CASH BONUS AGREEMENT

This Cash Bonus Agreement (the "Agreement") is entered into effective
as of SEPTEMBER 1, 2002 (the "Effective Date"), by and between Cytokinetics,
Incorporated, a Delaware corporation (the "Company"), and David Morgans (the
"Employee").

1.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $5,000, less applicable withholding taxes, on June
30, 2003, (ii) $5,000, less applicable withholding taxes, on June 30, 2004,
(iii) $22,000 less applicable withholding taxes, on June 30, 2005, (iv) $21,000,
less applicable withholding taxes, on June 30, 2006, (v) $20,000, less
applicable withholding taxes, on June 30, 2007 and (vi) $2,000, less applicable
withholding taxes, on June 30, 2008 (collectively, the "Cash Bonus"), provided
that Employee remains an employee in good standing of the Company, as determined
in the Company's sole discretion, on each such date.

2.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

3.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

4.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements whether written or oral;
provided, however, that this Agreement is meant to be in addition to any other
compensation arrangements Employee may have with the Company. No waiver,
alteration, or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by the parties hereto or their duly
authorized representatives. Neither this Agreement nor any rights of Employee
hereunder may be assigned or transferred by Employee.

5.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: /s/ James Sabry
-------------------------------------
Title: 
----------------------------------
EMPLOYEE

/s/ David Morgans
-----------------------------------------
Signature

David Morgans, Jr.
-----------------------------------------
Name

-2-

Exhibit 10.42

CYTOKINETICS, INCORPORATED

AMENDED AND RESTATED CASH BONUS AGREEMENT

This Amended and Restated Cash Bonus Agreement (the "Agreement") is
entered into effective as of December 1, 2003 (the "Effective Date"), by and
between Cytokinetics, Incorporated, a Delaware corporation (the "Company"), and
David Morgans (the "Employee").

WHEREAS the Company and the Employee entered into a Cash Bonus
Agreement dated as of September 1, 2002 (the "Prior Agreement"); and

WHEREAS the Company and the Employee desire to amend and restated the
Prior Agreement in its entirety with this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
agree as follows:

1.       Amendment and Restatement. The Company and the Employee hereby
amend and restate the Prior Agreement in its entirety with this Agreement.

2.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $7,400.00, less applicable withholding taxes, on
December 15, 2003, (ii) $7,400.00, less applicable withholding taxes, on June
30, 2004, (iii) $33,100.00, less applicable withholding taxes, on June 30, 2005,
(iv) $31,600.00, less applicable withholding taxes, on June 30, 2006, (v)
$30,200.00, less applicable withholding taxes, on June 30, 2007 and (vi)
$3,000.00, less applicable withholding taxes, on June 30, 2008 (collectively,
the "Cash Bonus"), provided that Employee remains an employee in good standing
of the Company, as determined in the Company's sole discretion, on each such
date.

3.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

4.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

5.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements, including, without
limitation, the Prior Agreement, whether written or oral; provided, however,
that this Agreement is meant to be in addition to any other compensation
arrangements Employee may have with the Company. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by the parties

hereto or their duly authorized representatives. Neither this Agreement nor any
rights of Employee hereunder may be assigned or transferred by Employee.

6.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

[remainder of this page intentionally left blank]

-2-

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: _____________________________________

Title: __________________________________

EMPLOYEE

_________________________________________
Signature

_________________________________________
Name

-3-

Exhibit 10.43

CYTOKINETICS, INCORPORATED

CASH BONUS AGREEMENT

This Cash Bonus Agreement (the "Agreement") is entered into effective
as of SEPTEMBER 1, 2002 (the "Effective Date"), by and between Cytokinetics,
Incorporated, a Delaware corporation (the "Company"), and Jay Trautman (the
"Employee").

1.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $13,000, less applicable withholding taxes, on
June 30, 2003, (ii) $13,000, less applicable withholding taxes, on June 30,
2004, (iii) $55,000, less applicable withholding taxes, on June 30, 2005, (iv)
$53,000, less applicable withholding taxes, on June 30, 2006, (v) $51,000, less
applicable withholding taxes, on June 30, 2007 and (vi) $5,000, less applicable
withholding taxes, on June 30, 2008 (collectively, the "Cash Bonus"), provided
that Employee remains an employee in good standing of the Company, as determined
in the Company's sole discretion, on each such date.

2.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

3.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

4.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements whether written or oral;
provided, however, that this Agreement is meant to be in addition to any other
compensation arrangements Employee may have with the Company. No waiver,
alteration, or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by the parties hereto or their duly
authorized representatives. Neither this Agreement nor any rights of Employee
hereunder may be assigned or transferred by Employee.

5.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: /s/ James Sabry
-------------------------------------
Title: 
----------------------------------
EMPLOYEE

/s/ Jay Trautman
-----------------------------------------
Signature

Jay Trautman
-----------------------------------------
Name

-2-

Exhibit 10.44

CYTOKINETICS, INCORPORATED

AMENDED AND RESTATED CASH BONUS AGREEMENT

This Amended and Restated Cash Bonus Agreement (the "Agreement") is
entered into effective as of December 1, 2003 (the "Effective Date"), by and
between Cytokinetics, Incorporated, a Delaware corporation (the "Company"), and
Jay Trautman (the "Employee")

WHEREAS the Company and the Employee entered into a Cash Bonus
Agreement dated as of September 1, 2002 (the "Prior Agreement"); and

WHEREAS the Company and the Employee desire to amend and restated the
Prior Agreement in its entirety with this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
agree as follows:

1.       Amendment and Restatement. The Company and the Employee hereby
amend and restate the Prior Agreement in its entirety with this Agreement.

2.       Cash Bonus. The Company hereby agrees to pay Employee cash
bonuses in the amount of: (i) $19,300, less applicable withholding taxes, on
December 15, 2003, (ii) $19,300 less applicable withholding taxes, on June 30,
2004, (iii) $86,200, less applicable withholding taxes, on June 30, 2005 (iv)
$82,300, less applicable withholding taxes, on June 30, 2006, (v) $78,500, less
applicable withholding taxes, on June 30, 2007 and (vi) $7,700, less applicable
withholding taxes, on June 30, 2008 (collectively, the "Cash Bonus"), provided
that Employee remains an employee in good standing of the Company, as determined
in the Company's sole discretion, on each such date.

3.       No Right To Continued Employment. Nothing contained herein
shall be construed to confer on Employee any right to continued employment with
the Company. The Company or Employee may terminate the employment relationship
of Employee with the Company for any reason or no reason, with or without cause,
and after such termination Employee shall not have any right to receive any
further payments of Cash Bonus remaining unpaid at such time.

4.       Taxes. Employee shall be responsible for all taxes related to
the Cash Bonus.

5.       Integration; No Assignment. This Agreement represents the
entire agreement and understanding between the parties as to the Cash Bonus, and
supersedes all prior or contemporaneous agreements, including, without
limitation, the Prior Agreement, whether written or oral; provided, however,
that this Agreement is meant to be in addition to any other compensation
arrangements Employee may have with the Company. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by the parties hereto or their duly authorized
representatives. Neither this Agreement nor any rights of Employee hereunder may
be assigned or transferred by Employee.

6.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, but not the choice
of law rules, of the State of California.

[remainder of this page intentionally left blank]

-2-

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

CYTOKINETICS, INCORPORATED

By: _____________________________________

Title: __________________________________

EMPLOYEE

_________________________________________
Signature

_________________________________________
Name

-3-

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated March 21, 2003, except for note 13 as to which the date is January
21, 2004, relating to the financial statements and our report dated March 21,
2003 relating to the financial statement schedule of Cytokinetics, Incorporated
(a development stage enterprise), which appear in such Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California
January 26, 2004