INTERNEURON PHARMACEUTICALS INC
LICENSE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.117
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>LICENSE AGREEMENT
<TEXT>

<PAGE>
Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.


                               LICENSE AGREEMENT

                                by and between

                            HEAVENLYDOOR.COM, INC.

                                      and

                       INTERNEURON PHARMACEUTICALS, INC

                                     dated

                                 June 14, 2000
<PAGE>

ARTICLE I     DEFINITIONS...................................................1
ARTICLE II    LICENSE; SUBLICENSES..........................................5
    2.1.    License Grant...................................................5
    2.2.    Improvements by Interneuron.....................................5
    2.3.    Sublicenses.....................................................5
ARTICLE III   DEVELOPMENT AND COMMERCIALIZATION.............................5
    3.1.    Exchange of Information.........................................5
    3.2.    Diligence; Development and Commercialization....................6
    3.3.    Regulatory Matters..............................................6
    3.4.    Trademark.......................................................6
    3.5.    Manufacturing...................................................6
    3.6.    Adverse Events..................................................6
    3.7.    Third Party Agreements..........................................6
 ARTICLE IV   CONFIDENTIALITY AND PUBLICITY.................................6
    4.1.    Non-Disclosure and Non-Use Obligations..........................7
    4.2.    Permitted Disclosure of Proprietary Information.................7
 ARTICLE V    PAYMENTS; ROYALTIES AND REPORTS...............................8
    5.1.    License Fee.....................................................8
    5.2.    Milestone Payments..............................................8
    5.3.    Royalties; Royalty Buy-Out Option...............................9
    5.4.    Royalty Buy-Out Option.........................................11
    5.5.    Payments from Sublicensee......................................12
    5.6.    Reports; Payment of Royalty....................................12
    5.7.    Audits.........................................................13
    5.8.    Payment Exchange Rate..........................................14
    5.9.    Tax Withholding................................................14
    5.10.   Interest on Late Payments......................................14
    5.11.   Exchange Controls..............................................14
ARTICLE VI    REPRESENTATIONS AND WARRANTIES...............................15
    6.1.    HDCI Representations and Warranties............................15
    6.2.    Warranty Disclaimer............................................16
    6.3.    Investment Representations.....................................16
    6.4.    Interneuron Representations and Warranties.....................17
ARTICLE VII   PATENT MATTERS...............................................18
    7.1.    Filing, Prosecution and Maintenance of Patent Applications
              or Patents...................................................18
    7.2.    Patent Office Proceedings......................................18
    7.3.    Enforcement and Defense........................................19
    7.4.    Patent Term Extensions and Supplemental Protection
              Certificates.................................................20
ARTICLE VIII  TERM AND TERMINATION.........................................20
    8.1.    Term and Expiration............................................20
    8.2.    Termination by Notice..........................................20
    8.3.    Termination....................................................21
    8.4.    Effect of Expiration or Termination............................22
ARTICLE IX    MISCELLANEOUS................................................23
    9.1.    Force Majeure..................................................23
<PAGE>

    9.2.    Assignment.....................................................23
    9.3.    Severability...................................................23
    9.4.    Notices........................................................23
    9.5.    Applicable Law.................................................24
    9.6.    Dispute Resolution.............................................24
    9.7.    Entire Agreement...............................................24
    9.8.    Independent Contractors........................................25
    9.9.    Waiver.........................................................25
    9.10.   Headings.......................................................25
    9.11.   Counterparts...................................................25

                                       ii
<PAGE>

                               LICENSE AGREEMENT

     THIS LICENSE AGREEMENT effective as of June 14, 2000 ("Effective Date"),
by and between HEAVENLYDOOR.COM, INC. (formerly Procept, Inc.), a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 1180 Avenue of the Americas, Suite 1447, New
York, New York 10036 ("HDCI") and INTERNEURON PHARMACEUTICALS, INC., a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 99 Hayden Avenue, Suite 200, Lexington
Massachusetts  02421 ("Interneuron").

                              W I T N E S S E T H:

     WHEREAS, HDCI is the owner of the Patent Assets and HDCI Know-How, as
defined herein;

     WHEREAS, Interneuron desires to obtain exclusive worldwide license rights,
with a right to grant sublicenses, under the Patent Assets and HDCI Know-How,
and HDCI desires to grant such license to Interneuron, upon the terms and
conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

     Unless specifically set forth to the contrary herein, the following terms,
where used in the singular or plural, shall have the respective meanings set
forth below:

1.1.  "1933 Act" means the Securities Act of 1933, and the rules and regulations
      ----------
      promulgated thereunder, or any successor act, all as the same shall be in
      effect at the time.

1.2.  "Affiliate" shall mean (i) any corporation or business entity of which
      -----------
      more than fifty percent (50%) of the securities or other ownership
      interests representing the equity, the voting stock or general partnership
      interest are owned, controlled or held, directly or indirectly, by a
      Party; (ii) any corporation or business entity which, directly or
      indirectly, owns, controls or holds more than fifty percent (50%) (or the
      maximum ownership interest permitted by law) of the securities or other
      ownership interests representing the equity, voting stock or general
      partnership interest, of a Party or (iii) any corporation or business
      entity of which a Party has the right to acquire, directly or indirectly,
      at least fifty percent (50%) of the securities or other ownership
      interests representing the equity, voting stock or general partnership
      interest thereof.

1.3.  "Business Day" means any day that is not a Saturday or a Sunday or a day
      --------------
      on which the New York Stock Exchange is closed.

1.4.  "Calendar Quarter" shall mean the respective periods of three (3)
      ------------------
      consecutive calendar months ending on March 31, June 30, September 30 and
      December 31.
<PAGE>

1.5.  "Calendar Year" shall mean each successive period of twelve (12) months
      ---------------
      commencing on January 1 and ending on December 31.

1.6.  "Compound" shall mean a condensation polymer of an aromatic sulfonic acid
      ----------
      and an aldehyde or a pharmaceutically acceptable salt or prodrug thereof
      or a derivative, homolog, or analog thereof.

1.7.  "Cost of Goods Sold" shall mean all direct and indirect manufacturing
      --------------------
      costs incurred by Interneuron or its Affiliates specifically allowable to
      and directly attributable to the production of Compound or Product
      calculated in accordance with GAAP.

1.8.  "Effective Date" shall mean the date first above written.
      ----------------

1.9.  "Fair Market Value" shall mean the average closing price for Interneuron
      -------------------
      Stock, as quoted by Nasdaq, for the ten consecutive trading days preceding
      the Election Date.

1.10. "FDA" shall mean the United States Food and Drug Administration and any
      -----
      successor agency having substantially the same functions.

1.11. "First Commercial Sale" shall mean, with respect to Product, the first
      -----------------------
      sale for end use or consumption of such Product in any country in the
      Territory after all required approvals, including marketing and pricing
      approvals, have been granted by the governing health authority of such
      country or, where government approval is not required, the first sale in
      that country in connection with the nationwide introduction of Product in
      that country by Interneuron, its Affiliates or sublicensees.

1.12. "GAAP" means generally accepted accounting principles in the United
       ----
      States.

1.13. "HDCI Know-How" shall mean any and all information and materials,
       -------------
      including but not limited to, discoveries, information, Improvements,
      processes, formulas, data, inventions, know-how and trade secrets,
      patentable or otherwise, (other than Patent Assets) which

          (a)  relate to Compound or Product; and

          (b)  which are in HDCI's possession or control and as to which HDCI
               has the right to license or sublicense to third parties, and are
               necessary or useful in connection with the rights granted and
               activities contemplated under this Agreement.

      Such know-how shall include, without limitation, all chemical,
      pharmaceutical, toxicological, preclinical, clinical, assay control,
      manufacturing, regulatory, and any other information used or useful for
      the development, manufacturing and/or regulatory approval of Compound or
      Product, including any data included in or generated as a result of or
      under an IND.

1.14. "Improvement" shall mean any enhancement in the manufacture, formulation,
       -----------
      ingredients, preparation, presentation, means of delivery or
      administration, dosage, indication, use or packaging of Compound or
      Product.

                                       2
<PAGE>

1.15. "IND" shall mean an investigational new drug application and any
      -----
      supplements and additions thereto relating to the use of Compound or
      Product.

1.16. "Interneuron Stock" shall mean common stock, $.001 par value of
       -----------------
      Interneuron

1.17. "MRC" shall mean the British Medical Research Council or any successor
       ---
      agency having substantially the same functions.

1.18. "MRC 1996 Agreement" shall mean the Agreement between MRC and HDCI dated
       ------------------
      October 7, 1996 and any amendments thereto.

1.19. "MRC 1999 Agreement" shall mean the Agreement between MRC and HDCI dated
       ------------------
      February 20, 1999 and any amendments thereto.

1.20. "Nasdaq" shall mean the Nasdaq National Market segment of the Nasdaq
       ------
      Stock Market, or if the Interneuron Stock is not listed on the National
      Market, than Nasdaq shall mean the Nasdaq SmallCap Market.

1.21. "NDA" shall mean a new drug application filed with the FDA for marketing
       ---
      authorization of a Product in the United States.

1.22. "Net Sales" shall mean the actual gross amount invoiced for the sale of
       ---------
      Product (except as provided in Section 5.3.1(b)(iii)) commencing upon the
      date of First Commercial Sale by Interneuron, its Affiliates or its
      sublicensees to the first Third Party after deducting in accordance with
      GAAP, if not previously deducted from the amount invoiced:

          (a) trade, cash, promotional and quantity discounts;

          (b) recalls, credits and allowances on account of returned or rejected
              products including, but not limited to, allowance for breakage and
              spoilage;

          (c) rebates and chargebacks;

          (d) retroactive price reductions;

          (e) sales or excise taxes, VAT or other taxes, transportation and
              insurance charges and additional special transportation, custom
              duties, and other governmental charges; and

          (f) reserves for bad debts or allowances, credits or rebates not
              covered by (a) through (e) above.

1.23. "NIH" shall mean the United States National Institutes of Health, or any
       ---
      successor agency having substantially the same functions.

1.24. "Operating Profit" shall mean the Net Sales received by Interneuron or
       ----------------
      its Affiliates for Compound or Product, less Cost of Goods Sold, selling,
      distribution and inventory

                                       3
<PAGE>

      management costs and other costs related to or allocable to the
      achievement of Net Sales and determined in accordance with GAAP.

1.25. "Party" shall mean HDCI or Interneuron.
       -----

1.26. "Patent Assets" shall mean any and all issued United States and foreign
       -------------
      patents, patent applications and foreign counterparts thereof (which shall
      be deemed to include certificates of invention and applications for
      certificates of invention) which

          (a)  as of the Effective Date or at any time during the term of this
               Agreement are owned by HDCI or which HDCI through license or
               otherwise has or acquires rights (and is not prohibited from
               sublicensing to third parties), and

          (b)  relate in any way to Compound, Product or any Improvement,
               including but not limited to compositions of Compound and/or
               Product, methods of their manufacture, or any uses thereof,
               including all certificates of invention, divisions,
               continuations, continuations-in-part, reissues, renewals,
               extensions, supplementary protection certificates or the like of
               any such patents, patent applications and foreign counterparts
               thereof, including but not limited to the patents, patent
               applications and foreign counterparts thereof listed on Schedule
               1.26 hereto, and including domestic and foreign patents, patent
               applications and foreign counterparts thereof covering any
               Improvements made by HDCI.

1.27. "Product" shall mean any product in final form for commercial sale by
       -------
      prescription, over-the-counter, or by any other method, which contains
      Compound in any dosage form as an active ingredient.

1.28. "Proprietary Information" shall mean any and all scientific, clinical,
       -----------------------
      regulatory, marketing, financial and commercial information or data,
      whether communicated in writing, orally or by any other means, which is
      provided by one Party to the other Party in connection with this
      Agreement.

1.29. "Royalty Year" shall mean each successive twelve (12) month period
       ------------
      commencing with the first day of the first month in which occurs the First
      Commercial Sale.

1.30. "SEC" means the United States Securities and Exchange Commission.
       ---

1.31. "Territory" shall mean all of the countries in the world.
       ---------

1.32. "Third Party(ies)" shall mean a person or entity who or which is neither
       ----------------
      a Party nor an Affiliate of a Party.

1.33. "Valid Claim" means a claim of an issued and unexpired patent included
       -----------
      within the Patent Assets, which has not been revoked or held unenforceable
      or invalid by a decision of a court or other governmental agency of
      competent jurisdiction, unappealable or for which an appeal has not been
      filed within the time allowed for appeal, and which has not

                                       4
<PAGE>

      been disclaimed, denied or admitted to be invalid or unenforceable through
      reissue or disclaimer or otherwise.

                                  ARTICLE II
                             LICENSE; SUBLICENSES

2.1.  License Grant.  HDCI hereby grants to Interneuron an exclusive (even as to
      -------------
      HDCI), license under the Patent Assets and HDCI Know-How, including the
      right to grant sublicenses, to develop, make, have made, use, import,
      offer for sale, market and sell and otherwise dispose of Compound and
      Product, including any Improvements thereto, in the Territory.

2.2.  Improvements by Interneuron.  Title to any general technology or
      ---------------------------
      Improvement developed or discovered by Interneuron in connection with the
      license granted under Section 2.1 above shall be vested solely in
      Interneuron.

2.3.  Sublicenses.
      -----------

          (a)  Interneuron shall have the right to grant sublicenses to Third
               Parties to develop, make, have made, use, import, market, sell,
               have sold, offer to sell and import Compound and Product in the
               Territory. Any sublicense by Interneuron of the rights granted to
               Interneuron in this Article 2 shall not be inconsistent with the
               terms of this Agreement and shall include an obligation for the
               sublicensee to comply with the provisions of Article 4 of this
               Agreement. Interneuron shall promptly provide HDCI with a fully
               executed copy of any sublicense agreement.

          (b)  Upon termination of this Agreement by Interneuron, HDCI shall
               accept assignment of sublicenses, provided that:

               (i)  the sublicensee is not in breach of its sublicense agreement
                    at the time of termination of this Agreement; and

               (ii) the sublicensee acquires no rights from or obligations on
                    the part of HDCI, other than those that are specifically
                    granted in this Agreement, and the sublicensee assumes all
                    obligations to HDCI required of Interneuron by this
                    Agreement.

                                  ARTICLE III
                       DEVELOPMENT AND COMMERCIALIZATION

3.1.  Exchange of Information.  Upon execution of this Agreement, HDCI shall
      -----------------------
      disclose to Interneuron in writing all HDCI Know-How and Patent Assets not
      previously disclosed to Interneuron. During the term of this Agreement,
      HDCI shall also promptly disclose to Interneuron in writing on an ongoing
      basis all HDCI Know-How and Patent Assets.

3.2.  Diligence; Development and Commercialization.  Interneuron shall use
      --------------------------------------------
      commercially reasonable efforts to develop and commercialize Product. As
      used herein, "commercially

                                       5
<PAGE>

      reasonable efforts" shall mean efforts and resources normally used by
      Interneuron for a product owned by it or to which it has exclusive rights,
      which is of similar market potential at a similar stage in its development
      or product life, taking into account issues of safety and efficacy,
      product profile, the competitiveness of the marketplace, the proprietary
      position of the compound or product, the regulatory and reimbursement
      structure involved, the profitability of the applicable products, and
      other relevant factors.

      Interneuron will be responsible for all remaining preclinical development,
      toxicology and clinical development, including regulatory filings, which
      are required for commercialization of Product in the Territory.
      Interneuron shall notify HDCI upon the receipt of regulatory approvals and
      of the date of First Commercial Sale.

      Except as specifically set forth in Schedule 3.7 hereof, Interneuron shall
      be responsible for all costs attributable to the development and
      commercialization of Compound and Product which are incurred after the
      Effective Date; provided that with respect to agreements entered into by
      HDCI relating to Compound or Product prior to the Effective Date,
      Interneuron shall be responsible only for the costs under those agreements
      referred to in Schedule 3.7 hereof.

3.3.  Regulatory Matters.  Interneuron shall own, control and retain primary
      ------------------
      legal responsibility for the preparation, filing and prosecution of all
      filings and regulatory applications required to obtain authorization to
      commercially develop, sell and use Product in each country in the
      Territory. HDCI shall transfer to Interneuron as soon as practicable after
      the Effective Date (but in no event later than 30 days) any IND or other
      regulatory filings relating to Compound or Product owned by HDCI and HDCI
      shall use its best efforts to allow Interneuron to cross reference any
      other IND or Drug Master File relating to Compound or Product to the
      extent HDCI is legally able to do so.

3.4.  Trademark.  Interneuron shall select, own and maintain trademarks for
      ---------
      Product.

3.5.  Manufacturing.  Interneuron shall be responsible for manufacture of the
      -------------
      Compound and Product.

3.6.  Adverse Events.  HDCI shall promptly furnish to Interneuron all
      --------------
      information concerning safety or utility of Compound or Product, such as
      adverse or unexpected side effects, injury or other events associated with
      uses, studies, investigations or tests of Compound or Product, whether or
      not HDCI is required to report such information to any regulatory
      authority and whether or not such event is determined to be attributable
      to Compound or Product.

3.7.  Third Party Agreements.  Agreements entered into by HDCI with third
      ----------------------
      parties prior to the Effective Date relating to the Compound or Product
      shall be handled in accordance with Schedule 3.7.

                                  ARTICLE IV
                         CONFIDENTIALITY AND PUBLICITY

4.1.  Non-Disclosure and Non-Use Obligations.  All Proprietary Information
      --------------------------------------
      disclosed by one Party to the other Party hereunder shall be maintained in
      confidence and shall not be

                                       6
<PAGE>

      disclosed to any Third Party or used for any purpose except as expressly
      permitted herein without the prior written consent of the Party that
      disclosed the Proprietary Information to the other Party. The foregoing
      non-disclosure and non-use obligations shall not apply to the extent that
      such Proprietary Information:

          (a)  is known by the receiving Party at the time of its receipt, and
               not through a prior disclosure by the disclosing Party, as
               documented by business records;

          (b)  is properly in the public domain;

          (c)  is subsequently disclosed to a receiving Party by a Third Party
               who may lawfully do so and is not under an obligation of
               confidentiality to the disclosing Party; or

          (d)  is developed by the receiving Party independently of Proprietary
               Information received from the other Party, as documented by
               research and development records.

4.2.  Permitted Disclosure of Proprietary Information.  Notwithstanding Section
      -----------------------------------------------
      4.1, a Party receiving Proprietary Information of another Party may
      disclose such Proprietary Information:

          (a)  to governmental or other regulatory agencies in order to obtain
               patents subject to this Agreement, or to gain approval to conduct
               clinical trials or to market Product, but such disclosure may be
               only to the extent reasonably necessary to obtain such patents or
               authorizations;

          (b)  by each of Interneuron or HDCI to its respective agents,
               consultants, Affiliates, Interneuron's sublicensees and/or other
               Third Parties for the research and development, manufacturing
               and/or marketing of the Compound and/or Product (or for such
               parties to determine their interests in performing such
               activities) on the condition that such Third Parties agree to be
               bound by the confidentiality obligations contained in this
               Agreement; or

          (c)  if required to be disclosed by law or court order, provided that
               notice is promptly delivered to the non-disclosing Party in order
               to provide an opportunity to challenge or limit the disclosure
               obligations; provided, however, without limiting any of the
               foregoing, it is understood that either Party or its Affiliates
               may make disclosure of this Agreement and the terms hereof in any
               filings required by the SEC, may file this Agreement as an
               exhibit to any filing with the SEC and may distribute any such
               filing in the ordinary course of its business provided that
               certain financial and other confidential terms are redacted from
               such filings to the extent possible, in consultation with the
               other Party.

                                       7
<PAGE>

          (d)  Neither Party shall use the name of the other Party in any
               publicity or advertising without the prior written approval of
               the other Party. Upon execution of this Agreement, the Parties
               may issue a press release in the form attached as Appendix
               4.2(d).

                                   ARTICLE V
                        PAYMENTS; ROYALTIES AND REPORTS

5.1.  License Fee.  Subject to the terms and conditions contained in this
      -----------
      Agreement, Interneuron shall pay HDCI a fee equal to $500,000 within ten
      (10) days following the Effective Date.

5.2.  Milestone Payments.  Subject to the terms and conditions contained in this
      ------------------
      Agreement, Interneuron shall pay HDCI the following milestone payments,
      each milestone payment to be made no more than once with respect to the
      achievement of each such milestone for Compound:

          (a)  $[*] upon initiation of any Phase 2 safety clinical trial in
               populations at risk for HIV infection or other sexually
               transmitted diseases by the MRC, NIH or other governmental or
               non-commercial sponsor which (i) is useful for FDA approval, and
               (ii) conforms with the guidelines set forth in Appendix 5.2(a),
               and for which the MRC, NIH or other governmental or non-
               commercial sponsor agrees to provide funding to cover at least
               [*] percent ([*] %) of the costs of the clinical trial (excluding
               the costs of the supply of Compound and any costs for required
               regulatory filings), provided that if the MRC, NIH or other
               governmental or non-commercial sponsor agrees to provide less
               than [*] percent ([*] %) of such costs, the payment to HDCI
               hereunder shall be reduced by the amount of funding for such
               study provided by Interneuron (excluding the costs of the supply
               of Compound and any costs for required regulatory filings); and

          (b)  $[*] upon initiation of any Phase 3 efficacy clinical trial or
               the Phase 3 portion of any Phase 2/3 clinical trial in
               populations at risk for HIV infection or other sexually
               transmitted diseases by the MRC, NIH or other governmental or
               non-commercial sponsor which (i) is useful for FDA approval, and
               (ii) conforms with the guidelines set forth in Appendix 5.2(b),
               and for which the MRC, NIH or other governmental or non-
               commercial sponsor agrees to provide funding to cover at least
               [*] percent ([*] %) of the costs of the clinical trial (excluding
               the costs of the supply of Compound and any costs for required
               regulatory filings), provided that if the MRC, NIH or other
               governmental or non-commercial sponsor agrees to provide less
               than [*] percent ([*]%) of such costs, the payment to HDCI
               hereunder shall be reduced by the amount of funding for such
               study provided by Interneuron (excluding the costs of the supply
               of

----------------------------------
* Confidential treatment requested.

                                       8
<PAGE>

               Compound and any costs for required regulatory filings).
               Notwithstanding the foregoing, in the event that (1) the MRC, NIH
               or other governmental or non-commercial sponsor conducts a Phase
               3 efficacy clinical trial (or a Phase 3 portion of any Phase 2/3
               clinical trial) that does not conform with the guidelines set
               forth in Appendix 5.2(b) and (2) the final results of such
               clinical trial demonstrate efficacy and are sufficient to obtain
               approval of the Product by the FDA, then Interneuron shall
               provide to HDCI the payment under this Section 5.2(b) upon the
               receipt of FDA approval.

      For purposes of this Section 5.2, initiation of a clinical trial shall
      mean the date of enrollment of the first participant in such trial.
      Interneuron shall notify HDCI in writing within sixty (60) days after the
      achievement of each milestone, and such notice shall be accompanied by
      payment of the appropriate milestone payment.

5.3.  Royalties; Royalty Buy-Out Option.
      ---------------------------------
      5.3.1  Royalties Payable By Interneuron.
             --------------------------------

             (a)  (i) Subject to the terms and conditions of this Agreement,
                  Interneuron shall pay to HDCI royalties in an amount equal to
                  the following percentages of Net Sales in each Royalty Year by
                  Interneuron or its Affiliates in each country in the Territory
                  where the manufacture, use or sale of such Product would,
                  absent the license granted hereunder, infringe one or more
                  Valid Claims of the Patent Assets in such country:

                     Amount of Net Sales                       Royalty Rate
                     -------------------                       ------------

                     Up to $[*] million                            [*] %
                     Over $[*] million and up to $[*] million      [*] %
                     More than $[*] million                        [*] %

                  Royalties on Net Sales at the rates set forth above shall
                  accrue as of the date of First Commercial Sale of Product in
                  such country and shall continue and accrue on Net Sales on a
                  country-by-country basis until the expiration of the last
                  applicable patent included within the Patent Assets, which
                  patent includes a Valid Claim that covers the manufacture, use
                  or sale of such Product or Compound in such country.
                  Thereafter, Interneuron shall not be required to make any
                  payments of royalties set forth in this Section 5.3.

                  (ii) Subject to the terms and conditions of this Agreement,
                  Interneuron shall pay to HDCI [*] percent ([*] %) of Operating
                  Profit on sales of Compound or Product by Interneuron or its
                  Affiliates in each country in the Territory where the
                  manufacture, use or sale of such Product does not

----------------------------------
* Confidential treatment requested.

                                       9
<PAGE>

                  or would not infringe one or more Valid Claims of the Patent
                  Assets in such country, provided that and for so long as, the
                  manufacture, use or sale of such Product would, absent the
                  license granted hereunder, infringe one or more Valid Claims
                  of the Patent Assets in the U.S., United Kingdom, France,
                  Germany, Italy or Spain.

                  The foregoing share of Operating Profit to HDCI shall accrue
                  as of the date of First Commercial Sale of Product in a
                  country where the manufacture, use or sale of such Product
                  does not infringe one or more Valid Claims of the Patent
                  Assets in such country but would, absent the license granted
                  hereunder, infringe one or more Valid Claims of the Patent
                  Assets in the U.S., United Kingdom, France, Germany, Italy or
                  Spain and shall continue and accrue on a country-by-country
                  basis until the expiration of the last applicable patent
                  included within the Patent Assets in the U.S., United Kingdom,
                  France, Germany, Italy or Spain. Thereafter, Interneuron shall
                  not be required to make any payments of Operating Profits set
                  forth in this Section 5.3.

             (b)  The payment of royalties and percentage of Operating Profit
                  set forth above shall be subject to the following conditions:

                  (i)  that only one payment shall be due with respect to the
                       same unit of Product;

                  (ii) that in the event that Interneuron enters into a
                       sublicense in the Territory to a Third Party or Third
                       Parties, in lieu of royalty and Operating Profit payments
                       set forth in Section 5.3.1(a), Interneuron shall pay HDCI
                       [*] percent ([*] %) of sublicensing royalties on net
                       sales of Product (s) received by Interneuron from such
                       sublicense(s); and

                 (iii) no royalties or Operating Profit sharing shall accrue on
                       the disposition of Product by Interneuron, Affiliates or
                       sublicensees as samples (promotion or otherwise) or as
                       donations (for example, to non-profit institutions or
                       government agencies) or to the extent Product is made
                       available at cost or at a substantial discount from the
                       prevailing price for Product in the U.S. pursuant to
                       Section 2.3 of the MRC 1996 Agreement or Section 2.2 of
                       the MRC 1999 Agreement.

                 (iv)  HDCI shall remain responsible for payment of any
                       royalties due MRC or any other entity with whom HDCI
                       agreed to pay a royalty on Compound or Product prior to
                       the Effective Date.

----------------------------------
* Confidential treatment requested.

                                       10
<PAGE>

      5.3.2  Royalties for Bulk Compound. In those cases where Interneuron sells
             ---------------------------
             bulk Compound to be incorporated into Product, rather than a
             Product, to a Third Party (excluding sales within or among
             Interneuron, its Affiliates and/or its sublicensees ), and is
             unable to determine Net Sales, royalties set forth in this Article
             V shall be calculated as if the bulk Compound is deemed to be
             Product.

      5.3.3  Compulsory Licenses.  If a compulsory license is granted to a
             -------------------
             Third Party with respect to Product in any country in the Territory
             with a royalty rate lower than the royalty rate provided by Section
             5.3.1, then the royalty rate to be paid by Interneuron on Net Sales
             in that country under Section 5.3.1 shall be reduced to the rate
             paid by the compulsory Third Party licensee.

      5.3.4  Third Party Licenses.  If one or more licenses from a Third Party
             --------------------
             or Parties are obtained by Interneuron or its Affiliates to
             develop, make, have made, use, sell or import Compound or Product
             in a particular country within the Territory, [*] percent ([*] %)
             of any royalties or other payments paid under such Third Party
             patent licenses by Interneuron in such country for such Calendar
             Quarter shall be creditable against the royalty or other payments
             to be paid to HDCI by Interneuron in such country; provided,
             however, that the royalties payable to HDCI hereunder shall not be
             reduced by more than [*] percent ([*] %) unless, absent the said
             license(s), Interneuron or its Affiliates would be prevented from
             practicing the Patent Assets licensed under Article 2 hereof, in
             which case the royalties or other payments payable to HDCI
             hereunder may be reduced by more than [*] percent ([*] %).

5.4.  Royalty Buy-Out Option.
      ----------------------

      5.4.1  Option. At any time prior to the date Interneuron is notified
             ------
             officially by a representative of the study group in writing or
             verbally of the preliminary statistical evaluation of the Pivotal
             Trial, Interneuron shall have the option (the "Royalty Buy-Out
             Option"), to buy out the royalty obligations set forth in Section
             5.3 for $[*], whereupon this license shall become a perpetual,
             royalty-free fully-paid up license. For purposes of this Section
             5.4.1 the Pivotal Trial shall mean the clinical trial described in
             Section 5.2(b).

      5.4.2  Notice Period.  In the event Interneuron determines to exercise the
             -------------
             Royalty Buy-Out Option, it shall notify HDCI in writing. The date
             of Interneuron's notice to HDCI shall be the Election Date.

      5.4.3  Payments in Interneuron Stock. In the event that Interneuron elects
             -----------------------------
             to exercise the Royalty Buy-out Option, [*] percent ([*] %) of the
             payment shall be due in cash and [*] percent ([*] %) of the payment
             shall be due in shares of Interneuron Stock. The number of shares
             of Interneuron Stock to be issued as [*] % of the

----------------------------------
* Confidential treatment requested.

                                       11
<PAGE>

             payment to HDCI shall equal the number of shares of Interneuron
             Stock, rounded to the nearest whole number, having a Fair Market
             Value as of the Election Date equal to $[*].

5.5.  Payments from Sublicensee.  Interneuron will pay HDCI [*] percent ([*] %)
      -------------------------
      of (i) any lump sum, milestone or other cash payments (other than
      royalties) or (ii) any securities of a sublicensee issued by such
      sublicensee, in either case received by Interneuron from sublicensees of
      Interneuron which payments or securities constitute advance royalties or
      other consideration for a sublicense agreement relating to the Patent
      Assets, excluding amounts received by Interneuron from Third Parties in
      connection with the issuance of debt or equity securities in Interneuron
      or to fund or reimburse research and development of Product; provided,
      however, that (i) any payments made to HDCI under this Section 5.5 that
      arise as a result of payments from sublicensees that are refunded by
      Interneuron shall be refunded by HDCI to Interneuron, or at Interneuron's
      election, credited against the milestones payable to HDCI listed under
      Section 5.2 (a) and (b) and (ii) only one payment hereunder shall be due
      with respect to the same payment made to Interneuron by a sublicensee.

      In the event Interneuron sublicenses the rights granted under Article 2
      hereof and, in lieu of the consideration referred to in the immediately
      preceding paragraph, Interneuron receives from the sublicensee for such
      sublicense rights in the sublicensee's technology, products or compounds
      (the "Technology"), then (a) if Interneuron sublicenses the Technology to
      a subsequent Third Party, Interneuron shall pay to HDCI [*] percent ([*]
      %) of any lump sum, milestone, royalty, other cash payments or securities
      received by Interneuron from the subsequent Third Party sublicensee which
      payments constitute consideration for a sublicense of the Technology to
      the subsequent Third Party sublicensee or (b) if Interneuron or its
      Affiliates commercializes the Technology internally, Interneuron shall pay
      to HDCI [*] percent ([*] %) of the operating profit on sales of product
      containing or utilizing the Technology. For purposes of this Section 5.5,
      "operating profit" shall mean the net sales received by Interneuron or its
      Affiliates for a product containing or utilizing the Technology, less the
      direct and indirect manufacturing costs incurred by Interneuron or its
      Affiliates specifically allowable to and directly attributable to the
      product, selling, distribution and inventory management costs and other
      costs related to or allocable to the achievement of net sales and
      determined in accordance with GAAP.

5.6.  Reports; Payment of Royalty.  Following the First Commercial Sale of a
      ---------------------------
      Product and during the term of the Agreement for so long as royalty or
      Operating Profit payments are due, Interneuron shall furnish to HDCI a
      quarterly written report for the Calendar Quarter showing the sales of all
      Products subject to royalty or Operating Profit payments sold by
      Interneuron, its Affiliates and its sublicensees in the Territory during
      the reporting period and the royalties or Operating Profit payable under
      this Agreement. Reports shall be due

----------------------------------
* Confidential treatment requested.

                                       12
<PAGE>

      on the ninetieth (90/th/) day following the close of each Calendar
      Quarter. Royalties and Operating Profit shown to have accrued by each
      royalty report, if any, shall be due and payable on the date such royalty
      report is due. Interneuron shall keep complete and accurate records in
      sufficient detail to enable the royalties and Operating Profit payable
      hereunder to be determined.

5.7.  Audits.
      ------
          (a)  Upon the written request of HDCI and not more than once in each
               Calendar Year, Interneuron shall permit an independent certified
               public accounting firm of nationally recognized standing selected
               by HDCI and reasonably acceptable to Interneuron, to have access
               during normal business hours at times mutually convenient to the
               Parties and upon reasonable notice to Interneuron to such of the
               records of Interneuron as may be reasonably necessary to verify
               the accuracy of the royalty reports hereunder for any year ending
               not more than twenty-four (24) months prior to the date of such
               request. The accounting firm shall disclose only to HDCI only
               whether the royalty reports are correct or incorrect and the
               specific details concerning any discrepancies.

          (b)  If such accounting firm concludes, and Interneuron agrees, that
               additional royalties or Operating Profit were owed during such
               period, Interneuron shall pay the additional royalties or
               Operating Profit (plus accrued interest at the rate announced by
               Fleet National Bank in Boston, Massachusetts (or its successors
               or assigns) as its prime rate in effect on the date that such
               payment was first due) within sixty (60) days of the date HDCI
               delivers to Interneuron such accounting firm's written report so
               concluding; provided that, in the event that Interneuron shall
               not be in agreement with the conclusion of such report (a)
               Interneuron shall not be required to pay such additional
               royalties or Operating Profit and (b) such matter shall be
               resolved pursuant to the provisions of Section 9.6 herein. In the
               event such accounting firm concludes that amounts were overpaid
               by Interneuron during such period, HDCI shall reimburse
               Interneuron the amount of such overpayment within thirty (30)
               days of receipt of such accounting firm's written report. The
               fees charged by such accounting firm shall be paid by HDCI;
               provided, however, that if an error in favor of HDCI in the
               payment of royalties or Operating Profit of more than the greater
               of (i) $100,000 or (ii) ten percent (10%) of the royalties or
               Operating Profit due hereunder for the period being reviewed is
               discovered, then the fees and expenses of the accounting firm
               shall be reimbursed by Interneuron.

          (c)  Upon the expiration of twenty-four (24) months following the end
               of any Royalty Year the calculation of royalties or Operating
               Profit payable with respect to such year shall be binding and
               conclusive upon HDCI, and Interneuron shall be released from any
               liability or accountability with respect to royalties and
               Operating Profit for such year.

                                       13
<PAGE>

          (d)  HDCI shall treat all financial information subject to review
               under this Section 5.7 in accordance with the confidentiality
               provisions of this Agreement.

5.8.  Payment Exchange Rate.  All payments to HDCI under this Agreement shall be
      ---------------------
      made in United States dollars. In the case of sales outside the United
      States, the rate of exchange to be used in computing the amount of
      currency equivalent in United States dollars due HDCI shall be calculated
      monthly in accordance with GAAP and based on the average of the conversion
      rates on the first and last Business Day of each month during each
      Calendar Quarter published in the Wall Street Journal, Eastern edition.

5.9.  Tax Withholding.  If laws, rules or regulations require withholding of
      ---------------
      income taxes or other taxes imposed upon payments set forth in this
      Article V, HDCI shall provide Interneuron, prior to any such payment,
      annually or more frequently if required, with all forms or documentation
      required by any applicable taxation laws, treaties or agreements to such
      withholding or as necessary to claim a benefit thereunder (including, but
      not limited to, Form 1001 and any successor form) and Interneuron shall
      make such withholding payments as required and subtract such withholding
      payments from the payments set forth in this Article V. Interneuron shall
      submit appropriate proof to HDCI of payment of the withholding taxes
      within a reasonable period of time. Interneuron will use commercially
      reasonable efforts consistent with its usual business practices to ensure
      that any withholding taxes imposed are reduced as far as possible under
      the provisions of the current or any future taxation treaties or
      agreements between foreign countries, and HDCI shall cooperate with such
      efforts.

5.10. Interest on Late Payments.  Except as otherwise set forth in this
      -------------------------
      Agreement, any payments by Interneuron that are not paid on or before the
      date such payments are due under this Agreement shall bear interest, to
      the extent permitted by applicable law, at the rate announced from time to
      time by Fleet National Bank in Boston, Massachusetts (or its successor or
      assigns) as its prime rate, calculated on the number of days payment is
      delinquent; provided, that if such payment has been delayed because it is
      related to a dispute raised by a Party in good faith that is undergoing
      the dispute resolution procedures set forth in Section 9.6 hereof,
      interest shall be calculated on the number of days payment is delinquent
      starting on the day after such dispute is finally resolved.

5.11. Exchange Controls. Notwithstanding any other provision of this Agreement,
      -----------------
      if at any time legal restrictions prevent the prompt remittance of part or
      all of the royalties with respect to Net Sales or Operating Profits in any
      country, payment shall be made through such lawful means or methods as
      Interneuron may determine. When in any country the law or regulations
      prohibit both the transmittal and deposit of royalties on sales or
      Operating Profits in such a country, royalty payments or Operating Profits
      shall be suspended for as long as such prohibition is in effect (and such
      suspended payments shall not accrue interest), and promptly after such
      prohibition ceases to be in effect, all royalties that Interneuron or its
      Affiliates or sublicensees would have been obligated to transmit or
      deposit, but for the prohibition, shall be deposited or transmitted, as
      the case may be, to the extent allowable (with any interest earned on such
      suspended royalties which were placed in an interest-bearing bank account
      in that country, less any

                                       14
<PAGE>

      transactional costs). If the royalty rate specified in this Agreement
      should exceed the permissible rate established in any country, the royalty
      rate for sales in such country shall be adjusted to the highest legally
      permissible or government-approved rate.

                                  ARTICLE VI
                        REPRESENTATIONS AND WARRANTIES

6.1.  HDCI Representations and Warranties.  HDCI represents and warrants to
      -----------------------------------
      Interneuron that as of the Effective Date:

          (a) to the best of its knowledge, there is no reason that the
               presumption of validity would not apply to the issued patents
               included in the Patent Assets and no reason that a court of
               competent jurisdiction would, upon investigation, find such
               patents unenforceable;

          (b)  this Agreement has been duly executed and delivered by it and
               constitutes legal, valid, and binding obligations of it
               enforceable against it in accordance with its terms;

          (c)  no approval, authorization, consent, or other order or action of
               or filing with any court, administrative agency or other
               governmental authority is required for the execution and delivery
               by it of this Agreement or the consummation by it of the
               transactions contemplated hereby;

          (d)  it has the full right, power and authority to enter into and
               deliver this Agreement, to perform and to grant the licenses
               granted under Article II hereof and to consummate the
               transactions contemplated hereby. 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;

          (e)  it has not previously assigned, transferred, conveyed or
               otherwise encumbered its right, title and interest in the Patent
               Assets or HDCI Know-How or entered into any agreement with any
               Third Party which is in conflict with the rights granted to
               Interneuron pursuant to this Agreement;

          (f)  it is the sole and exclusive owner under the Patent Assets and
               HDCI Know-How, all of which are free and clear of any liens,
               charges and encumbrances, and no other person, corporate or other
               private entity, or governmental entity or subdivision thereof,
               has any valid claim of ownership with respect to the Patent
               Assets and HDCI Know-How, whatsoever. HDCI shall notify the U.S.
               Patent & Trademark Office and foreign patent offices that
               Procept, Inc. changed its name to HDCI and take any other actions
               necessary to effect this change;

          (g)  to the best of HDCI's knowledge, the Patent Assets and HDCI Know-
               How practiced as contemplated herein and the development,
               manufacture, use

                                       15
<PAGE>

               and sale of Compound and Products do not and will not infringe
               any patent rights owned or possessed by any Third Party;

          (h)  there are no claims, judgments or settlements against or owed by
               HDCI or pending or, threatened claims or litigation relating to
               the Patent Assets and HDCI Know-How;

          (i)  it has disclosed to Interneuron all relevant information known by
               it regarding the Patent Assets and HDCI Know-How reasonably
               related to the activities contemplated under this Agreement; and

          (j)  to its knowledge, no contract research organization, corporation,
               business entity or individual which have been involved in any
               studies conducted for the purpose of obtaining regulatory
               approvals have been debarred individuals or entities within the
               meaning of 21 U.S.C. section 335(a) or (b).

6.2.  Warranty Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
      -------------------
      AGREEMENT, HDCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
      PATENT ASSETS, HDCI KNOW-HOW OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND
      HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
      PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.

6.3.  Investment Representations.
      --------------------------

          (a)  Acquisition for Investment.  In the event the Royalty Buy-Out
               --------------------------
               Option is exercised, HDCI hereby represents that it is acquiring
               the Interneuron Stock as principal for its own account for
               investment and not with a view to any sale or distribution
               thereof within the meaning of the 1933 Act and not for the
               benefit of any other person. HDCI understands that the
               Interneuron Stock that may be acquired hereby will not been
               registered under the 1933 Act, by reason of its issuance by
               Interneuron in a transaction exempt from the registration
               requirements of the 1933 Act, and that any such unregistered
               shares must be held by HDCI indefinitely unless a subsequent
               disposition thereof is registered under the 1933 Act and any
               applicable state securities or blue sky laws or unless an
               exemption from registration is available.

          (b)  Acknowledgments of HDCI.  HDCI acknowledges that:
               -----------------------

               (i)  HDCI has obtained all the necessary information concerning
                    Interneuron that it requires and that it does not require
                    any additional information about Interneuron or the
                    Interneuron Stock;

               (ii) an investment in the Interneuron Stock is highly speculative
                    and could result in a total loss of its investment and that
                    HDCI has a net worth sufficient to permit HDCI to afford a
                    total loss of its

                                       16
<PAGE>

                    investment without substantially affecting HDCI `s present
                    business affairs;

              (iii) in completing the sale of the Interneuron Stock to HDCI,
                    Interneuron will rely on the representations and warranties
                    of HDCI contained in this Agreement;

               (iv) Interneuron has not provided HDCI with investment, legal or
                    tax advice or acted as an adviser with respect to this
                    subscription and HDCI is relying solely on its own
                    professional advisers, if any, for any necessary advice; and

               (v)  HDCI has had an opportunity to ask questions and receive
                    answers concerning Interneuron and its proposed business,
                    and that any request for such information has been complied
                    with to HDCI's satisfaction.

          (c)  Certificates to Bear Legends. The certificate or certificates
               ----------------------------
               evidencing the Interneuron Stock shall bear the following legend
               until such time as the legend may be removed pursuant to Section
               6.2(d) herein:

               "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
               "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE
               OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
               STATEMENT UNDER THE SECURITIES ACT, OR (ii) AN EXEMPTION FROM
               REGISTRATION UNDER THE SECURITIES ACT."

          (d)  Removal of Legends and Transfer Restrictions. The legends
               endorsed on each certificate for the Interneuron Stock pursuant
               to Section 6.2(c) shall be removed and Interneuron shall issue a
               certificate without such legends to HDCI if (x) such Securities
               are registered under the 1933 Act and a prospectus meeting the
               requirements of Section 10 of the 1933 Act is available and the
               Interneuron Stock is sold thereunder, or (y) there is available
               an exemption from registration under the 1933 Act, and
               Interneuron shall have received an opinion of counsel to HDCI to
               such effect.

6.4.  Interneuron Representations and Warranties.  Interneuron represents and
      ------------------------------------------
      warrants to HDCI that as of the Effective Date:

          (a)  this Agreement has been duly executed and delivered by it and
               constitutes legal, valid, and binding obligations of it
               enforceable against it in accordance with its terms;

                                       17
<PAGE>

          (b)  it has full corporate power and authority to execute and deliver
               this Agreement and to consummate the transactions contemplated
               hereby. 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; and

          (c)  no approval, authorization, consent, or other order or action of
               or filing with any court, administrative agency or other
               governmental authority is required for the execution and delivery
               by it of this Agreement or the consummation by it of the
               transactions contemplated hereby.

                                  ARTICLE VII
                                PATENT MATTERS

7.1.  Filing, Prosecution and Maintenance of Patent Applications or Patents.
      ---------------------------------------------------------------------
      Interneuron shall file, prosecute and maintain the patent applications and
      patents included in the Patent Assets, in HDCI's name using counsel
      reasonably acceptable to HDCI (including counsel listed on Schedule 7.1
      hereto), in such countries in the Territory as Interneuron shall determine
      in its sole discretion. HDCI shall be responsible for the payment of all
      patent costs incurred prior to the Effective Date and Interneuron shall
      pay all patent costs incurred after the Effective Date. If Interneuron
      elects not to file, prosecute or maintain a patent application or patent
      included in the Patent Assets, and advises HDCI in writing that it intends
      not to file, prosecute, or maintain such patent application or patent,
      HDCI shall have the right, at its sole expense, to file, prosecute, or
      maintain such patent application or patent, and Interneuron shall
      cooperate in the filing, prosecution, or maintenance of such patent
      application or patent. In each case, the filing Party shall give the non-
      filing Party an opportunity to review the text of the application before
      filing, shall consult with the non-filing Party with respect thereto, and
      shall supply the non-filing Party with a copy of the application as filed,
      together with notice of its filing date and serial number. The filing
      Party shall keep the non-filing Party advised of the status of the actual
      and prospective patent application filings and upon the request of the
      non-filing Party, provide advance copies of any papers related to the
      filing, prosecution, or maintenance of such patent application filings.
      Interneuron shall give notice to HDCI of the grant, lapse, revocation,
      surrender, invalidation or abandonment of any patent licensed to
      Interneuron by HDCI. The Party that is the filing Party under this Section
      shall be responsible for the payment of all costs and expenses related to
      such filing and subsequent prosecution and maintenance thereof.

7.2.  Patent Office Proceedings.  Each Party shall inform the other Party of any
      -------------------------
      request for, filing, or declaration of any proceeding before a patent
      office seeking to protest, oppose, cancel, reexamine, declare an
      interference proceeding, initiate a conflicts proceeding, or analogous
      process involving a patent application or patent included in the Patent
      Assets. HDCI thereafter shall cooperate fully with Interneuron with
      respect to any such patent office proceeding that Interneuron chooses in
      its sole discretion to defend. HDCI will provide Interneuron with any
      information or assistance that Interneuron reasonably may request.
      Interneuron shall bear the expense of defending any such patent office
      proceeding that Interneuron chooses to defend.

                                       18
<PAGE>

7.3.  Enforcement and Defense.
      -----------------------

          (a)  Each Party shall promptly give the other Party notice of any
               infringement in the Territory of any patent application or patent
               included in the Patent Assets that comes to such Party's
               attention. The Parties will thereafter consult and cooperate
               fully to determine a course of action, including, without
               limitation, the commencement of legal action by any Party.
               However, Interneuron, upon notice to HDCI, shall have the first
               right to initiate and prosecute such legal action at its own
               expense and in the name of HDCI and Interneuron, or to control
               the defense of any declaratory judgment action relating to Patent
               Assets. Interneuron shall promptly inform HDCI if Interneuron
               elects not to exercise such first right, and HDCI thereafter
               shall have the right either to initiate and prosecute such action
               or to control the defense of such declaratory judgment action in
               the name of HDCI and, if necessary, Interneuron. In no event
               shall Interneuron enter into any settlement which would adversely
               affect the Patent Assets in any material respect without the
               prior written consent of HDCI, which consent shall not be
               unreasonably withheld.

          (b)  If Interneuron elects not to initiate and prosecute an
               infringement or defend a declaratory judgment action in any
               country in the Territory as provided in Subsection 7.3(a), and
               HDCI elects to do so, the cost of any agreed-upon course of
               action, including the costs of any legal action commenced or any
               declaratory judgment action defended, shall be borne solely by
               HDCI.

          (c)  For any such legal action or defense, in the event that any Party
               is unable to initiate, prosecute, or defend such action solely in
               its own name, the other Party will join such action voluntarily
               and will execute all documents necessary for the Party to
               prosecute, defend and maintain such action. In connection with
               any such action, the Parties will cooperate fully and will
               provide each other with any information or assistance that either
               reasonably may request. Each Party shall keep the other informed
               of developments in any such action or proceeding, including, to
               the extent permissible by law, the status of any settlement
               negotiations and the terms of any offer related thereto.

          (d)  Any recovery obtained by Interneuron or HDCI shall be shared as
               follows:

               (i)  the Party that initiated and prosecuted, or maintained the
                    defense of, the action shall recoup all of its costs and
                    expenses incurred in connection with the action, whether by
                    settlement or otherwise;

               (ii) the other Party then shall, to the extent possible, recover
                    its costs and expenses incurred in connection with the
                    action;

                                       19
<PAGE>

               (iii) if HDCI initiated and prosecuted, or maintained the defense
                    of, the action, the amount of any recovery remaining then
                    shall be retained by HDCI; and

               (iv) if Interneuron initiated and prosecuted, or maintained the
                    defense of, the action, the amount of any recovery remaining
                    shall be retained by Interneuron except that HDCI shall
                    receive a portion equivalent to the royalties they would
                    have received on such remaining amount if such amount were
                    deemed Net Sales and the Royalty Buy-Out Option has not been
                    exercised.

           (e)  HDCI shall inform Interneuron of any certification regarding any
                Patent Assets it has received pursuant to either 21 U.S.C.
                (S)(S) 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under Canada's
                Patented Medicines (Notice of Compliance) Regulations Article 5
                and shall provide Interneuron with a copy of such certification
                within five (5) days of receipt. HDCI `s and Interneuron's
                rights with respect to the initiation and prosecution, or
                defense, of any legal action as a result of such certification
                or any recovery obtained as a result of such legal action shall
                be allocated as defined in Subsections 7.3(a) through (d);
                provided, however, that Interneuron shall exercise the first
                right to initiate and prosecute, or defend, any action and shall
                inform HDCI of such decision within fifteen (15) days of receipt
                of the certification, after which time, if Interneuron has not
                advised HDCI of its intention to initiate and prosecute, or
                defend, such action, HDCI shall have the right to initiate and
                prosecute, or defend, such action.

7.4.  Patent Term Extensions and Supplemental Protection Certificates.  The
      ---------------------------------------------------------------
      Parties shall cooperate in obtaining patent term extensions or
      supplemental protection certificates or their equivalents in any country
      in the Territory where applicable and where desired by Interneuron. If
      elections with respect to obtaining such extension or supplemental
      protection certificates are to be made, Interneuron shall have the right
      to make the election and HDCI shall abide by such election.

                                 ARTICLE VIII
                             TERM AND TERMINATION

8.1.  Term and Expiration.  This Agreement shall be effective as of the
      -------------------
      Effective Date and unless terminated earlier pursuant to Section 8.2 and
      8.3 below, the term of this Agreement shall continue in effect until
      expiration of all royalty and Operating Profit payment obligations
      hereunder. Upon expiration of the royalty and Operating Profit obligations
      with respect to a Product hereunder, including upon exercise of the
      Royalty Buy-Out Option, Interneuron's license hereunder pursuant to
      Section 2.1 shall become a fully paid-up, perpetual license.

8.2.  Termination by Notice.  Notwithstanding anything contained herein to the
      ---------------------
      contrary, Interneuron shall have the right to terminate this Agreement at
      any time by giving thirty (30) days advance written notice to HDCI. Except
      as set forth in this Agreement, in the

                                       20
<PAGE>

      event of such termination, (i) the rights and obligations hereunder,
      excluding any payment obligation which has accrued as of the termination
      date, shall terminate and (ii) Interneuron shall have no further rights
      with respect to the Patent Assets or HDCI Know-How.

8.3.  Termination.
      -----------

8.3.1 Termination for Cause.  Either Party may terminate this Agreement by
      ---------------------
      notice to the other Party at any time during the term of this Agreement as
      follows:

          (a)  if the other Party is in breach of its material obligations
               hereunder by causes and reasons within its control, or has
               breached, in any material respect, any representations or
               warranties set forth in Article VI, and if capable of being
               cured, has not cured such breach within ninety (90) days after
               notice requesting cure of the breach provided, however, that if
               the breach is not capable of being cured within ninety (90) days
               of such written notice, the Agreement may not be terminated so
               long as the breaching Party commences and is taking commercially
               reasonable actions to cure such breach as promptly as
               practicable; or

          (b)  upon the filing or institution of bankruptcy, reorganization,
               liquidation or receivership proceedings, or upon an assignment of
               a substantial portion of the assets for the benefit of creditors
               by the other Party; provided, however, in the case of any
               involuntary bankruptcy, reorganization, liquidation, receivership
               or assignment proceeding such right to terminate shall only
               become effective if the Party consents to the involuntary
               proceeding or such proceeding is not dismissed within ninety (90)
               days after the filing thereof.

8.3.2 Licensee Rights Not Affected.
      ----------------------------

          (a)  In the event Interneuron terminates this Agreement under Section
               8.3.1(b), or this Agreement is otherwise terminated under Section
               8.3.1(b), or HDCI is a debtor in a bankruptcy proceeding, whether
               voluntary or involuntary, all rights and licenses granted
               pursuant to this Agreement are, and shall otherwise be deemed to
               be, for purposes of Section 365(n) of 11 U.S.C. (S)101 et seq.
               (the "Bankruptcy Code"), licenses of rights to "intellectual
               property" as defined under Section 101(35A) of the Bankruptcy
               Code. The Parties agree that Interneuron, as a licensee of such
               rights under this Agreement, shall retain and may fully exercise
               all of its rights, remedies and elections under the Bankruptcy
               Code. The Parties further agree that, in the event of the
               commencement of a bankruptcy proceeding by or against HDCI under
               the Bankruptcy Code, Interneuron shall be entitled to all
               applicable rights under Section 365 of the Bankruptcy Code,
               including but not limited to, entitled to a complete duplicate of
               (or complete access to, as appropriate) any such intellectual

                                       21
<PAGE>

               property and all embodiments of such intellectual property upon
               written request therefor by Interneuron.

          (b)  In the event Interneuron is a debtor in a bankruptcy proceeding,
               whether voluntary or involuntary, all rights and licenses granted
               pursuant to this Agreement are, and shall otherwise be deemed to
               be, for purposes of Section 365 of the Bankruptcy Code, executory
               contracts. The Parties agree that applicable law does not excuse
               HDCI from accepting performance by, or rendering performance
               under this Agreement and all rights and licenses granted
               hereunder to, a person or entity other than Interneuron.
               Interneuron, as a licensee of such rights under this Agreement,
               shall retain and may fully exercise all of its rights, remedies
               and elections under the Bankruptcy Code.

8.4.  Effect of Expiration or Termination.  Expiration or termination of this
      -----------------------------------
      Agreement shall not relieve the Parties of any obligation accruing prior
      to such expiration or termination. In addition to any other provisions of
      this Agreement which by their terms continue after the expiration of this
      Agreement, the provisions of Article IV shall survive the expiration or
      termination of this Agreement and shall continue in effect for five (5)
      years from the date of expiration or termination. Any expiration or early
      termination of this Agreement shall be without prejudice to the rights of
      any Party against the other accrued or accruing under this Agreement prior
      to termination, including the obligation to pay royalties for Product (s)
      or Compound sold prior to such termination.

      Except as otherwise provided in this Section 8, in the event of
      termination by Interneuron pursuant to Section 8.2, Interneuron shall
      promptly return any and all HDCI Know-How in its possession at the time of
      termination. If requested by HDCI, Interneuron and HDCI shall negotiate in
      good faith the commercially reasonable terms of an exclusive license from
      Interneuron to HDCI of all information, materials, Improvements,
      processes, formulas, data, inventions, know-how, trademarks, patent
      applications, patents, regulatory approvals and intellectual property
      rights which relate to Compound or Product and which are in Interneuron's
      possession or control and as to which Interneuron has the right to license
      or sublicense to HDCI without compensation to any third party (unless HDCI
      agrees to pay Interneuron any such compensation) and Interneuron shall use
      reasonable efforts to have all relevant contracts with third parties
      related to Compound or Product assigned to HDCI, provided HDCI assumes
      related obligations under such contracts.

      Except as otherwise provided in this Section 8, in the event of
      termination by HDCI pursuant to Section 8.3.1(a), Interneuron shall
      promptly return any and all HDCI Know-How in its possession at the time of
      termination. If requested by HDCI, Interneuron and HDCI shall negotiate in
      good faith the commercially reasonable terms of a non-exclusive license
      from Interneuron to HDCI of all information, materials, Improvements,
      processes, formulas, data, inventions, know-how, trademarks, patent
      applications, patents, regulatory approvals and intellectual property
      rights which relate to Compound or Product and which are in Interneuron's
      possession or control and as to which Interneuron has the right to license
      or sublicense to HDCI without compensation to any third party

                                       22
<PAGE>

      (unless HDCI agrees to pay Interneuron any such compensation) and
      Interneuron shall use reasonable efforts to have all relevant contracts
      with third parties related to Compound or Product assigned to HDCI,
      provided HDCI assumes related obligations under such contracts.

                                  ARTICLE IX
                                 MISCELLANEOUS

9.1.  Force Majeure.  Neither Party shall be held liable or responsible to the
      -------------
      other Party nor be deemed to have defaulted under or breached the
      Agreement for failure or delay in fulfilling or performing any term of the
      Agreement during the period of time when such failure or delay is caused
      by or results from causes beyond the reasonable control of the affected
      Party including, but not limited to, fire, flood, embargo, war, acts of
      war (whether war be declared or not), insurrection, riot, civil commotion,
      strike, lockout or other labor disturbance, act of God or act, omission or
      delay in acting by any governmental authority or the other Party. The
      affected Party shall notify the other Party of such force majeure
      circumstances as soon as reasonably practicable.

9.2.  Assignment.  The Agreement may not be assigned or otherwise transferred,
      ----------
      nor, except as expressly provided hereunder, may any right or obligations
      hereunder be assigned or transferred by a Party; provided, however, that
      either Party may assign this Agreement and its rights and obligations
      hereunder to an Affiliate or in connection with the transfer or sale of
      all or substantially all of its assets related to Compound or Product or
      its business or in the event of its merger or consolidation or change in
      control or similar transaction. Except as otherwise set forth herein, any
      permitted assignee shall assume all obligations of its assignor under this
      Agreement.

9.3.  Severability.  In the event that any of the provisions contained in this
      ------------
      Agreement are held invalid, illegal or unenforceable in any respect, the
      validity, legality and enforceability of the remaining provisions
      contained herein shall not in any way be affected or impaired thereby,
      unless the absence of the invalidated provision(s) adversely affect the
      substantive rights of the Parties. In such event, the Parties shall
      replace the invalid, illegal or unenforceable provision(s) with valid,
      legal and enforceable provision(s) which, insofar as practical, implement
      the purposes of this Agreement.

9.4.  Notices.  All notices or other communications which are required or
      -------
      permitted hereunder shall be in writing and sufficient if delivered
      personally, sent by facsimile (and promptly confirmed by personal
      delivery, registered or certified mail or overnight courier), sent by
      nationally-recognized overnight courier or sent by registered or certified
      mail, postage prepaid, return receipt requested, addressed as follows:

          if to Interneuron to:

               Interneuron Pharmaceuticals, Inc.
               99 Hayden Avenue, Suite 200
               Lexington, MA  02421
               Attention:  President
               Fax No.:  781-862-3859

                                       23
<PAGE>

          if to HeavenlyDoor.com, Inc. to:

               HeavenlyDoor.com, Inc.
               1180 Avenue of the Americas, Suite 1447
               New York, NY 10036
               Attention:  President
               Fax No.:   212-899-5291

or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith.  Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by facsimile on a Business Day, upon confirmed delivery by
nationally-recognized overnight courier if so delivered and on the third
Business Day following the date of mailing if sent by registered or certified
mail.

9.5.  Applicable Law.  The Agreement shall be governed by and construed in
      --------------
      accordance with the laws of the United States of America and State of New
      York and the United States without reference to any rules of conflict of
      laws.

9.6.  Dispute Resolution.  The Parties agree to attempt initially to solve all
      ------------------
      claims, disputes, or controversies arising under, out of, or in connection
      with this Agreement by conducting good faith negotiations. If the Parties
      are unable to settle the matter between themselves within forty-five (45)
      days, either Party may initiate mediation upon written notice to the other
      Party. If the Parties have not reached a settlement within forty-five (45)
      days of the initiation of the mediation, then either Party may initiate
      binding arbitration proceedings. Whenever a Party shall decide to
      institute arbitration proceedings, it shall give written notice to that
      effect to the other Party. The Party giving such notice shall refrain from
      instituting the arbitration proceedings for a period of sixty (60) days
      following such notice. During such period, the Parties shall continue to
      make good faith efforts to amicably resolve the dispute without
      arbitration. Any arbitration hereunder shall be conducted under the rules
      of the American Arbitration Association ("AAA"). Each such arbitration
      shall be conducted by a panel of three arbitrators: one arbitrator shall
      be appointed by each of Interneuron and HDCI and the third shall be
      appointed by the AAA. Any such arbitration shall be held in New York, New
      York. The arbitrators shall have the authority to grant specific
      performance. Judgment upon the award so rendered may be entered in any
      court having jurisdiction or application may be made to such court for
      judicial acceptance of any award and an order of enforcement, as the case
      may be. In no event shall a demand for arbitration be made after the date
      when institution of a legal or equitable proceeding based on such claim,
      dispute or other matter in question would be barred by the applicable
      statute of limitations. Each Party shall bear its own costs and expenses
      incurred in connection with any arbitration proceeding and the Parties
      shall equally share the cost of the arbitration levied by the AAA

9.7.  Entire Agreement.  This Agreement contains the entire understanding of the
      ----------------
      Parties with respect to the subject matter hereof.  All express or implied
      agreements and understandings, either oral or written, heretofore made are
      expressly merged in and made

                                       24
<PAGE>

      a part of this Agreement. This Agreement may be amended, or any term
      hereof modified, only by a written instrument duly executed by all Parties
      hereto.

9.8.  Independent Contractors.  It is expressly agreed that the Parties shall be
      -----------------------
      independent contractors and that the relationship between the Parties
      shall not constitute a partnership, joint venture or agency. Neither Party
      shall have the authority to make any statements, representations or
      commitments of any kind, or to take any action, which shall be binding on
      the other Party, without the prior consent of such other Party.

9.9.  Waiver.  The waiver by a Party hereto of any right hereunder or the
      ------
      failure to perform or of a breach by another Party shall not be deemed a
      waiver of any other right hereunder or of any other breach or failure by
      said other Party whether of a similar nature or otherwise.

9.10. Headings.  The captions to the several Articles and Sections hereof are
      --------
      not a part of the Agreement, but are merely guides or labels to assist in
      locating and reading the several Articles and Sections hereof.

9.11. Counterparts.  The 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.

      IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

HEAVENLYDOOR.COM, INC.


By: /s/ John Dee
   ------------------------------------
   Name:  John Dee
   Title:  Vice Chairman


INTERNEURON PHARMACEUTICALS, INC.



By: /s/ Glenn L. Cooper, M.D.
   ------------------------------------
   Name:  Glenn L. Cooper, M.D.
   Title:  President and Chief Executive Officer

                                       25
<PAGE>

                                 SCHEDULE 1.26
                                 -------- ----
                                 PATENT ASSETS

<TABLE>
<CAPTION>
      DOCKET                      SUMMARY OF CLAIMS                        CURRENT STATUS
   (US FILING)
------------------------------------------------------------------------------------------------
 <S>              <C>                                             <C>
PRO93-13            Use of aldehyde/aromatic sulfonic acid          Abandoned in favor of
(11/23/93)          condensates to inhibit gp120/CD4 binding and    PRO93-13A
                    HIV infection of CD4+ cells in an individual
                    and in blood preparations.

------------------------------------------------------------------------------------------------
PRO93-13A           Use of aldehyde/aromatic sulfonic acid          Issued as U. S. Patent
(5/19/94)           condensates to inhibit or treat HIV infection   5,614,559  (3/25/97)
                    in an individual, and to inhibit HIV            Filed in PCT (11/17/94)
                    infection in a blood preparation.               National/regional filings
                    EPO Application contains composition claims.    in Canada, Japan, EPO
                                                                    (only)  (5/23/96)
------------------------------------------------------------------------------------------------
PRO93-13A2**        Use of aldehyde/aromatic sulfonic acid          Issued as U. S. Patent
(6/6/95)            condensates to prevent or treat HIV infection   5,677,343  (10/14/97)
                    in an individual, and to inhibit HIV            No international filing
                    infection in a blood preparation.
                    Composition claims abandoned.

------------------------------------------------------------------------------------------------
PRO93-13AB**        Composition claims to narrow or monodispersed   Issued as U. S. Patent
(6/6/95)            condensation polymer of naphthalene sulfonic    6,075,050  (6/13/00)
                    acid and aldehyde.  Method claims abandoned.    No international filing

------------------------------------------------------------------------------------------------
[*]                 [*]                                             [*]
------------------------------------------------------------------------------------------------
PRO97-01            Method of preventing pregnancy.                 Issued as U.S. Patent
(5/1/97)                                                            5,958,399 (9/28/99)
                                                                    Filed in PCT and South
                                                                    Africa (4/30/98);  Allowed
                                                                    in South Africa (2/25/99)
                                                                    National/regional filings
                                                                    in EPO, Russian Fed.,
                                                                    Canada, Mexico, Brazil,
                                                                    China, Japan, S. Korea,
                                                                    Australia and New Zealand
------------------------------------------------------------------------------------------------
</TABLE>
________________________
*  Confidential treatment requested.
**  PRO93-13A2, AB, and AC filed as identical applications; AC abandoned

                                       26
<PAGE>

                                 SCHEDULE 3.7
                                 ------------
                            THIRD PARTY AGREEMENTS

1.   MRC. Interneuron hereby assumes the obligations of HDCI under Section 2.3
     ---
of the MRC 1996 Agreement and Section 2.2 of the MRC 1999 Agreement.  The
Parties shall use commercially reasonable efforts to promptly execute an
agreement among MRC, HDCI and Interneuron which includes an obligation for MRC
to release HDCI from the obligations assumed by Interneuron hereunder and,
during the negotiation of such agreement, HDCI shall use commercially reasonable
efforts to assist in obtaining MRC's agreement to modify the terms of Section
2.3 of the MRC 1996 Agreement and Section 2.2 of the MRC 1999 Agreement as
acceptable to Interneuron.

     HDCI shall remain responsible for and shall pay when due any royalties
required to be paid to MRC under the MRC 1996 Agreement.

     HDCI shall pay any remaining study payments due to MRC under the MRC 1996
Agreement or the MRC 1999 Agreement to the extent incurred prior to the
Effective Date (including without limitation the payment of $[*] due upon
submission of the data summary and the payment of $[*]  for additional studies
as outlined in the letter from MRC dated May 20, 1999).  HDCI has received the
final data summary and shall use its best efforts to obtain all research results
from MRC under the MRC 1999 Agreement, and shall provide such data summary and
research results to Interneuron when received.

2.   DAIDS. HDCI shall pay any remaining amounts due for the distribution of
     -----
Compound (anticipated to be less than $[*]) or any other payments to the extent
incurred prior to the Effective Date under the Clinical Trial Agreement between
the Division of AIDS, National Institute of Allergy and Infectious Diseases
("DAIDS") and HDCI dated March 3, 1999 (the "NIH Agreement").  Notwithstanding
the foregoing, Interneuron shall be responsible for any costs associated with an
optional ancillary study involving the analysis of plasma under the NIH
Agreement payable after the Effective Date (anticipated to be approximately
$[*]) only if Interneuron notifies HDCI that Interneuron wants such study
performed.  HDCI shall use its best efforts to obtain the research results from
DAIDS and shall provide such research results to Interneuron when received.  In
the event HDCI is unable to obtain the research results from DAIDS, HDCI hereby
grants Interneuron permission to obtain the data directly from DAIDS.

3.   Schweizerhall.  Promptly after the Effective Date, HDCI shall terminate the
     -------------
Agreement between HDCI and Schweizerhall dated February 10, 2000 (the
"Schweizerhall Agreement").  HDCI shall be responsible for any costs associated
with the termination of the Schweizerhall Agreement.

4.   PHARM-ECO.  HDCI shall use its best efforts to obtain the results of Pharm-
     ---------
Eco's activities under the Research and Manufacturing Contract between HDCI and
Pharm-Eco Laboratories,
-----------------------------------
*  Confidential treatment requested.

                                       27
<PAGE>

Inc. ("Pharm-Eco") dated March 14, 1994 (the "Pharm-Eco Agreement") from Pharm-
Eco and shall provide such results to Interneuron when received. HDCI shall pay
any remaining amounts due to Pharm-Eco to the extent incurred prior to the
Effective Date including without limitation the costs of the May, 2000 stability
study pull, except that Interneuron shall be responsible for the payment of any
fees for the one (1) stability study pull scheduled to be performed after the
Effective Date of this Agreement (which are anticipated to be approximately
$[*]). As set forth in the letter from Pharm-Eco to the FDA dated June 8, 2000,
Interneuron may cross-reference or otherwise refer to the drug master files for
the Compound.

5.   DOW. HDCI shall inform Dow Pharmaceutical Sciences ("Dow") that HDCI grants
     ---
its permission for Interneuron to continue the stability studies and protocols
that are being conducted at Dow.  HDCI shall pay any remaining amounts due to
Dow to the extent incurred prior to the Effective Date (including without
limitation, the fee of approximately $[*] for the stability study pull
authorized on April 19, 2000) and Interneuron shall be responsible for the
payment of any fees for any stability study pulls performed after the Effective
Date of this Agreement.  HDCI shall use its best efforts to obtain the data
generated by Dow and shall provide such data to Interneuron when it is received.

-----------------------------------
*  Confidential treatment requested.

                                       28
<PAGE>

                                 APPENDIX 4.2
                                 ------------

                             FORM OF PRESS RELEASE

                                       29
<PAGE>

                                APPENDIX 5.2(A)
                                ---------------

                           Phase 2 Study Guidelines
                           ------------------------

     Phase 2 clinical trials of vaginal microbicides are designed primarily to
evaluate safety in populations of women at risk for acquiring HIV infection
and/or other sexually transmitted diseases.  It is envisioned that these studies
will be conducted in developing countries; [*] female participants will be asked
to apply the product for two or more weeks while engaging in sexual intercourse.
Detailed safety assessments will be performed on each participant.

     A Phase 2 study protocol ("PREVENT") is being developed by the Medical
Research Council (MRC) Clinical Trials Unit (London, U.K.) in association with
investigators at Imperial College School of Medicine (London, U.K.), The
Institute for Tropical Medicine (Antwerp, Belgium), the MRC Programme on AIDS in
Uganda (Entebbe, Uganda), Nsambya Hospital (Kampala, Uganda) and the Centre de
Confiance (Abidjan, Cote d'Ivoire).  The study is partially funded through a
grant awarded by the European Commission.  Two populations will be involved: a
cohort of female commercial sex workers recruited in Abidjan, Cote d'Ivoire, and
a cohort of women recruited at family planning and infertility clinics in
Uganda.  Currently, it is envisioned that [*] women will be randomized to
receive PRO 2000 Gel ([*]) or a matched placebo gel ([*]).  These participants
will be asked to apply the gel prior to each act of sexual intercourse for four
weeks.  Pelvic examinations (with colposcopy) will be conducted at [*]
intervals, and the incidence of epithelial disruption determined.  In addition,
effects on the vaginal microenvironment and laboratory safety parameters will be
assessed.  Acceptability will be assessed using questionnaires.

-----------------------------------
*  Confidential treatment requested.

                                       30
<PAGE>

                                APPENDIX 5.2(B)
                                ---------------
                           Phase 3 Study Guidelines
                           ------------------------

     Phase 3 clinical trials of vaginal microbicides are designed to gather
information on long-term safety and protective efficacy.  Such studies will be
conducted in populations of women who are at risk for acquiring HIV infection
and/or other sexually transmitted diseases.  The sample size will need to be
sufficiently large to assess the risks and benefits of the product; exact
numbers of participants will be determined by statisticians based on the level
of protection anticipated, the proposed dosing period, the incidence of
infection in the target population(s), and the expected loss to follow-up.

     The HIV Prevention Trials Network (HPTN) of the National Institute of
Allergy and Infectious Diseases (NIAID) is developing a protocol for a Phase 3
trial.  The HPTN Science Working Group currently envisions a multi-center,
randomized, double-blind, placebo-controlled design that will be sized to
detect, with statistical significance, an [*] % or [*] reduction in HIV/STD
transmission rates.  Women will be asked to use the product prior to each act of
intercourse for six months or more, and will be monitored periodically for
evidence of infection and safety problems.  For ethical reasons, the use of male
condoms by the participant's sexual partners will be promoted, but it is
envisioned that enrollment will be limited to women who report difficulty in
adhering to a program of consistent condom use.  The protocol may be divided
into Phase 2 safety and Phase 3 safety and efficacy stages.

-----------------------------------
*  Confidential treatment requested.

                                       31
<PAGE>

                                 APPENDIX 7.1
                                 ------------

                 Patent Counsel Reasonably Acceptable to HDCI

1.  Gilberto (Ybet) Villacorta

                                       32
</TEXT>
</DOCUMENT>
