COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT

EXHIBIT 10.20


PUBLIC HEALTH SERVICE


COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT


This Cooperative Research and Development Agreement, hereinafter referred to as the "CRADA," consists of this Cover Page, an attached Agreement, and various Appendices referenced in the Agreement. This Cover Page serves to identify the Parties to this CRADA:


(1) the following Bureau(s), Institute(s), Center(s) or Division(s) of the National Institutes of Health ("NIH"), the Food and Drug Administration ("FDA"), and the Centers for Disease Control and Prevention ("CDC"):


The National Cancer Institute hereinafter singly or collectively referred to as the Public Health Service ("PHS"); and


(2) Maxygen, Incorporated, which has offices at 515 Galveston Drive, Redwood City, California, 94063 hereinafter referred to as the "Collaborator."


THE SYMBOL "*******" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT


Article 1. Introduction


This Cooperative Research and Development Agreement (CRADA) between PHS and the Collaborator will be effective when signed by all Parties. The research and development activities which will be undertaken by each of the Parties in the course of this CRADA are detailed in the Research Plan (RP) which is attached as Appendix A. The funding and staffing commitments of the Parties are set forth in Appendix B. Any exceptions or changes to the CRADA are set forth in Appendix C. This CRADA is made under the authority of the Federal Technology Transfer Act, 15 U.S.C. (S)3710a and is governed by its terms.


Article 2. Definitions


As used in this CRADA, the following terms shall have the indicated meanings:


2.1 "Affiliate" means any corporation or other business entity controlled by,
controlling, or under common control with Collaborator. For this purpose, A
"control" means direct or indirect beneficial ownership of at least fifty
(50) percent of the voting stock or at least fifty (50) percent interest in
the income of such corporation or other business.


2.2 "Cooperative Research and Development Agreement" or "CRADA" means this
Agreement, entered into by PHS pursuant to the Federal Technology Transfer
Act of 1986, as amended, 15 U.S.C. 3710a et seq. and Executive Order 12591
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of October 10, 1987.


2.3 "Government" means the Government of the United States as represented
through the PHS agency that is a Party to this agreement.


2.4 "IP" means intellectual property.


2.5 "Invention" means any invention or discovery which is or may be patentable
or otherwise protected under title 35, United States Code, or any novel
variety or plant which is or may be protectable under the Plant Variety
Protection Act (7 U.S.C. 2321 et seq.).
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2.6 "Principal Investigator(s)" or "PIs" means the persons designated
respectively by the Parties to this CRADA who will be responsible for the
scientific and technical conduct of the RP.


2.7 "Proprietary/Confidential Information" means confidential scientific,
business, or financial information provided that such information does not
include:


2.7.1. information that is publicly known or available from other sources
who are not under a confidentiality obligation to the source of the
information;


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2.7.2. information which has been made available by its owners to others
without a confidentiality obligation;


2.7.3. information which is already known by or available to the receiving
Party without a confidentiality obligation; or


2.7.4. information which relates to potential hazards or cautionary
warnings associated with the production, handling or use of the
subject matter of the Research Plan of this CRADA.


2.8 "Research Materials" means all tangible materials other than Subject Data
first produced in the performance of this CRADA.


2.9 "Research Plan" or "RP" means the statement in Appendix A of the respective
research and development commitments of the Parties to this CRADA.


2.10 "Subject Invention" means any Invention of the Parties, conceived or first
actually reduced to practice in the performance of the Research Plan of
this CRADA.


2.11 "Subject Data" means all recorded information first produced in the
performance of this CRADA by the Parties.


Article 3. Cooperative Research


3.1 Principal Investigators. PHS research work under this CRADA will be
performed by the PHS laboratory identified in the RP, and the PHS Principal
Investigator (PI) designated in the RP will be responsible for the
scientific and technical conduct of this project on behalf of PHS. Also
designated in the RP is the Collaborator PI who will be responsible for the
scientific and technical conduct of this project on behalf of the
Collaborator.


3.2 Research Plan Change. The RP may be modified by mutual written consent of
the Principal Investigators. Substantial changes in the scope of the RP
will be treated as amendments under Article 13.6.


Article 4. Reports


4.1 Interim Reports. The Parties shall exchange formal written interim
progress reports on a schedule agreed to by the PIs, but at least within
twelve (12) months after this CRADA becomes effective and at least within
every twelve (12) months thereafter. Such reports shall set forth the
technical progress made, identifying such problems as may have been
encountered and establishing goals and objectives requiring further effort,
any modifications to the Research Plan pursuant to Article 3.2, and all
CRADA-related patent applications filed.


4.2 Final Reports. The Parties shall exchange final reports of their results
within four (4) months after completing the projects described in the RP or
after the expiration or termination of this CRADA.


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Article 5. Financial and Staffing Obligations


5.1 PHS and Collaborator Contributions. The contributions of the Parties,
including payment schedules, if applicable, are set forth in Appendix B.
PHS shall not be obligated to perform any of the research specified herein
or to take any other action required by this CRADA if the funding is not
provided as set forth in Appendix B. PHS shall return excess funds to the
Collaborator when it sends its final fiscal report pursuant to Article 5.2,
except for staffing support pursuant to Article 10.3. Collaborator
acknowledges that the U.S. Government will have the authority to retain and
expend any excess funds for up to one (1) year subsequent to the expiration
or termination of the CRADA to cover any costs incurred during the term of
the CRADA in undertaking the work set forth in the RP.


5.2 Accounting Records. PHS shall maintain separate and distinct current
accounts, records, and other evidence supporting all its obligations under
this CRADA, and shall provide the Collaborator a final fiscal report
pursuant to Article 4.2.


5.3 Capital Equipment. Equipment purchased by PHS with funds provided by the
Collaborator shall be the property of PHS. All capital equipment provided
under this CRADA by one party for the use of another Party remains the
property of the providing Party unless other disposition is mutually agreed
upon by in writing by the Parties. If title to this equipment remains with
the providing Party, that Party is responsible for maintenance of the
equipment and the costs of its transportation to and from the site where it
will be used.


Article 6. Intellectual Property Rights and Patent Applications


6.1 Reporting. The Parties shall promptly report to each other in writing each
Subject Invention resulting from the research conducted under this CRADA
that is reported to them by their respective employees. Each Party shall
report all Subject Inventions to the other Party in sufficient detail to
determine inventorship. Such reports shall be treated as
Proprietary/Confidential Information in accordance with Article 8.4.


6.2 Collaborator Employee Inventions. If the Collaborator does not elect to
retain its IP rights, the Collaborator shall offer to assign these IP
rights to the Subject Invention to PHS pursuant to Article 6.5. If PHS
declines such assignment, the Collaborator may release its IP rights as it
may determine.


6.3 PHS Employee Inventions. PHS on behalf of the U.S. Government may elect to
retain IP rights to each Subject Invention made solely by PHS employees.
If PHS does not elect to retain IP rights, PHS shall offer to assign these
IP rights to such Subject Invention to the Collaborator pursuant to Article
6.5. If the Collaborator declines such assignment, PHS may release IP
rights in such Subject Invention to its employee inventors pursuant to
Article 6.6.


6.4 Joint Inventions. Each Subject Invention made jointly by PHS and
Collaborator employees shall be jointly owned by PHS and the Collaborator.
The Collaborator may elect to file the joint patent or other IP
application(s) thereon and shall notify PHS promptly upon making this
election. If the Collaborator decides to file such applications,


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it shall do so in a timely manner and at its own expense. If the
Collaborator does not elect to file such application(s), PHS on behalf of
the U.S. Government shall have the right to file the joint application(s)
in a timely manner and at its own expense. If either Party decides not to
retain its IP rights to a jointly owned Subject Invention, it shall offer
to assign such rights to the other Party pursuant to Article 6.5. If the
other Party declines such assignment, the offering Party may release its IP
rights as provided in Articles 6.2, 6.3, and 6.6.


6.5 Filing of Patent Applications. With respect to Subject Inventions made by
the Collaborator as described in Article 6.2, or by PHS as described in
Article 6.3, a Party exercising its right to elect to retain IP rights to a
Subject Invention agrees to file patent or other IP applications in a
timely manner and at its own expense and after consultation with the other
Party. The Party shall notify the other Party of its decision regarding
filing in countries other than the United States in a timely manner. The
Party may elect not to file a patent or other IP application thereon in any
particular country or countries provided it so advises the other Party
ninety (90) days prior to the expiration of any applicable filing deadline,
priority period or statutory bar date, and hereby agrees to assign its IP
right, title and interest in such country or countries to the Subject
Invention to the other Party and to cooperate in the preparation and filing
of a patent or other IP applications. In any countries in which title to
patent or other IP rights is transferred to the Collaborator, the
Collaborator agrees that PHS inventors will share in any royalty
distribution that the Collaborator pays to its own inventors.


6.6 Release to Inventors. In the event neither of the Parties to this CRADA
elects to file a patent or other IP application on a Subject Invention,
either or both (if a joint invention) may retain or release their IP rights
in accordance with their respective policies and procedures. However, the
Government shall retain a nonexclusive, non-transferable, irrevocable,
royalty-free license to practice any such Subject Invention or have it
practiced throughout the world by or on behalf of the Government.


6.7 Patent Expenses. The expenses attendant to the filing of patent or other
IP applications generally shall be paid by the Party filing such
application. If an exclusive license to any Subject Invention is granted
to the Collaborator, the Collaborator shall be responsible for all past and
future out-of-pocket expenses in connection with the preparation, filing,
prosecution and maintenance of any applications claiming such exclusively-
licensed inventions and any patents or other IP grants that may issue on
such applications. The Collaborator may waive its exclusive license rights
on any application, patent or other IP grant at any time, and incur no
subsequent compensation obligation for that application, patent or IP
grant.


6.8 Prosecution of Intellectual Property Applications. Within one month of
receipt or filing, each Party shall provide the other Party with copies of
the applications and all documents received from or filed with the relevant
patent or other IP office in connection with the prosecution of such
applications. Each Party shall also provide the other Party with the power
to inspect and make copies of all documents retained in the patent or other
IP application files by the applicable patent or other IP office. Where
licensing is contemplated by Collaborator, the Parties agree to consult
with each other with respect to


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the prosecution of applications for PHS Subject Inventions described in
Article 6.3 and joint Subject Inventions described in Article 6.4. If the
Collaborator elects to file and prosecute IP applications on joint Subject
Inventions pursuant to Article 6.4, PHS will be granted an associate power
of attorney (or its equivalent) on such IP applications.


Article 7. Licensing


7.1 Option for Commercialization License. With respect to Government IP rights
to any Subject Invention not made solely by the Collaborator's employees
for which a patent or other IP application is filed, PHS hereby grants to
the Collaborator an exclusive option to elect an exclusive or nonexclusive
commercialization license, which is substantially in the form of the
appropriate model PHS license agreement. This option does not apply to
Subject Inventions conceived prior to the effective date of this CRADA that
are reduced to practice under this CRADA, if prior to that reduction to
practice, PHS has filed a patent application on the invention and has
licensed it or offered to license it to a third party. The terms of the
license will fairly reflect the nature of the invention, the relative
contributions of the Parties to the invention and the CRADA, the risks
incurred by the Collaborator and the costs of subsequent research and
development needed to bring the invention to the marketplace. The field of
use of the license will be commensurate with the scope of the RP.


7.2 Exercise of License Option. The option of Article 7.1 must be exercised by
written notice mailed within three (3) months after either (i) Collaborator
receives written notice from PHS that the patent or other IP application
has been filed; or (ii) the date Collaborator files such IP application.
Exercise of this option by the Collaborator initiates a negotiation period
that expires nine (9) months after the exercise of the option. If the last
proposal by the Collaborator has not been responded to in writing by PHS
within this nine (9) month period, the negotiation period shall be extended
to expire one (1) month after PHS so responds, during which month the
Collaborator may accept in writing the final license proposal of PHS. In
the absence of such acceptance, or an extension of the time limits by PHS,
PHS will be free to license such IP rights to others. In the event that
the Collaborator elects the option for an exclusive license, but no such
license is executed during the negotiation period, PHS agrees not to make
an offer for an exclusive license on more favorable terms to a third party
for a period of six (6) months without first offering Collaborator those
more favorable terms. These times may be extended at the sole discretion of
PHS upon good cause shown in writing by the Collaborator.


7.3 License for PHS Employee Inventions and Joint Inventions. Pursuant to 15
U.S.C. (S) 3710a(b)(1)(A), for Subject Inventions made under this CRADA by
a PHS employee(s) or jointly by such employee(s) and employees of the
Collaborator pursuant to Articles 6.3 and 6.4 and licensed pursuant to the
option of Article 7.1, the Collaborator grants to the Government a
nonexclusive, nontransferable, irrevocable, paid-up license to practice the
invention or have the invention practiced throughout the world by or on
behalf of the Government. In the exercise of such license, the Government
shall not publicly disclose trade secrets or commercial or financial
information that is privileged or confidential


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within the meaning of 5 U.S.C. 552(b)(4) or which would be considered as
such if it had been obtained from a non-Federal party.


7.4 License in Collaborator Inventions. Pursuant to 15 U.S.C. (S) 3710a(b)(2),
for inventions made solely by Collaborator employees under this CRADA
pursuant to Article 6.2, the Collaborator grants to the Government a
nonexclusive, nontransferable, irrevocable, paid-up license to practice the
invention or have the invention practiced throughout the world by or on
behalf of the Government for research or other Government purposes.


7.5 Third Party License. Pursuant to 15 U.S.C. (S) 3710a(b)(1)(B), if PHS
grants an exclusive license to a Subject Invention made wholly by PHS
employees or jointly with a Collaborator under this CRADA, pursuant to
Articles 6.3 and 6.4, the Government shall retain the right to require the
Collaborator to grant to a responsible applicant a nonexclusive, partially
exclusive, or exclusive sublicense to use the invention in Collaborator's
licensed field of use on terms that are reasonable under the circumstances;
or if the Collaborator fails to grant such a license, to grant the license
itself. The exercise of such rights by the Government shall only be in
exceptional circumstances and only if the Government determines (i) the
action is necessary to meet health or safety needs that are not reasonably
satisfied by Collaborator, (ii) the action is necessary to meet
requirements for public use specified by Federal regulations, and such
requirements are not reasonably satisfied by the Collaborator; or (iii) the
Collaborator has failed to comply with an agreement containing provisions
described in 15 U.S.C. 3710a(c)(4)(B). The determination made by the
Government under this Article is subject to administrative appeal and
judicial review under 35 U.S.C. 203(2).


7.6 Joint Inventions Not Exclusively Licensed. In the event that the
Collaborator does not acquire an exclusive commercialization license to IP
rights in all fields in joint Subject Inventions described in Article 6.4,
then each Party shall have the right to use the joint Subject Invention and
to license its use to others in all fields not exclusively licensed to
Collaborator. The Parties may agree to a joint licensing approach for such
IP rights.


Article 8. Proprietary Rights and Publication


8.1 Right of Access. PHS and the Collaborator agree to exchange all Subject
Data produced in the course of research under this CRADA. Research
Materials will be shared equally by the Parties to the CRADA unless other
disposition is agreed to by the Parties. All Parties to this CRADA will be
free to utilize Subject Data and Research Materials for their own purposes,
consistent with their obligations under this CRADA.


8.2 Ownership of Subject Data and Research Materials. Subject to the sharing
requirements of Paragraph 8.1 and the regulatory filing requirements of
Paragraph 8.3, the producing Party will retain ownership of and title to
all Subject Inventions, all Subject Data and all Research Materials
produced solely by their investigators. Jointly developed Subject
Inventions, Subject Data and Research Materials will be jointly owned.


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8.3 Dissemination of Subject Data and Research Materials. To the extent
permitted by law, the Collaborator and PHS agree to use reasonable efforts
to keep Subject Data and Research Materials confidential until published or
until corresponding patent applications are filed. Any information that
would identify human subjects of research or patients will always be
maintained confidentially. To the extent permitted by law, the
Collaborator shall have the exclusive right to use any and all CRADA
Subject Data in and for any regulatory filing by or on behalf of
Collaborator, except that PHS shall have the exclusive right to use Subject
Data for that purpose, and authorize others to do so, if the CRADA is
terminated or if Collaborator abandons its commercialization efforts.


8.4 Proprietary/Confidential Information. Each Party agrees to limit its
disclosure of Proprietary/Confidential Information to the amount necessary
to carry out the Research Plan of this CRADA, and shall place a
confidentiality notice on all such information. Confidential oral
communications shall be reduced to writing within 30 days by the disclosing
Party. Each Party receiving Proprietary/Confidential Information agrees
that any information so designated shall be used by it only for the
purposes described in the attached Research Plan. Any Party may object to
the designation of information as Proprietary/Confidential Information by
another Party. Subject Data and Research Materials developed solely by the
Collaborator may be designated as Proprietary/Confidential Information when
they are wholly separable from the Subject Data and Research Materials
developed jointly with PHS investigators, and advance designation of such
data and material categories is set forth in the RP. The exchange of other
confidential information, e.g., patient-identifying data, should be
similarly limited and treated. Jointly developed Subject Data and Research
Material derived from the Research Plan may be disclosed by Collaborator to
a third party under a confidentiality agreement for the purpose of possible
sublicensing pursuant to the Licensing Agreement and subject to Article
8.7.


8.5 Protection of Proprietary/Confidential Information.
Proprietary/Confidential Information shall not be disclosed, copied,
reproduced or otherwise made available to any other person or entity
without the consent of the owning Party except as required under court
order or the Freedom of Information Act (5 U.S.C. ' 552). Each Party agrees
to use its best efforts to maintain the confidentiality of
Proprietary/Confidential Information. Each Party agrees that the other
Party is not liable for the disclosure of Proprietary/Confidential
Information which, after notice to and consultation with the concerned
Party, the other Party in possession of the Proprietary/Confidential
Information determines may not be lawfully withheld, provided the concerned
Party has been given an opportunity to seek a court order to enjoin
disclosure.


8.6 Duration of Confidentiality Obligation. The obligation to maintain the
confidentiality of Proprietary/Confidential Information shall expire at the
earlier of the date when the information is no longer Proprietary
Information as defined in Article 2.7 or three (3) years after the
expiration or termination date of this CRADA. The Collaborator may request
an extension to this term when necessary to protect
Proprietary/Confidential Information relating to products not yet
commercialized.


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8.7 Publication. The Parties are encouraged to make publicly available the
results of their research. Before either Party submits a paper or abstract
for publication or otherwise intends to publicly disclose information about
a Subject Invention, Subject Data or Research Materials, the other Party
shall be provided thirty (30) days to review the proposed publication or
disclosure to assure that Proprietary/Confidential Information is
protected. The publication or other disclosure shall be delayed for up to
thirty (30) additional days upon written request by any Party as necessary
to preserve U.S. or foreign patent or other IP rights.


Article 9. Representations and Warranties


9.1 Representations and Warranties of PHS. PHS hereby represents and warrants
to the Collaborator that the official signing this CRADA has authority to
do so.


9.2 Representations and Warranties of the Collaborator.


9.2.1. The Collaborator hereby represents and warrants to PHS that the
Collaborator has the requisite power and authority to enter into
this CRADA and to perform according to its terms, and that the
Collaborator's official signing this CRADA has authority to do so.
The Collaborator further represents that it is financially able to
satisfy any funding commitments made in Appendix B.


9.2.2. The Collaborator certifies that the statements herein are true,
complete, and accurate to the best of its knowledge. The
Collaborator is aware that any false, fictitious, or fraudulent
statements or claims may subject it to criminal, civil, or
administrative penalties.


Article 10. Termination


10.1 Termination By Mutual Consent. PHS and the Collaborator may terminate this
CRADA, or portions thereof, at any time by mutual written consent. In such
event the Parties shall specify the disposition of all property,
inventions, patent or other IP applications and other results of work
accomplished or in progress, arising from or performed under this CRADA,
all in accordance with the rights granted to the Parties under the terms of
this Agreement.


10.2 Unilateral Termination. Either PHS or the Collaborator may unilaterally
terminate this entire CRADA at any time by giving written notice at least
thirty (30) days prior to the desired terminatio ...