PART I Financial Information

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(See Exhibit 10.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-4, filed with the SEC on July 14, 2004)

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Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

Chrysalis Patent and Patent Applications Licensed from the University of Texas

*Co-owned by Pfizer, with interest exclusively licensed to The University of Texas through original Agreement with Monsanto (Monsanto Pharmaceuticals was acquired by Pharmacia, which was subsequently acquired by Pfizer)

SECURITY AGREEMENT
(Patents)

     This Security Agreement dated as of [      ] (this “Agreement”), is made by [ASSIGNEE], a [STATE] corporation (the “Debtor”), in favor of the Board of Regents of the University of Texas System, an agency of the State of Texas (the “Secured Party”) through its component institution, The University of Texas Medical Branch at Galveston (the “University”).

INTRODUCTION

     Reference is made to that certain Patent Assignment Agreement dated as of [       ] (as amended, restated, modified, or supplemented from time to time, the “Patent Assignment Agreement”), between the Secured Party and the Debtor. The Patent Assignment Agreement, among other things, contemplates a possibility of the grant of a security interest in Assignee’s interest therein upon the occurrence of certain events.

     NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Debtor agrees with the Secured Party as follows:

Section 1. DEFINITIONS

     1.1 Terms defined above and elsewhere in this Agreement shall have their specified meanings. Capitalized terms used herein but not defined herein shall have the meanings specified in the Patent Assignment Agreement. Capitalized terms that are neither defined herein nor in the Patent Assignment Agreement shall have the meanings specified in Article 9 of the UCC.

     1.2 The following terms shall have the following meanings:

     “Carney” means Darrel H. Carney, Ph.D.

     “Collateral” means any and all of the Debtor’s present and future rights in and to the Patent Rights assigned to Debtor under the Patent Assignment Agreement and the inventions claimed therein, and all proceeds thereof.

     “Event of Default” means a default of the Debtor in its payment obligations under the Patent Assignment Agreement.

     “Patent License Documents” means the Patent Assignment Agreement, and any other documents made or delivered from time to time in connection therewith, but shall not include that certain Patent License Agreement dated as of         , 2004 between the Secured Party and the Debtor.

     “Secured Obligations” means (a) all principal, interest, fees, reimbursements, indemnifications, and other amounts now or hereafter owed by the Debtor to the Secured Party under this Agreement, the Patent Assignment Agreement, and the other Patent Assignment Documents; and (b) any increases, extensions, and rearrangements of the foregoing obligations under any amendments, supplements, and other modifications of the agreements creating the foregoing obligations.

     “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of Texas.

Section 2. COLLATERAL; GRANT

     2.1 Grant of Security Interest. The Debtor hereby grants to the Secured Party a security interest in all of the Debtor’s present and future right, title, and interest in and to the Collateral to secure the payment and performance of the Secured Obligations. To the extent that the Collateral is not subject to the UCC, the Debtor collaterally assigns all of the Debtor’s right, title, and interest in and to such Collateral to the Secured Party to secure the payment and performance of the Secured Obligations to the full extent that such a collateral assignment is possible under the relevant law.

     2.2 Debtors Remain Liable. Anything herein to the contrary notwithstanding: (a) the Debtor shall remain liable under any contracts and agreements included in the Collateral of the Debtor to the extent set forth therein to perform the Debtor’s obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Secured Party of any rights hereunder shall not release the Debtor from any obligations under any contracts and agreements included in the Collateral of the Debtor; and (c) the Secured Party shall not have any obligation under any contracts and agreements included in the Collateral of the Debtor by reason of this Agreement, nor shall the Secured Party be obligated to perform or fulfill any of the obligations of the Debtor thereunder, including any obligation to make any inquiry as to the nature or sufficiency of any payment that the Debtor may be entitled to receive thereunder, to present or file any claim, or to take any action to collect or enforce any claim for payment thereunder.

     2.3 Financing Statements. The Debtor represents and warrants to and agrees with the Secured Party as follows:

          (a) As of the date of this Agreement, the true and correct name of the Debtor as listed on the Debtor’s certificate of incorporation is the name specified for the Debtor on the signature page of this Agreement. The Debtor has had no prior names other than [     ]. The Debtor has not used and does not use any trade names other than [     ]. As of the date of this Agreement, the Debtor is organized under the laws of the State of [     ]. Without advance written notice to the Secured Party and reasonable opportunity for the Secured Party to take action to protect the Secured Party’s interests hereunder, the Debtor shall not change its name, reincorporate or otherwise reorganize, or change its jurisdiction of organization.

          (b) The Debtor authorizes the Secured Party to file one or more financing statements, or other documents describing any or all of the Collateral in any filing or recording office.

Section 3. REMEDIES

     3.1 General Remedies. During the existence of an Event of Default, the Secured Party may, at the Secured Party’s option, exercise one or more of the following remedies:

          (a) To the extent permitted by law, the Secured Party may exercise all the rights and remedies of a secured party under the UCC.

          (b) The Secured Party may prosecute actions in equity or at law for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted or for the enforcement of any other appropriate legal or equitable remedy.

          (c) The Secured Party may instruct any obligors owing payments to the Debtor with respect to the Collateral, including royalty payments, to make all such payments directly to the Secured Party.

          (d) The Secured Party may foreclose on any Collateral in any manner permitted by the courts of or in the State of Texas or the state in which any Collateral is located. If the Secured Party should institute a suit for the collection of the Secured Obligations and for foreclosure under this Agreement, the Secured Party may at any time before the entry of a final judgment dismiss the same, and take any other action permitted by this Agreement.

          (e) To the extent permitted by law, the Secured Party may exercise all the foreclosure rights and remedies of a secured party under the UCC. In connection therewith, the Secured Party may sell any Collateral at public or private sale, at the office of the Secured Party or elsewhere, for cash or credit and upon such other terms as the Secured Party deems commercially reasonable. The Secured Party may sell any Collateral at one or more sales, and the security interest granted hereunder shall remain in effect as to the unsold portion of the Collateral. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any sale by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was adjourned. In the event that any sale hereunder is not completed or is defective in the opinion of the Secured Party, the Secured Party shall have the right to cause subsequent sales to be made hereunder. Any statements of fact or other recitals made in any bill of sale, assignment, or other document representing any sale hereunder, including statements relating to the occurrence of an Event of Default, acceleration of the Secured Obligations, notice of the sale, the time, place, and terms of the sale, and other actions taken by the Secured Party in relation to the sale may be conclusively relied upon by the purchaser at any sale hereunder. The Secured Party may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale.

          (f) All costs and expenses incurred by the Secured Party in enforcement or preservation of its rights under this Agreement, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed by the Debtor to the Secured Party on demand.

     3.2 Application of Proceeds.

          (a) Unless otherwise specified herein, any cash proceeds received by the Secured Party from the sale of, collection of, or other realization upon any part of the Collateral or any other amounts received by the Secured Party hereunder may be, at the reasonable discretion of the Secured Party (i) held by the Secured Party as cash collateral for the Secured Obligations or (ii) applied to the Secured Obligations.

          (b) Amounts applied to the Secured Obligations shall be applied in the following order:

          First, to the payment of the costs and expenses of exercising the Secured Party’s rights hereunder, whether expressly provided for herein or otherwise; and

          Second, to the payment of the Secured Obligations in the order set forth by the Secured Party.

Any surplus cash collateral or cash proceeds held by the Secured Party after payment in full of the Secured Obligations and the termination of any commitments of the Secured Party to any Debtor shall be paid over to the Debtor or to whomever may be lawfully entitled to receive such surplus.

     3.3 Remedies Cumulative. The Secured Party’s remedies under this Agreement and the Patent License Documents shall be cumulative, and no delay in enforcing this Agreement and the Patent License Documents shall act as a waiver of the Secured Party’s rights hereunder or thereunder.

Section 4. GENERAL

     4.1 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF TEXAS.

     4.2 Notice. All notices and other communications from the Secured Party to the Debtor provide for in this Agreement shall be delivered in the manner and to the addresses set forth in the Patent Assignment Agreement.

     4.3 General. If any provision in this Agreement is held to be unenforceable, such provision shall be severed and the remaining provisions shall remain in full force and effect. All representations, warranties, and covenants of the Debtor in this Agreement shall survive the execution of this Agreement and the other Patent License Documents. If a due date for an amount payable is not specified in this Agreement, the due date shall be the date on which the Secured Party demands payment therefor. The provisions of this Agreement may be waived or

amended only in a writing signed by the party against whom enforcement is sought. This Agreement shall bind and inure to the benefit of the Debtor and the Secured Party and their respective successors and assigns. The Debtor may not assign its rights or delegate its duties under this Agreement; provided, that Debtor may assign its rights and delegate its duties to the assignee of Debtor’s rights under the Patent Assignment Agreement in connection with any assignment permitted thereunder, so long as such assignee assumes and agrees to perform all of Debtor’s obligations hereunder. This Agreement may be executed in multiple counterparts each of which shall constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

     THIS WRITTEN AGREEMENT AND THE OTHER PATENT LICENSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the date first above written.